This take is correct. Home ownership is generally a dogshit investment. It always has been, and it always will be. https://mattbruenig.com/2021/08/05/home-ownership-is-still-mostly-renting/
Consider how a homeowner pays for housing versus how a renter pays for housing.
A renter pays rent and maybe renter's insurance, the latter of which is a basically negligible amount.
A homeowner pays a mortgage premium, mortgage interest, home maintenance or condo fees, property taxes, and homeowner's insurance.
I want you to understand that for the homeowner, the mortgage interest, home maintenance/condo fees, property taxes, and homeowner's insurance are absolutely no different than paying rent. They're all money flushed right down the shitter, it's just that the money goes to banks, contractors, Uncle Sam, and insurance companies rather than a landleech. But for your bottom line it doesn't make a difference. The only investment the homeowner has is the mortgage premium. That's where 100% of your home appreciation comes from, and it's at most 20-30% of your housing payment.
Being a homeowner also means you pay closing costs on both buying and selling. That can easily exceed a year's rent on both ends, and it's also money flushed right down the drain. So you're already setting yourself back two years of rent (and it's really more than two years) just to get your name on the deed.
Secondly, home appreciation only matters if you sell the home. Housing is the least liquid asset in the world. Let's say you bought a home, struck gold, and now it's worth more. How does this benefit you? You can't realize the money unless you sell the house, and then you have to pay more closing costs and fucking move, probably to another house that's also appreciated in value canceling out your gain.
Furthermore, your home is only appreciating because of housing shortages. Like - home appreciation is direct profit off of homelessness/high rents/etc. Again, that doesn't make you a bad person for owning a home but you should at least understand how the sausage is made here. Homeowners absolutely have reactionary class interests. A lot of the housing crisis is not because of institutional investors or developers or whatever, it's because homeowners have the exact same class interests as landlords. They restrict both net housing supply and afforable housing measures so their homes get more expensive.
The only reasons why home ownership isn't the single worst investment in the world (and honestly it still might be) is because you get some pretty sick tax breaks for it like the mortgage interest deduction and SALT deductions.
But bottom line, renting isn't as bad as people make it out to be. If two people had a decent nest egg and Person A bought a home while Person B rented and stuck the rest of their money in the stock market, Person B would emerge much wealthier. I guarantee it. Home ownership is a dogshit investment, renting low-key slaps in comparison.
EDIT: Please do not go to hexbear for financial advice. The upvoted comments here, I promise you, have no fucking clue what they're talking about. I promise you these teenagers have not done an investigation and do not have the right to speak :mao-shining:
It also ignores the fact that when you own one property, (an unethical person) could use it as the collateral for future investments. It also ignores the fact that you can pass a home onto your children. Also, if you own a house you can have animals and guests as much as you want. Also, the money isn't flushed away in a mortgage situation; each month you are gaining (a small amount, admittedly) of equity.
If Person A bought a house in Echo Park in 2006, or in Westwood in 2000, they'd see like a 5-10x return on their investment. I guess Person B could have randomly purchased amazon or apple stocks but with gentrification going on, real estate seems to have a good return
Let’s say you bought a home, struck gold, and now it’s worth more. How does this benefit you?
You house appreciated from 200,000 to 400,000. Rents in the area have gone up from $400/month to $800 month. Since you purhcased at $200,000, you can charge a tenant $800 and that's some nice profit. Also when you own a home, a landlord can't fucking kick you out.
It depends on the area I guess, but I don't agree with some of what you just said. Renting isn't terrible, but owning is ideal. There is a reason people are increasingly being shut out of being homeowners. Housing is a need and people with capital stand to make a lot of money if they can succeed at stopping you from buying a home.
Real estate moguls and landlords are the people that stand to make crazy money from the housing market. Buying an individual house as a financial investment itself isn't really any way to build any kind of wealth unless you were able to buy in an area that is expected to greatly appreciate and flip it.
