Re:Basic income plan clearly rejected by Swiss voters
by nemo44x on Sunday June 05, 2016 @08:14PM
(#11843857)
I think it's important to not conflate being a landlord (investment and business) with buying a home to live in.
The Bay Area is but a single market and not representative of all markets. There are many more markets that haven't seen similar growth. The Bat Area is the exception.
If you are paying off a home and you lose your job, if you've leveraged yourself like many home buyers have then you might lose your home! Especially if you lose your job because the economy tanked and home prices have ranked leaving you underwater owing more than the home is worth. And then the bank takes the home back and your entire investment is wiped out. Look to 2009 for an example of this. And rents dropped significantly at that time.
The opportunity cost of tying up a solid down payment needs to be considered too. 200k down could be used in other places too.
I think most people who buy with 20% or less down don't understand how leveraged and dangerous their position is.
Lastly if buying a home was a good way to get rich then we'd have a whole lot more wealthy people.
It's not a bad thing at all and for certain people in certain positions it's a good thing. If you can buy with cash and have at least 40% of your bankroll left afterwards then yeah it makes sense. If you plan on staying in a place forever (laying down roots) and can afford 30% down and still have 2 years of mortgage payments in a cash savings account it makes sense.
I feel like a lot of people buy homes because they just think that's what you do. A home has meaning to a lot of people. But the opportunity costs and risks are large and the rewards are generally a wash with renting long term in most markets with the exception of places that get a 30 year boom or other rare real estate lottery scenarios.
There are ways to win but 10% down and a 30 year mortgage is rarely it.
The Bay Area is but a single market and not representative of all markets. There are many more markets that haven't seen similar growth. The Bat Area is the exception.
If you are paying off a home and you lose your job, if you've leveraged yourself like many home buyers have then you might lose your home! Especially if you lose your job because the economy tanked and home prices have ranked leaving you underwater owing more than the home is worth. And then the bank takes the home back and your entire investment is wiped out. Look to 2009 for an example of this. And rents dropped significantly at that time.
The opportunity cost of tying up a solid down payment needs to be considered too. 200k down could be used in other places too.
I think most people who buy with 20% or less down don't understand how leveraged and dangerous their position is.
Lastly if buying a home was a good way to get rich then we'd have a whole lot more wealthy people.
It's not a bad thing at all and for certain people in certain positions it's a good thing. If you can buy with cash and have at least 40% of your bankroll left afterwards then yeah it makes sense. If you plan on staying in a place forever (laying down roots) and can afford 30% down and still have 2 years of mortgage payments in a cash savings account it makes sense.
I feel like a lot of people buy homes because they just think that's what you do. A home has meaning to a lot of people. But the opportunity costs and risks are large and the rewards are generally a wash with renting long term in most markets with the exception of places that get a 30 year boom or other rare real estate lottery scenarios.
There are ways to win but 10% down and a 30 year mortgage is rarely it.