People Who Live In Suburbs: Classy, Icky, or Dudes?

right those problems refer to people who buy a single house to live in it, not like real estate companies or w/e

tho tbf real estate investment is a p dicey business too

well, it also depends on the function of the investment. Like it should be considered a long-term investment - like, you buy it when you're young and live in it until you die or have to go to the nursing home. but as someone pointed out upthread, i think it was jon, houses can also be used for temporary cash flow problems, like the person starting a business.

another thing that can be used for temporary cash flow problems is almost any other investment that the money would otherwise be in

and man, let me tell you, if you have a profitable business and do some of the work out of a home you own, the tax benefits are really enviable.

xp - uh, taking money out of an IRA or an employer retirement plan before you reach retirement age is a bad idea, the penalties are higher than mortgage interest rates.

selling stock is a much easier and cheaper than refinancing yr house

if that stock is in a standard brokerage account and not in an IRA or other retirement savings account (which is where most people put their savings), then yes, you are right.

yes, that's why I said "almost"

yes, but that's a minority of investments, as far as the American public is concerned!

'this is what the american public thinks' is, if anything, a good way to argue against an idea

would be curious to see a break down on penalties paid on withdrawing ira funds early v interest paid on 2nd mortgages, nah no i woulndt n/m just kill me now

I'm not saying that that's what they think, I am saying that the majority of Americans who have money investment in stocks, bonds, etc. have it invested through retirement plans that carry significant penalties (10% federal, some states assess penalties as well, California's penalty is 2.5%) for taking money out early.

that only on the earnings tho, not the principal

?

rule of thumb: if you get a tax deduction/reduction for putting it into the account, it is taxable coming out (and subject to penalties for being taken out early)

a. there are other ways to save money, whether or not they are currently the norm
b. upthread there was evidence that people who own houses are less likely to start a business, so the fact that we are talking about how great it is that you can take money out of your house to start a business is like some ouroboros argument

ah ok i have never had one of those shits, it really doesnt seem worth locking away money i might like want to access at some point

thread got so hilarious

b. upthread there was evidence that people who own houses are less likely to start a business

but that was about British people, so it doesn't really provide much in the way of evidence

in any case it's a marginal issue compared to things like job mobility and whether or not the govt should be giving tax breaks to upper middle class owners and not lower class renters.

you should just be glad they repealed the deduction for car loan interest back in 86

that was the year I was born, I was like an anti-car jesus

i like cars, but people spend too much money on them.

iatee on your planet who owns all the housing and what does that do in terms of wealth distribution/inequality in your planet's society?

anyone who feels like they have very stable long-term employment and wants to avoid future price volatility buys.

gov't stops pushing housing via tax policy so a poor single mother who rents and saves money isn't punished by the tax system for not adding unnecessary risk to her life.

gov't also stops pushing housing via form planning (single-family houses are more natural 'fits' for ownership) which is also good for people like her, because she isn't forced to spend a third of her income on a car and can take reliable public transit to work etc.

a large apt building market not constrained by zoning policy and nimbyism ensures that she isn't 'taken advantage of' by the man (anymore than she's taken advantage of when she owes a bank for 30 years, at least). if she's very poor and can't even afford market rent for the metro area, she's given gov't help.

everything about the system 'not in my planet's society' is currently working against this person

iatee fwiw I agree with a lot of what you say. I was yelling pretty loudly against housing as an investment back in 2006 when the bubble was still running up, and there are posts to prove it. I also oppose the mortgage interest tax deduction. In fact I don't even think it actually "encourages home ownership" -- it just inflates prices a bit more.

That said, I think you are making some mistakes in your thinking about housing as an "investment" (or non-investment). You can't compare ROI on a house to ROI on other things because (1) it doesn't work the same way, and (2) no one has the option of earning ANY return on their rent money, in fact it's a total loss.

Obviously if the total monthly cost of ownership in your location is way, way above that of renting, it's possible you're better off just renting, then taking the excess and putting it in a 401(k) or IRA in some index funds and sitting on them for the next 30 years.

