[Atreiden]

I'd point out that the data for homes is averaged nationally. Historically, there have been Good Places and Bad Places to buy a home. Home price growth in in-demand coastal areas is very different than in rural areas. In the US, "Flyover states" I'm sure skew this number heavily.

Part of this is captured by the Volatility Index mentioned

> Individual houses are 4x the volatility of a housing index, close to the same volatility as the stock market.

But it bears calling out explicitly. Economically depressed areas will have very poor growth relative to inflation. Economically prosperous, desirable, growing areas will, by definition, have an increasing population and a finite area to accommodate that population. NIMBYism exacerbates this effect by reducing supply of new homes.

If you pick a good location, buying a home is a fantastic purchase. It ties up that investment money in an asset that you can actually USE. You can improve it, make modifications and tweaks to your liking, which renters cannot. And often times these improvements result in positive net positive return.

You'll never get forced out because your landlord wants to sell.

You'll never have to deal with toxic landlords at all.

You'll get to deduct all that mortgage interest from your taxes (if you itemize).

And in California, your monthly payments will never rise YoY more than $MONTHLY_TAX * .02

[bravetraveler]

I'd point out that while an asset, yes, it is a liability. Not in the typical financial sense, either!

I'm hesitant on buying because I have next to no certainty in my role. If I be a good little Business Man and make someone else filthy rich, have all the make-up beers, and show up on time: at-will employment is still a thing. I may still be forced out by circumstance.

Equity might make the hit softer, I don't know. I do know a rainy day fund will be useful.

[nunez]

I bought recently. Mortgage lenders seem to be much more willing to work with people who can't make their mortgage than landlords are. Deferred plans, interest only payments, and more. In Texas, landlords can evict you within three days of missing a rent payment. THREE. DAYS! I got hit with this letter when auto pay screwed up. It's pretty scary.

[bravetraveler]

I've found landlords both more auditable and flexible than jobs or even lenders, sadly. I'll buy something when I can afford it (in more than one sense, too). That frees me to pick a place not tied to financing or any particular location.

All roads lead to uncertainty, I'd rather travel it with a heavy purse. Good for smacking away problems or making trades on the way.

If it becomes less fashionable to force people to relocate, maybe I'd find it wise to invest. Until then autonomy is valuable. Days? Cute! Three hours is no problem with a could-be down payment in your pocket and no attachments.

With RTO/AI/Actually-Indians... it's an arms race for those of us who 'survive'. I'd rather buy when it dips or with less competition. Not directly contribute to building Company Town 3.0 while my peers and I try to outbid each other and suckle from the same teet.

Game theory is telling me either I'm getting laid off or someone else is, there may be advantage in waiting. Costs nothing but opportunity, funny: provides that too.

A couple more tropes to close: accounting tricks all the way down, money plays.

[red-iron-pine]

that sounds like a Texas and a "non-tenant-friendly" problem -- plenty of states ain't like that.

and as someone who owns and rents property, finding good renters is hard and costly. if one of my normally good tenant gets screwed and needs a little patience and wiggle room I'd rather work w/ them then roll the dice over some noob. e.g. if they're out of work for a longer than expected then they can help paint the place, finish up some landscaping, etc.

[msgodel]

The ugly thing is that you're most likely to get laid off when the market is down. I've argued this with people so many times and I think some of them are finally starting to see what I was saying.

btw I don't think getting rid of at will employment will change that. These cycles are so long they'll certainly find a way to get rid of you during a down cycle if they want to.

[bravetraveler]

Thank you, absolutely. Contrivances abound. I was wrong to stop with at-will employment; RTO policies are a notable miss.

Say I buy somewhere affordable and am now officially remote. No longer conveniently in the same city as the office, but at home... truly elsewhere. The calculus has changed!

Then we get into fuzzier topics like AI use. It's absolutely not just about productivity. The non-minded gap between my peers and I shows that to be irrelevant. I sandbag, they grind. It's a wash. In the end, a weird litmus/loyalty test that I can't quite articulate.

[nradov]

Well if you have to move to take a new job then you can always sell your home or rent it out. You'll take a hit on transaction costs or property management fees but you're unlikely to lose all of your equity.

[bravetraveler]

> Well if you have to move to take a new job then you can always sell your home or rent it out.

Right, that's 'forced out' with extra steps :) I'm buying a home to live in (and if we're honest, die). Not employment. It may not even pay!

> unlikely

Hence the hesitation [for certainty]. This is half a statement about the market and half about my capacity for it. If I lost my job - the more likely case - I don't want this burden, too.

To your/OPs point: this can be an opportunity... but so is that fat down payment! Losing the position with savings/options: video games and burn-out recovery for the next three years. Comfortably trying on the next fad.

Without savings/options but a house/debt: panic, hot potato, and paperwork with a much more urgent job search.

[pitpatagain]

The mortgage interest deduction is incredibly over rated. For most people the last few years of high standard deduction + salt cap mean few people really get much benefit from it. At lower tax brackets it's a pretty minor discount on your interest to begin with.

