Excellent summary. Home ownership will probably never in our lifetimes look like a better investment than it does now. Mortgages rates are extremely low, and because of all the quantitative easing, it's possible that we will see higher than average inflation over the next 10 years.

As a result you can basically borrow hundreds of thousands of dollars, long-term for free. Inflation offsets a fixed interest rate--and the spread is probably only about a point right now, with low inflation.

The housing market is recovering, and immigration reform could create millions of new legal customers for real estate. The only downside is that the mortgage deduction will likely be capped, reduced, or taken away as part of tax reform in the next decade.

If nothing go and refinance now. At least do yourself a favor and calculate to see how much you'd save over the life of your loan.

What leverages up can (and will) leverage down. The problem with the housing collapse was that people with low or zero down-payment mortgages found that the property value fell, wiping out their entire stake (if they had any at all). More skin in the game should (though there's some research suggesting otherwise) make the market more stable by reducing the ability to speculate. This is a lesson that goes back to the crash of 1929 and the Dutch tulip bubble.

The mortgage deduction is priced into your home (as are low interest rates). Absent the deduction, real estate prices will fall. As interest rates rise, housing prices will also tend to soften.

What inflation giveth, it also taketh away: your mortgage costs are reduced, but so is the appreciation of your house.

Each of those is an contribution to risk and and potential reward, I guess it still comes down to whether people think their house will appreciate or not faster than inflation.

There is also:

* Closing costs. 5k to 10k can easily go to that only. So just buying and selling constantly could end wasted eaten "transaction costs"

* Chance of moving. Are you likely to move? If so think twice about a house. This is offset in the software world by working from home.

* You effectively get a 4% loan and pay it off in 30 years. That could be hundreds of thousands of dollars over the cost of your house you end up paying to the bank in 30 years. That completely escapes many people. Now there is inflation and the opportunity cost to do something else with the money but:

* You have to figure is your salary going to keep up with the inflation? You hope so right...right?

* Opportunity cost. Could you make more by buying some stock, and sell it after 30 years?

* Do you think housing is going to go up again or is the stock market going to go up faster. Same compounding for interest rate goes for reinvesting stock dividends.

Add to the "chance of moving" cost: your opportunity cost in lost income (or additional expenses) by being unable to sell your house in the course of a move. Either you lose out on the income opportunity (which is what this subthread started with), or you're left with the higher costs of renting out your home (likely not covering mortgage) while renting at the new location.

We saw this last situation for a new hire who last year was unable to sell his underwater midwest home while finding rents in a markedly hotter housing market much higher, especially when proximity to good schools and low crime rates were factored in.

I recently sold a condo where I paid closing costs for the buyer. Total costs that didn't go to me were in excess of $30k.

> More skin in the game should (though there's some research suggesting otherwise) make the market more stable by reducing the ability to speculate. This is a lesson that goes back to the crash of 1929 and the Dutch tulip bubble.

True, but that's not what we have in the market today. You are confusing "should" with "is".

Sorry? Your comment's not clear.

Are you saying that today we have more skin in the game and it's not helping, or that today we don't have more skin in the game (with market stability left AFAICT uncommented on)?

+i for the inflation comment. This is a big driver for my current investment approach. The opportunity to pick up a large, real asset at rates below the inflation I personally experience (US gov't published inflation rate is lower than mine), in market with significant appreciation due to positive population metrics (Austin TX)

Note that you should always spread risk in your portfolio, but housing at nominally negative rates should have youngers investing if they can. Buy something small and close to the city core.

You can effectively leverage 100x with stock options. You can by deep in the money LEAPs (long-term options, expiring 18 months-2 years out) and effectively have the risk profile of the stock itself. You can then sell and roll those over to longer-term expiring options every 6 months or so.

Also not accounting for a house being a place to live, raise a family, and store your stuff. Talking about it like it's just another investment is strange.

Not to derail the thread, but on the eve of my 30th birthday, if I've learned anything it's that "stuff" is a fucking liability, and spending a lot of resources on a place to house it is just one of the manifold reasons to perpetually avoid accumulating it if at all possible.

One additional negative to home ownership is transaction costs. Real Estate agents, laywers, lenders, title companies all get you comin' and goin'. They love churn!

I like redfin.com as a market changer in this space. Check them out!

Of course. The real estate lobby is behind all these programs, and the propaganda about home ownership.

Many people would be better served renting. All of the incentives are actually causing us to spend a lot more on housing than we otherwise would have, capital that is being diverted away from building productive industries.

Which is fine, since we are letting China have all that stuff anyway. We have all the empty houses and the debt to brag about.

* Leverage. (The most you can leverage a stock investment is 2x. For homes people can leverage their money up to an insane 20x, for example: by buying a 500k home with 25k down. The proper comparison is not to compare buying a 500k home vs 500k worth of stocks; it's buying 25k or 50k worth of stocks vs a 500k home.)*

I guess you are confusing investment and mortgage?