>Keep in mind that instead of feeling bad about losing possible equity in a house you could invest that money instead of spending it on closing costs. So in a short term situation you can potentially earn more money by NOT buying a house, even if the monthly payments are the same.

Can you explain this a bit more. What is your definition of short term and by investments im assuming equities. Generally for a less than 5 years the advice is not to invest downpayment money in risk assets.

>Also keep in mind that 1 million dollar house in Bay area gets you a reasonably nice place.

I wish.houses in the east bay are listed between 1-1.5. And are sold over list. I’m not even thinking about peninsula or South Bay that is double the price for a smaller home.

For 1m I’d have to move over an hour or more away if not more or buy rougher housing stock on the east bay listed <1m. Might get luckier with condos tho.

> Can you explain this a bit more. What is your definition of short term and by investments im assuming equities. Generally for a less than 5 years the advice is not to invest downpayment money in risk assets.

A down payment is different then closing costs. The money you put down on the house goes into the house. So effectively you retain the value of the downpayment in the equity of your house. So it is not "lost".

The closing costs are the costs of actually getting the loan. That is money you spend in order to get the loan. That money doesn't go anywhere except into taxes, bank fees, real state fees, titling, etc etc. So that is money that simply 'evaporates'.

You can use that money for purposes other then buying a mortgage.

When deciding to rent vs buy the argument for buying a home is that you get equity in the home, were as with renting that money is gone for ever.

So say you spend 10,000 on closing costs and make payments of 3000 dollars a month. Out of that payment the vast majority goes to taxes, insurance, and interest payments. You may only end up with 300 dollars in actually equity.

Versus

You spend 3000 dollars a month on rent, make zero equity, and get to keep your 10000 dollars.

So if you live in a house for just 3 years then sell it... You might get 10,800 in actual equity in your house.

So over the course of 3 years you only actually earned 800 dollars.

Is that 800 dollars more or less then what you could of gotten if you invested that 10 grand into something?

Most people assume that buying a house is a no-brainer because over the years the value of the house rises. So even if you don't put much money into the equity you can still earn a sizable profit selling it.

But that is only true if there is no bubble and people can afford to buy your house in the future.

Really whether or not to buy a house ends up being a math problem. Were do you want to be and what are the chances of making money by renting vs buying.

If you are planning on living somewhere for 10 or 20 years then closing costs end up incidental and you win by buying pretty much no matter what.

I see, you were talking about closing costs. Yeah I fully fund retirement plus I bonds plus sick some away in after tax account and kids 529. So I think I am investing the difference now.

But I still have the couple hundred grand that was earmarked for a down amdownpayment withering away in a savings account.

Yep. It's impossible to give a definitive answer one way or another.

If you want to live in that place for years and years and years then it's kinda dumb not to buy the house.

But if you want to get out of that area once you get your career more established or something like that then just rent.

You can go ahead and stuff your down payment into some bond ETFs or something like that if you don't want to get a house right away. I use Vanguard "inflation protected" ETFs, personally. You won't make a whole lot of money, but if Fed bonds take a huge shit your money isn't going to be worth much anyways. So it's one of the safest place to put it and still have it easily accessible.