Buying a house/townhome/condo gets you out from underneath a landlord and ensures that outside of taxes, your monthly payment on your house NEVER increases assuming you have a fixed mortgage. Your landlord decides what you will pay either according to market prices or how much they know they can price gouge you because housing is a need. This is why landlords are evil because they leverage capital to exploit the housing needs of people.
All the things you listed as "home-owners have to pay for" are things that YOU ARE PAYING FOR WHEN YOU RENT. In fact, you are expected to maintain the interior of your dwelling while not owning any of it. You claim that a mortgage is no different than paying rent, except for the fact that your landlord owns, and determines what you will pay.
The upfront costs function as a way to filter out poor people from ever owning. Sure, it is still "renting" if you want to consider that it is rent from the bank, but there is no middleman landlord.
Home ownership isn't about trying to save vast sums of money. A lot of your post is ignoring the autonomy a homeowner enjoys over a renter. (Can you even repaint your apartment you are in?) It doesn't account for differences in square footage, or how existing infrastructure of the US caters to houses/townhomes.
Also the homeowner can also "invest in stonks" just as easily.
I think you're on the money, I just had one point to add. When you say:
Buying an individual house as a financial investment itself isn’t really any way to build any kind of wealth unless you were able to buy in an area that is expected to greatly appreciate and flip it.
But I'm telling you, that if a person owns one house, they can use that to get another house. And another. I've seen it happen -- and I think it's the story behind these 'mom and pop' landlords that own like 20 properties. So while an individual house isn't the best financial investment (although honestly, I disagree with this even), it can be a fundamental step to becoming a kulak which is the American dream.
I agree that buying a home gets you out from underneath a landlord, but remember that it also puts you underneath a bank. You can just as easily be condemned to homelessness by a capitalist as a homeowner for non-payment. And you're still being exploited, just by mortgage interest payments rather than rent. Landlords are parasites, but banks are too.
You're correct that home ownership guarantees that you won't be subject to rent increases, but in the overwhelming majority of cases renting is still better for your bottom line because rent increases are not going to come close to the enormous closing costs of buying and selling real estate. I agree with you that protection from payment increases is a benefit of home ownership.
I also agree that you are more autonomous as a homeowner, although not by as much as you might think. In many nicer areas HOAs dictate a lot of what you can do with your home, and although even the most restrained homeowner is more autonomous than the most liberated renter it might not be by as much as you think. You say a renter cannot paint their house without landlord approval, but all too often a homeowner can't either without HOA approval. Furthermore, this has nothing to do with my post above. I am simply arguing that renting + investing is better for your bottom line than home ownership. I'm ignoring the autonomy associated with home ownership because that's literally not what this thread is about.
You're wrong, however, when you say a homeowner can "invest in stonks" just as easily. If we're doing an apples to apples comparison, where a person has X money and has to choose between homeownership and renting + investing in stonks, the renter will have a greater ability to invest because they are not paying closing costs. I am saying that if a person has, say, X thousand dollars and they can choose between purchasing a home or renting a home and investing the money they'd otherwise spend on closing costs the renter would come out ahead. That is all I'm claiming. Nothing else.
This really reads like something someone who hasn't had to rent in a city in the past 20 years has written. My rent on the outskirts of a city of 100,000 with a minimum wage of $7.25 is $2,000/month (plus yard maintenance). The mortgage on the house were renting is $1,300/month and taxes bring it to around $1,600/month max.
Renting is entirely a scam that forces the renter to pay for all the homeowner's expenses plus a profit for the landlord. My grandmother gets a $5k/month pension from her union contract and is constantly complaining about how expensive her mortgage is. All in? She pays $1,300/month.
Meanwhile I work 45 hours a week and my girlfriend works 50-60 hours a week to pay our rent and have nothing left at the end of the month.
$2000 is insanely low in property tax on a mortgage that costs $1300. Like, even in small towns you should expect property taxes of twice that, in a small city you should expect three times that. And add home maintenance too.
