311–320 of 1001 posts
“But shelling out $2,500 (£1,960) a month in rent doesn't leave much left over” I’ve noticed roommates are not a thing for many people anymore, particularly among younger folk. Is this a post-Covid thing?
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Why is this happening everywhere right now? On Reddit I see this in so many places (US, UK, Europe, not sure about Asia)
Situation in Europe is often reported in misleading ways. Everybody calls it "housing crisis" - but we do not have millions of homeless roaming the street. It is actually a "moving crisis" - people want to move to nicer places but can't afford it. I.e. here in Germany, we have close to 1M perfectly habitable empty flats/houses - but they are in rural areas or the countryside. Indeed there is high demand for urban are…
So no, it's not a matter of "nicer places".
I don’t get articles like this. It’s arguably a better financial decision to NOT buy a home, and park your downpayment in a broad based index fund. I get that there are arguments for or against, but there doesn’t seem to be a clear financial advantage to home ownership. So, what’s the big fuss about? Just pay rent and carry on? Surely, there are better things to focus on?
Every person should be able to have a right to say "This is me. This is where I live. I belong here." It's all fun and games until you've lived in one place for 15 years and your landlord decides to sell the place out from under your feet because a developer wants to build a high rise.
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Home ownership isn't a good financial option for everyone, but for most consumers who aren't accredited investors it's the only way to make highly leveraged trades. You can't buy an index fund with 20:1 leverage. Of course this occasionally blows up, but even then the downside is limited. Even if ownership doesn't make sense from a financial standpoint it's still somewhat essential for parents of school age children.…
People always talk about how buying a home is the only way for the common person to obtain leverage. Please excuse my ignorance, but how does the common person use that leverage, exactly?
So suppose you have $100, and you believe a stock will increase by 10% in value, then borrowing $900 and buying $1000 of the stock, will leave you with $1100 if your prediction is true. When you pay off the loan, you'll be left with $200, and you will have doubled your money.
The loan thereby acts as a leverage multiplying the 10% return on investment to in this case a 100% return on investment.
Now imagine that instead of having $100, you have $50k, and instead of borrowing $900, you borrow $450k, and instead of buying stock, you buy a home with the 50k deposit and 450k mortgage. The same applies, the home appreciates 10% to 550k, but your equity increases from $50k to $100k. Again, the mortgage loan acts as a lever.
The difference is that most consumers do not have large and cheap capital available to them, say to borrow $450k to invest in the stock market. But most people do have such opportunities to invest in the real estate market with a mortgage.
Anyway, wether it's a good investment really depends on many factors. The NYT buy or rent calculator is still one of the best sources to get an intuition on what is best for your circumstance. https://www.nytimes.com/interactive/2024/upshot/buy-rent-cal...
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No-one can kick you out of your own home because they want to rent to someone they can charge more. No-one can tell you you can’t change the wallpaper in your own home, or remodel the bathroom, or get a dog. Not everything is a purely financial decision. A home is primarily a place to live, not an investment opportunity.
> No-one can tell you you can’t change the wallpaper in your own home, or remodel the bathroom, or get a dog. Yes, the housing association absolutely can tell you not to remodel your bathroom. Unless you literally own a house rather than an appartment, you really don't have a lot more rights than a renter would have. I am speaking as a Finnish homeowner.
First of all, agreed that housing prices are insane, even two-income households struggle to buy in my city. But taking a more long-term view, in the US the owner-occupied housing rate about 65%, which has not changed a ton in the last 50-60 years (high was 69% in 2005 and low was 63% in 1965). Granted the market has changed a lot, we have much bigger houses, and more two-income families to pay for those more expensiv…
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The recent rate of appreciation is not typical. Homes generally appreciate at 3-4% per year. Subtract from that taxes, insurance and upkeep. They’re a terrible investment unless you own rental property, at which point your tenants are paying down the loan.
So, the alternative to buying, which is a terrible investment according to you, is renting, where you pay down the loan of the landlord. That’s better, how?
People intuitively jump to the conclusion that the problem is caused by a lack of building. While more building would help, a lack of it isn't the main cause of this problem. Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? In my view this is symptomatic of a more fundamental issue - global asset price infla…
In my experience, people "intuitively" jump to basically every conclusion besides this one. "Greedy landlords" or "[favorite scapegoat] collusion" are intuitive conclusions which are far more common than supply and demand.
> Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause?
Yes they do, to varying degrees. The Anglo land use regime is a disaster.
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That's not the problem at all. Stop allowing people to buy multiple homes. Stop allowing landlords to "collaborate" on prices.
How is restricting supply not a problem? The fewer houses there are to buy, the higher prices will get, because there are more people competing for less.
“But shelling out $2,500 (£1,960) a month in rent doesn't leave much left over” I’ve noticed roommates are not a thing for many people anymore, particularly among younger folk. Is this a post-Covid thing?
That’s not my experience at all: me, my friends, everyone I know that lives in a city lives with housemates. I don’t know anyone lucky or well-off-enough who can possibly afford a place to themselves that isn’t a minuscule studio.