While buying a house is not a luxury everyone can afford, buying one instead of renting provides several key benefits that pay off in the long term.
What does everyone else think about buying when compared to renting?
The absolute inanity of posting something like this as if it is a new revelation.
If young people could buy a home. They would.
What;s your next post?
It’s better to have children in your 30s than in your 50s!
If you spend more than you earn you in for a bad time!
Stop being poor by having more money!!
Yeah, the issue is saving up for a deposit. I finally managed to buy recently, and despite rate rises the mortgage is already pretty much the same as what rent would cost for a similar house (and long term will only be trending down in real terms with inflation). People would buy if they could, it’s not like people love having to deal with landlords.
What the author used as their title is not the most ideal however the main point is the benefits buying has over renting.
However I understand that people can’t afford a down payment on a house in major cities.
Out where I live houses can go for 100-200k so it is more achievable for those of more modest income.
Obviously I never intended to put people down because they don’t make 200k+ a year.
I don’t buy it. Imagine writing an article about how a 250k house will cost you a million dollars by the time you die and shilling that as a good thing. Insane!
Value goes up, taxes go up. Value goes down, you’re upside down on “your investment”. It’s a lose lose. A house isn’t an asset! It’s not an investment! An investment in what? Who’s doing the work to raise the value? You are! So it’s an investment in yourself? It’s an asset that you have to continue to pour capital into to keep it’s value? That’s not an asset, that’s a liability!
I’ve got a friend that lives in a medium sized city in a large metro area. He pays the total value of his house every 10 years in taxes. That’s every 10 years, he’s re-paying off his house. Every year they raise the taxes by the maximum legal amount, every year he disputes it, every year he is denied.
Water leaks. Mowing a yard. A new roof. Another pain in the ass every weekend.
The idea that you’re not tied to a house after buying it is ridiculous. As if it’s a liquid asset you can just slap on Facebook marketplace and sell in a weekend.
HOAs. You must select one of the approved paint colors. You can’t cut down that tree. You can’t plant that tree. You can’t park on the street in front of your house. You can’t work on your car in your driveway.
What if you don’t want to buy a house as an investment? What if you want to you know, just own a place to live? Too bad. You’d better have a line of credit for emergency expenses on the house, you’d better have home equity, you’d better have a valuation higher than your liability in perpetuity or youret fucked. You can’t just have a home anymore, you have to manage an asset, or a liability.
So that 200k savings you get by the time you croak according to the author’s math, is it worth the hassle? The neighbors telling you what to do, the municipality fleecing you for every dime they can get, the constant maintenance because a house is a liability, not an asset, that will crumble if you don’t pour money and time into it, the commute, the traffic, is it worth it?
I would never, ever buy a house in a residential area, ever. The whole market is a god damn mess. Now, buying land somewhere rural and slapping up an A frame…
I’m basically with you on all of that, except it still sounds better than renting.
Also, I don’t have kids, but I see a lot of folks buying houses in suburbs “for the schools”. In affluent towns where the math you’re describing is the worst, renting often isn’t even an option. Also a lot of those parents will sell and move the second their kids graduate high school. All of that is way cheaper than private school, especially for multiple kids.
This must have been written before interest rates hit a 20-year high.
Most of what he says is true, but it’s pretty tone deaf to write in this market.
Where’s that post-peak finance blog post telling people interest rates don’t matter because surely they’ll be able to refi.
I think his math is questionable and his logic even more so. My house costs about 10% of the value of the house. About half is capital opportunity cost and the other half is maintenance, taxes, and utilities. This is a cash purchase and never goes away.
Sure if you rented the same house it should be cheaper to buy. Generally one does not do that. I rented a much smaller place then I purchased. Then there is the a risk. If you buy in an up market and you have to move in a down market especially a one company town there that business went bad you are skewed.
Not saying no to home but there are many considerations. In the end it is a total numbers game. What are your exact alternatives. Then places to live including a house you own is a cost center not an investment. So cheapest apartment and smallest house is generally better.
Wow. Someone got paid for writing that garbage.
Uhhh… I managed to save up a hefty down payment and bought my house in 2009.
It has since then over doubled in value.
So yeah, “sane choice = buying a home while you are young” is my vote.… buuuuut, today you’d have to be nuts to buy a home.
Not sure where that leaves the young people today, but there is no way (in my area at least) that home values will keep on climbing.
They plateaued and I don’t see any further appreciation.Not sure where that leaves the young people today
On the street.
Since when could young people afford to buy a house?
It’s only insane because, at least here in America, housing scarcity has been manufactured in order to drive up prices and rents and our political leaders aren’t going to do a damn thing to stop it.
Governments should set a standard house price for new buyers and cover the difference. Each generation pays the same relative amount as previous generations, and capital gains / land value tax claws back money from people that take the piss and over-value their houses to take advantage of this scheme.
Median house prices are around $400k. The low end of down payments are 10% of the total price, meaning to buy a home I’d need to save an entire year’s worth of income when I can barely manage $3k in savings, and I’m the most frugal person in my family. “While buying a house is not a luxury everyone can afford” is one of the most laughably privileged things I’ve read in a while. Please go outside and touch grass sometime this century.
You can go as low as 3.5% down with an FHA loan if you have a 580 FICO.
That’s still $14k though and too much for a lot of people. I do know some people who were able to buy homes with FHA loans though.
Huh neat, I’ll have to squirrel that knowledge nugget away just in case that ever becomes viable. Another snag in my situation which I expect a lot of people my age experience though, the longest I’ve ever been employed at any company is my current job for 4 years (often not by choice - the current job just fired 1/4 of the staff for “budget reasons” on what should be a high-margin contract), and I’ve lived in almost as many locations as I have years. Buying a home would tie me down to one location, and my life has thus far been too volatile to trust that I could stay in one place without needing to move 5 years later. Plus, I was a kid during the 2008 financial crisis so I saw first hand my parents buy a big house past their means only to lose it within a couple years. That one is more irrational/emotional but worth mentioning.
Then there’s the hopium that the proletariat will be pressed by late-stage capitalism into ☭Glorius Revolution☭™ and/or AI removes labor from the labor-consumer-owner equation and causes economic collapse (can’t be a consumer if you don’t have money from labor, can’t be an owner if no one consumes, can’t be labor if no one can hire you), and buying a house will mean a big expense that gets nationalized by the end of the decade. Probably not. But I also have no idea what the next 20 years looks like.
As an investment, a home is risky. For one, you’re only going to have one most likely, so you’re not diversified. While property values do trend up, there’s a myriad of things that could potentially happen to reduce your property value as well. Not to mention, while the land underneath the home increases in value, the value of the home itself (on top of the land) decreases as the house ages.
On top of that, you’re paying maintenance, insurance, and property tax. While yes, it’s better than renting, it’s not necessarily a good investment compared to other investments you can make. On average, you’re going to have a better return on the stock market than a home. True, that’s also risky, but it’s easier to diversify and there’s more money to be made.
Finally, you’re usually leveraged pretty deep on a home. If you default for whatever reason, you’ll be left with nothing. If the bank somehow fails to recover its investment after selling the home (say, because you owed more than it was worth), they can sue you for the difference.
That said, it’s not a bad idea to buy a home. You can always live in it, if nothing else. You might want to buy one just because you want it, which is valid. Lots of people do well on homes. You just need to realize that it’s not as safe or good of an investment as it might seem.
