Hacker News Reader

Comment by WalterBright | Hacker News Reader

> In the US at least, the home is one of the major mechanisms of increasing wealth over lifetime and inter-generational wealth.

I just don't buy that. Most people who do that seem to ignore the heavy costs of owning a house in the meantime: taxes, repairs, maintenance, insurance, commissions, upgrades, lawn care, pest control, utilities, alarm systems, etc.

I've serially owned houses over the decades. Sometimes I'll look at what I sold them for, when, and compare with their current zillow value. The return on every one is less than if I'd invested the money in the stock market, and that's NOT counting all those major ongoing costs I listed. It's just on the price.

View on HN

The wealth is also generated by multiplying purchasing power by leveraging against an asset with a mortgage (e.g. when else does a regular person get a $XXXk loan).

You're neglecting the cost of actually living in a similar dwelling. What would renting an identical house in the same neighborhood cost you?

Let me put it this way. None of the houses I've bought were bought as an investment. I bought them as places to live in and enjoy. I've lost money on two of them, quite a bit.

Keep in mind that if your house burns down, your generational equity goes up in flames.

That's orthogonal.

The point is that your question should not be "have I made a profit on these houses relative to an index fund" like a speculator.

Your question should be "would I have made a profit on these houses relative to an index fund if I had kept them rented out to tenants 100% of the time at market rates?".

The core to living in a residence you own shouldn't be the asset value, it should be the living. If you're neglecting the market rate for that quality of life in favor of focusing on asset appreciation, you're approaching homeownership in a backwards manner that is ultimately destructive.

I mean, it’s not a foregone conclusion that you’ll do better than otherwise. You could buy when prices are high and sell when prices are low. There is an ongoing calculus also about how long you need to live in a house before you end up saving money; it’s something like, if you sell your house within 5 years buying, assuming prices are equal, you’ll loose money bc of various purchase costs.

I pay less for my mortgage than I did for my apartment, probably approximately 85%. That was last in 2016; in general, I understand that locally rent prices have gone up since then. Of course my mortgage hasn’t, but let’s set that aside. Also, my house is much better than my apartments were, so.

Anyway, the issue is that you have to live somewhere, rent vs mortgage. That’s the difference to consider.

Nothing is a foregone conclusion when investing. And yes, you need a place to live. And the mortgage is only part of your cost to live there, see my previous post.

I just had to fork out a big chunk for a new roof, and another large expense removing a very large tree that decided to lean towards the neighbor's house.

Reply on news.ycombinator.com