Why is everyone obsessed about housing?

New / Eng
Derek last

New Eng

Derek last
Nov 30, 2018 103 Comments

Why is everyone on blind so maniacal about buying a house?

Especially in the Bay, you lock in hundreds of thousands of dollars for down payment and you ensure yourself a life of slavery by paying an insanely fat mortgage every month that puts so much stress on you, then 3 years from now you change job and your commute now becomes twice as long just because you can’t move closer to work because of your house.

Why can’t you just rent a smaller place close to work and invest everything somewhere else? (E.g. rental real estate where it actually makes sense and reasonable price/rent ratio, or stock market index funds).

Is it because you have big families and many kids?

Age: 32
TC: 400k
NW: 1.2M (all in vanguard)

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TOP 103 Comments
  • Microsoft / Eng
    KennyH

    Go to company page Microsoft Eng

    KennyH
    Because Bay Area housing has had incredible double digit returns over the last bull market. Oakland has done 70% or something. You won’t get that kind of ROI in vanguard unless you’re an options genius.
    Nov 30, 2018 6
    • Amazon / Eng
      buffdude

      Go to company page Amazon Eng

      buffdude
      Wait what?! 2+ years makes tax waived? Where can I read more about it?
      Dec 5, 2018
    • Google / Mgmt
      FYlH08

      Go to company page Google Mgmt

      FYlH08
      Google for California 2/5 capital gains tax waiver. If you live in your house for 2 years you can claim capital gains tax exemption on it. But you can use this benefit only once every 5 years. Better get started!
      Dec 5, 2018
  • New
    Pppoop

    New

    Pppoop
    I am up 1.2 million on my 2 houses. House is the best way to build equity. Rent is a waste.
    Nov 30, 2018 3
    • I mean, you can leverage in the stock market as well to some degree. But you’re right, you won’t be able to borrow $1 million to put into stocks. Otherwise, everyone will be putting money in REITs
      Nov 30, 2018
    • LinkedIn / Eng
      goldbug

      Go to company page LinkedIn Eng

      PRE
      Google
      BIO
      Full time coder and part time gold dealer.
      goldbug
      You can’t leverage the same way in stock market.

      With rental properties you can put 25% to 30% down and have the rent cover the PITI and other expenses. Thus as long as rent doesn’t decrease year by year you will never face a ‘margin call’.

      With stocks, you get margin call when its price goes down (which is much more likely than rent going down yoy). And I honestly can’t find any stock that pays enough dividends to cover a hypothetical 30-year mortgage on itself.
      Dec 1, 2018
  • Rent is unstable and unpredictable; mortgages are the same for decades with a max yearly increase of 2% propery tax. Interest rates have been insanely low for over the past decade which made leveraging money almost free. People enjoy owning property as it is theirs improve or do what they want without any permission needed. Finally people are hopeful that appreciation continues to outpace the norm and real estate is a pretty low risk leverage leading to wealth. Not for everyone of course.
    Nov 30, 2018 2
    • TI
      CantCatchM

      Go to company page TI

      CantCatchM
      Rent is much more predictable than housing prices.
      Nov 30, 2018
    • Incorrect. A mortgage payment is locked for 30 years. Rent changes anytime the owner wants and market allows. Buy a house today and your payment in year 1 and 25 is exactly the same (less property taxes). Rent on the other hand is likely to change every year. Even if housing values drop 50% one year over 30 it's likely to beat renting.
      Nov 30, 2018
  • IBM
    gösser

    Go to company page IBM

    gösser
    Because Blind is full of Asians (both East and South) and Asians tend to overinvest in real estate. I fully agree with OP. If 80-90% of your wealth is in one asset class, hell, just one particular asset, then it's not a very diversified portfolio. Don't buy property for the sake of buying property.
    Nov 30, 2018 19
    • New / Eng
      Derek last

      New Eng

      Derek last
      OP
      Thanks. The question is: where would you find reasonable ones? As I said earlier, bigger pockets seems just full of marketers, everyone is seemingly trying to help but when you google their name they are usually paid promoters for whatever they pitch...
      Dec 1, 2018
    • Amazon / Eng
      IAmJob

      Go to company page Amazon Eng

      IAmJob
      Lookup Joe Fairless and Thompson investing. Usually 50k minimum investment. Must be an accredited investor.
      Dec 2, 2018
  • LinkedIn / Eng
    goldbug

    Go to company page LinkedIn Eng

    PRE
    Google
    BIO
    Full time coder and part time gold dealer.
    goldbug
    Why are you so obsessed with Vanguard?
    Nov 30, 2018 9
    • New / Eng
      Derek last

      New Eng

      Derek last
      OP
      Well I envy you then. I work too hard and thus have very little time to build an education in real estate and roam around to evaluate properties. If I were to go out and buy a multi family in SF I would for sure buy a lemon, lose my down payment and then get sued by some tenant who breaks his leg inside my unit. It’s really more like a business, in the sense that you have to know what you’re doing. It’s more like putting 400k on a single stock, you really have to evaluate the fundamentals of your property, you can’t just bank on “oh well, the economy will go up and so will my property”.
      Nov 30, 2018
    • LinkedIn / Eng
      goldbug

      Go to company page LinkedIn Eng

      PRE
      Google
      BIO
      Full time coder and part time gold dealer.
      goldbug
      It is a business. And stock trading is also a business. There is no easy way to generate a good return on your 1.2M capital. And I don’t think passive ETFs are the answer.

      I wish my job could motivate me more so I work harder and make more. But it looks like I will be my own boss at some point in the future and get rid of this job.

      Owning a SFH is still a good idea financially if you are staying in SF longterm. SFHs are mediocre investments but they are still better than index funds if you don’t trade it too often.
      Nov 30, 2018