The much bigger tax thing this article doesn't consider is the $250k/$500k single/married capital gains exemption on sale of primary residence.

[centra_minded]

You can filter for SF/NYC home appreciation in the tool at the bottom of the post to see the difference between in-demand areas and overall.

[Velorivox]

> If you pick a good location, buying a home is a fantastic purchase. It ties up that investment money in an asset that you can actually USE.

Also: It's a leveraged investment for most people (mortgage). If you put in 20% and your house tripled in value over the last ten years (which is what happened in SF & Seattle afaict), you make an annualized return of 27% (for a whopping 1070% total, i.e. more than 10x), after accounting for your payments (with realtor fees the number is slightly less but not meaningfully). Meanwhile as a renter your rent would likely have at least doubled over the same period, doubling the size of the nonrecoupable leak in your financial hull.

That's 1070% as opposed to 224%, i.e. 10x vs. 2x in the S&P. This is the reality of what has happened over the past 10 years, by the way, I am not using hypotheticals. Do note that home values tripling in price over the last decade is not common, even among these expensive cities, you have to be looking at specific types of housing in "luxury" neighborhoods.

TL;DR: Location matters. A LOT.

[ethbr1]

100%!

People underappreciate how valuable access to leverage can be in terms of boosting returns from a home. Putting 5% down, claiming the interest on taxes, and keeping 100% of the price appreciation is a solid deal.

Furthermore, since they're a hard asset, homes generally scale with inflation and thus serve as a hedge.

[DontchaKnowit]

I mean you can make any investment look great if you just make up the return.

What percentage of houses triples in value over 10 years? And home much are you spending in maintaining, insuring, and paying taxes in 10 years?

I think your point still stands but its not nearly as fabulous an investment as you are suggesting

[jrs235]

The home value didn't triple. Their equity did. Put $60,000 down on a $300,000 home. Live in it three years. Sell it for $540,000. Just made $240,000 in three years by investing $60,000. Granted there's also costs associated with carrying the home and mortgage one needs to count against the full profit and return.

[Velorivox]

> I think your point still stands

Thanks.

> its not nearly as fabulous an investment as you are suggesting

In case it wasn't clear, I'm not trying to give investment advice (my comment is very focused on what happened, not what will happen). I am however, implying that a lot of people made bad financial decisions by misapprehending their situation and consuming the wrong "content". I believe many people can be spared significant regret if they double-check, disbelieve, or replace much of what they’re told by the internet.

[readthenotes1]

"You'll never get forced out because your landlord wants to sell."

Where I live, the highest source of inflation for me has been property taxes. It's almost as if my landlord wants me to sell.

[derekp7]

I had the double whammy of property taxes AND insurance increases on my last house. Budget was a bit tight, but that almost sent me over the edge. I learned my lesson on my next house purchase, and made sure there was a ton of leg room in the budget, along with things I could very quickly drop from the budget if needed.

[sorcerer-mar]

Hot take: that’s actually desirable.

Sell and let someone who can make better use of it (i.e. more readily stomach the property tax) take possession.

Calcified landed gentry just sitting on dirt that appreciates due to the efforts and investments of everyone around them is Bad, Actually.

[readthenotes1]

Not for those of us who like our home and have made a life here.

What you're advocating for is treating potential club members better than current club members. It doesn't make that much sense.

If you really were advocating for sensible policies, you would be advocating for many many more multifamily dwellings and/or taxes being directly proportional to the cost of the infrastructure needed to support it--generally by linear feet of roadway taken instead of property square feet.

[sorcerer-mar]

No I'm advocating for the prevention of feudalism where a permanent landed gentry can extract wealth in perpetuity through no contribution whatsoever than having a deed.

I agree that property square feet is a bad metric. The right way to do this is actually to tax based on the unimproved value of the land, which would in fact create many many more multifamily dwellings by virtue of increasing the carrying cost of land as the market demand for density increases.

[archagon]

In my opinion, a person should not be forced to move just because of economic circumstances outside their control. Unless you're a spry 20-something with no real connections, moving will be incredibly disruptive and potentially traumatic.

One person's "landed gentry" is another's "housing stability."

[sorcerer-mar]

In my opinion, options should be balanced against each other and then we should pick the least-bad or most-good ones.

The "allow zero carrying costs indefinitely on any land" option entails runaway wealth inequality, skyrocketing housing costs, major impediments to family and household formation, and destruction of the payoff period for any capital expenditures made in a geography as younger generations have to create new cities from scratch over and over again, creating enormous financially unsustainable infrastructure sprawl (see: Houston) as redevelopment is too difficult against the vested interests of the landed gentry (see: NYC and SF). This of course causes decay, bankrupts cities and states, and ends up reducing the quality of life for everyone, including the landed gentry.

The "incur carrying costs" option entails old people reverse mortgaging their property until they die, or selling and moving into something more suitable for their needs.