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Ask HN: What are idling first-time home buyers doing?

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Re: Ask HN: What are idling first-time home buyers doing?

#11

Post by mangoTangoBango »

What other kind of investment apart from housing can one take out >=5x leverage on an investment and have the interest tax-subsidized?

Housing is a big racket in the United States, and everyone is too afraid to say anything becuse they just spent the better part of a million dollars on a condo https://www.redfin.com/WA/Seattle/3610-1st-Ave-NW-98107/unit...

But if you make $300/yr and don't have kids or too many expenses thats like 5 years to pay off, so not too bad then? Not totally sustainable for the rest of the country and/or poor people though.

Re: Ask HN: What are idling first-time home buyers doing?

#13

Post by user68858788 »

I’m just now looking for a house. So far I’ve been throwing extra money into vanguard funds. It seems like waiting for a housing crash doesn’t make sense because stocks will drop too. My buying power would be about the same before and after.

Please correct me if I’m wrong here. I can’t keep up with all the variables.

Re: Ask HN: What are idling first-time home buyers doing?

#15

Post by jopsen »

user68858788 wrote: post #13

I’m just now looking for a house. So far I’ve been throwing extra money into vanguard funds. It seems like waiting for a housing crash doesn’t make sense because stocks will drop too. My buying power would be about the same before and after. Please correct me if I’m wrong here. I can’t keep up with all the variables.

This was the math I did when I bought 6 months ago...

... waiting for a housing crash makes no sense because my stonks would crash with the housing market.

Of course this was just my pocket philosophy.

(In general, waiting for a crash that might not happen also feels risky)

Re: Ask HN: What are idling first-time home buyers doing?

#16

Post by milkytron »

soared wrote: post #6

I’m Denver a single family home within 20 minutes of downtown starts at $300k for a very small or rundown house. I’m continuing to rent apartments that are near-luxury for less per month. My friends who are purchasing homes either move very far from the city or their parents pay for the down payment.

That must be 20 minutes to the east.

20 minutes west is nearly double that for any SFH. A few near me went for 450 that were for land value only/needing to be scraped.

I ended up buying a townhouse a few years ago to stay close to downtown, near a train station, and access to a bike path. I don't need the space or maintenance of a SFH, so it seemed worth it at the time.

Re: Ask HN: What are idling first-time home buyers doing?

#17

Post by hackerfromthefu »

polishdude20 wrote: post #14

We're undecided so far. Living in the high cost of housing area is crazy expensive but it would be close to friends and family. Another option is living in another town in another province which would be cheaper but we'd be so far away from everyone.

This John Ruskin quote came to mind!

"When you pay too much, you lose a little money - that is all. When you pay too little, you sometimes lose everything, because the thing you bought is incapable of doing the thing it was bought to do."

Re: Ask HN: What are idling first-time home buyers doing?

#18

Post by algoatecorn »

arghnoname wrote: post #5

I think of pricing as a probability distribution, and while it's possible that prices continue to increase, in my view the downside risk on house prices predominates. Here are a few possibilities: 1. high interest leads to an increase in rates, significantly increasing payments and making current prices less affordable. 2. A recession drops wages 3. Stock prices drop precipitously, devaluing a lot of paper money in s…

All perfectly valid points. May I ask what you mean by #1? Interest rates are historically low and a fixed mortgage will only change based on property taxes and insurance.

#2 is something I thought about a lot as I was buying my first home, but I couldn't see how a drop in wage would change anything, since my mortgage is now less than what I paid in rent for just a modest apartment.

Re: Ask HN: What are idling first-time home buyers doing?

#19

Post by deanmoriarty »

sghiassy wrote: post #7

This question seems to have an implicit assumption that buying a house is a superior investment than other investment vehicles. I believe it's been shown that investing in equities outperforms housing historically.

It’s not superior per se, but with real estate you can get cheap non-callable leverage that is almost impossible to replicate with equity investments. That’s how it becomes superior.

Find me a broker that will lend 5X the value of my stock portfolio at 3% fixed for 30 years, and won’t issue a margin call if the market drops 50% as long as I pay the interest and monthly repayment, and I promise I would never look at real estate at all. Until then, it makes complete sense to dabble with it.

Re: Ask HN: What are idling first-time home buyers doing?

#20

Post by ChrisLomont »

sghiassy wrote: post #7

This question seems to have an implicit assumption that buying a house is a superior investment than other investment vehicles. I believe it's been shown that investing in equities outperforms housing historically.

Top 5 hits on google disagree - they're pretty close, and most years it looks like real estate outperforms.

Plus you need a place to live. Factor in rent costs to the investment side, and you're losing value for investing returns. Factor in a lot of nice tricks you get with real estate (tax break for interest, ability to flip up with no capital gains along the way, dozens more), and housing is a pretty good investment.

https://www.investopedia.com/investing/reasons-invest-real-e...

https://www.millionacres.com/real-estate-investing/articles/...

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