[dionidium]

> You need a roof over your head so if your property goes up 10%, so has every property you’re likely to want to move to when it comes time to sell.

I think this common argument massively overstates the case. I have friends whose parents left them their primary residence. Mine did not. "Where’s the huge upside though?" sounds to me like sort of an insane question, when viewed through that lens.

But just to lay out the argument further, here are some concrete examples of upside:

1. The money is real and you could move to a lower-cost-of-living area. Owning a house in San Francisco is like having a standing offer of a million dollars to move to the Midwest. That's not nothing. "But I don't want that million dollars, I want to stay here," is not a compelling argument. The offer exists whether you take it or not.

2. You can sell and rent and keep all the equity, which you get to invest elsewhere. Congratulations, you're now a renter, just like millions of ordinary hard-working people. The difference between you and them is the cash you put in your pocket when you sold.

3. Your mortgage payment is fixed, so it's an inflation hedge.

4. You can borrow against your equity.

5. Because you can buy with so little down, having a lot of equity means it's pretty easy to buy again, even if prices go up. An existing homeowner is much better positioned to buy than a non-homeowner, all else equal.

The benefits of owning a valuable asset don't disappear just because you don't want to sell it at the moment. The asset represents options, if nothing else.

[nerdawson]

> I have friends whose parents left them their primary residence. Mine did not.

I fail to see how that factors in to buying a property. You have friends who benefited from an inheritance.

> Owning a house in San Francisco is like having a standing offer of a million dollars to move to the Midwest.

Owning a house in the Midwest is like having an $xyz offer to move to <area with even lower house prices>. The offer exists whether you take it or not.

You could sell up and live in a tent too.

I don’t believe most people are willing to uproot their lives simply because they can get cheaper housing elsewhere. I’m sure it factors in but it’s rarely the driving motivator.

I think some of the points you made were fair. As a homeowner for instance you do generally have access to cheaper capital.

> You can borrow against your equity.

What equity? You advocated for putting as little as 5% down. You’re already going to have a higher than average interest rate and with such a small deposit it’ll be easy to tip into negative equity.

You only see the benefit years down the line and that relies on house prices rising in the short term.

> Because you can buy with so little down, having a lot of equity means it's pretty easy to buy again,

I’m not really following this argument. You’re suggesting buying with a small downpayment. You don’t have a lot of equity.

[dionidium]

> I fail to see how that factors in to buying a property. You have friends who benefited from an inheritance.

I mean, somebody had to decide to buy the house at some point in time. I would have told them to do it.

> Owning a house in the Midwest is like having an $xyz offer to move to <area with even lower house prices>.

Yes, that is correct. The argument generalizes.

> I don’t believe most people are willing to uproot their lives simply because they can get cheaper housing elsewhere.

If I offer you a million dollars to move, then you're free to turn that down. What you are not free to do is pretend that it's not a real offer that you have that other people don't have. It exists. It's real. And if you own a home in California, then you have that offer. And other people do not. What you choose to do with that offer is up to you.

> What equity? You advocated for putting as little as 5% down. You’re already going to have a higher than average interest rate and with such a small deposit it’ll be easy to tip into negative equity.

The house I bought in 2020 is worth $xxx more today than what I paid for it. Had that not happened, then I'd just live here, either way, and I'd be in no worse position than had I stayed in the apartment I left to move here. (As you yourself argued, I need a roof over my head, anyway.) Since it did happen, I get to keep every bit of the upside, tax free.

[nerdawson]

> The house I bought in 2020 is worth $120k more today than what I paid for it.

You bought at just the right time. Would buying the same property at 95% LTV be a great decision today?

With potential for a major loss, where’s the asymmetric upside the OP asked about?

I bought 6 years ago and prices remained flat for the first 4 years. It wasn’t until the pandemic fuelled boom that I saw any meaningful growth.

Had I chosen to sell before 2020 it would have been a negative “investment” once costs had been factored in.

[evilbob93]

> I don’t believe most people are willing to uproot their lives simply because they can get cheaper housing elsewhere. I’m sure it factors in but it’s rarely the driving motivator.

Retirees and other fixed income people may have a different opinion. Where I am in Colorado, a bunch of boomer-aged people seem to be disappearing to places that have a lower cost of living, with or without bubble payouts.