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

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.

Making your house "better" is a hell of a lot easier than making your car "better".

One of my high school's building was a Model T factory and an airplane factory before finally being converted into a school. At one point, the district was trying to sell the building and it was going to possibly be converted to condos.

brb attaching a coffee can to my house's exhaust system for performance reasons

ya mh that is a very good example of something that would count as 'making an investment'. whereas buying something and living in it, is not in itself 'an investment', it can be speculative or you could build another floor on your house, that could be an investment. but just taking out a lot of money to buy something useful is not 'investing'

or rather, it only is when you will make more $ from its usefulness

I could take this in a whole other direction as to arguing why there is no real distinction between "investment" and "speculation" but I won't (after all, buying an index fund is CERTAINLY speculative). I think the distinction you're trying to get at is between something whose only potential appreciation will come from supply/demand (e.g. a commodity) vs. something whose value can increase based on actual value creation (e.g. a business or a stock in someone else's business).

All that is fine, except, again, your choice is not between putting your money into a home vs a business or a stock, so it's kind of a moot point.

Making your house "better" is a hell of a lot easier than making your car "better".

To a certain degree, I think you think this because you're an architect? But what if you were a mechanic? You could arguably be having this exact same convo about buying old classic cars and refinishing them, and it it would still be SPECULATION rather than investment.

Oh, certainly, I don't think home ownership is an investment. My father agreed when I spoke to him a couple weeks ago, being a serial home improver. I don't think my parents have lived in a home where they haven't crafted it to their whims and remodeled the entire place over the time they've lived there, but they've very much taken pride in maintaining and making homes better.

The theory is that money spent on the greater cost of a home over renting could be invested in the long term, correct? What if the difference in costs isn't great and the long-term is break-even with rental prices when factored in with minor appreciation?

If you put new floor mats in your car, you're making your car a lot better than putting a new rug in your living room, imo.

If by investment you mean "hey i'll make a lot of money by buying this house" yeah obviously that's dumb. If by investment you mean "20 years from now I will have some equity instead of nothing" then it's an investment. Even just inflation-protecting your money is an investment. People buy investments that do nothing more than keep pace with inflation ON PURPOSE, because at least their money is protected from inflation.

BTW, you know what depreciates REALLY fast? Rent money.

To a certain degree, I think you think this because you're an architect? But what if you were a mechanic? You could arguably be having this exact same convo about buying old classic cars and refinishing them, and it it would still be SPECULATION rather than investment.

That's a good point wrt to classic cars, but new cars depreciate so quickly that you would have to do a significant amount of expensive work to make a car made within the last, say, ten years, MORE valuable than when you bought it. I guess I was just saying that there are so many options for a house - new finishes, new appliances, fixing up garages, converting basements or attics, etc etc. I think the discussion of refurbishing "classic" cars is a separate thing.

you can buy some baller houses in memphis right now for amazingly low prices imo. but i'm a big believer in putting 20% down and doing low interest fixed-rate 15-year mortgages, so i won't be snapping up any extra property any time soon. i bought in 2004 and got a pretty good deal, even if the area/ neighborhood was a bit over-valued at the time. we're lucky in that we never saw the wild fluctuations in either direction over the last decade. if i had it to do over i prob would have waited on some of the improvements (attic addition, electrical overhaul, new bathroom, energy efficient foam insulation, etc). all will be very helpful if/ when i try to sell, but none were 'necessary' for me to live there.

Like, I don't think even one of the best mechanics around would have a whole lot of options for making a 2009 Nissan Versa more valuable without basically stripping it down and starting over.

(xpost)

floor mats

new tires

lol, but really nevermind, i'm not going to get sucked into another internet argument with a poster is bound and determined to nitpick everyfuckingthing i say though.

in my non-expert opinion the secret to making sure your house is actually an investment rather than a wash or an outright loser is to buy less house than you could technically afford and pay it off asap

and if you're not too weird about it, rent out a room

I think...cars are more replaceable than houses, because there are so many available, both used and new, all the time? So yeah, it's not a direct comparison w/r/t devaluation, potential improvements, etc.

But I think this relates to one of iatee's central (and oft-made) points, which is that IF THE RENTAL MARKET WASN'T ARTIFICIALLY CONSTRAINED, a wider variety of affordable apartments would be available to people and could make that market function more like a the car business than the owning-a-home business.

again, fixing up a house is quite clearly making an investment.

otherwise hurting, I'm fine w/ framing it as a place to store cash that keeps pace w/ inflation. I don't think that's what most people think of when they think that 'buying a house is an investment'.

and again, more importantly, looking at things from the macro perspective, policies / a tax structure / planning that promote homeownership don't affect everyone equally and end up hurting 'don't have a choice' renters the most.

first assume a hammer

xp

btw don't a lot of the things that "artificially constrain" the rental market also "artificially constrain" the homebuying market? I mean any restriction on building is going to affect rentals, condos, co-ops, etc.

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.

This is fine strategy, until you factor in the 20%-down you need to purchase your property. Most renters can barely cover their rent each month . . . there is no way that they are going to be able to come up with a 20%-down purchase price. In this scenario, "throwing away money on rent" is allowing them to have housing without having to come up a huge sum of money up-front.

Also, the argument that instead of putting your money into a house, you put it into the stock market . . . who are all of these people with all of this extra money lying around? . . . I don't think that most people have the luxury of making that kind of choice. They put their money into rent and food and clothing and etc. and there's not much left over for savings or investment or what-have-you.

Perhaps Mitchell-Lama is the answer? Sorry, I'm getting pretty city-centric on this here suburbs thread.

ooh don't get me started on Mitchell-Lama

But as far as the down payment, yes that's a good point. And I'd like to hear arguments either way why the government shouldn't use policy to support a system where buyers don't need to come up with such a large downpayment. That's basically what the FHA does, iirc. I mean one of the traps of being poor is never being able to accumulate enough capital (or access enough credit) to better yourself.

btw don't a lot of the things that "artificially constrain" the rental market also "artificially constrain" the homebuying market? I mean any restriction on building is going to affect rentals, condos, co-ops, etc.

No! And this is why we keep having the same conversation over and over again, because this question has already been answered but people ignore the information they don't like. Just quickly grabbing from the "finding an apt in nyc" thread, it's discussed in way more detail in the collapsed part of THIS thread:

"there's a lot of specific discussion about this in the icky suburbs thread, but the regulations that usually get called out are those that restrict building heights, restrict mixed use development, and set *minimums* for things like parking spaces per unit, empty space between lots, and general space per person/unit. not really conservative stuff." (--chinavision)

and go

btw don't a lot of the things that "artificially constrain" the rental market also "artificially constrain" the homebuying market? I mean any restriction on building is going to affect rentals, condos, co-ops, etc.
--el doctoro (Hurting 2)

single family homes are more natural fits to ownership and vice versa.

Get started on Mitchell-Lama! I'm looking at their list of open properties right now.

Also, tell me about FHA.

I dunno, doesn't putting little money down though just trap you into an endless and unsustainable payment cycle? (See, the housing market crash.)

But as far as the down payment, yes that's a good point. And I'd like to hear arguments either way why the government shouldn't use policy to support a system where buyers don't need to come up with such a large downpayment. That's basically what the FHA does, iirc. I mean one of the traps of being poor is never being able to accumulate enough capital (or access enough credit) to better yourself.
--el doctoro (Hurting 2)

"better yourself" oh boy.

yeah more imp traps to being poor: having to live somewhere w/ artificially inflated rent prices, wasting 1/3 of your income on transportation.