> Buying a home is a massive bet on the local employment market (in your niche) staying fungible over decades.
I've seen "fungible" used to indicate flexibility, and I've seen it used to indicate growth and decay. Are you using it to indicate either of these, or are you attempting to indicate a long-term steady state?
When trying to communicate an idea, you may wish to use a word that has a fixed meaning and a reasonable chance of being understood, because to be brutally honest, I haven't any idea what you're actually intending.
>Is everyone else treating their house as a fungible good with no personal meaning, now?
If anything, it probably used to be even more like that:
>The typical U.S. homeowner has spent 12.3 years in their home [...] with median homeowner tenure sitting at about 10 years in 2012 and 6.5 years in 2005.
> To who? If it can't be profitable, why would anyone else want to buy it? Maybe you'll get lucky and find another sucker, but then you're just pushing the same problem onto the next guy.
Someone will almost assuredly buy it at a low enough rate. It's either that or actively lose money each month.
Tbh i'm still confused by your argument. Are you saying that you believe people will, month after month, take a loss for years so that someone can live more cheaply in a house than it would take that same person to own the home themselves?
Economies of scale is the only way this plays out in the long term in any stable way. No?
> stop financializing homes as a financial asset ... The market is actually pretty good at solving this issue.
"financializing" in this case is a scare word describing the functioning of markets. not sure how you finance the apartments you're constructing without "financializing."
> I'll go ahead and say this. Your home is NEVER and investment. A house that you own, maybe. But, I repeat, your home is never an investment.
I'll go ahead and say this. My home is certainly an investment. I allocated some capital to some real property, and this real property generates value for me every day, which I might have purchased otherwise (indeed, would have been nearly forced to). Because of the ability of my home to generate value in this manner, I expect that others might want to own it, and so it can probably be resold. I also am pretty optimistic about my ability to resell it for more than I bought it for, although perhaps not at such a price such that the purchase was as profitable as, say, buying an Vanguard ETF.
> If I sell my house for more than I paid for it, it's zero sum since someone simply provided me that money.
I think the point the author was trying to make is that you can participate in the housing market by building and selling houses, with the former being “positive sum” (since the land and building materials have a cumulative value less than that of a finished dwelling). The positive sum stuff seemed to be describing markets, not individual transactions
Is it really anyone's fault but their own? I don't recall housing being offered as a low/no-risk investment with guaranteed profits. Financial blogs, podcasts, and Reddit commenters might have shared that view.
Are there any examples of mortgage issuers or home builders advertising housing as an investment?
> You keep talking about "things you can afford to lose". Houses NEVER fall into that category.
Of course they do. Consider -- do you want to be financially solvent, or own a house? Many people choose being financially solvent. Others walk away from houses whose mortgages are larger than the house's actual value. In both these cases, a house is just another commodity, a choice, not an absolute necessity like breathing.
> But if you live in the house, then just considering appreciation and expenses leaves out a huge benefit
Indeed. If you bought a house stricly as a speculative asset and neither live in it nor rent it, it's a terrible investement.
But since you can live in it, the equation changes completely. You can't live in a stock certificate and you have to live somewhere. If you could live for free somewhere (e.g. with parents) then sure, invest in the market and don't buy a house.
> Housing is close to a perfectly-competitive market.
Pick any US jurisdiction (with the possible exception of Puerto Rico? I’m not very familiar with how taxation works there) and contemplate the tax implications of selling an appreciated property. Further contemplate how those implications are different for different potential buyers and sellers of that same property at the same price. Then say again that it’s perfectly competitive.
Hint: there are all manner of effects here. Capital gains. The basis step up at death. 1031 exchanges and their associated rules. Transfer fees, title fees (which is pretty close to being a tax).
“Market value” requires willing participants. If a seller doesn’t want to sell at a particular price and the good isn’t fungible (which housing is not), they aren’t getting market value by being forced to sell at a price determined solely by the buyer.
>To me, buying a house is cementing your location and stunting the amount of knowledge you can acquire by handcuffing you to a location and limiting your exposure to the world.
Too many people have a narrow view of home ownership and end up believing in things like this.
Whether it is true or not depends entirely on the location and the market. In the right places, you can buy a house that is near all the amenities (walking distance, even). The only real risk is the RE market, and how much loss you're willing to take to sell the house quickly (i.e. 6% RE fees when selling). In my case, the value rose enough in one year that I could have sold and still made a gain.
If you can't sell because the loss will be too high, there are other alternatives (e.g. renting your house), but as I said, it all depends on the market.
>If I do it, it would be to exploit financial interests with the right opportunity.
Umm - isn't that why many do it? I mean yes, people do buy houses for other reasons, but if they don't perform due diligence in the math, it could end up hurting.
At the moment my house is limiting my opportunities - I'm turning down any offer to move to SV, for example. But it has nothing to do with being shackled financially. I'm making the choice because of all the fringe benefits my house provides, which I would instantly lose were I to move to SV. Am I missing out on broadening my world view by not moving? Sure. Are others missing out on experiences by not owning? In some cases, yes.
> you're underwater on your house for a pretty long time.
Having owned 3 homes (with some renting in between), this has not been my experience.
Looking back I realized one thing that really surprised me: For the last two home sales the appreciation on my house was greater than the down payment + closing costs + all the mortgage payments made living in the house (this includes not only the loan but property taxes, home insurance and mortgage insurance when applicable).
That is all of the time I lived in a home I owned, I have effectively lived there for free. This is spanning a period of nearly 20 years so not simply caused by this recent housing bubble (if that's what it really is).
> The house that the owner lives in is not an asset. It's a durable consumer good.
Thank you. I had already figured that considering one's house to be an asset is the wrong way to think about it, but lacked the words for how to then accurately describe what it actually is. "Durable consumer good" captures what a house is and does much better, IMO.
Getting this attitude more widespread is going to be difficult, sadly. The land that the house rests upon absolute is an asset, and the house thereupon can't be readily decoupled from the land (trailers and double-wides not withstanding). Thus conflating the actual asset, the land, with the consumer good it is presently being used to produce, the house, is a reasonable mental shortcut.
Did you read what I said enough to make a counterpoint with new information or thinking? Care to be wrong about other things?
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