Thanks for your very logic take on this. I'll admit that many in my "generation" 2000/2001 grads (and also 2009 grads in NY) gut burnt and have a different risk-reward outlook in life. I think that explains some of the differences.
What you say is highly logical and models well with the current state of the world. However, it doesnt model unknown unknowns. The problem with modeling unknown unknowns is that you remain in a constant state of fear of what might happen, even though in the base case you would be OK -- so again your viewpoint makes sense.
However, I myself, cant stop thinking of unknown unknowns. Two that worry me (not worry me crazy, just worry me enough not to buy an expensive home in SF) are:
- What if tech jobs go remote and SF property prices stay constant? Now you dont get the appreciation you are expecting. Also, now, wages are stagnant or reduced with the large pool of workers across the US willing to work for less.
- What if the "burn down tech industry" segment of politicians win power (or cabinet influence) and create all sorts of punitive laws?
- What if we allow a lot more highly-skilled immigrants into the country (generally, i'm in favor of this coming from an immigrant family, but it cannot be denied that there would be a 3-5yr blip downwards in wages as the industry re-calibrates to more efficiently use all resources, including eventually creating net new jobs)
I'll give you three examples of unknown unknowns:
1. A friend in NYC purchased a simple 2family home and rents out the below unit to help pay the mega-mortgage. This year, there was a law that in many cases renters can defer rent (unlikely to pay it later, since it will obviously be a huge number.) Also, there is a moratorium on evictions. Also, the homeowner has to continue paying property taxes, utilities, heating, gas, etc. The model just went out the window.
2. A friend in 2009 -- outstanding performer -- was fighting to keep his job (along with a dozen other folks.) Suddenly there was a sexual harrassment claim (no witnesses, he said vs she said.) One person desperately trying to keep their job was the accuser, one was the accused. The accused lost his job. Took him 9 months to find a new job. Burnt thru his 6mo savings buffer. Increasingly desperate for a job, lowered his salary expectations and no longer earning $250k
3. Company is doing well. You are doing awesome. Making great buck. Suddenly, a corporate acquisition. New overloads bringing in loyalists. Bonuses cut for a year or so. Market is bad, stock grants are below what you got (Happens all the time). Dont want to switch jobs and be LIFO. You just went from $250 TC to $170TC.
My point is not that people cannot make ends meet. They can. Also, we in tech have it pretty good. BUT I would agrue that there are too many unknowns and stresses to "just pursue your passion" as the GP post was saying. I mean, sure, if everything was covered i'd love to pursue my passion. But it isnt.
Finally, you cant easily sell a home.
1. 6% real estate commission (if you put 20% down, you just lost 30% of your equity)
2. Title Insurance (1.5% depending on state)
3. Lawyers, fees, transfer taxes.
4. Bid-Ask spread.
All in, selling a home, especially under duress, exacts ~7-10% cost depending on your tax jurisdiction. If you put 20% down, you just lost 33 to 50% of your equity.