Why do people buy a house?

Jun 12, 2018 482 Comments

Say you are giving away 250k for down payment and 5k per month on the loan payment.
Considering 15% again on 250k stock that is 37.5 per year or about 3k per month.

That's about 8k per month of lost money.

You can get a nice apartment for rent about 4k. Why do people want to loose 4k per month?

I understand house value increases but isn't that a high risk? And would you really sell your house for money?

I'd rather spend that extra 4k and enjoy life.

I will add some good comments here to let the readers get a tldr.

tax benefit on mortgage

your pay will adjust as well

Interesting questions:
You think bank is giving you at a much lower interest rate? Why don't banks crash then?

What if a new technology company comes in and solves this problem? If we can think about flying cars in 2024, why is it so hard to solve the housing problem?

It's funny how most of us work in technology and don't believe this problem would be solved soon and keep worrying about renting 30 years from now.


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TOP 482 Comments
  • Apple / Eng

    Apple Eng

    What is this magic 15% return investment?
    Jun 12, 2018 19
    • Microsoft DaAX46
      Gamt he’s actually just driving part time
      Jun 13, 2018
    • Visa shaolin
      Like that Ackman kid. He is doing goid this year though. Actually, his fund is selling at sale price now anyone wants in.
      Jun 14, 2018
  • Google KjDt62
    Rent increase is a higher risk. I don't want my family to be homeless.
    Jun 12, 2018 12
    • Microsoft Zuzi
      Based on his price range for a good rental in the Bay Area. Also his apparent lack of awareness of the non monetary cost of having to move a family with kids from rental to rental every now and again. It’s a cost those who have luxury of owning their house don’t have to pay.
      Jun 15, 2018
    • Google KjDt62
      Yeah, I can feel that a lot. We used to waste a lot of time and effort every year to find the next neighborhood for us.

      Many rental properties are nice. They have gyms, pools and party rooms. But they never make us feel at home.
      Jun 15, 2018
  • Lyft Toktok
    Putting a side the emotional part, a mortgage is one of few avenues for a retail investor to get leverage for their money.
    Jun 12, 2018 12
    • Microsoft / Eng secureity
      Exactly. If market is insane and I can live for 3 times cheaper just renting. Why not? If the market is 300k for a house or 2k for rent. Might as well buy the house. When market is 1.2m for non piece of shit house, I'll keep my 1800 rent.
      Jun 13, 2018
    • Salesforce ynlE82
      If you have 1800 rent, maybe you should hold on to it, OPs math was different though.
      Jun 14, 2018
  • Medallia CXM8
    Main question isnt who would buy a house, but who would buy a house in shitty California? Do you know the type of house and property you can own for $250k down and $5k/mo in places that are not broken liberal experiments?

    Life is amazing working for a company based on the coast, but living in places that do not punish success or have destroyed any semblance of middle and upper middle class.

    You all just keep fighting over your $1M shacks surrounded by homeless and needles. Not only do I own a very nice home, but I'm almost debt free and have only 9 years left on a 15 yr mortgage.
    Jun 13, 2018 35
    • Microsoft JsonBlob
      Jun 14, 2018
    • Microsoft JsonBlob
      I think apart from Silicon Valley and Hollywood California is gold!
      Jun 14, 2018
  • Facebook public
    If you could get 15% a year consistently you would be a billionaire... Mortgages allow you to leverage huge amounts of money at a comically low interest rate, receive tax benefits, land is a scare resource, payment is predictable and stable unlike rent, and finally the emotional satisfaction of being able to do whatever you want on your property. If the property appreciatiates in value that is just gravy. Finally no, I hope you never sell any of my houses for money. Tenants pay me each month to live there and hopefully always will. Thank you renters!
    Jun 12, 2018 9
    • Amazon / Eng n0v
      Huh? Most mortgages are sold off to Freddie/Fannie, and the bank doesn't fund them at all. They go for the guaranteed return. Freddie/Fannie collateralize those loans and sell them to investors. Mortgages that remain on the bank's books (portfolio loans) and actually funded by Bank assets are fairly rare. Mostly they are jumbo loans to wealthier clients and some credit unions/small bank's hold confirming loans on their books.
      Jun 13, 2018
    • Uber / Eng

      Uber Eng

      Facebook, Cisco
      Great responses, public.
      Jun 13, 2018
  • Amazon ij
    I love that I can put as many nails on wall as I want.