That second sentence is just a word salad. Most landlords don’t have mortgages so there’s no bank’s profits, and your boss has nothing to do with whether you own a home or rent. Are you under the impression that once you buy a home you can write a letter to your boss and they have to start giving you the surplus value of your labor?
Assuming you have a basket of money and are simply undecided, renting is effectively a short on the housing market in your area between when you move in and when you move out. You're theoretically just saying that the expected proceeds from selling your house, plus net savings on rent vs cost of buying, minus a time premium, will be lower when you sell than when you buy If you plan to move in a year, transaction costs will likely eat your gains no matter what. If you plan to stay long enough, the time premium depends on how much you valuable the stability of living in one place with fixed/decreasing monthly costs vs what you expect to make in the market. Eventually, unless you have a huge pile of cash, you get old enough where that stability (so you don't have to keep grinding every month) is more important than chasing gains.
The only reasons why home ownership isn’t the single worst investment in the world (and honestly it still might be) is because you get some pretty sick tax breaks for it like the mortgage interest deduction and SALT deductions.
That and leverage (which is subsidized via cheap government mortgages). Real estate will always under-perform investing in the market because real estate is a lower risk asset. You sacrifice some gains in exchange for "not camping in the street" and also "not subject to some asshole called a 'lord' and paying him tribute". In practice, the whole point of "landlords" for the Capitalist class is to drive up the price of housing to force you to have to provide more labor - you have to provide V more dollars of labor a month than you would otherwise to pay for the landlord's profit, while you're boss makes V*(rate of exploitation) extra profits from you working that much more. It also drives up the value of land which theoretically allows them to take out more loans to invest more money based on the "value" of any property a company may own.
Assuming you have a basket of money and are simply undecided, renting is effectively a short on the housing market in your area between when you move in and when you move out. You’re theoretically just saying that the expected proceeds from selling your house, plus net savings on rent vs cost of buying, minus a time premium, will be lower when you sell than when you buy If you plan to move in a year, transaction costs will likely eat your gains no matter what.
This take is correct. Home ownership is generally a dogshit investment. It always has been, and it always will be. https://mattbruenig.com/2021/08/05/home-ownership-is-still-mostly-renting/
Consider how a homeowner pays for housing versus how a renter pays for housing.
A renter pays rent and maybe renter's insurance, the latter of which is a basically negligible amount.
A homeowner pays a mortgage premium, mortgage interest, home maintenance or condo fees, property taxes, and homeowner's insurance.
I want you to understand that for the homeowner, the mortgage interest, home maintenance/condo fees, property taxes, and homeowner's insurance are absolutely no different than paying rent. They're all money flushed right down the shitter, it's just that the money goes to banks, contractors, Uncle Sam, and insurance companies rather than a landleech. But for your bottom line it doesn't make a difference. The only investment the homeowner has is the mortgage premium. That's where 100% of your home appreciation comes from, and it's at most 20-30% of your housing payment.
Being a homeowner also means you pay closing costs on both buying and selling. That can easily exceed a year's rent on both ends, and it's also money flushed right down the drain. So you're already setting yourself back two years of rent (and it's really more than two years) just to get your name on the deed.
Secondly, home appreciation only matters if you sell the home. Housing is the least liquid asset in the world. Let's say you bought a home, struck gold, and now it's worth more. How does this benefit you? You can't realize the money unless you sell the house, and then you have to pay more closing costs and fucking move, probably to another house that's also appreciated in value canceling out your gain.
Furthermore, your home is only appreciating because of housing shortages. Like - home appreciation is direct profit off of homelessness/high rents/etc. Again, that doesn't make you a bad person for owning a home but you should at least understand how the sausage is made here. Homeowners absolutely have reactionary class interests. A lot of the housing crisis is not because of institutional investors or developers or whatever, it's because homeowners have the exact same class interests as landlords. They restrict both net housing supply and afforable housing measures so their homes get more expensive.
