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re: Interesting question: Is home ownership becoming the new "college degree"?
Posted on 8/16/25 at 11:23 pm to SlowFlowPro
Posted on 8/16/25 at 11:23 pm to SlowFlowPro
quote:
Because housing is severely inflated.
Housing prices are inflated because there's a nationwide shortage and building materials didn't go back to pre-COVID levels.
That being said, price of housing is one of the things intelligent, forward-thinking Americans don't want to go drop far. You want to see a second Great Depression? Housing prices making quick and large drops is it. Millions going underwater on their mortgage and home equity is the quickest way to kill the economy.
1
Posted on 8/16/25 at 11:41 pm to SlowFlowPro
quote:
The vast majority of people do not pay it off early.
That depends on what you mean by "early." I guess it also depends on what you mean by "staying in the same house."
Your post was written such that it implied that you couldn't fathom someone paying off a 30 year mortgage because you couldn't fathom someone staying in the same house for 30 years.
If I buy a house in 1970 and move 3 times between 1970 and 2000—in 1980, 1990, and the last time in 1995—and each time I move I roll the equity and appreciation into the new house, I shouldn't have to do anything extraordinary in order to pay the house off in 2000.
So if what you mean is buying the first property and being done with mortgage payments after 30 years, barring an unusual real estate market that should be routinely doable. No matter how many times you move.
If, on the other hand, what you mean is that I took out my last 30 year loan in 1995, so you expect I won't be done paying off my mortgage until 2025, that's a different story.
quote:
The vast majority of people roll up any profits into a home upgrade. They're getting cheaper payments with the upgrade, but re-starting the clock on the mortgage.
Do you know this, have data on this, or are you just going by perception and anecdotal experience?
The difference in our 1st and 2nd house was completely lateral and just for the purpose of life circumstances taking us somewhere else, but we upgraded between our 2nd and 3rd house and still paid it off in 16 years (which isn't even necessary for my point...if we had paid it off in 22 years that would have been 22 years from the first mortgage we ever took out). The point being, we didn't upgrade to the point that it turned a 30 year mortgage into a 40 (or more) year mortgage.
If people are doing this en masse and they can't resist such massive upgrades, then they really would likely be better off renting.
Depends on how much the rent is vs the mortgage and how the market is appreciating, of course, but making 50 years worth of mortgage payments isn't a whole lot better than making rent payments your whole life. You get the appreciation, but you also pay the interest.
This post was edited on 8/16/25 at 11:48 pm
Posted on 8/17/25 at 12:23 am to Obtuse1
quote:
As someone that owns more than one non-primary home, do NOT do it as an investment unless you plan to rent it out when you aren't there.
I'm looking at it as an investment in the land. We're in our 30's and can't realistically build our dream lake home now. With prices of lakefront property continuing to go up, I'm more interested in getting a good piece of land that I can build on later.
We'll ideally find a place that is AirBNB friendly and rent it out when we aren't using it.
As far as the costs, my parents have two homes that they split their time between and don't rent out, so I've got a good idea of the additional maintenance and upkeep costs associated with a second property.
Posted on 8/17/25 at 6:43 am to lsu xman
quote:
Houses in BR is just too stupid expensive.
This is something I have to reiterate.
The point of this thread isn't that home ownership always has been a bad investment. It's about how the conditions today make it that way, today.
Inflated prices + interest rates that are high compared to the last 15 years create a lot more financial risk, just like how college wasn't always as expensive to get the same opportunities (but is now, which makes it a questionable decision for many now)
Posted on 8/17/25 at 6:46 am to The Pirate King
quote:
That being said, price of housing is one of the things intelligent, forward-thinking Americans don't want to go drop far.
And that's why we are in this boat.
quote:
You want to see a second Great Depression? Housing prices making quick and large drops is it. Millions going underwater on their mortgage and home equity is the quickest way to kill the economy.
And there is the fear porn justifying it.
Posted on 8/17/25 at 6:51 am to wackatimesthree
quote:
Your post was written such that it implied that you couldn't fathom someone paying off a 30 year mortgage because you couldn't fathom someone staying in the same house for 30 years.
It's not that I can't fathom it. It's just rare. These days, at least. It was much more common when home ownership became part of the halcyon vision of the American Dream.
quote:
If I buy a house in 1970 and move 3 times between 1970 and 2000—in 1980, 1990, and the last time in 1995—and each time I move I roll the equity and appreciation into the new house
Do people typically do this, or do they buy more house with "car payment" logic?
quote:
If, on the other hand, what you mean is that I took out my last 30 year loan in 1995, so you expect I won't be done paying off my mortgage until 2025, that's a different story.
I think this is much more common than what the particular population on this board may do. Just like how my baseline was the 30-year mortgage and someone pointed out that you can do 15. Sure, and I know people on here do. About 90% of mortgages are 30-year, though.
