My folks had a friend who lost it all in late 70’s (I think it was then, could have been 80 or 81) due to the home as investment deal and rolling over interest bigger and better until the bottom dropped out so yeah, nothing new for California. Pretty sure I’ve been hearing home is your largest investment (and counter argument, largest liability) since Clinton years and I doubt teen Squirrel would have paid any attention during HW or Reagen years. And I barely remember the 70’s.

For an owner occupied residence, it is not really an investment. We all need to live somewhere, and you simply choose whether to buy or rent. Both have a cost. Where it ends up looking like an investment is when a retired couple has minimal savings, is living off social security, and the only thing of value they have is the family home. If they didn't keep re-amortizing the term, most homes will be paid off by retirement. The other investment like element of a home is that it gains value over long periods of time. But on the downside, unlike a typical investment, it has a very large holding cost through property taxes, maintenance expenses, and lack of liquidity. Now with rental properties, you get a yield plus the capital appreciation to offset those costs, but the family home does not earn you rent.

The push toward greater home ownership really came during the Clinton Administration where it directed Fannie and Freddie to create special loan programs to get lower income folks into homes. Once the Fed starting dropping rates, and the Federal Home Loan Banks were handing out subsidized loans to companies like WaMu and Countrywide, well, the ball got rolling fast. Wall Street's securitization machine took over, and mortgage capital was quickly recycled.

Oh but I digress.....

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Hawaii (fuck) You

This is true, and largely because home ownership is good for you.

A home is a good thing to own as you cement your costs. When you sign that mortgage (assuming you have fixed rate) you are guaranteeing your price for principal and interest for the next 15-30 years. When you rent, you can see that rent go up each and every year if your landlord decides to raise it. Even if the home I'm buying never appreciates, the purchase will be worth it just to have that locked in monthly payment that does not change (OK property taxes and insurance can increase, but those are smaller relative P+I). Furthermore, home ownership means that your gaining equity so whatever you pay in principal still remains part of your net worth. If you can own, you really should as. Even if if you don't see your home as an investment, getting a locked in monthly payment that doesn't change with inflation is all the justification one needs to buy.

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“When I walked in this morning, and saw the flag was at half mast, I thought 'alright another bureaucrat ate it.'" - Ron Swanson

I can lock in a monthly payment by setting a budget and moving to a new rental if my current location rises above my threshold. The transaction costs of renting are far lower and overlooked in rent vs. buy.

Plus the opportunity cost of (Down Payment + Mortgage Pmt + Taxes/Maintenance) vs (Rent Pmt) is typically ignored. People only seem to consider Mortgate Pmt vs. Rent Pmt.

This is a good debate, and I think it largely depends on the individual. Ogie's points are true, but there is also an increased risk assumed as a homeowner in the form of maintenance. Home warranties can help protect against this, but those also cost money. Someone with low income is probably not going to have enough savings for those occasions.

That said, the cost of renting has gone way up. You're likely to pay more in rent than you would if you purchased the home, even with the minimum down payment. Even with a 30-year fixed, you have a decent amount of your payment going toward principal, which is essentially savings.

Either way, after working in insurance for a long time, I would NOT recommend buying a condo or anything with a lot of "common elements" paid for by an association with bylaws. There are a lot of things out of your control, and you can be racked with massive expenses for things that are not your fault and you may not even think are necessary. Homeowner's Associations are different.

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Good debate. One thing I have to add to Kirkwood's point. The renting and picking up and moving should rent get too high etc is hard when you have children and all the factors that go with that.

Also, as mentioned the government and banking practices influence the decision making process. Right now I find rent to be somehow higher than I would expect from an inflationary standpoint given the simultaneous property value changes.

I am now in a different space than I expected due to changes in my life that have me thinking a lot about different avenues. It sure is interesting.

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Elections have consequences.

that often means moving into worse conditions. you are also able to deduct interest which you are unable to do with renting.

there are benefits to both.

in illinois a 15 yr fixed mortgage is equivalent to renting price wise. but in 15 years all you have left at that point is insurance and taxes. which aren't nothing but a fraction of what you'd pay in rent. and you can get into homes for around 5% down.

When you rent, there is nothing that keeps you locked in long term. Your landlord can raise the rent with the expiry of the lease each year. If you look to move again after the rent has been raised, you will likely find that any comparable rentals in the same area have gone up as well. You may be able to find something at the same price, but you may have to give up on location or amenities.

When you get a mortgage, you get a guaranteed and set cost for the length of the mortgage and then $0 in monthly payments (minus of course insurance and property taxes) once the mortgage is paid off. If you rent, you will always have a payment, even in retirement.

As for the cost of the down payment, that is money which really doesn't leave your net worth as that money is transferred directly to equity and is thus part of your net worth.

If you don't want to be bothered with maintenance, lawn care, etc, then there are advantages to renting. I just believe long term, owning is the wiser financial investment. There are lifestyle advantages to both though.

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“When I walked in this morning, and saw the flag was at half mast, I thought 'alright another bureaucrat ate it.'" - Ron Swanson

That is why the theory that the powers had to get people into homes was a good one. The down payment is the singular biggest thing hold people back from a better all around deal, IN GENERAL. They only missed the new way they should have found to replace the risk/responsibility that the down payment held when the bad times came.

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Elections have consequences.