The only reasons why home ownership isn't the single worst investment in the world (and honestly it still might be) is because you get some pretty sick tax breaks for it like the mortgage interest deduction and SALT deductions.
But bottom line, renting isn't as bad as people make it out to be. If two people had a decent nest egg and Person A bought a home while Person B rented and stuck the rest of their money in the stock market, Person B would emerge much wealthier. I guarantee it. Home ownership is a dogshit investment, renting low-key slaps in comparison.
EDIT: Please do not go to hexbear for financial advice. The upvoted comments here, I promise you, have no fucking clue what they're talking about. I promise you these teenagers have not done an investigation and do not have the right to speak :mao-shining:
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It also ignores the fact that when you own one property, (an unethical person) could use it as the collateral for future investments. It also ignores the fact that you can pass a home onto your children. Also, if you own a house you can have animals and guests as much as you want. Also, the money isn't flushed away in a mortgage situation; each month you are gaining (a small amount, admittedly) of equity.
If Person A bought a house in Echo Park in 2006, or in Westwood in 2000, they'd see like a 5-10x return on their investment. I guess Person B could have randomly purchased amazon or apple stocks but with gentrification going on, real estate seems to have a good return
You house appreciated from 200,000 to 400,000. Rents in the area have gone up from $400/month to $800 month. Since you purhcased at $200,000, you can charge a tenant $800 and that's some nice profit. Also when you own a home, a landlord can't fucking kick you out.
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It depends on the area I guess, but I don't agree with some of what you just said. Renting isn't terrible, but owning is ideal. There is a reason people are increasingly being shut out of being homeowners. Housing is a need and people with capital stand to make a lot of money if they can succeed at stopping you from buying a home.
Real estate moguls and landlords are the people that stand to make crazy money from the housing market. Buying an individual house as a financial investment itself isn't really any way to build any kind of wealth unless you were able to buy in an area that is expected to greatly appreciate and flip it.
Buying a house/townhome/condo gets you out from underneath a landlord and ensures that outside of taxes, your monthly payment on your house NEVER increases assuming you have a fixed mortgage. Your landlord decides what you will pay either according to market prices or how much they know they can price gouge you because housing is a need. This is why landlords are evil because they leverage capital to exploit the housing needs of people.
All the things you listed as "home-owners have to pay for" are things that YOU ARE PAYING FOR WHEN YOU RENT. In fact, you are expected to maintain the interior of your dwelling while not owning any of it. You claim that a mortgage is no different than paying rent, except for the fact that your landlord owns, and determines what you will pay.
The upfront costs function as a way to filter out poor people from ever owning. Sure, it is still "renting" if you want to consider that it is rent from the bank, but there is no middleman landlord.
Home ownership isn't about trying to save vast sums of money. A lot of your post is ignoring the autonomy a homeowner enjoys over a renter. (Can you even repaint your apartment you are in?) It doesn't account for differences in square footage, or how existing infrastructure of the US caters to houses/townhomes.
Also the homeowner can also "invest in stonks" just as easily.
I think you're on the money, I just had one point to add. When you say:
But I'm telling you, that if a person owns one house, they can use that to get another house. And another. I've seen it happen -- and I think it's the story behind these 'mom and pop' landlords that own like 20 properties. So while an individual house isn't the best financial investment (although honestly, I disagree with this even), it can be a fundamental step to becoming a kulak which is the American dream.
I agree that buying a home gets you out from underneath a landlord, but remember that it also puts you underneath a bank. You can just as easily be condemned to homelessness by a capitalist as a homeowner for non-payment. And you're still being exploited, just by mortgage interest payments rather than rent. Landlords are parasites, but banks are too.
You're correct that home ownership guarantees that you won't be subject to rent increases, but in the overwhelming majority of cases renting is still better for your bottom line because rent increases are not going to come close to the enormous closing costs of buying and selling real estate. I agree with you that protection from payment increases is a benefit of home ownership.
