Why you should buy a home as early as possible.

[Hello_World1]

My experience might be wholly anecdotal, but I feel like owning a home has helped with the control aspect of my life. When me and the husband moved from our parents' homes in 2019, an apartment in AZ was $1000. Then $1500, then $2000, then $2300. We realized we were playing catch up and it was digging into our time and energy to keep renting. (our original $1200 rent was $2600 when we bought our house and jumped ship for a $1800 mortgage.)

I am a science type, so I feel like the more variables that keep shifting around, the harder it will be to gain any kind of clarity on what your next step should be. It's like shooting a moving target from a moving platform. For us, hopping off the "rental increase cycle" was pivotal for us to STOP focusing so much of our energy on constantly increasing our intrinsic value every 12 months to keep our budget financially sound.

I'm sure this area of Pinal County will explode and blossom in the next 5-10 years, and the value of our home will go up. But value gained aside, we just needed a solid foundation where we could exercise control of as many variables as possible as we climb.

 

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[MJ DeMarco]

https://www.cnn.com/2024/12/16/economy/renter-homeowner-net-worth-gap/index.html

 

[SpinnerRedPenny]

Most people who do too much mathematics are usually the ones with missed opportunities. I have been a victim of 'Mathematics and overthinking' combo and missed some massive opportunities almost a decade ago!

@NervesOfSteel I'm with you in this.

My folks' neighbors offered to sell me their farm in 2014 for just under $300k. I spent several days building spreadsheets, poring over plat maps, and literally getting into soil types and expected crop yields. My analysis determined that it would take about 35 years for it to pay off. I passed with many thanks for the opportunity. One of the other neighbors bought it.

Two years ago it was subdivided and the parcels sold off for nearly $800k.

My new motto is "Never miss an opportunity to miss an opportunity."

 

[NervesOfSteel]

@NervesOfSteel I'm with you in this.

My folks' neighbors offered to sell me their farm in 2014 for just under $300k. I spent several days building spreadsheets, poring over plat maps, and literally getting into soil types and expected crop yields. My analysis determined that it would take about 35 years for it to pay off. I passed with many thanks for the opportunity. One of the other neighbors bought it.

Two years ago it was subdivided and the parcels sold off for nearly $800k.

My new motto is "Never miss an opportunity to miss an opportunity."

The global land is not increasing but the population is exploding!

 

[theNeverMore]

For a long time I was against buying a home. I was with the "Ramit Sethi" crowd.

But my wife insisted we save for a downpayment.

After 2 years, we pulled the trigger and got a new home.

And given my very particular situation, owning a home will be slightly worse for us:

• It will cost more per month to own than to rent, mainly due to 1) not-so-low interest rates in Ireland, and 2) because my rent hasn't been adjusted for 4 years. I should be paying 50% more at least
• We live in one of the nicest areas in Dublin (basically where the rich live, and we're not rich, we're just lucky). We're going to move to an new estate that doesn't have many things going on, besides supermarkets and a train station.
• My commute will increase by 10 minutes each way
• There are no gyms near the new house. this is the biggest issue for me since going to the gym is part of my identity. Still need to figure out a solution for this

On top of that, new builds involve a lot of costs, like lawyers, flooring, buying furniture, etc.

But... I'm glad I listened to my wife even though I didn't agree with her.

Maybe renting is good for some people. But for us I think buying makes sense. Not because in 20 years we'll own 50% of our house. But because it unlocks more mental clarity. I don't need to worry anymore about:

• Landlord wanting the apartment back
• Renting/housing crisis in Ireland
• Enough space for when we have kids.

And since it's a new estate (area) my head is bubbling with ideas on what to offer new home owners.

Not all ideas can be quantifiable.

I think this was a huge net-positive acquisition in our life!

 

[Kevin88660]

@NervesOfSteel I'm with you in this.

My folks' neighbors offered to sell me their farm in 2014 for just under $300k. I spent several days building spreadsheets, poring over plat maps, and literally getting into soil types and expected crop yields. My analysis determined that it would take about 35 years for it to pay off. I passed with many thanks for the opportunity. One of the other neighbors bought it.

Two years ago it was subdivided and the parcels sold off for nearly $800k.

My new motto is "Never miss an opportunity to miss an opportunity."