3.5% now with the FHA loans. Personally the fact that there are government backed mortgages selling to people with 3.5% down and 580 credit scores terrifies me. No bank would issue those loans without the government backing them, and those are loans which should never be issued. Even worse are the USDA Rural Development loans with 0% down.

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“When I walked in this morning, and saw the flag was at half mast, I thought 'alright another bureaucrat ate it.'" - Ron Swanson

yeah and its still yours. its just held as equity.

Exactly. When you rent, that money is gone. When you own, whatever went to principal is yours upon the sale of the house (so long as the home holds its value)

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“When I walked in this morning, and saw the flag was at half mast, I thought 'alright another bureaucrat ate it.'" - Ron Swanson

It's ridiculous. We will continue to have boom and bust cycles as long as the practice continues. I don't pay enough attention to know if it's as bad as it was before 2008, but practically anyone can get a mortgage.

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But you need to compare equity gains from a house versus the gains from the stock market. The stock market vastly exceeds the gains from housing. Of course there are special circumstances depending on timing, location, etc. But overall, investment wise...equity markets>>>>>>housing

A mortgage is a "fixed cost" but literally the only fixed cost. MUST OWN HOUSE people ignore that houses are depreciating assets with annual costs outside the mortgage payment - transaction cost of buying/selling, maintenance, remodeling, insurance, taxes, etc.

Owning isn't always a clear cut victory. Sure, where rental stock isn't plentiful then owning likely makes more sense. But in Chicago proper where there is a huge amount of rentals flooding the market? Rent away, wait for the next crash and then jump in if it makes financial sense.

I agree in a normal market that stocks will outperform the housing market. I guess my primary point for having a mortgage above renting (aside from never seeing my costs go up) is that once that mortgage is gone, I have no payment. I could be entirely debt free without a payment in the world outside of taxes and insurance. I would not want to enter retirement with any kind of debt or housing payment.

When I close next month, I'll be able to still pay extra on mortgage while still maxing out Roth contributions and then putting even additional money into other mutual fund investments outside of the Roth. I know that paying extra on my mortgage is pretty much the same as putting money in the bond market for 30 years at 4%. Yes I also know that it would be underperforming the market and mathematically I should just pay the minimum on the mortgage and invest the extra payments in the S&P for 8% returns. However, paying extra on the mortgage is more for piece of mind than looking to maximize returns. I want my mortgage gone before my 1st kid is in college.

As I said there are advantages and disadvantages to both, I just personally like the security and stability that comes with home ownership. There is nothing wrong with renting your entire life if you find a way that makes it work for you.

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“When I walked in this morning, and saw the flag was at half mast, I thought 'alright another bureaucrat ate it.'" - Ron Swanson

NINJA loans are back, it's scary. I'm closing on my house in less than 30 days and the amount of verification for my loan (or lack thereof) horrified me. Granted I'm considered super-prime but damn don't just look at my FICO score. I'm practically asking the bank if they wants to see my investment statements, bank statements, tax returns, etc. If they don't look at my income, how can they even calculate the ratios they are supposed to? I always understood that was a key component of mortgage underwriting. I'm not a NINJA borrower, but with the level of verification they did, how would they know if I am or not. A FICO score is a very incomplete look for something as big as a home purchase.

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“When I walked in this morning, and saw the flag was at half mast, I thought 'alright another bureaucrat ate it.'" - Ron Swanson

the renters still generally pay for all this indirectly.

How many points does being Jewish raise a credit score?

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That information is classified

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“When I walked in this morning, and saw the flag was at half mast, I thought 'alright another bureaucrat ate it.'" - Ron Swanson

Oregon sucks also as does Washington. All three states have shitloads of out of work people living on the streets, doing drugs and providing law enforcement big time problems. Property costs in Washington is amazingly high with the far eastern interests buying up property big time and paying cash for it.

Personally, I wish I had moved out of this state about 15 years ago and told my three kids to get out of the state if they could land comparable jobs out of here. This state is awful. The only good thing is the weather and there are other states that also have decent weather but not the taxes, crime, and otherwise crap climate in California.

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An Ode to the Texas man who shot an Antifa terrorist:

Oh, he might have went on livin'
But he made one fatal slip
When he tried to match the Ranger
With the big iron on his hip

My youngest lived in Portland for a few years. Kind of an intersting city but huge drug problems, homeless everywhere, and high taxes.

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An Ode to the Texas man who shot an Antifa terrorist:

Oh, he might have went on livin'
But he made one fatal slip
When he tried to match the Ranger
With the big iron on his hip

Drug users shooting up on the streets in high rent districts in Frisco. My daughter has business there every couple of weeks. It is a shame. Very pretty city but dirty as hell and very high crime as well as scores of illegal people and homeless.

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An Ode to the Texas man who shot an Antifa terrorist:

Oh, he might have went on livin'
But he made one fatal slip
When he tried to match the Ranger
With the big iron on his hip

THose gimmick loans were hugely responsible for the crash in the housing market. Both Clinton and Bush II somehow got the idea going that everyone deserved a house and the flood gates opened. I remember local democrat politicians setting up offices to help low income people apply for these loans and somehow "forgot" to tell these people who depended on both people or even families to make their mortgage payments BEFORE the gimmick period expired and the harsh reality of the prevailing rate come into actuality. Or when the economy went south and people within the household lost their job(s).

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An Ode to the Texas man who shot an Antifa terrorist:

Oh, he might have went on livin'
But he made one fatal slip
When he tried to match the Ranger
With the big iron on his hip