Homes like stocks are way overvalued. Homes are fueled by the frenzy of ownership at all costs, and stocks keep pumping at absurd levels.
Everything is extremely overpriced. Eventually, it will come down to common sense.
My friend has put all his savings and stocks to buy a 2b apartment. Myself, on the other hand, did not sell any stock and have invested all my savings. I rent a much bigger place, my rent is way lower than his mortgage and at least for me it will be more convenient to rent at least for the next 10y. After that, I will retire and move to a cheaper area.
Keep saying people have gone mad. Many fail and underestimate cost of ownership. Remember that a good chunk of your mortgage are taxes and interests, factor that when you compare rent vs buy.
That said, I do own properties that I rent out. But I bought them at sane prices. And they generate cash flow that I use to pay for my rent and other expenses.
People have been saying this for a long time in Canada, but there is no indication that things will change. People who waited and saved have simply seen that the price increases have far outpaced their saving rate.
When it's in a government's interests to keep prices rising, then they're going to do things that keep those prices rising.
Another outcome could simply be that actual ownership of a house in some areas becomes so expensive as to be the exclusive domain of the wealthy, and everyone else just rents. More middlemen raising the costs, more renting and less ownership per capita, as is the trend of more and more industries these days.
> ownership of a house in some areas becomes so expensive as to be the exclusive domain of the wealthy
I agree. In fact, I live in an expensive area, but planning on moving in few years when I will be retired. Then I will buy a mansion for little money. And still gonna have plenty of savings and investments to pass onto my kids.
I don't understand the ownership at all cost. You need to run some numbers and understand if buy is financially more convenient than renting. If not, it is ok to rent.
But some people are just obsessed with ownership. Even if is not financially sound.
I don’t think people are obsessed with ownership for the sake of ownership. There are a large number of benefits to owning which the individual might find valuable enough to pay for:
- more space
- individual outdoor space
- control over your own area. Can paint or remodel however you like.
- Dealing with terrible neighbors isn’t nearly as bad.
- location might be quieter and more desirable
If we compare renting a house to buying a house, the cost just doesn’t make sense for rent. It’s much higher than renting an apartment in cities
That's hardly the case. Buy a big place, usually costs more than renting one. Or at least that's my experience. If I had to buy the place I rent it will cost me easily $3M to 4M. My rent will only pay for a 2b/1ba.
I am talking about major city. Perhaps is different in suburbs, don't know.
>Dealing with terrible neighbors isn’t nearly as bad.
It is way easier to just rent a different place than having to sell your house because of that noise neighbor that likes to throw party every week end.
I rent, but am looking to buy. Rent is about 2200 / mo for me; and buying would be 2700/mo for me... but in 4 years, rent will probably be 2700/mo for me and then buying will begin to make me money.
Sometimes buying makes sense as well. The NY Times has a good calculator for this. In my case, rent is so expensive in my city that buying and building equity was higher EV than keeping my cash in investments.
Comments like this make it seem like it’s all figured out.
Everyone’s situation is different based on income (sounds like you are high income too - which makes choosing where to deposit cash easier), location, family/living requirements, current net worth, job stability, partner income, etc...
It is very possible too your friend made the better decision. There was a time where stocks and house prices going up was different and the world was not in a 10 year plus aggressive bull market.
Absolutely, it all depends. But I keep seeing close friends who are now home poor. They own their place, but that's it. They are done. They don't have any significant money for rainy days, they can't afford anything else because all their money go into their properties.
For me, that's not how I want to live my life. But as you said, everyone is different. So for them, perhaps that's ok. Not judging.
Don’t think you are judging. Comment definitely just came from position of what I infer as having privilege:
- 10 year retirement (no idea your age but assuming this earlier retirement/semi-retirement)
- Rental properties that are cash flow positive (require in most circumstances a bigger down payment)
- Assuming others have enough income left over to put into the stock market after rent. Don’t consider madness for families to balance their lifestyle and savings
Either way, I believe the majority of these homes Zillow bought are more towards the lower-middle class budgets. Which is kind of my point on frustration with the inflated cost. It’s a much bigger impact than a lot of tech bros/girls probably feel personally.
It is a seller market, and it is probably gonna stay that way for some time. The only properties I am considering buy are those located in vacation places. You can still find good deals, and you can easily repay by renting them out for few months a year.
I will only consider buying a property in a major urban city only if I had to live there basically for ever. Otherwise I will keep renting. Prices in major EU cities, like the rest of the world are insane compared to the level of income, even for wealthy engineers.
Everything is extremely overpriced. Eventually, it will come down to common sense.
My friend has put all his savings and stocks to buy a 2b apartment. Myself, on the other hand, did not sell any stock and have invested all my savings. I rent a much bigger place, my rent is way lower than his mortgage and at least for me it will be more convenient to rent at least for the next 10y. After that, I will retire and move to a cheaper area.
Keep saying people have gone mad. Many fail and underestimate cost of ownership. Remember that a good chunk of your mortgage are taxes and interests, factor that when you compare rent vs buy.
That said, I do own properties that I rent out. But I bought them at sane prices. And they generate cash flow that I use to pay for my rent and other expenses.