    I love that I can have a workshop in a room and not worry about damaging the floor.

    I love that I can put brown color paint on exterior.

    I love that I was able to dig a pond in my yard.

    I love that I can have a 100lb dog and not worry about him eating the doors.

    To me buying a house is kind of freedom. I did not have this in my rental. Investment or savings that house brings is a side benefit.
    Jun 13, 2018 3
    • PayPal Isjnd

      I’m lucky in that I have a great landlord right now, so I was allowed to use my garage as my shop space.

      But by the sound of it, most everyone in this thread is interested in their returns, while staring out the windows of their 3rd floor condo, longing for that early retirement where they can do more of the same thing.

      I track my bikes, my cars and I work on them in my spare time. Oh, and I have a 75lbs German Shepherd. In other words, I have hobbies that necessitate a certain freedom that renting usually doesn’t give you.

      (That same landlord is having all siding redone and wants us to tell him what color to have it pained. Cool dude.)
      Jun 13, 2018
    • Amazon ij
      That is one GOOD landlord. And that too when you have a GS. I had a bad time finding a rental that allowed Rottweiler.
      Jun 13, 2018
  • Oracle HL3l$
    You have already figured out what you want. Why do you care about others?
    Jun 12, 2018 8
    • Amazon IzUmI
      OP, where was all your money 11 years ago? In stock market?

      At some point I had the same thought but it is changed over time.
      Jun 13, 2018
    • LinkedIn $$$$$$$$$
      I am not OP but 11 years ago I was in high school
      Jun 13, 2018
  • Google ;O
    Are you insane? That’s not lost money. You’re converting liquid assets into illiquid assets each month, but the money is still yours (except interest / tax).

    We just bought another property in San Jose. $200k down payment; $4000/mo. On Airbnb we’ll get $5-6k each month, while it currently rises over $15k/mo.

    Our primary house has risen $1m. But if we had your mindset, we’d be dumb and poor. And the risk isn’t that high; there’s an incredible number of people here and so little construction.
    Jun 13, 2018 13
    • Intuit NK1An42
      Condos like right on the water have appreciated very well in my area in the last decade or two.

      Maybe zoning laws will change... though many many people are betting they won’t
      Jun 13, 2018
    • Google ;O
      Location appreciates the best no matter what it is.
      Jun 13, 2018
  • Yahoo Funday123
    U have to pay taxes on sale of stock , so profit is 2.1 k after taxes. You get tax benefits on buying the house let’s take it 1k. So now the profit is down to 1k 😀. Now in the mortgage payment you are actually building equity which is not the case with rent. Rent always increases but not the mortgage payment. So if you do the math buying is better in your example
    Jun 12, 2018 3
    • Yahoo Funday123
      Yes but if u sell house you pay no tax on profit upto 500k if married and 250k if single
      Jun 12, 2018
    • Amazon PurpleHaze
      500K? Didnt know that! Off to Zillow.
      Jun 13, 2018
  • Microsoft / Eng Sinbad
    You are borrowing money at a low rate from the bank. If you are located in the Bay Area or Seattle, housing has been going up like crazy (15% a year?).
    Jun 12, 2018 6
    • Amazon PurpleHaze
      OP is a dumb piece of crap! Do you even understand basic economics? You ask stupid questions and when people answer, you follow with even dumber ones. Rent and GTFO.
      Jun 13, 2018
    • Microsoft DaAX46
      I went to shit schools till university but then again Microsoft isn’t FAANG so maybe it does matter :(((((((
      Jun 13, 2018


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