Insurance exists for a reason, loans exist for a reason, and the difficulty in selling a home is artificial because it’s treated like an investment that appreciates instead of a commodity that depreciates like it actually is.
Landlords buy bad appliances all the time, they are incentivized to, the cheaper the better because they don’t have to live with the consequences except for repairing it when it breaks.
In exchange for not owning anything in the place you live and having a fundamentally worse experience for it you get to pay someone else their mortgage AND their repair fund. You don’t take that into account. Renters pay for everything, we just pay it every month instead of in lump sum hits like an appliance dying.
Landlords do not provide a service, at best they provide living mobility which could be improved drastically if housing wasn’t treated like a private investment but instead a public service - so what little service they do provide is artificial.
The home is not the investment, the land is. Land is scarce, especially in desirable places. The home itself does depreciate and frequently drags down the price of the property, with new owners often tearing the place to the ground after purchase.
Renters do not pay for everything. Ask any financial advisor and they will tell you it is cheaper to rent than to own. It’s a very common strategy to rent, then take the extra money you save and invest it into stocks and bonds for retirement. In the long run, if your investments match the S&P 500 (not hard to do with index funds) then you’ll have more money than you would have if you bought a home (at national average real estate growth rates anyway).
You might point to some place like San Francisco and claim the people who bought houses there back in the 1990s beat the market. Sure, but that’s the Texas Sharpshooter Fallacy. You could just as easily have bought a house in Detroit instead. I would also say you could play the same game about picking stocks after the fact, but that would be beating a dead horse.
So why do people buy houses if they’re a bad investment compared to stocks? Emotional value, mainly. Having a place to call your own is important to a lot of people.
So why do people buy houses if they’re a bad investment compared to stocks? Emotional value, mainly. Having a place to call your own is important to a lot of people.
Also, of course, the same reason one buys anything.
If you own it, you can do whatever you want with it (mostly). Wanna repaint an entire room? No problem. Wanna tear down a (non load bearing) wall and move it? Easy. Wanna tear up the lawn and add raised garden beds? Call before you dig but aside from that, go for it.
Most of that sorta stuff of course isn’t kosher if you are renting :p
If you buy a house as an investment you need to work extremely hard to actually net positive. Simply buying a house and sitting on it is usually net negative (reminder that the price tag you buy the house at isnt how much money you pay, you have to account for all the extra interest you pay over 20 years, which is usually a solid +35% or more of the cost of the house)
So your house has to appreciate not only more than the interest you paid, but then even more to also beat basic blue chip stock rates.
Which is, at best, a gamble.
The main way you actually profit is if you renovate the house to boost its value. And that takes a fuck tonne of work. If you hire other people to do it, it wont be profitable, you have to do it yourself to have a hope in hell of netting positive.
So hope you are good at mudding and taping walls, cause you are gonna be doing a lot of it~
Insurance exists for a reason, loans exist for a reason, and the difficulty in selling a home is artificial because it’s treated like an investment that appreciates instead of a commodity that depreciates like it actually is.
Landlords buy bad appliances all the time, they are incentivized to, the cheaper the better because they don’t have to live with the consequences except for repairing it when it breaks.
In exchange for not owning anything in the place you live and having a fundamentally worse experience for it you get to pay someone else their mortgage AND their repair fund. You don’t take that into account. Renters pay for everything, we just pay it every month instead of in lump sum hits like an appliance dying.
Landlords do not provide a service, at best they provide living mobility which could be improved drastically if housing wasn’t treated like a private investment but instead a public service - so what little service they do provide is artificial.
The home is not the investment, the land is. Land is scarce, especially in desirable places. The home itself does depreciate and frequently drags down the price of the property, with new owners often tearing the place to the ground after purchase.
Renters do not pay for everything. Ask any financial advisor and they will tell you it is cheaper to rent than to own. It’s a very common strategy to rent, then take the extra money you save and invest it into stocks and bonds for retirement. In the long run, if your investments match the S&P 500 (not hard to do with index funds) then you’ll have more money than you would have if you bought a home (at national average real estate growth rates anyway).
You might point to some place like San Francisco and claim the people who bought houses there back in the 1990s beat the market. Sure, but that’s the Texas Sharpshooter Fallacy. You could just as easily have bought a house in Detroit instead. I would also say you could play the same game about picking stocks after the fact, but that would be beating a dead horse.
So why do people buy houses if they’re a bad investment compared to stocks? Emotional value, mainly. Having a place to call your own is important to a lot of people.
Also, of course, the same reason one buys anything.
If you own it, you can do whatever you want with it (mostly). Wanna repaint an entire room? No problem. Wanna tear down a (non load bearing) wall and move it? Easy. Wanna tear up the lawn and add raised garden beds? Call before you dig but aside from that, go for it.
Most of that sorta stuff of course isn’t kosher if you are renting :p
If you buy a house as an investment you need to work extremely hard to actually net positive. Simply buying a house and sitting on it is usually net negative (reminder that the price tag you buy the house at isnt how much money you pay, you have to account for all the extra interest you pay over 20 years, which is usually a solid +35% or more of the cost of the house)
So your house has to appreciate not only more than the interest you paid, but then even more to also beat basic blue chip stock rates.
Which is, at best, a gamble.
The main way you actually profit is if you renovate the house to boost its value. And that takes a fuck tonne of work. If you hire other people to do it, it wont be profitable, you have to do it yourself to have a hope in hell of netting positive.
So hope you are good at mudding and taping walls, cause you are gonna be doing a lot of it~