I too missed the real estate appreciation cycle.

Fortunately I live alone in a place fully paid off by my parents, there is no rush to me to get a house bought and rented out, in the process converting my other liquid investment into a downpayment.

I don’t spend anytime researching on real estates in my area. If one day I would buy one (provided I have the money in the future) it would be best by staying simple stupid and buying one apartment in the CBD prime location. You never lose money with good locations in the long run. That would cost 1.8-2M in my country. It won’t be like most people wanting to invest and fight inflation, but rather a case when I have enough money and finally I can just say I can afford to live in the best neighborhood in my country.

I don’t see real estate as “an investment” as most of my peers and my fellow country men and women who have a religious zeal with it to grow their wealth. I will leave it to the enthusiasts and real estate professionals. I see it as a ticket to buy where I want to live and this ticket can retain its value.

But I do acknowledge the intangible value and benefit of living in the best neighborhood. I think this is where the massive value that it gives. Not just on a superficial level of locational convenience to city and national hubs, but rather mixing with global top executives and other business professionals.

Orchard Road ranks 12th most expensive retail street globally: Cushman & Wakefield

Cushman & Wakefield: Orchard Road had maintained its position while jumping 2% higher from US$404 ($540) psf per year to US$431 ($576) psf per year (Photo: albert Chua/EdgeProp Singapore). SINGAPORE (EDGEPROP) - Singapore’s Orchard Road has maintained its ranking as the 12th most expensive...

sg.finance.yahoo.com

 

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[WJK]

I saw a study that said the average renter in the USA has a net worth of $10,000+ assets while the average home-owner has a net worth of around $400.000. One's home is usually the biggest asset for most middle-class people and it is paid for over their working life. It's also the centerpin of the American dream. I know that renting is usually cheaper and easier, but it leads to having a lot less wealth.

 

[Kevin88660]

I saw a study that said the average renter in the USA has a net worth of $10,000+ assets while the average home-owner has a net worth of around $400.000. One's home is usually the biggest asset for most middle-class people and it is paid for over their working life. It's also the centerpin of the American dream. I know that renting is usually cheaper and easier, but it leads to having a lot less wealth.

Probably due to the effect of forced saving.

Most people are just terrible with that and end up with home equity value and social security cheque as the only asset when they are retiring.

 

[MJ DeMarco]

Probably due to the effect of forced saving.

Absolutely 100%.

On top of that RE is a hard asset that will always have value, even in inflationary times.

Throw in appreciation on those "forced savings" that hasn't seemed to have subsided, and it's a double pronged attack at creating wealth, even Slowlane style.

Also, in the US, $250K is tax free if you sell a primary residence every 2+ years.

I'd recommend not only buying a house, but selling as soon as your gains hit $250K, take the money tax free, and then buy another house.

Repeat until death.

You can accumulate millions, tax free, doing this over 40 years.

 

[Saint]

I saw a study that said the average renter in the USA has a net worth of $10,000+ assets while the average home-owner has a net worth of around $400.000. One's home is usually the biggest asset for most middle-class people and it is paid for over their working life. It's also the centerpin of the American dream. I know that renting is usually cheaper and easier, but it leads to having a lot less wealth.

This seems like reverse causation to me. The wealthy are able to buy homes, buying homes doesn't lead to wealth. Low wealth people don't stay low wealth because they don't have homes, they don't have homes because they can't afford it because they're paycheck-to-paycheck, terrible credit, etc.

Also, in the US, $250K is tax free if you sell a primary residence every 2+ years.

I'd recommend not only buying a house, but selling as soon as your gains hit $250K, take the money tax free, and then buy another house.

Repeat until death.

You can accumulate millions, tax free, doing this over 40 years.

I did not realize that. Gotta look into that for my state. That would be really compelling, though moving every two years doesn't sound fun.

I'm still wondering how long real estate will be scarce once boomers start dying off and the effects of the cratering birth rate globally start hitting in the next decade or two. Separately, people in Florida and Texas seem to be getting quite worried rn from conversations I've had.

 

[biophase]

I saw a study that said the average renter in the USA has a net worth of $10,000+ assets while the average home-owner has a net worth of around $400.000. One's home is usually the biggest asset for most middle-class people and it is paid for over their working life. It's also the centerpin of the American dream. I know that renting is usually cheaper and easier, but it leads to having a lot less wealth.

