It’s getting prohibitively expensive. Before brokers fees were banned in Boston, a $2,000/mo apartment could have cost you $8000 just to move in. That’s for first, last, security and brokers fee. That’s a worst case scenario but even just first and last months rent is $4000. It’s getting outrageous.
Way back when I started my career - I almost COULDN'T take a good job in Boston, because I couldn't figure out how I could literally live there long enough to get my first few paychecks to pay for my rent.
I decided that I'd just go into credit card debt and live in the crappiest hotel that I could find until I had enough money to pay the first/last/security deposit.
Luckily, I found some shady landlord on Craigslist that turned out to be pretty chill, and just let me move in without even paying until I had the money. Dude even picked me up from the airport and moved me right in. It was kind of a rip-off for a room, but it was furnished, and I wasn't going to be in a position to buy furniture for months, so it worked out for both of us for 6 months or so.
I do wonder... At what point does this start to impact who can and can't even move to your area for work? Have we already reached that point?
Reminds me when I moved to boston for a job as a young grad. Found a room available for rent on craigslist for $400 in a 2 floor apartment. Half way through living there, someone bought the vacant apartment downstairs and turns out the room I was staying in was owned by the downstairs people so I had to change rooms.
I think there's always a way to make these moves work. You just need to take a risk and be ready to suffer.
You're so close to realizing the point but the difference is between a dystopian future and a future worth living.
Corporate housing, and worker housing in general, is what we're bouldering towards. The only way to extract further wealth from most of the population is for them not to own anything. It's the Western equivalent of South Asian brick kilns.
What we need instead is social housing like Vienna [1]. Americans in particular always associate such thing with ghettoes and Section 8.
And here's another problem: US corporations already keep employees and pay them less with the fear of losing health insurance. That's why the system exists. How much worse would it be if it's also your housing you'll lose?
30 year mortgage is founded partly on the idea that your house will be worth more in the future when you sell it. That you can lock in a lower price now.
Number cannot always go up. We are at the top of the carbon pulse. Financialization has taken us far from the material baseline of the rock we are flying through space on. Debt will only get us so far.
For this and many other reasons, why would you believe a house "as an investment" is a reasonable thing to keep hoping for, especially 30 years from now? If you have even a reasonably stable rental, it's less risk exposure if you can save some money that isn't tied up in a down payment.
You're falling for the trap of just thinking of buying a house as an investment.
Buying a house can be an investment, but it's also buying a place to live. Even if the home's value merely keeps pace with inflation over 30 years, you've converted a largely fixed housing payment into ownership rather than paying ever-increasing rent indefinitely.
Along the same lines, you are buying a place. A place that you own and can do whatever you like with. I spent twenty years renting and twenty years of feeling like you can’t hang a picture on the wall, paint a room, upgrade an appliance, or really do anything to improve your surroundings, tends to get tiring.
> Buying a house can be an investment, but it's also buying a place to live.
I'm a strong proponent of both owning and renting, and each has tradeoffs vs. the other. I've moved between renting and home ownership a couple times, and I appreciate the customizability of ownership along with the very real financial advantages.
On the other side, I've also enjoyed "freedom" of renting, where I didn't have to spend any additional time, energy, or money on maintenance tasks. In my HCOL part of the country, I could also afford the rent to live "downtown" when owning anything remotely similar was out of the question.
Your "also a place to live" line is fantastically underrated. When the housing market was flat or declining, I'd always get annoyed when people said something like "I've owned this house for 5 years, but now it's worth $20k less than when I bought it!". That also means if they sold it right now at that $20k "loss" then they effectively paid $333/month plus upkeep to live somewhere for 5 years!
> That also means if they sold it right now at that $20k "loss" then they effectively paid $333/month plus upkeep to live somewhere for 5 years!
This also ignores the costs in buying/selling, including agent fees, lawyers, etc. You should probably only buy if you plan on living in a single place for at least a decade.
That isn't a trap if we're talking about how other people perceive things. You might want a place to live, but the houses are all owned by people who want investments, so for the purpose of explaining the housing market, they're investments.
No constant anxiety that you’re going to be serially priced out of your own home or that the landlord is going to decide they’re giving the apartment to their nephew or something is worth quite a lot.
I’m not against renting but the rate at which prices are rising in many areas is unbelievable and the inherent instability it brings frankly sucks. It makes renewal time every year needlessly stressful.
If prices were more stable over long periods and one could more easily secure assurance that the owner isn’t going to rugpull them so one could only move every decade or so at most frequent that’d be easier to deal with.
There is virtually no security in renting outside of whatever landlord-tenant laws your municipality will offer you. The landlord can simply say that they're not going to renew your lease at the end of the year because the neighbors don't like your barking dog. And you have no recourse.
Home ownership comes with costs, too. There's maintenance, taxes, etc.
It can also be a prison, as many people who locked in at low interest rates are learning. If they move, a lot of them will have to reset their mortgage rates and end up paying a lot more. This has trapped people into housing that is substandard for their living situations (growing families, moving for career opportunities, etc).
Renting can be perfectly fine for society, though the explicit tax benefits in the USA usually tilt in favour of home ownership. But a lot of very wealthy countries are majority renters, including Switzerland (where the home ownership rate is in the 30-40% range). This gives the Swiss a huge leg up on lifestyle flexibility and the majority of their wealth isn't tied up in a single asset.
I'm not trying to shit on owning a place, but ideally there should be nothing wrong with renting (assuming a competitive market where rental units can be built and aren't zoned out due to restrictions, etc).
Buying a house isn't just about expected return. It's also about hedging. You need to live somewhere, so you have an implicit liability of a stream of rental costs. The most natural hedge for that is a house. If expected future rental costs go up, your house value goes up. If they go down, your house value goes down. Overall, your risk, in present value terms, is reduced.