And, in a world where the market is warped due to high prices and high interest, what person starting out their economic life is going to pick the 15-year mortgage? I'd assume an incredibly small % of that 10%.
Posted on 8/17/25 at 6:53 am to HailHailtoMichigan!
quote:so what happens after 50 when one pays their home off and the other is still renting perpetually?
is stale 1950s style thinking to view home ownership as a necessary component of becoming wealthy
I think the worse danger is that people pay off their homes and the neighborhoods around them change to places that make them worthless
Posted on 8/17/25 at 7:00 am to chalmetteowl
quote:
so what happens after 50 when one pays their home off and the other is still renting perpetually?
So what happens when a person loses their down payment, maintenance payments, and payments in a mortgage because it's foreclosed?
You can do this either way. It's not a "gotcha"
The point is that the above scenario is becoming more of a crunch with housing inflation. It's not just the cost of the house + interest, either. Property taxes, maintenance, and insurance are all increasing.
quote:
I think the worse danger is that people pay off their homes and the neighborhoods around them change to places that make them worthless
Add this to the scenario above.
Posted on 8/17/25 at 7:02 am to Adam Banks
quote:
There has been 4 pages and the anti ownership side can’t refute that maintenance costs are simply baked into rent. They just ignore it.
Rent will continue to rise over the course of several years and that at some point a mortgage ends.
The response is simply “well I mean who actually pays off their mortgage”
I guess they think people who buy a house in their 30s always die before their 60s?
So who is not interested in an honest dialogue again?
Study: Renting is increasingly more affordable than buying in most large U.S. metros
quote:
Average rents are cheaper than average mortgage payments (homeowners insurance and property taxes included) in all 50 of the largest U.S. metros in 2025, with the cost difference between the two growing in all but 12 of those metros since last year, according to Bankrate’s Rent vs. Buy Study.
Over the last year, the study found average mortgage payments (including principal, interest, homeowners insurance and property taxes) increased while average rents either declined or remained stable in nearly all the metros we analyzed.
Housing experts said the fact that it’s cheaper to rent in all 50 metros in 2025 is a broader reflection of rental and housing market conditions across the country. High mortgage and home prices, combined with limited housing inventory, have created a high barrier to entry for aspiring homeowners. Rising property taxes and homeowners insurance rates are also straining homeowners’ budgets. At the same time, rents have experienced a slowdown in growth and rental inventory has dramatically increased, giving renters more options to choose from.
There are still long-term financial benefits to owning a home, but hopeful buyers entering the market now should plan to make a larger down payment or allocate a larger portion of their monthly budget to their mortgage payment, experts said.
The mortgage side didn't even take into account maintenance.
ETA: and I fully understand that if you can make it through the 30, the delta is likely made up with the asset value. However, most people don't stop at their first purchase and that 30 keeps getting extended (which means the realization of those gains is delayed) AND the risk is significantly higher on the mortgage side (and growing)
Lastly, if this hypothesis is correct, you're going to see a massive correction in prices (without a government bailout again), which skews things towards renting. Also, don't forget that over the next few decades boomers are going to start dying and the market is going to be flooded with houses, further pushing down prices. They're going to leave more houses than we need, ultimately, due to their huge population numbers
This post was edited on 8/17/25 at 7:09 am
Posted on 8/17/25 at 7:12 am to SlowFlowPro
When you look at all of these loan programs and the income threshold. It goes to people who can’t afford a house anyway.
Make over 50k and have great credit, sorry. But make 41k and have middling credit and you qualify.
Make over 50k and have great credit, sorry. But make 41k and have middling credit and you qualify.
Posted on 8/17/25 at 7:13 am to SlowFlowPro
From your own link which is written from a you’ll own nothing and like it perspective
Sorry I didn’t get that you were wanting to have a conversation about Manhattan
So your argument is that since there are some people who make bad decisions with money that means everyone should avoid it?
which is written from a you’ll own nothing and like it perspective quote:
However, in cheaper areas of the country, it’s a lot easier to justify a home purchase right now, even with mortgage rates above what they were five years ago. While it’s still cheaper in the short term to rent in more affordable metros, the long-term financial benefits of buying are also more obvious in those areas because the differences between renting and buying costs are much smaller. In Detroit, for example, an average mortgage payment — with property taxes and homeowners insurance included — costs roughly 2 percent more than average rent. Homeowners in those areas may pay more upfront now, but in the long run, they’ll generate equity, hedge themselves against rent increases and otherwise enjoy the intangibles that come with homeownership.
Sorry I didn’t get that you were wanting to have a conversation about Manhattan
quote:
and I fully understand that if you can make it through the 30, the delta is likely made up with the asset value. However, most people don't stop at their first purchase and that 30 keeps getting extended (which means the realization of those gains is delayed) AND the risk is significantly higher on the mortgage side (and growing)
So your argument is that since there are some people who make bad decisions with money that means everyone should avoid it?