I don’t think this implies that the homeowner has $400k due to their in equity as their main net worth. It’s probably more because a homeowner would have a higher paying job, was able to save for a down payment, which shows decent financial management ability and most importantly good credit

 

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[biophase]

For a long time I was against buying a home. I was with the "Ramit Sethi" crowd.

But my wife insisted we save for a downpayment.

After 2 years, we pulled the trigger and got a new home.

And given my very particular situation, owning a home will be slightly worse for us:

• It will cost more per month to own than to rent, mainly due to 1) not-so-low interest rates in Ireland, and 2) because my rent hasn't been adjusted for 4 years. I should be paying 50% more at least
• We live in one of the nicest areas in Dublin (basically where the rich live, and we're not rich, we're just lucky). We're going to move to an new estate that doesn't have many things going on, besides supermarkets and a train station.
• My commute will increase by 10 minutes each way
• There are no gyms near the new house. this is the biggest issue for me since going to the gym is part of my identity. Still need to figure out a solution for this

On top of that, new builds involve a lot of costs, like lawyers, flooring, buying furniture, etc.

But... I'm glad I listened to my wife even though I didn't agree with her.

Maybe renting is good for some people. But for us I think buying makes sense. Not because in 20 years we'll own 50% of our house. But because it unlocks more mental clarity. I don't need to worry anymore about:

• Landlord wanting the apartment back
• Renting/housing crisis in Ireland
• Enough space for when we have kids.

And since it's a new estate (area) my head is bubbling with ideas on what to offer new home owners.

Not all ideas can be quantifiable.

I think this was a huge net-positive acquisition in our life!

My home in Scottsdale is in a pretty nice neighborhood and it was sitting empty. My friend’s home got flooded due to a pipe leak.

I let her move into my house for three months, and then she moved back into her house once it was fixed. She lives in a small 2br house. A few days ago she told me that she noticed that she was in a better mood and much happier living at my house because there was a lot more room, and it had a very nice backyard and pool, and it had a lot of natural light.

She told me she never thought that changing to a different house would make such a big difference. She always stayed in her house because she was saving money and always said she didn’t need a larger house. But now she realizes what a big difference a cozy and comfortable home makes, something that can’t be measured by dollars sitting in the savings account.

 

[WJK]

"This seems like reverse causation to me. The wealthy are able to buy homes, buying homes doesn't lead to wealth. Low wealth people don't stay low wealth because they don't have homes, they don't have homes because they can't afford it because they're paycheck-to-paycheck, terrible credit, etc."

"I did not realize that. Gotta look into that for my state. That would be really compelling, though moving every two years doesn't sound fun.

I'm still wondering how long real estate will be scarce once boomers start dying off and the effects of the cratering birth rate globally start hitting in the next decade or two. Separately, people in Florida and Texas seem to be getting quite worried rn from conversations I've had."

Buying a home allows the buyer to pay for that asset over 30 years on a monthly payment plan. There are very assets that can be leveraged. And housing is a basic need that must be either rented or purchassed. No, it's not always the best investment,but it is commonly the only the one that most people can and do make. It's a forced savings plan in a world where most people of modest means don't save even a dime. When they retire, it gives them a paid-for place to live rather than being in a retirement home on the government's dole. In some cases in the USA, they can take out a reverse mortgage and get an small income from their equity. Also, if they sell, the first $250,000 is free from Federal taxation. There are several reasons for a middle income person to buy a home. No, It's not a great investment a lot of times. It just has good results.

On your last comment: Keep holding your breath. When I started in RE in the early 1970's, basic houses in California started at $25,000 and a really great tract house in an average neighborhood was between $40,000 and $50,000. But the student minimum wage rate was $1.35 per hour. And the basic minimum wage rate $1.65. A gallon of gas was around 25 cents. That was a half a century ago and you can look at the stats.

 

[biophase]

I'm still wondering how long real estate will be scarce once boomers start dying off and the effects of the cratering birth rate globally start hitting in the next decade or two. Separately, people in Florida and Texas seem to be getting quite worried rn from conversations I've had.

I was listening to a podcast who had a crypto guy as a guest. The host asked him where he would invest his money now and he said the first thing he would do is buy a primary residence in a very desirable real estate area.