Of course this doesn't work exactly and you can nitpick this, but I think people should at least look at housing assets as more than "is it going to go up?", and more about long-term risk reduction. (And, just to be clear, this doesn't mean that you should lever up beyond reason to buy a house.)
Right. This would make it possible and reasonable if you could find a house that is enough, such that you can live in it, expect a reasonably good experience in it for the life of your time in it, and that that mortgage payment, plus all maintenance, insurance, tax, etc. is reasonably comparable to an equivalent rental. Depending on where you are, this is not always the case. Or you need to buy a small place at current rates and prices to make it at all comparable.
You have to decide what "enough" is, and that's variable depending on your expected standard of living, etc. I am personally currently lucky enough to be in a good rental situation, which colors my view.
Having a landlord that will fix problems and eat incidental appliance/roof/major expenses is a form of insurance paid as rental.
Exactly- owning one home is actually the neutral position. Renters are persistently taking a short position on real estate and landlords/multiple owners are effectively long.
Keep in mind though that by entering into a 20% down mortgage you are effectively levered up 5x against your local real estate market. So it’s not like you’re totally reducing your risk. Luckily for homeowners, home prices only go up since the GFC so this leverage seems like a good position to be in.
This is false. Can you cite a source for the idea that the 30-year mortgage was "founded" on the idea of appreciation? The thirty year mortgage was introduced to reduce the housing appreciation requirement the old balloon loan system relied on.
The mortgage was to allow people to eventually OWN THE PROPERTY, not a leveraged investment.
It's an interesting development that some (most?) regular people have forgotten that there is a 3rd option, not just rent or loan. You can actually OWN the thing and pay only property tax on it.
You don't really own it because of the property tax. Unless you live in Malta or a handful of other countries you are effectively renting from the state.
If paying property taxes is considered "renting from the state", then I'll be glad to pay the $600 a month in rent in order for the state and my county to maintain the roads, sewers, drains, school district and everything around me that allows me to enjoy my home and participate in society.
Exactly, a house in the middle of nowhere, with no infrastructure, quickly becomes worthless.
If anything, property taxes could be considered ‘maintenance’, which is an inevitable part of ownership. Nobody likes paying for the maintenance work, but you have to, otherwise the house falls down.
>Number cannot always go up. We are at the top of the carbon pulse. Financialization has taken us far from the material baseline of the rock we are flying through space on. Debt will only get us so far.
Why can't it? GDP per capita has been steadily marching up since the dawn of industrialization. You mention carbon but most developed countries have decoupled carbon emissions from their economic growth.
Yeah, I thought that when I was young too. The housing market can keep going up for much longer than you can hold out. Then, if there ever is a correction, it probably won't drop lower than this point right now.
My advice to any young'un thinking they can wait out the market: you can't, buy whatever you can afford as soon as you can and watch inflation reduce that painful monthly outgoing to something more manageable over time.
Housing isn't an investment opportunity. It's where you live.
> My advice to any young'un thinking they can wait out the market: you can't, buy whatever you can afford as soon as you can and watch inflation reduce that painful monthly outgoing to something more manageable over time.
I don't think that is quite right. Buy whatever you can afford as soon as life puts you in a position where you can reasonably expect to live in the same place for at least 7 years. You will never perfectly know your future, but predicting 7 years generally isn't too hard, and if you are wrong it is probably close enough to 7 years that you are okay.
My first house I had to sell after 10 years (I got a job in a new city) and I lost money on the sale despite the 10 years, but that is an outlier. Most people will see enough value appreciation in less years as to not be out too much if they have to move. 7 is just a good compromise for most people.
Don't forget when buying a house that you have to pay for maintenance. Make sure you can afford this somehow. If you have friends/family that can help with that work that can save a ton of money over if you have to hire someone.
Mathematics agrees with you, there are in fact infinitely many numbers.
Physics and reality do not. Once the number gets big enough it loses all practical value. Humans are not really built to reason about very large numbers. At some point you reach Zimbabwean inflation and your currency loses all value because everyone is paid in the trillions. Then you reset your currency back to lower numbers because that's what humans and their systems can handle.
So, no, the number cannot always go up. There is a practical ceiling beyond which numbers lose meaning and value.
Inflation is more probable than deflation: Meaning, over 30 years, we're more likely to hit a period of inflation where the value of your house (in dollars) will go up even though the real value (in your earning potential) might stay the same.
But, if we hit deflation and a lot of people need to default... Well then we're all in the same boat anyway.
> 30 year mortgage is founded partly on the idea that your house will be worth more in the future when you sell it.
Another meaningful reason is that it is a hedge against inflation. You pay a fixed amount for housing for 360 months, rather than having to adjust rental payments that will tend to go up over that time frame.
I can, rent in cheap cost of living location. Why pay 600k+ usd to purchase in m-hcol when instead can live abroad during retirement and pay 1k/month and use the remaining for better living or health care or whatnot?
I can sell my house when I'm retired if I choose to do that.
I can only save so much money in retirement plans. A house (in the US - other countries have different rules!) is my next best retirement investment because I can live there rent-free after I retire, or I can sell it for more cash.
If you are not maxing out your retirement accounts then the house may be a worse investment than adding more to your retirement accounts.
Agree here. But I'm a doomer/collapsenik - so, the same future coming for "retirement" is the same future coming for "house always appreciates in value". Maybe 1990 -> 2020 was an okay 30 year period, 2026 -> 2056 sure won't be.
I don’t have that information, but I’m also not claiming I do. The GP is claiming “1990 -> 2020 was an okay 30 year period, 2026 -> 2056 sure won't be.”
The fact that there was Black Wednesday, 9/11, the dot com crash, the Iraq War, a once in a century global financial crisis, Brexit, and a global pandemic… suggests it wasn’t an “ok period” for markets. Yet, somehow, over the period of a mortgage, they all went up.
The idea that humans won’t adapt to whatever happens in the next 30 years is ludicrous. There will be short term market instability, just like the events I noted from the previous 30 years, but planning for the apocalypse is mind numbingly stupid.
