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Comment by tayo42 | Hacker News Reader

its still expensive to borrow $700,000, on top of your current expenses. that's an extra payment of $3300, whos got that laying around to wait for a house to be built

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Hang on let me check your other comments in this thread.

You do!

Most people, when they get a mortgage, they're going deep into debt. You have about that much in liquid assets. You can definitely afford it.

Ehh I think it would be irresponsible to use all my savings like that, plus you need to buy the land to build on and pay for your current place

You still end up owning the house, so it's more of a conversion in savings. And you'd probably be paying it off over time, with the help of ongoing income, if the mortgage rate isn't super high.

Land depends on where you go, no comment there, but keeping up payment on your current place during construction just means you end up paying for 21 years of housing on a 20 year mortgage, or 31 years of housing on a 30 year mortgage, not a big deal.

hmm thats an interesting way to think of it.

Nothing wrong with having $1mil in a bank account, $1mil house, $1mil mortgage (yes naive / general example - but I am sure you can get the idea).

If the Fed is committed to propping up equity markets which they asserted in no uncertain terms when markets died in the beginnings of the realization that COVID was going to be much more substantive than SARS or H1N1, it was clear that equity markets would take the "good news" of lockdowns + continued lower interest rates as signs that equity markets were going to continue to rally.

I mean basically where is there yield? Crypto + NFTs (yuck to the latter), real estate and equities. Even just running correlation analysis on these various assets over the last 20 years showed that crypto was super underpriced (despite only 12/13 year track record) while real estate is tremendously overvalued and equities were the only thing to react in a reasonable way to both (1) the initial realization covid was serious and (2) the Fed stepping in with 2 novel revolvers for SMB and for corporate credit. Treasury even threw in a bit into the bowl and performed stimulus. The last 1.5 years likely minted more "wealth" than in the previous 100 years combined (hand waving a bit) - a framework was laid to make much more money than what you put in provided you were looking at what was to come based on what was spoken.

> Even just running correlation analysis on these various assets over the last 20 years showed that crypto was super underpriced

care to elaborate?

feel free to reach out to me, my emails are available via links on my profile.

You know, all these people talking about savings being sacred and driving investment. All that stimulus did nothing. It turns out, unlike the cartoon villain depictions of government in various economic ideologies, governments are one of the biggest drivers of investment in an economy and taking money away from them often results in less investment overall. Meanwhile it's the private sector that failed to invest its money.

When people talk more and more about how lower taxes on the rich boost investment you already know that private investment is dead and won't recover no matter what you do.

Assuming a 4% interest rate and 30 year mortgage that 700k house will also cost you $500k in interest and therefore the financing cost of that house is $1.2 million. The fun part: dropping interest to 0% raises the price of the house to $1.2 million without raising the financing cost.

What dropping interest rates does is not prop up the price of housing, it's increasing the resale value of the housing you already pay for.

So the winners are the people that already own and the losers are those yet to buy?

This sounds familiar…

A down payment is required if not paying cash, usually 10-20%. You’re financing the rest at 2-3% for 30 years, or borrowing against your public securities at ~1% and a reasonable amount of leverage (~%30) dictated by your brokerage.

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