> I am not alright with paying absurd rent.
Then you should either:
1) Buy a house to live in
2) Buy a house to hedge against rents going bananas
The 30-year fixed rate mortgage at negative real rates is the biggest handout the world has ever seen.
Then you should either:
1) Buy a house to live in
2) Buy a house to hedge against rents going bananas
The 30-year fixed rate mortgage at negative real rates is the biggest handout the world has ever seen.
The Federal Reserve MANDATES that consumer prices go up 2% per year. If house prices ever go down, they'll be there - waiting - to pump them up.
Prices will rarely ever go down substantially for a long period of time unless the Fed completely changes (I doubt it).
You can either:
1) try to time the market (difficult in housing, I'd argue not as impossible as equitities)
2) buy into the bubble
3) hope that the US basically turns into a different country
4) be ruined financially by missing out on the biggest handout in the history of the world (the 30-year fixed negative real interest rate mortgage)
Pick your poison.
How? Dollars are worth $0.5 in 1990. Yet your mortgage payment is unchanged. Your house payment is much less.
Rents are much higher.
You won.
They didn't "win." They broke even. The people that sold them won. The people with no house but inflated away cash/salary lost.
Someone else is allowed to win, too.
It's a zero sum game, and the only losers have been renters.
That can change if there's a massive, sustained housing crash. But I won't hold my breath for that.
I'm willing to bet, like always, house prices won't decline. The value of the dollar will decline instead (because the Fed can just easily QE until the only people that lose are renters).
If you go back to 1900 you see home ownership rates in the US at less than half of households[1]
The interesting thing to me is how conflated home ownership has become with housing affordability. As we’ve doubled the numbers of home owners we’ve dramatically removed the options for housing.
[0] https://fred.stlouisfed.org/series/RHORUSQ156N
[1] https://www.census.gov/data/tables/time-series/dec/coh-owner...
Agree. I bought a house around a decade ago. Refied into a sub 3% rate. The house next door now rents for 2.5x my mortgage. That's 10s of thousands of dollars/year extra I have in my pocket.
The more leverage you have - the more you're taking advantage of The Federal Reserve mandate that prices go up at least 2% per year.
2%x33 = 66% return GUARANTEED by yours truly, the Federal Reserve.
If prices appreciate 2% = $2000.
$2000 / $3000 = 66%
But that's just how mortgages work, right? Lock into a rate, and have that for 30 years? Only in the U. S., AFAICT. Canadians will correct my details, but as one example in Canada one gets a mortgage for, say, five years at x%. After five years, go renegotiate? (Help me out here, Canucks; as soon as I went to write it out, I knew I had it wrong.) Anyway, point is, the "lock it in at 2.5% for 30 years" seems to be unique to the U. S., and assuming that your wages increase, after a period of years you will keep more money in your pocket than the neighbor that rents.
Your interest rate is probably 5% or so?
The real interest rate is probably 3% or so. That means your REAL interest rate is 2%.
When you inevitably get the chance to refinance at below 3% - your REAL interest rate will be negative.
The 30-year fixed mortgage is a product that would not exist without a government guarantee on Fannie & Freddie's debt. Even if you have a jumbo loan - it's only because of the MBS market created by Fannie & Freddie.
In essence, the tax payer is paying you for you to have a mortgage on your house - regardless of whether Fannie securitized your mortgage.
Gen Z and the generations to come have a real reason to be pissed at the rest of us.
I'd assume every country is its own special mess:)
In Canada last year we had a stat released that said 1 in 5 Millennials that own property own more than one. This was inline with both GenX and Boomer stats.
Millennials are just as much a part of the problem as any other generation, assuming you think speculators are part of the problem.
I mean, by definition that property would have sold to either a new home buyer or another speculator like yourself.
And by definition, if you own a property you rent out, you are a speculator:)
i have no problem with you being a speculator:)
In a lot of markets here (I’m Canadian) average people who bought average homes in the mid 2010’s (millennials) have already made over a million dollars. Most home owners make way more money from their home than their job. This will never happen to my generation.