If the apocalypse happens, everyone is in the same boat. If it doesn’t and you didn’t get on the housing ladder early, well, you’ll probably be buying a more expensive house in the future.
I’m saying this as someone who waited far too long to get on the ladder when I saw how rapidly prices were ascending in the 2000s (leading up the the GFC). I used the exact language lots of people in this thread are using about prices coming down eventually. But I was wrong.
Post the crash I couldn’t buy because deposit demands doubled. It took me out of the market for a long time. Ultimately costing me more when I did buy.
The future always seems risky, it’s the nature of the beast.
In the UK at least there’s significant tax advantages to home ownership compared to renting.
Easily 30-50% of the money you pay in rent is immediately burned in tax/letting agent fees that don’t happen to a homeowner who “is their own landlord”. Additionally there’s no capital gains tax on one’s primary home.
Even if house prices stay flat it’s usually still better to own if rental yields in your area are higher than 5%.
A house is a good hedge against inflation - my payments stay the same for 30 years of inflation, then go to zero (I still have taxes and maintenance so this is wrong - but it is close enough to true for discussion). Meanwhile rent is expected to go up with inflation. The longer you live in a house the better an investment it is.
Where I live, there's just a growing sense that rent and homeownership are wildly more expensive compared to what you get. Lack of development in the urban core has made moving anywhere else (cheaper) entail buying a car, dealing with commutes, etc. It has also made moving within the urban core significantly more expensive, especially with rent control pricing limiting availability. Basically, from a purely financial perspective, the juice (moving) is not really worth the squeeze.
The promises of WFH have also not come to fruition. The dream of moving anywhere and retaining your email job are not the reality in 2026. Employers seem actively hostile to that idea or are reneging on promises or claims that that "is the future".
Moving is a pain in the ass, especially in today's world where we just have a lot of stuff.
I moved a lot in my 20s, and really grew to hate moving. One year I moved into a place that I hated (because I could just move again) and when I moved out of that place into a place that I loved, I really grew to hate moving.
A socialized housing market replaces exorbitant prices with a lottery; public-subsidized housing in Stockholm has a waiting list of years. The way to stabilize the demand curve is to increase to supply.
Socialized housing is a management technique. It does not inherently create housing. Read about Stockholm's situation if you are interested in learning about the topic.
It is indisputable that there have been successful socialized housing schemes. It is also indisputable there are successful free-market housing systems; for example, Minneapolis.
A vanishingly small portion of the US rental market is rent controlled - fractions of one percent. In New York City there are only about 25,000 units that are actually rent controlled - tenants who have lived continuously since July 1, 1971 in a building built before 1947.
Rent stabilization - caps on how much landlords are permitted to increase rent - are also not that widespread. Washington DC is unusual in having over half of its rental stock covered by rent stabilization, but even in NYC less than half of the rental stock has stabilized rents.
Comparing to the 1980s maybe misses that the population was much younger then, and there’s still a general trend of people moving more when they’re younger and settling down when they’re older. I would have liked to see the data broken down by age cohorts.
Housing values skyrocketed due to low interest rates. The prices are sticky and won't correct just because mortgage rates have gone up. That means no one can move. What we need is a large number of small houses (or owner owned multitenants) and a population willing to move into them.
Maybe my feed is biased. But, I’ve been seeing good arguments lately that “The rent is too damned high!” is largely a problem created by voters. And, I don’t know how we’re going to fix that.
Ex: https://youtu.be/yoT76zITRx8 TLDR: 60% of both left and right wing voters like rent control. 98% of economists oppose it. Even liberal lefty economists. Even though they support price controls elsewhere like utility monopolies. Rent control feels good in the short term, but is detrimental to the vast majority in the long term in a large variety of ways.
The actual solution, to the surprise of no one, is to increase supply.
Unfortunately, there was a paper I don’t have a link to showing that not just old NIMBY homeowners, but largely everyone consistently vote against measures that increase supply. It’s part of a larger effect where people measurably bias their voting against policies that sound like they will benefit rich people. Very similar policies in similar areas will get different votes depending on how the wording makes it clear the rich will benefit.
Well guess who almost always benefits immediately from real estate construction? So… we keep voting to prevent construction and then complaining that the rent keeps going up.
Rent control doesn’t “feel good” — it allows for housing stability in a volatile economic environment. Without rent control, I would be de facto evicted from my home with a 50–100% rent increase from the recent AI boom. (This is literally happening to other folks in my neighborhood.) Why on earth would I vote against it? Because some economist said so? (And no, it’s not 98%, you made that figure up.)
Fortunately, you can have rent control and incentivize housing construction. These things are not mutually exclusive.
> It’s part of a larger effect where people measurably bias their voting against policies that sound like they will benefit rich people.
Blaming this on voters gives up the propagandists' game. A statement like "we'll make sure more houses are built to lower housing costs" does not sound like "we'll let business owners do business they otherwise wouldn't be allowed to do", even if they happen to describe the same policy.
I feel like US is too heavily weighted on incumbant "rent seeking" through law and policy. We were just in Tokyo and Seoul, the average costs of rents in New York City: ~$3,900 – $4,200 vs Tokyo: ~$1,200 – $1,350 and vs Seoul: ~$950 – $1,100. Renters will move if there are affordable newer options in cities instead of treating boomer asset holding rent seekers as a privileged class.
It is very common in Japan to have to pay key money when moving in, which is typically 1-2 months of rent. This isn’t like a security deposit as it is non refundable and is basically a “thank you for letting me live here”
Also if you are actually getting paid in Yen then the gap narrows between NY and Tokyo. Then there is the fact that your home could be destroyed in a massive earthquake but everyone has a different price for that risk
It's bizarre to me that this is all couched in "expect". This is a financial problem - they have the actual numbers to know whether the responses are rational.