He used New York Manhattan as an example he said the people coming overseas to Manhattan in 1900 probably said wow Manhattan is so expensive. And then he said somebody in 1935 probably said the same thing and again in 1970. And again in 2000 and 2020. His point was that real estate is always gonna seem expensive to the person who has to purchase it at that time because by default it’s at market. And he said that desirable real estate will always be desirable for many many years. Beach front will always be beach front.

Now I understand that a lot can change and cities can grow or die, oceans may or may not rise, But in our lifespan, we need our real estate to be desirable for the span of between 20 to 40 years.

 

[WJK]

I don’t think this implies that the homeowner has $400k due to their in equity as their main net worth. It’s probably more because a homeowner would have a higher paying job, was able to save for a down payment, which shows decent financial management ability and most importantly good credit

All that being said, home ownership usually means that the person is a stable, productive member of society. It gives them a base for their lives. It gives them a reason to struggle to stay above water and do better. Most people are not going to be entrepreneurs. They are going to be the "worker-bee" type of person. Their home becomes part of their identity.

 

[Bounce Back]

Absolutely 100%.

On top of that RE is a hard asset that will always have value, even in inflationary times.

Throw in appreciation on those "forced savings" that hasn't seemed to have subsided, and it's a double pronged attack at creating wealth, even Slowlane style.

Also, in the US, $250K is tax free if you sell a primary residence every 2+ years.

I'd recommend not only buying a house, but selling as soon as your gains hit $250K, take the money tax free, and then buy another house.

Repeat until death.

You can accumulate millions, tax free, doing this over 40 years.

One thing to consider is in bankruptcy / lawsuits in a lot of states the capital parked in your house would be off limits though. Just something to balance this strategy with depending on your risk tolerance and amount of capital to protect.

 

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[Kevin88660]

This seems like reverse causation to me. The wealthy are able to buy homes, buying homes doesn't lead to wealth. Low wealth people don't stay low wealth because they don't have homes, they don't have homes because they can't afford it because they're paycheck-to-paycheck, terrible credit, etc.



I did not realize that. Gotta look into that for my state. That would be really compelling, though moving every two years doesn't sound fun.

I'm still wondering how long real estate will be scarce once boomers start dying off and the effects of the cratering birth rate globally start hitting in the next decade or two. Separately, people in Florida and Texas seem to be getting quite worried rn from conversations I've had.

Most people are terrible with sticking to a saving plan. So having a home forced them to save their money in the home equity.

Most people retired with two assets and very little cash in hand or other asset. Their state run mandatory retirement pension, and their home equity.

So when they found out they have too little to retire, downgrading their house into smaller unit and less prime location to extract the cash becomes a viable path.

In theory if you rent for life and park your money into S&P you will just do as fine. But since it’s optional to drop out halfway but not for mortgages….people can’t just stick to it.

Urban development trend and demographic changes and impact the real estate prices a lot. But for prime locations they will always retain their value over the long run. Because they are a super scarce asset in a world with abundant cheap money.

Apartments and land are not scarce resources in the world. Prime locations always are.

I rather own a cubicle in top twenty districts in the world than to own a similarly priced big house in a much less prime area. Because I can sleep well at night knowing I will surely get my money back.

It will also be great for personal development knowing that you are the “poorest guy in the neighborhood”. Your social circle quality just explodes.

I will put this as my long term personal goal.

 

[WJK]

My goal for 2025 is to streamline my core business. It's going great. It become a productocracy over the last 25 years.

I'm training my assistant to do more of the actions and chores I normally do. We just got back from our vacation and she did fine while we were gone. I retired from my career 22 years ago and I'm not very good at this retirement thing. I'm still working 6 days a week.

 

[srodrigo]

I wish I had bought ~10 years ago. Now prices have almost tripled in the same areas lmao. Now I have money sitting in the bank but buying at these prices is very risky as they are inflated. I wish I had put the money into actual houses back then. One was a lovely semidetached in front of the beach

 

[theNeverMore]

My home in Scottsdale is in a pretty nice neighborhood and it was sitting empty. My friend’s home got flooded due to a pipe leak.

I let her move into my house for three months, and then she moved back into her house once it was fixed. She lives in a small 2br house. A few days ago she told me that she noticed that she was in a better mood and much happier living at my house because there was a lot more room, and it had a very nice backyard and pool, and it had a lot of natural light.

