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Comment by hellisothers | Hacker News Reader

True but you buy a house with leverage. So if you put 20% down and the house doubles in value your return is 500%, on top of being able to deduct your taxes and most of your monthly payment (as interest), and when you sell (after 2 years) you don’t pay taxes on $250k of the proceeds ($500k per couple).

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You honestly think that all those 3 bedroom, 2 bath homes selling for $500K right now are going to be selling for a million in 2 years? They were selling for like $125K only a couple of years ago!

This just doesn't seem sustainable. Nobody will be able to afford a house if this keeps up.

Obviously, it's location dependent but i keep saying that to myself as the homes in my area just keep going up. I assumed at $500k, it couldn't possibly go any higher. Now that those same houses are pushing $900k, I'm thinking they can't possibly go higher.

I used double as an example, nobody is making the argument that houses will double.

I tend to agree, but we used to live (own) in a major city. We then moved only 4 years later and the house had gone up quite substantially (I couldn't believe it).

Now 4 years after moving away I still check on that house and see it keeps going up and even though our savings has gone up, we can no longer afford that house anymore.

After a few moves, we're now renting a home in a pretty far off suburb of another city and the prices in this area are starting to get out of hand. Witnessed by us starting to look after we decided we like it here. The houses in this market won't last a week and offers are way over list.

But I still go back to, this can't keep up. Who is going to keep buying at this pace? Salaries certainly can't be keeping up with this?

> True but you buy a house with leverage.

You can buy stock with leverage, too.

OTOH, buying a house with leverage, at least in a non-recourse state, exposes you to less downside risk.

True, but the govt won’t subsidize any of it and you can’t live in the stock :)

My impression is you can borrow significantly more (as a proportion) against real estate, and get better rates, generally speaking.

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