But once the costs get closer, it's not a choice between put $1500/mo into an index fund vs. put $1500/mo into a house, it's put $1500/mo into a house, where you keep the principal plus a very small return, vs. put the $1500/mo into your landlord's pocket. I was the quick to call bullshit on this argument back when costs of ownership were way out of whack with renting and prices were appreciating unsustainably, but now that the market has cooled there is legitimacy to this argument.

Of course this usually only works if you're going to be staying in a place at least five years or so. But once you're working and have a family it's not really hard to make this assumption.

Hurting OTM

Plus a lot of people are just really, really bad at managing their 401ks/IRAs. I'm actually pretty much against individually-managed retirement accounts - I think they're a giant scam.

again you are missing what I said upthread - in some markets today the price-rent ratio makes buying cheaper for many people but that's *because* we have a highly constrained rental market, not because houses are magic things that make money. in a functioning market the only money you can make by taking out a huge loan to buy a depreciating object would be vis speculation.

and again that's not to say that there are *no* reasons to want to own. stability can be good. moving sux. etc. but the fact that rent prices are high enough that buying can save certain people money is absurd and the people who suffer the most are the ones who can't take advantage of that absurdity.

again you are missing what I said upthread - in some markets today the price-rent ratio makes buying cheaper for many people but that's *because* we have a highly constrained rental market, not because houses are magic things that make money. in a functioning market the only money you can make by taking out a huge loan to buy a depreciating object would be vis speculation.

― iatee, Wednesday, July 11, 2012 10:19 AM Bookmark Flag Post Permalink

Wrong.

http://www.forbes.com/sites/morganbrennan/2012/03/23/the-u-s-cities-where-buying-beats-renting-a-home/

uh reread my post

I don't think we're in 'a functioning market'

no, but you keep stating your case as if it's always true

What do you mean by "make money"? What do you mean by "I don't think we're in a functioning market"?

Surely rental supply is not artificially constrained in 98/100 metropolitan areas. And if you mean that the homebuying market is not "functioning", well it's functioning precisely according to your assumptions, i.e. that homebuying isn't for most people and hence loans shouldn't be given to most people.

yeah I'm on my

rental housing is constrained not just by zoning but by structural factors, yes in those 98/100 markets too.

I am on my phone again and not going to write 5 paragraphs about what a 'better functioning' housing market would look like, I mostly have upthread anyway.

but I will just add this: in any market where buying is 'cheaper' than renting, which demographics don't get to take advantage of this?

If real estate is a bad personal investment, is it any better for the owners of rental homes/condos/apartment buildings? If their investments are just going to depreciate in real dollars or they're going to break even, why do notable maintenance?

then,,

iatee-bot is malfunctioning

you can make money building cars. you can make money buying and selling many cars. you can make money fixing up cars. but if you take out a lot of money and buy one car and use it, nobody believes that's 'an investment'. in some places owning a car can save you time and money because public transit is shitty and expensive and maybe you can get a job you couldn't otherwise get. that does not make the car itself 'an investment' tho it can appear to be in context. at the end of the day it's an expensive thing that's going to depreciate. in the same way, a house in an overpriced rental market is not 'an investment', it's an expensive thing that's going to depreciate. but it allows you to avoid a shitty rental market. that can be good, for you, in that context. but it's not good for other reasons. and people who don't have the flexibility to buy at will don't get to make the 'financially wise' decision. so we should try to fix that. but 'make it easier for poor people to buy expensive objects on credit' is prob not the best way to fix that. xp

Houses don't depreciate the way cars do, that's just a silly comparison.

For starters, they don't have motors or transmissions.

Who owns the places where people live in the new model, China or Mitt Romney?

how do mobile homes factor into this

they don't depreciate as quickly but they also don't turn into factories or better houses, they turn into worse houses. the land value itself can go up or it can go down, as w/ any commodity.

What is your obsession with houses turning into factories? And, actually houses can turn into better houses.