How do the Japanese build wealth, then? Buying a desirable home in a solid market is pretty much the only way for an average person earning the median wage to make it into the middle class.
Rising housing prices have played out the same across the Anglophone world. It's not sustainable as a means to get the lower classes into the middle class, because the higher prices rise the more debt they need to take on to join the game.
Housing is something people consume. It's durable, but so are cars and imagining them as being a gateway investment to the middle class because they will cost more in the future should be just as silly as for housing.
But when you're talking a capitalization period on the order of the average person's lifespan, it becomes a new class of asset in my mind. You can't treat something which will pretty much guaranteed always exist until the day you die the same as a usable good.
You've basically snuck in a tautology in your question. 'Breaking into the middle-class' in the US has simply become synonymous with owning a house, without really asking whether owning that house actually provides people with material benefits to begin with.
Like Switzerland, Germany or South Korea among some other countries Japan is very much a nation of renters. This has arguably saved them from some very grave problems.
62% of households in Japan own their own home. This is ~10% above Germany and ~1.5% below the US.
I'm literally speechless to this
There's also low-cost index funds and ETFs...cheaper, lower barrier for entry, more diversified, more liquid. The government won't seize them for non-payment of property taxes in case of unemployment or health issues. I'd argue they're a better choice than a home for an average person to build wealth.
Index funds and ETFs have been around since the 70s - nearly 50 years.
The US gov subsidizes real estate investment with long duration fixed mortgages.
Besides, GP stated that real estate ownership was the "only way" for Joe-sixpack to get into the middle-class. Homeownership may well have financial and tax advantages but it's by no means the sole way to build wealth.
I could, tomorrow, go buy a duplex, triplex, or quad with only 3% down and immediately rent out all units except the one I’m living in. Usually a much higher cash on cash return than index funds when done properly, your co-tenants are paying your rent, and you’re getting to depreciate an asset annually on your taxes that is most likely appreciating.
How could you tell people not to take advantage of such a good deal?
But that's not something an average person does. The poster I replied to was speaking of real estate wealth building solely in terms of buying a house, living in it till you retire, then selling it at an appreciated value and going live in Florida or wherever. (or alternatively change house every 10 years, rolling the appreciated property value into a bigger house every time)
What you're talking about is the work of a real estate investor, and is far more time-consuming and involved than buying a few index funds on Vanguard. Researching properties, finding and screening tenants, performing or managing repairs is a non-trivial amount of work.
You're trivializing the work of getting into landlording (maybe you're already doing it so you underestimate how much work it is for someone who has no experience doing it). If it really was that easy to earn better than index fund returns, everyone would be doing it and the returns would naturally come down.
> While not the sole way to build wealth, it’s one of the most accessible ways for anyone who isn’t already wealthy and intends to live somewhere more than a few years.
I don't even agree with that. To buy a single share of an ETF you need $50-100 max to spare. To put even 3% down on a property that you can rent out, you're talking thousands of dollars + decent credit for getting a mortgage on the property.
My point is that almost always, real estate values in the US go up. So if you need to live somewhere, and the government is going to give you cheap money to do it, you’d be crazy not to.
Yes, it’s not as easy as opening a Vanguard account and buying a share of a mutual fund. But it’s also not terribly difficult.
Your market investments did fine if you could weather 2008. If you had to liquidate, you got wrecked.
As long as the mortgage is covered, I can hold a property indefinitely.
I'm mid 30s, and have invested in real estate since my early 20s.
> Buying a desirable home in a solid market is pretty much the only way for an average person earning the median wage to make it into the middle class.
Not true. You, too, can ascend from poverty if you don't fall into the finance-everything lifestyle of the (former) American middle class.
People need to stop treating housing with the expectation that the value of a house should grow and grow and grow, because that's part of how we got to all this NIMBY bullshit.
Buy an index fund.
Yes but you don't have to pay the same amounts. There's a reason "rent-or-buy" calculators exist.
Rent, 4 or 5 year economic slump and people are out of a home.
Ownership doesn't lead to this. Even mortgages have more forgiveness for late payment than most rental agreements.
Multi-generational property ownership also helps. Buy a good house now, and your kids/grand kids have insurance against economic downturns.
I rented a 1.3m home in CA for $3,500/month, made no sense to buy at that level other than a forced savings program.
[1] https://www.theguardian.com/sustainable-business/disposable-...