Is it really necessary to own a home if your mortgage is going to be 20 years long? I get that renting is like throwing money in a hole, but people are so much more nomadic these days. What's the big deal in moving once every 10 years once rent gets unbearable?
> people are so much more nomadic these days
I think you have a bit of a skewed view of reality there - people in the US are far less likely to move for work than in past generations. You may be surrounded by a bubble of digital nomads, but it’s far from common.
You also have to factor in the opportunity cost of what you could've done with that down payment (e.g. What would a $100k downpayment invested for 30 years in the stock market be worth vs how much is that worth in your home in 30 years?) The NYT has a buy vs rent calculator that helps make some of these decisions: https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...
Everyone I know in my age group with a house got help with their down payment from parents. Either in the form of low/no interest casual loans or just substantial gifts. It's possible this money wouldn't have been available to them for speculation in the stock market.
You also have to factor in the opportunity cost of what you could've done with that down payment (e.g. What would a $100k downpayment invested for 30 years in the stock market be worth vs how much is that worth in your home in 30 years?) The NYT has a buy vs rent calculator that helps make some of these decisions: https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...
Everyone I know in my age group with a house got help with their down payment from parents. Either in the form of low/no interest casual loans or just substantial gifts. It's possible this money wouldn't have been available to them for speculation in the stock market.
Might depend on your age group. If you were (un)lucky enough to be of home buying age during the 2005ish period, you could get a "NINJA" (No Income? No Job? Approved!) loan. This let you sneak around PMI and even having a down payment by using a 80% LTV conventional 1st mortgage, and a HELOC acting as 2nd mortgage based in order to reach full purchase price. Add in a 10 year interest only period, and you're good to go. What could go wrong?!
There are most certainly many things deeply wrong. Most people have negative savings every year. They have more debt. If one has bought a house, then it is very easy to go into more debt every year, when house prices are rising. Then they fall. Since the beginning of written history (the first written records are records of debts) there are stories and parables about the evil of debt and the need for debt jubilees. A…
Easy access to credit is an important component to a free market. Making borrowing illegal just leads to all sorts of inefficient contortions to do it another way. For example, businesses often need to borrow money in order to get started. For another, "bridge" loans and "revolving lines of credit" allow a business to operate when the timing of receiving payments does not line up with the timing of when bills are due…
> Forgiving debts means that interest rates must rise to cover those losses.
Exactly. Interests rates are way too low at the moment.
Do you want to have pets? Do you want to redecorate to your own taste? Can you even find anywhere to rent? Not everywhere has a liquid rental market. Moving only once every 10 years sounds great. Renting means maybe having to move on notice as short as one month. Back when I was renting I moved about every 3 years, although that was also house-sharing with other young professionals. Rent is usually more expensive tha…
> also, obviously, after 20 years you have no more payments. You have maintenance. And if something bad happens with the foundation, that's very expensive to fix. Unless you just plan to die and have the house demolished and the property sold (which is honestly preferable in some cases of inheritance). I had to pay $25k to have supports installed in the crawlspace and other mitigation to avoid foundation work. I migh…
Not that I'm helping, but I think you were definitely ripped off. Those supports cost about 20 dollars each. I had a company do one part for 3k, and did the rest myself. 25k should have been a big red flag.
It's not like you avoid these expenses by renting. They're just rolled into your rent. You get to avoid thinking about them, of course. Although there is an economies-of-scale advantage to maintenance on multi-family dwellings.
Yeah, it's basically like insurance. You're not hit with a sudden $10k+ bill, you just have a rent that has ~$100 a month factored in for maintenance costs.
Also with renting, one should be careful to avoid arguments at equilibrium. E.g. not all landlords seek the same profit margin and rent increases don't track improvements perfectly. Comparison shopping and moving opportunistically, one can stay ahead of the curve. Other people already financed the improvement ts you're enjoying!
Depends of course. Despite the high cost, many live here because their salary is multiple times higher than they could get elsewhere.
It's not just the salary. It's also the opportunities to do things as in for the SF Bay Area we can go to wine country one weekend, go snow boarding another, sail, surf, hike; there's a lot of stuff to do here. I'm sure people can say the same for the NY metro and other similar places. I've lived in cheaper but boring places. The financial tradeoff is fair.
You could also do the same in, say, Sacramento. Or Modesto.
Citations for that number? Why don’t they save for retirement? Can someone on minimum wage with a family save for retirement? Does someone who makes bad choices deserve to be homeless and destitute later in life?
>Does someone who makes bad choices deserve to be homeless and destitute later in life? The rest of us don't deserve to pay for their bad choices.
Suppose your odds of landing in that exact scenerio are .001%. If you are unlucky, should we pay for you? What about your kids?
It seems valuable to society to not have old, homeless people causing trouble. But that's just me.
He mentions a county in Texas as the most affordable — and yet Texas has relatively high property taxes (higher than California). So there's that. And the more expensive homes will also be an income tap when you retire and sell the house (hint: anyone in the magenta can retire, sell and live out their lives anywhere in the green).
Texas also has no state income tax, though. And property taxes are based on the value of the home, so lower values means lower property taxes.
My understanding is that state income tax can be deducted from federal income tax. Retirement income is usually pretty low as well.