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Comment by jacekm | Hacker News Reader

I do. Housing prices are constantly rising, when you take a loan you are buying an asset which (with some luck) may appreciate in value more than mortgage interest rates. That's why in some countries it's worth taking a loan as soon as possible without saving for too long.

Sure, without mortgage you may not be able to afford a house at all but it does not change the fact that mortgage is a "good" loan (i.e. you benefit from taking it)

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Mortgages with low interest rates are also one of the (main) reasons houses are so "expensive" in the first place.

The cheaper money (credit) is, the "higher" the prices will go.

It's not so much that houses became expensive, it's more that money to buy a house (specifically mortgages) became relatively cheaper. Low interest rates did that.

This is a one-time effect, though. Or at least, an effect that only changes periodically (and should reverse) when interest rates change. 30-year mortgages have been standard in the US for most of my life, and houses have gotten a lot more expensive during that time.

Mortgage loans have been getting cheaper due to automation and the commoditization of loans / increase in surplus capital.

That then pushes up home prices over time relative to inflation.

Home prices have doubled in most areas since 2009 (and worse in many areas.) when people complain about prices in 2025, this is what they’re talking about. This is not driven by the novel existence of 30-year mortgages and interest rates are at a near-term high.

Half of that is inflation. Most of what remains is the anomaly in housing prices in 2009 https://fred.stlouisfed.org/series/MSPUS

Inflation adjusted median US home prices Q4 2024 where 419,300 vs Q4 2006 ~382,00 that isn’t flat but the difference is far less interesting.

Median home prices aren’t very interesting because most of the increase is limited to specific competitive areas, and median US home prices hides that effect. I’m sure houses in deeply rural areas haven’t gotten much more expensive, but it isn’t relevant to me.

Well over half of Americans are living in Urban areas so median here is a measure of urban home prices.

Further average home prices reflects overall economic gains. The top 10%, 1%, 0.1%, etc getting richer buy nicer stuff driving up the average but that says little about overall affordability.

The effect may pause when interest rates change, but it's unlikely to reverse significantly. People who have homes now aren't going to want to sell for less than they paid for them, so there's a lot of inertia against prices going down.

The home ownership rate in the USA is 65%. If house prices start going down, money will be printed until they start going back up.

House size, build "quality" (the details in the house), resource scarcity, and zoning policy are the drivers of cost. Cheap credit and lifetime loans allow the system to continue.

Every time a municipality levies a requirement upon new development the price of everything that could be used the same way goes up by that amount since it's the "next best thing". I got told I need to spend $20-50k on engineered assessments and plans to clear an old farm field that was left to grown over for 30yr and is now considered "forest" by (a single unelected employee of) the municipality.

Game out the economic implications of that sort of regulatory behavior across the entire real estate and housing sectors and suddenly a lot of stuff that makes no sense makes a lot more sense.

I don't know about this - when I see quotes on build cost in my area they add up to more than similar properties sell for in some cases, and generally aren't a whole lot different than buying to the point that I've wondered why it's like that.

People forget that houses tend to get bigger when people can afford it. Adam Smith observed this back in his famous book.

> Housing prices are constantly rising

Housing prices are _generally_ rising. It's entirely possible to buy a house and wind up selling it later, having lost money in it. Many times through no real fault.

I hope most people haven't forgotten about 2008 financial crisis and how it was caused by declining housing prices (and the banks/markets not taking that risk into account)

We do. And we remember the rebound some years later and are still kicking ourselves for having not scooped up real estate fire-sales in Las Vegas.

I mean, hypothetically. Some people. Might be kicking themselves.

> Housing prices are constantly rising

Housing prices typically appreciate up with inflation over the long run, although local markets don't always follow the same pattern. (IE, Silicon Valley is a case where real estate appreciated faster than inflation.)

Remember, it's over the long run. There can be periods where a house will appreciate faster than inflation, and other periods where the real value of a house doesn't keep up. If you understand this dynamic, you can make a lot of money. (IE, flipping and then becoming a landlord when the market turns.)

Since the not-yet-homeowner is no doubt paying rent, home appreciation can slip by some measure below the rate of inflation and still have been a wise investment.

Of course there is home insurance and repairs to consider. But also there is the increase in rent to consider on the other side as well.

Depends on how long the not yet homeowener will live there. If you live in the same house for the next 40 years you are almost certainly better off owning it. However if you have to move after a year (which might not be in your control) you probably will lose money. 7 years is a good rule of thumb for minimum time you need to live in a house before it is better than renting, but exact circumstances can be very different.

> repairs

My house is 7 years old and the various amount of things I need to fix is making me miss being a renter.

That being said, generally the reason why home ownership is a "good deal" in the US is because you can accumulate equity, even when the value of the home keeps up with inflation. (Technically it means that inflation works in your favor if you have a fixed-rate mortgage.)

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