2. What is your income and what is your rent?
While I appreciate the anecdotal data point, it’s easy to conflate personal situations to “this is what everyone else can do”. I say this because for a good 5 years I lived with my spouse in a $2k single bedroom apartment in San Francisco that was under rent control when both of us were raking in tech money. It’s doable, but not something that you can extend to everyone in the country.
The shocking part is that we pay 5k in rent, but mortgage on the same place would be closer to 9k. Plus the commitment part (annual lease vs 30 year debt)
Very important to do your own math on these things and not just follow common wisdom.
Yes and still can’t [responsibly] afford to buy in my locale :)
The situation is truly fucked and it’s about time Americans admit that housing cannot be both an expectation and an investment. Either everyone gets to own a house or it can be an investment. You can’t have both.
IMO housing is a consumption expense but people hate it when I bring that up at dinner.
only the building portion.
The land is not consumed when you live there. It only appreciates due to the developments around that land, making it more desirable and thus, more valuable.
And if the land is more valuable, then it makes sense for it to cost more - either as rent, or as capital appreciation.
> everyone gets to own a house
which is not a truth, but a want/desire. So housing is an investment first and foremost, and will always remain so.
if you then live in that house, you lose that rental income. That is what you are consuming. the rest of the investment remains intact.
as I like to phrase it, when you move from a rental into a house that you own, you still pay rent.
yes it is. The term is called cost of capital, and sometimes imputed rent. But it's not an "expense" per se like it is when you pay liquid cash to somebody for use of a capital good.
The strong household income is the only reason why you’re able to limit how much you spend on housing, which unfortunately is not something most people are able to do, even if they’re renting. I get that renting is cheaper than buying at the moment with the interest rates, but it’s not cheap overall.