This is just the surface of the issue, housing market problem is far deeper, and even home “owners” aren’t actually owning with their perpetual property taxes, which is unlike rent, uncontrolled. To solve housing for everyone, the solution is simple, it’s not building new units, that’s temporary, it’s not more regulations on whatever, that doesn’t solve the root cause, you need to solve that root cause and that is houses are considered an investment, not a shelter, and investments are always expected to go up, obviously it will reach a point that having a few walls of plywood is like owning a merchandise, it doesn’t take a genius to find this. So the steps to solve the toot cause as follows:
- making housing as a depreciated asset, like a car, TV, whatever, it’s NOT an investment. Go invest and start a business that actually contributes to the economy instead of leeching on other’s wealth.
- ban interest rates on mortgages, so banks aren’t incentivized to pour fake numbers into accounts and deducting fake numbers from other accounts as debt all while enjoying the sweet real money from interest. Once that is ban, they won’t give loans based on speculated prices, ending the daisy chain of using another house to get a bigger loan to buy a bigger house based on fake speculated market value.
- relax the permits and regulations on owning and building houses, which is a big topic on its own.
Among many other points that goes after the root cause, not some duct tape solution, housing is a shelter not an investment, look up any human needs diagram and you will find shelter is at the bottom of it, you can’t be creative or do great things when you are not settling in a house, you can’t think about making a business and contribute to economy if you are paying most of your income to landlord who take that to pay a mortgage so the bank can take the interest. Things now seem calm but most the new generation don’t own a house or ever thinking of owning a one, these soon will be the majority of voting and decision making, and it will be a brutal reaction on boomers and the overall selfish system that do anything to make their lives more miserable.
So I'm Gen-X. Statistically speaking, I have more yesterdays than tomorrows. I can't even begin to describe how much of a dystopian hellscape the world has become and is becoming. Many my age describe the 1990s as the last good decade.
I lived in a 2 bedroom apartment in the 1990s for $200/month 3 miles from the city center. All my other expenses were less than another $200/month. The median house price was less than $80k. College graduate positions typically paid ~$30k but that was OK. This was pre-9/11 so all those old TV shows and movies you saw of people meeting people at the airport gate were very real. I've seen younger people think this was just a trope, like the 30 seconds the trace a call bit. No, that was real. Friends of a friend lived in Iowa and split a 4 bedroom house for $180/month. Not each, total.
For younger millenials and Gen-Z, I honestly wish you could've experienced this world, for no other reason than to see that things weren't always this way and don't have to be this way.
There's an old episode of the Cosby Show that had the father (Bill Cosby) teaching his son, Theo, about finances. It's funny watching it back now because it has the line "an apartment in Manhattan is going to cost you $400" and I remember thinking how expensive that sounded at the time.
The absolute worst thing that has happened is how hoarding housing has become a retirement plan. It's simply stealing from the next generation and it's absolutely strangling the economy. Society is fraying at the edges. For anyone interested, there's been academic work on this that falls under the label of "the housing theory of everything" eg [1].
But what I hate most is how cruel, selfish and stupid everybody seems to be getting, in part fuelled by increasing desperation to stay above the rising tide just a little bit longer. And the ultra-wealthy constantly throw gas on this fire and torch the planet for what? So they can have $200 billion instead of $100 billion? What good does that do you if there's nothing left? But what's crazy is that a third of the population will defend Jeff Bezos in this equation.
What you see in a lot of economic indicators (such as those posted here) can be read as people incradsingly see themselves as having no future. Continued consumer spending is not a sign of a healthy economy or optimism anymore. It's a sign of fatalism.
While I'm not glossing over real problems we have today (I'm also Gen-X), the 90s were not that great, you were just young and unencumbered. Healthcare was cheaper and more friendly, but not better for serious issues. There was such little information available about... everything? TV, Newspapers, and word of mouth, were about it. I'm surprised I made it where I am today with the random walk most of us took in life back then.
It’s getting prohibitively expensive. Before brokers fees were banned in Boston, a $2,000/mo apartment could have cost you $8000 just to move in. That’s for first, last, security and brokers fee. That’s a worst case scenario but even just first and last months rent is $4000. It’s getting outrageous.
Way back when I started my career - I almost COULDN'T take a good job in Boston, because I couldn't figure out how I could literally live there long enough to get my first few paychecks to pay for my rent.
I decided that I'd just go into credit card debt and live in the crappiest hotel that I could find until I had enough money to pay the first/last/security deposit.
Luckily, I found some shady landlord on Craigslist that turned out to be pretty chill, and just let me move in without even paying until I had the money. Dude even picked me up from the airport and moved me right in. It was kind of a rip-off for a room, but it was furnished, and I wasn't going to be in a position to buy furniture for months, so it worked out for both of us for 6 months or so.
I do wonder... At what point does this start to impact who can and can't even move to your area for work? Have we already reached that point?
Reminds me when I moved to boston for a job as a young grad. Found a room available for rent on craigslist for $400 in a 2 floor apartment. Half way through living there, someone bought the vacant apartment downstairs and turns out the room I was staying in was owned by the downstairs people so I had to change rooms.
I think there's always a way to make these moves work. You just need to take a risk and be ready to suffer.
Easy fix, the department of defense has been doing it for years in Southwest DC.
Just build corporate housing.
Then we can have little Amazon towns where all your needs are met and everyone lives in perfect harmony in downtown San Fransisco.
As long as they stick to housing it could be an improvement over the status quo.
Vertical integration isn't that unethical if you religiously stick to only integrating what would otherwise suck.
Could even include Amazon store credits in the compensation package!*
* Non-transferrable, no cash value, forfeit upon separation, taxes on items purchased with credits must still be paid in USD by user
Toss in a robot that folds laundry and I'm in
Yes, then we can build a company store where the slav... er, "employees" can shop and discuss how to be more productive on their projects!
You're so close to realizing the point but the difference is between a dystopian future and a future worth living.