She told me she never thought that changing to a different house would make such a big difference. She always stayed in her house because she was saving money and always said she didn’t need a larger house. But now she realizes what a big difference a cozy and comfortable home makes, something that can’t be measured by dollars sitting in the savings account.

I honestly never thought about it.

We're getting the keys in 2 weeks. The house is much different than where we're living in. My wife is excited about our little front garden.

I guess this could mean less time watching TV and more time enjoying the new environment. I'll pay attention in the next months to see if I notice any changes in our mood! Thanks for this

 

[EngineerThis]

Here's the deal my parents and I made.. My wife and I were getting killed with CC debt and just had our baby for context..
-My mom who just retired, "Invested" in a house for us.
-We took out a Equity loan and paid off all the CC debt
-My wife and I renovated the house out of pocket
-Now my wife and I are moving, but we will be Airbnbing the house out, doing a 70/30 split.. We get extra income, my parents get some too
-We will leverage this house to buy a new one in a different state
-Airbnb the old house for 5 years or so
-Sell the old house (paying my parents back), split the profit between my parents and I
This puts us WAY ahead on paying down our new house, gave us a place to stay when we needed it, and will give my parents profit and security over their cash.. I feel like we're all winners, because our house value has already jumped up!

 

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[MJ DeMarco]

But now she realizes what a big difference a cozy and comfortable home makes, something that can’t be measured by dollars sitting in the savings account.

I might have said this elsewhere, but your home is where most of your life unfolds, especially if you work at home.

Unlike an expensive car which I'll enjoy 1 hour a day, I'll use and enjoy my home the other 23 hours.

Make your home a vacation paradise and paying to leave for another vacation paradise just doesn't have the same appeal, urgency, or meaning.

 

[Timmy C]

I just bought a home and couldn't be happier. The security is worth more than returns on any other investment out there.

No more soul sucking rental inspections, monthly rental increases, or competing with 50 other people at open homes due to the housing crisis in Australia, for the privilege of renting a dog box. It's all mine, and I can do what I want with it.

I already get excited thinking about what I can do to the backyard.

I am only 18 minutes from a major city and have a really nice walking track with a river directly behind my house.

 

[MJ DeMarco]

I just bought a home and couldn't be happier. The security is worth more than returns on any other investment out there.

No more soul sucking rental inspections, monthly rental increases, or competing with 50 other people at open homes due to the housing crisis in Australia, for the privilege of renting a dog box. It's all mine, and I can do what I want with it.

I already get excited thinking about what I can do to the backyard.

I am only 18 minutes from a major city and have a really nice walking track with a river directly behind my house.

Congrats! Pay it off and you'll love it even more. No housing payment is like winning a lottery.

 

[MTF]

I just bought a home and couldn't be happier. The security is worth more than returns on any other investment out there.

No more soul sucking rental inspections, monthly rental increases, or competing with 50 other people at open homes due to the housing crisis in Australia, for the privilege of renting a dog box. It's all mine, and I can do what I want with it.

I already get excited thinking about what I can do to the backyard.

I am only 18 minutes from a major city and have a really nice walking track with a river directly behind my house.

I'm happy for you, Timmy. I bet this makes your stress levels so much lower on so many levels. And it's awesome to have nature right by your house.

 

[Timmy C]

Congrats! Pay it off and you'll love it even more. No housing payment is like winning a lottery.

Thanks MJ!

 

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[MTF]

@Timmy C what is your property tax?

 

[Timmy C]

I'm happy for you, Timmy. I bet this makes your stress levels so much lower on so many levels. And it's awesome to have nature right by your house.

Thank you very much mate.

It does make me less stressed, one less thing to worry about. it's up against the Maribyrnong river and goes right through brimbank Park.

 

[Timmy C]

@Timmy C what is your property tax?

Not much for me, $1600 PCY. (Per calendar year)

I didnt pay anything for stamp duty, but that's because I made sure to spend less that $600,000.

If you have already bought a home before, you are looking at about $30,000 for stamp duty for what I paid.

 

[Johnny boy]

She was able to qualify for a house on a salary of under $15,000 a year!

That’s cool I make over $250,000 and get denied from Klarna.