This post was edited on 8/17/25 at 7:19 am
Posted on 8/17/25 at 7:19 am to Adam Banks
quote:
which is written from a you’ll own nothing and like it perspective
Why do you keep coming back to this nonsense?
This is a discussion about a market getting inefficient, not some kooky conspiracy. If I'm correct, it's not a permanent state, and there are relatively simple fixes (primarily price deflation).
quote:
However, in cheaper areas of the country, it’s a lot easier to justify a home purchase right now
You're also taking on a bigger risk in those areas, right now.
quote:
Homeowners in those areas may pay more upfront now, but in the long run, they’ll generate equity, hedge themselves against rent increases and otherwise enjoy the intangibles that come with homeownership.
And, like with college, you can still come out ahead, but many won't. The risk has become much higher as housing prices have increased irrationally.
And those calculations, again, don't take into account maintenance costs of the mortgage cohort, just FYI. That 2% is much larger.
quote:
So your argument is that since there are some people who make bad decisions with money that means everyone should avoid it?
No. I still tell quality people to go to college (and take out loans, even).
But if this theory is right, it could be highly beneficial to people thinking of buying now. Waiting for the market to correct could save them a ton of money. Jumping in now could be financially devastating.
This post was edited on 8/17/25 at 7:22 am
Posted on 8/17/25 at 7:22 am to SlowFlowPro
quote:
And, like with college, you can still come out ahead, but many won't. The risk has become much higher as housing prices have increased irrationally. And those calculations, again, don't take into account maintenance costs of the mortgage cohort, just FYI. That 2% is much larger.
So as I said
So your argument is that since there are some people who make bad decisions with money that means everyone should avoid it?
It’s like saying because some people take massive loans to go to Amherst and get a gender studies degree then going to Georgia Tech and majoring in mechanical engineering is a bad idea.
Posted on 8/17/25 at 7:26 am to SlowFlowPro
quote:
But if this theory is right, it could be highly beneficial to people thinking of buying now. Waiting for the market to correct could save them a ton of money.
Well waiting for a year or two is completely different then saying renting is better than buying.
So I’m other words buying is by far the better decision in the past, in the future etc. but at this very particular moment if you can wait a year or two you should wait to buy. You should still buy, but wait a year or two to buy
What’s the point of this thread then?
Posted on 8/17/25 at 7:27 am to Adam Banks
quote:
So your argument is that since there are some people who make bad decisions with money that means everyone should avoid it?
No, and I already replied to this addition via edit above.
quote:
It’s like saying because some people take massive loans to go to Amherst and get a gender studies degree then going to Georgia Tech and majoring in mechanical engineering is a bad idea.
The OP LITERALLY preemptively covers this
quote:
Just like some people pick the right college path, even with massive SLs, some people are going to get the right deals on their home. The video does get into making good decisions and all of that. But the general paradigm may be flipping, and we may be on the front-end of that issue.
You sound like people in 2008 criticizing JerseyTiger, Col Hap, and Milehigh
Posted on 8/17/25 at 7:29 am to Adam Banks
quote:
Well waiting for a year or two is completely different then saying renting is better than buying.
Did you not read the OP or something?
quote:
So I’m other words buying is by far the better decision in the past, in the future etc.
It has been somewhat in the past, and may be in the future
quote:
but at this very particular moment if you can wait a year or two you should wait to buy. You should still buy, but wait a year or two to buy
It may take more than a year or 2. Government policy has been inflating the market since 2009 with monetary and political policies. We'll see how they respond once prices start falling finally.
quote:
What’s the point of this thread then?
Discussing if home ownership becoming the new "college degree"
Posted on 8/17/25 at 7:29 am to SlowFlowPro
ETA I see you responded to that post in a separate post
This post was edited on 8/17/25 at 7:31 am
Posted on 8/17/25 at 7:32 am to wutangfinancial
quote:
I think that’s a fair comment but are you willing to have the discussion that most people struggle because of bad decision making on top of that?
Part of the reason I made this thread was because people often make bad decisions by following the trends of general wisdom. That wisdom is so pervasive you'd never think following it could be a bad decision. Just like with college degrees and how that became such a societally popular meme in the 90s, so when kids in the mid-00s or so (when costs really started exploding) chose to go to college and take out loans, very few people thought that was a bad decision because of the decades of popular wisdom.
It's only with hindsight that we see how bad the mistake was for so many.
Posted on 8/17/25 at 7:42 am to SlowFlowPro
quote:
Putting down 20% for a relatively expensive loan on depreciating property that is expensive to maintain sounds like hell on earth, economically
So you’re opposed to buying a vehicle, boat, or spending money on a vacation as well, correct?
Posted on 8/17/25 at 7:44 am to tigerinthebueche
quote:
So you’re opposed to buying a vehicle, boat, or spending money on a vacation as well, correct?
Who considers any of those things investment assets?
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