Corporate housing, and worker housing in general, is what we're bouldering towards. The only way to extract further wealth from most of the population is for them not to own anything. It's the Western equivalent of South Asian brick kilns.
What we need instead is social housing like Vienna [1]. Americans in particular always associate such thing with ghettoes and Section 8.
And here's another problem: US corporations already keep employees and pay them less with the fear of losing health insurance. That's why the system exists. How much worse would it be if it's also your housing you'll lose?
[1]: https://www.youtube.com/watch?v=41VJudBdYXY&t=242s
30 year mortgage is founded partly on the idea that your house will be worth more in the future when you sell it. That you can lock in a lower price now.
Number cannot always go up. We are at the top of the carbon pulse. Financialization has taken us far from the material baseline of the rock we are flying through space on. Debt will only get us so far.
For this and many other reasons, why would you believe a house "as an investment" is a reasonable thing to keep hoping for, especially 30 years from now? If you have even a reasonably stable rental, it's less risk exposure if you can save some money that isn't tied up in a down payment.
You're falling for the trap of just thinking of buying a house as an investment.
Buying a house can be an investment, but it's also buying a place to live. Even if the home's value merely keeps pace with inflation over 30 years, you've converted a largely fixed housing payment into ownership rather than paying ever-increasing rent indefinitely.
Along the same lines, you are buying a place. A place that you own and can do whatever you like with. I spent twenty years renting and twenty years of feeling like you can’t hang a picture on the wall, paint a room, upgrade an appliance, or really do anything to improve your surroundings, tends to get tiring.
Why can't you hang a picture on the wall? Fixing holes in drywall is super trivial, a good life skill to learn.
Painting, too. Not sure how common or uncommon but my landlord explicitly allows painting, as long as it's not a dark color
Yes; but matching the paint color? and matching it to the wear of sun/fade of the surrounding area? That's not nearly as straightforward.
[dead]
Is there a law saying your landlord has to accept the repair?
In most jurisdictions, what you can take out of a deposit is legislated.
And it's really not that hard to make an unnoticeable drywall repair.
> Buying a house can be an investment, but it's also buying a place to live.
I'm a strong proponent of both owning and renting, and each has tradeoffs vs. the other. I've moved between renting and home ownership a couple times, and I appreciate the customizability of ownership along with the very real financial advantages.
On the other side, I've also enjoyed "freedom" of renting, where I didn't have to spend any additional time, energy, or money on maintenance tasks. In my HCOL part of the country, I could also afford the rent to live "downtown" when owning anything remotely similar was out of the question.
Your "also a place to live" line is fantastically underrated. When the housing market was flat or declining, I'd always get annoyed when people said something like "I've owned this house for 5 years, but now it's worth $20k less than when I bought it!". That also means if they sold it right now at that $20k "loss" then they effectively paid $333/month plus upkeep to live somewhere for 5 years!
> That also means if they sold it right now at that $20k "loss" then they effectively paid $333/month plus upkeep to live somewhere for 5 years!
This also ignores the costs in buying/selling, including agent fees, lawyers, etc. You should probably only buy if you plan on living in a single place for at least a decade.
Unless you are willing to enter into some kind of a special arrangement, closing costs are almost always negotiated and usually paid by the seller.
That isn't a trap if we're talking about how other people perceive things. You might want a place to live, but the houses are all owned by people who want investments, so for the purpose of explaining the housing market, they're investments.
No constant anxiety that you’re going to be serially priced out of your own home or that the landlord is going to decide they’re giving the apartment to their nephew or something is worth quite a lot.
I’m not against renting but the rate at which prices are rising in many areas is unbelievable and the inherent instability it brings frankly sucks. It makes renewal time every year needlessly stressful.
If prices were more stable over long periods and one could more easily secure assurance that the owner isn’t going to rugpull them so one could only move every decade or so at most frequent that’d be easier to deal with.
There is virtually no security in renting outside of whatever landlord-tenant laws your municipality will offer you. The landlord can simply say that they're not going to renew your lease at the end of the year because the neighbors don't like your barking dog. And you have no recourse.
Home ownership comes with costs, too. There's maintenance, taxes, etc.
It can also be a prison, as many people who locked in at low interest rates are learning. If they move, a lot of them will have to reset their mortgage rates and end up paying a lot more. This has trapped people into housing that is substandard for their living situations (growing families, moving for career opportunities, etc).
Renting can be perfectly fine for society, though the explicit tax benefits in the USA usually tilt in favour of home ownership. But a lot of very wealthy countries are majority renters, including Switzerland (where the home ownership rate is in the 30-40% range). This gives the Swiss a huge leg up on lifestyle flexibility and the majority of their wealth isn't tied up in a single asset.
I'm not trying to shit on owning a place, but ideally there should be nothing wrong with renting (assuming a competitive market where rental units can be built and aren't zoned out due to restrictions, etc).
you are falling into the trap of thinking of a house as a maintenance-free place to live
I agree with this. The same goes for subscription cars. Default on the monthly payments and they take it away.
If you purchased a rust bucket of a car, you own it and if it all goes south you still have a roof over your head.
Buying a house isn't just about expected return. It's also about hedging. You need to live somewhere, so you have an implicit liability of a stream of rental costs. The most natural hedge for that is a house. If expected future rental costs go up, your house value goes up. If they go down, your house value goes down. Overall, your risk, in present value terms, is reduced.
Of course this doesn't work exactly and you can nitpick this, but I think people should at least look at housing assets as more than "is it going to go up?", and more about long-term risk reduction. (And, just to be clear, this doesn't mean that you should lever up beyond reason to buy a house.)
Right. This would make it possible and reasonable if you could find a house that is enough, such that you can live in it, expect a reasonably good experience in it for the life of your time in it, and that that mortgage payment, plus all maintenance, insurance, tax, etc. is reasonably comparable to an equivalent rental. Depending on where you are, this is not always the case. Or you need to buy a small place at current rates and prices to make it at all comparable.
You have to decide what "enough" is, and that's variable depending on your expected standard of living, etc. I am personally currently lucky enough to be in a good rental situation, which colors my view.
Having a landlord that will fix problems and eat incidental appliance/roof/major expenses is a form of insurance paid as rental.
Exactly- owning one home is actually the neutral position. Renters are persistently taking a short position on real estate and landlords/multiple owners are effectively long.
Keep in mind though that by entering into a 20% down mortgage you are effectively levered up 5x against your local real estate market. So it’s not like you’re totally reducing your risk. Luckily for homeowners, home prices only go up since the GFC so this leverage seems like a good position to be in.
This is false. Can you cite a source for the idea that the 30-year mortgage was "founded" on the idea of appreciation? The thirty year mortgage was introduced to reduce the housing appreciation requirement the old balloon loan system relied on.
I agree.
The mortgage was to allow people to eventually OWN THE PROPERTY, not a leveraged investment.
It's an interesting development that some (most?) regular people have forgotten that there is a 3rd option, not just rent or loan. You can actually OWN the thing and pay only property tax on it.
You don't really own it because of the property tax. Unless you live in Malta or a handful of other countries you are effectively renting from the state.
If paying property taxes is considered "renting from the state", then I'll be glad to pay the $600 a month in rent in order for the state and my county to maintain the roads, sewers, drains, school district and everything around me that allows me to enjoy my home and participate in society.
Exactly, a house in the middle of nowhere, with no infrastructure, quickly becomes worthless.
If anything, property taxes could be considered ‘maintenance’, which is an inevitable part of ownership. Nobody likes paying for the maintenance work, but you have to, otherwise the house falls down.
>Number cannot always go up. We are at the top of the carbon pulse. Financialization has taken us far from the material baseline of the rock we are flying through space on. Debt will only get us so far.
Why can't it? GDP per capita has been steadily marching up since the dawn of industrialization. You mention carbon but most developed countries have decoupled carbon emissions from their economic growth.
https://ourworldindata.org/co2-gdp-decoupling
> Number cannot always go up.
Yeah, I thought that when I was young too. The housing market can keep going up for much longer than you can hold out. Then, if there ever is a correction, it probably won't drop lower than this point right now.
My advice to any young'un thinking they can wait out the market: you can't, buy whatever you can afford as soon as you can and watch inflation reduce that painful monthly outgoing to something more manageable over time.
Housing isn't an investment opportunity. It's where you live.
> My advice to any young'un thinking they can wait out the market: you can't, buy whatever you can afford as soon as you can and watch inflation reduce that painful monthly outgoing to something more manageable over time.
I don't think that is quite right. Buy whatever you can afford as soon as life puts you in a position where you can reasonably expect to live in the same place for at least 7 years. You will never perfectly know your future, but predicting 7 years generally isn't too hard, and if you are wrong it is probably close enough to 7 years that you are okay.
My first house I had to sell after 10 years (I got a job in a new city) and I lost money on the sale despite the 10 years, but that is an outlier. Most people will see enough value appreciation in less years as to not be out too much if they have to move. 7 is just a good compromise for most people.
Don't forget when buying a house that you have to pay for maintenance. Make sure you can afford this somehow. If you have friends/family that can help with that work that can save a ton of money over if you have to hire someone.
inflation disagrees with your premise, there is no reason why number can't always go up, there are plenty of countries that prove otherwise.
Mathematics agrees with you, there are in fact infinitely many numbers.
Physics and reality do not. Once the number gets big enough it loses all practical value. Humans are not really built to reason about very large numbers. At some point you reach Zimbabwean inflation and your currency loses all value because everyone is paid in the trillions. Then you reset your currency back to lower numbers because that's what humans and their systems can handle.
So, no, the number cannot always go up. There is a practical ceiling beyond which numbers lose meaning and value.
There are some countries where a thousand or a million of their currency is worth a dollar. People just start thinking in thousands or millions.
Heck, the dollar is already it. What used to cost a penny now costs ten dollars. We just think in dollars and forget about the pennies.
Inflation is more probable than deflation: Meaning, over 30 years, we're more likely to hit a period of inflation where the value of your house (in dollars) will go up even though the real value (in your earning potential) might stay the same.
But, if we hit deflation and a lot of people need to default... Well then we're all in the same boat anyway.
> 30 year mortgage is founded partly on the idea that your house will be worth more in the future when you sell it.
Another meaningful reason is that it is a hedge against inflation. You pay a fixed amount for housing for 360 months, rather than having to adjust rental payments that will tend to go up over that time frame.
"The rule of thumb was:
- buy when home prices are 10x rent
- sell when home prices are 20x rent"
- The Big Short by Micheal Lewis [0]
I remember reading this quote and then checking NYC prices and it was a 33x multiple.
0 - https://amzn.to/4cr0tWX
> Numbers cannot always go up
Isn't that how our monetary system works though? Inflation means the numbers WILL always go up.
Generally people are indexing the numbers always go up to inflation. Which should be different, but so far numbers still go up anyway.
Not all numbers. Some numbers have certainly gone down. Your home might be one of them. So might really bad stock pick too.
Even if the house is worth less, the morgage is eventually paid off. Rent has to be paid forever.
I can't even imagine renting when I'm retired and have less money.
I can, rent in cheap cost of living location. Why pay 600k+ usd to purchase in m-hcol when instead can live abroad during retirement and pay 1k/month and use the remaining for better living or health care or whatnot?
I can sell my house when I'm retired if I choose to do that.
I can only save so much money in retirement plans. A house (in the US - other countries have different rules!) is my next best retirement investment because I can live there rent-free after I retire, or I can sell it for more cash.
If you are not maxing out your retirement accounts then the house may be a worse investment than adding more to your retirement accounts.
Buying a house as an investment is so dumb.
Its only an investment if you are renting it out to someone else, otherwise you are just gambling.
Agree here. But I'm a doomer/collapsenik - so, the same future coming for "retirement" is the same future coming for "house always appreciates in value". Maybe 1990 -> 2020 was an okay 30 year period, 2026 -> 2056 sure won't be.
> 2026 -> 2056 sure won't be.
You have evidence from the future?
Do you?
Where's your evidence global temperatures won't plummet 20 degrees tomorrow and reverse climate change?
Past observations inform future predictions.
I don’t have that information, but I’m also not claiming I do. The GP is claiming “1990 -> 2020 was an okay 30 year period, 2026 -> 2056 sure won't be.”
The fact that there was Black Wednesday, 9/11, the dot com crash, the Iraq War, a once in a century global financial crisis, Brexit, and a global pandemic… suggests it wasn’t an “ok period” for markets. Yet, somehow, over the period of a mortgage, they all went up.
The idea that humans won’t adapt to whatever happens in the next 30 years is ludicrous. There will be short term market instability, just like the events I noted from the previous 30 years, but planning for the apocalypse is mind numbingly stupid.
If the apocalypse happens, everyone is in the same boat. If it doesn’t and you didn’t get on the housing ladder early, well, you’ll probably be buying a more expensive house in the future.
I’m saying this as someone who waited far too long to get on the ladder when I saw how rapidly prices were ascending in the 2000s (leading up the the GFC). I used the exact language lots of people in this thread are using about prices coming down eventually. But I was wrong.
Post the crash I couldn’t buy because deposit demands doubled. It took me out of the market for a long time. Ultimately costing me more when I did buy.
The future always seems risky, it’s the nature of the beast.
If your bar for "ok" is "not literal human extinction" then yeah, it'll probably be ok.
In the UK at least there’s significant tax advantages to home ownership compared to renting.
Easily 30-50% of the money you pay in rent is immediately burned in tax/letting agent fees that don’t happen to a homeowner who “is their own landlord”. Additionally there’s no capital gains tax on one’s primary home.
Even if house prices stay flat it’s usually still better to own if rental yields in your area are higher than 5%.
A house is a good hedge against inflation - my payments stay the same for 30 years of inflation, then go to zero (I still have taxes and maintenance so this is wrong - but it is close enough to true for discussion). Meanwhile rent is expected to go up with inflation. The longer you live in a house the better an investment it is.
Where I live, there's just a growing sense that rent and homeownership are wildly more expensive compared to what you get. Lack of development in the urban core has made moving anywhere else (cheaper) entail buying a car, dealing with commutes, etc. It has also made moving within the urban core significantly more expensive, especially with rent control pricing limiting availability. Basically, from a purely financial perspective, the juice (moving) is not really worth the squeeze.
The promises of WFH have also not come to fruition. The dream of moving anywhere and retaining your email job are not the reality in 2026. Employers seem actively hostile to that idea or are reneging on promises or claims that that "is the future".
Moving is a pain in the ass, especially in today's world where we just have a lot of stuff.
I moved a lot in my 20s, and really grew to hate moving. One year I moved into a place that I hated (because I could just move again) and when I moved out of that place into a place that I loved, I really grew to hate moving.
Because you cannot pay market prices if you leave your rent controlled apartment. Once you are out, you never get one again.
Apparently that is beyond the high and mighty Federal Reserve employees who wrote this speculation.
The housing market needs to be socialized.
A socialized housing market replaces exorbitant prices with a lottery; public-subsidized housing in Stockholm has a waiting list of years. The way to stabilize the demand curve is to increase to supply.
Sounds like it also puts the incentives in the right place. Why don't you keep voting out the government until it builds enough houses?
you are correct that we need to increase supply, and socialized housing creates more supply. great idea
Socialized housing is a management technique. It does not inherently create housing. Read about Stockholm's situation if you are interested in learning about the topic.
It is indisputable that there have been successful socialized housing schemes. It is also indisputable there are successful free-market housing systems; for example, Minneapolis.
A vanishingly small portion of the US rental market is rent controlled - fractions of one percent. In New York City there are only about 25,000 units that are actually rent controlled - tenants who have lived continuously since July 1, 1971 in a building built before 1947.
Rent stabilization - caps on how much landlords are permitted to increase rent - are also not that widespread. Washington DC is unusual in having over half of its rental stock covered by rent stabilization, but even in NYC less than half of the rental stock has stabilized rents.
All true, but there is evidence that rent increases for existing tenants lag behind market increases.
Get off Reddit, there is no rent control. It's thousands a month, they got you by the balls
Comparing to the 1980s maybe misses that the population was much younger then, and there’s still a general trend of people moving more when they’re younger and settling down when they’re older. I would have liked to see the data broken down by age cohorts.
Housing values skyrocketed due to low interest rates. The prices are sticky and won't correct just because mortgage rates have gone up. That means no one can move. What we need is a large number of small houses (or owner owned multitenants) and a population willing to move into them.
Maybe my feed is biased. But, I’ve been seeing good arguments lately that “The rent is too damned high!” is largely a problem created by voters. And, I don’t know how we’re going to fix that.
Ex: https://youtu.be/yoT76zITRx8 TLDR: 60% of both left and right wing voters like rent control. 98% of economists oppose it. Even liberal lefty economists. Even though they support price controls elsewhere like utility monopolies. Rent control feels good in the short term, but is detrimental to the vast majority in the long term in a large variety of ways.
The actual solution, to the surprise of no one, is to increase supply.
Unfortunately, there was a paper I don’t have a link to showing that not just old NIMBY homeowners, but largely everyone consistently vote against measures that increase supply. It’s part of a larger effect where people measurably bias their voting against policies that sound like they will benefit rich people. Very similar policies in similar areas will get different votes depending on how the wording makes it clear the rich will benefit.
Well guess who almost always benefits immediately from real estate construction? So… we keep voting to prevent construction and then complaining that the rent keeps going up.
Rent control doesn’t “feel good” — it allows for housing stability in a volatile economic environment. Without rent control, I would be de facto evicted from my home with a 50–100% rent increase from the recent AI boom. (This is literally happening to other folks in my neighborhood.) Why on earth would I vote against it? Because some economist said so? (And no, it’s not 98%, you made that figure up.)
Fortunately, you can have rent control and incentivize housing construction. These things are not mutually exclusive.
> It’s part of a larger effect where people measurably bias their voting against policies that sound like they will benefit rich people.
Blaming this on voters gives up the propagandists' game. A statement like "we'll make sure more houses are built to lower housing costs" does not sound like "we'll let business owners do business they otherwise wouldn't be allowed to do", even if they happen to describe the same policy.
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I feel like US is too heavily weighted on incumbant "rent seeking" through law and policy. We were just in Tokyo and Seoul, the average costs of rents in New York City: ~$3,900 – $4,200 vs Tokyo: ~$1,200 – $1,350 and vs Seoul: ~$950 – $1,100. Renters will move if there are affordable newer options in cities instead of treating boomer asset holding rent seekers as a privileged class.
It is very common in Japan to have to pay key money when moving in, which is typically 1-2 months of rent. This isn’t like a security deposit as it is non refundable and is basically a “thank you for letting me live here”
Also if you are actually getting paid in Yen then the gap narrows between NY and Tokyo. Then there is the fact that your home could be destroyed in a massive earthquake but everyone has a different price for that risk
To add, renters not moving is a renter problem. It's a real estate owner benefit.
It's bizarre to me that this is all couched in "expect". This is a financial problem - they have the actual numbers to know whether the responses are rational.
Sounds about right
This is just the surface of the issue, housing market problem is far deeper, and even home “owners” aren’t actually owning with their perpetual property taxes, which is unlike rent, uncontrolled. To solve housing for everyone, the solution is simple, it’s not building new units, that’s temporary, it’s not more regulations on whatever, that doesn’t solve the root cause, you need to solve that root cause and that is houses are considered an investment, not a shelter, and investments are always expected to go up, obviously it will reach a point that having a few walls of plywood is like owning a merchandise, it doesn’t take a genius to find this. So the steps to solve the toot cause as follows:
- making housing as a depreciated asset, like a car, TV, whatever, it’s NOT an investment. Go invest and start a business that actually contributes to the economy instead of leeching on other’s wealth.
- ban interest rates on mortgages, so banks aren’t incentivized to pour fake numbers into accounts and deducting fake numbers from other accounts as debt all while enjoying the sweet real money from interest. Once that is ban, they won’t give loans based on speculated prices, ending the daisy chain of using another house to get a bigger loan to buy a bigger house based on fake speculated market value.
- relax the permits and regulations on owning and building houses, which is a big topic on its own.
Among many other points that goes after the root cause, not some duct tape solution, housing is a shelter not an investment, look up any human needs diagram and you will find shelter is at the bottom of it, you can’t be creative or do great things when you are not settling in a house, you can’t think about making a business and contribute to economy if you are paying most of your income to landlord who take that to pay a mortgage so the bank can take the interest. Things now seem calm but most the new generation don’t own a house or ever thinking of owning a one, these soon will be the majority of voting and decision making, and it will be a brutal reaction on boomers and the overall selfish system that do anything to make their lives more miserable.
So I'm Gen-X. Statistically speaking, I have more yesterdays than tomorrows. I can't even begin to describe how much of a dystopian hellscape the world has become and is becoming. Many my age describe the 1990s as the last good decade.
I lived in a 2 bedroom apartment in the 1990s for $200/month 3 miles from the city center. All my other expenses were less than another $200/month. The median house price was less than $80k. College graduate positions typically paid ~$30k but that was OK. This was pre-9/11 so all those old TV shows and movies you saw of people meeting people at the airport gate were very real. I've seen younger people think this was just a trope, like the 30 seconds the trace a call bit. No, that was real. Friends of a friend lived in Iowa and split a 4 bedroom house for $180/month. Not each, total.
For younger millenials and Gen-Z, I honestly wish you could've experienced this world, for no other reason than to see that things weren't always this way and don't have to be this way.
There's an old episode of the Cosby Show that had the father (Bill Cosby) teaching his son, Theo, about finances. It's funny watching it back now because it has the line "an apartment in Manhattan is going to cost you $400" and I remember thinking how expensive that sounded at the time.
The absolute worst thing that has happened is how hoarding housing has become a retirement plan. It's simply stealing from the next generation and it's absolutely strangling the economy. Society is fraying at the edges. For anyone interested, there's been academic work on this that falls under the label of "the housing theory of everything" eg [1].
But what I hate most is how cruel, selfish and stupid everybody seems to be getting, in part fuelled by increasing desperation to stay above the rising tide just a little bit longer. And the ultra-wealthy constantly throw gas on this fire and torch the planet for what? So they can have $200 billion instead of $100 billion? What good does that do you if there's nothing left? But what's crazy is that a third of the population will defend Jeff Bezos in this equation.
What you see in a lot of economic indicators (such as those posted here) can be read as people incradsingly see themselves as having no future. Continued consumer spending is not a sign of a healthy economy or optimism anymore. It's a sign of fatalism.
The entire thing is honestly deeply depressing.
[1]: https://worksinprogress.co/issue/the-housing-theory-of-every...
While I'm not glossing over real problems we have today (I'm also Gen-X), the 90s were not that great, you were just young and unencumbered. Healthcare was cheaper and more friendly, but not better for serious issues. There was such little information available about... everything? TV, Newspapers, and word of mouth, were about it. I'm surprised I made it where I am today with the random walk most of us took in life back then.
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evidence?
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This reads as parody, but sounds like you are serious. What are some specific examples you've seen (without doxxing yourself of course).
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