I also agree that you are more autonomous as a homeowner, although not by as much as you might think. In many nicer areas HOAs dictate a lot of what you can do with your home, and although even the most restrained homeowner is more autonomous than the most liberated renter it might not be by as much as you think. You say a renter cannot paint their house without landlord approval, but all too often a homeowner can't either without HOA approval. Furthermore, this has nothing to do with my post above. I am simply arguing that renting + investing is better for your bottom line than home ownership. I'm ignoring the autonomy associated with home ownership because that's literally not what this thread is about.
You're wrong, however, when you say a homeowner can "invest in stonks" just as easily. If we're doing an apples to apples comparison, where a person has X money and has to choose between homeownership and renting + investing in stonks, the renter will have a greater ability to invest because they are not paying closing costs. I am saying that if a person has, say, X thousand dollars and they can choose between purchasing a home or renting a home and investing the money they'd otherwise spend on closing costs the renter would come out ahead. That is all I'm claiming. Nothing else.
This really reads like something someone who hasn't had to rent in a city in the past 20 years has written. My rent on the outskirts of a city of 100,000 with a minimum wage of $7.25 is $2,000/month (plus yard maintenance). The mortgage on the house were renting is $1,300/month and taxes bring it to around $1,600/month max.
Renting is entirely a scam that forces the renter to pay for all the homeowner's expenses plus a profit for the landlord. My grandmother gets a $5k/month pension from her union contract and is constantly complaining about how expensive her mortgage is. All in? She pays $1,300/month.
Meanwhile I work 45 hours a week and my girlfriend works 50-60 hours a week to pay our rent and have nothing left at the end of the month.
What universe are you only paying $300 a month in property tax on a $1300 mortgage???
If you don’t think I’ve had to rent in a city in the last 20 years, I promise you I wish that were the case…
Also, you realize that homeownership is also a scam that forces you to pay the same expenses plus profits for a bank, right?
$2000/year in property tax
And renting is a scam that makes you pay the homeowner's profits, the banks profits, and your boss's profits.
$2000 is insanely low in property tax on a mortgage that costs $1300. Like, even in small towns you should expect property taxes of twice that, in a small city you should expect three times that. And add home maintenance too.
That second sentence is just a word salad. Most landlords don’t have mortgages so there’s no bank’s profits, and your boss has nothing to do with whether you own a home or rent. Are you under the impression that once you buy a home you can write a letter to your boss and they have to start giving you the surplus value of your labor?
No I'm just pointing out that you are now paying a landlord's profit on top of the bank profits and the boss profits.
And lots of the landlords out here are in fact on mortgages which is why rents are so high
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Assuming you have a basket of money and are simply undecided, renting is effectively a short on the housing market in your area between when you move in and when you move out. You're theoretically just saying that the expected proceeds from selling your house, plus net savings on rent vs cost of buying, minus a time premium, will be lower when you sell than when you buy If you plan to move in a year, transaction costs will likely eat your gains no matter what. If you plan to stay long enough, the time premium depends on how much you valuable the stability of living in one place with fixed/decreasing monthly costs vs what you expect to make in the market. Eventually, unless you have a huge pile of cash, you get old enough where that stability (so you don't have to keep grinding every month) is more important than chasing gains.
That and leverage (which is subsidized via cheap government mortgages). Real estate will always under-perform investing in the market because real estate is a lower risk asset. You sacrifice some gains in exchange for "not camping in the street" and also "not subject to some asshole called a 'lord' and paying him tribute". In practice, the whole point of "landlords" for the Capitalist class is to drive up the price of housing to force you to have to provide more labor - you have to provide V more dollars of labor a month than you would otherwise to pay for the landlord's profit, while you're boss makes V*(rate of exploitation) extra profits from you working that much more. It also drives up the value of land which theoretically allows them to take out more loans to invest more money based on the "value" of any property a company may own.
:jesse-wtf: