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by awinder 2104 days ago
The problem in my mind is that while homes are investments they’re not great investments (they’re rather illiquid, they’re not diversified, they’re multipurposed when a domicile and that makes valuation and decisions messy). They carry a lot of benefits too though, so it’s a worthwhile asset, but having to put a larger % of your wealth into that asset would be suboptimal. In my experience the delta on home prices (and then down payments) is in excess of the salary deltas but however that math breaks down individually seems like the right thing to focus on.

Oh yeah and then after that you can choose where to live for whatever reasons work for you :-)
1 comments
notyouravgdoge 2104 days ago
My understanding is that you can "liquidate" by taking out a home equity line of credit or by doing a cash out refinance. Both of those options only work if your home has appreciated in value.
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prostoalex 2103 days ago
It doesn't have to appreciate, the amounts just have to satisfy the loan-to-value ratios that the lender is looking for.
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yellowapple 2104 days ago
And both of those options leave you pretty much screwed if we get another 2008/2009.
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notyouravgdoge 2104 days ago
I'm not particularly knowledgable about housing so I could be wrong here - but if another 2008/2009 happens, you can just keep the house and wait for prices to recover. There are some assumptions baked in:

- Either you don't plan on moving or you can cover a substantial amount of your mortgage from rental income if you do move.

- You're not overleveraged. If you lose your job or take a pay cut due to a recession, you can still continue making mortgage payments on your house without risk of foreclosure.

Caveat: There are probably some areas where housing prices never fully recovered after the 2008 financial crisis. But there also areas like the SF Bay Area, where the housing market is doing well even in the midst of wildfires, a pandemic, and tech employees fleeing the area in U-Haul trucks. As with all investments, nothing is guaranteed. For what it's worth, your run of the mill index fund would have taken a huge hit in 2008 as well. It wasn't just the housing market.

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