This really baffles me. Someone willing to be in debt the rest of their lives (or a vast majority) for something that they could easily have while renting... I mean 90% of people buy a home... and sell it in 2 or 3 years for much LESS than they expected.. rarely do they actually get more.

I really dont understand the mentality of... "I make 90k a year so I should buy a 450k house and I'll have it paid off in 10 years." Do their brains just suddenly go into "Off" mode about not calculating costs of living, car expenses, travel expenses, taxes, interest, life RNG.

Everyone I talk to about buying a home is like.. "you know I'll probably be able to sell it and get some profit when the markets go up so its definitely worth the investment".

I dunno but everytime I get into this discussion with people about buying a home I just get generally frustrated by the lack of overall foresight and mindset these people get into.

Personally I dont see a point in buying a place if you're just going to move out in 2 or 3 years after you sell it or while you rent it to someone. Why not just rent something more expensive that you'll enjoy for a longer period of time?

Dont get me wrong though, I can completely understand someone buying a home to be closer to family or move multiple family members in together or that actually want to pass a place down to their kids (like country house or cottage etc..)

What do you guys think?

I tend to agree with your overall sentiment but personally I think it's more about people buying houses too soon in their lives/careers.

House ownership is the single biggest reason for people braking $1M in assets in this country.

You trade you rent money for ability to controll a 200-400K asset - where else can you do that? The government will give you a big discount on your interest. And the best part is that if you put 0 down, you only have upside potential and very limited downside potential. (losing hypothetical credit score matters little in most people's lives)

If you don't live in the ghetto and don't buy the flashiest thing possible, it also seems pretty hard to lose equity if you stay for 5 years. I know people who bought in the height of the bubble in DC and are selling for a big profit right now. Others are braking even - which is still a huge win considering that they paid zero rent for 6-7 years.

You gotta be in it to win it. House is the biggest investment most people will ever make and gain the most from it. (but lose very little unless they really screw things up.)

Housing is just a way to have people lock up money instead of waste it on stuff. It's basically a terrible forced savings plan.

You are definitely right that buying a home without the intent to live there for at least 10 years is foolish. The fees will kill you if you only live there for a few years.

I think many are starting to realize that a home is not an investment. The price of one bedrooms in NYC (which are the classic home many buy for a few years) seems to have fallen harder than two and three bedrooms.

Housing prices have not recovered to their bubble levels (certainly not in DC). No way someone that bought at the peak is selling without a loss now.

Also, the idea that they got to live there rent free is wrong. Instead of buying the home and paying interest, taxes, insurance, etc., they could have rented an equivolent home for five years and would have been much better off.

I'm not one of the people that thinks homes are a bad investment - if you live there ten years you'll probably do about as well as other forms of investment (especially due to the incentives). But the idea that homes are always a great investment is just wrong. If you live there five years, you're going to take a huge hit on fees - you pay about 15-20% of the cost of a home (this counts the total fees from both buying and seling).

A lot of it is social cultural conditioning. It really is the biggest money pit you will ever find in your life. I owned a home before and I thought at the time that it was the right thing to do. I moved out of state and rented it out, and it worked out fine, but once I sold it I knew I would likely never get involved again.

A house is like the beach, or champagne, or New Year's Eve. People are conditioned to think that these things represent the enjoyable things. Being able to relax at the beach. That gets old real quick. 99 percent of the people who live in Miami or Los Angeles, or places where there are beaches, never even go to the beach. Champagne generally tastes like crap to most people. And New Year's Eve eventually becomes a night to stay in, but it takes years to realize these things.

People want to feel that they are successful, so people do stupid things like buying houses because they think that is the American Dream. It turned into a nightmare for almost everyone.

I value being able to do what I want to do, and I like to pursue many different interests. I do not want to be running back and forth to Home Depot and doing stuff like mowing the lawn, cleaning leaves out of the gutters, and a million other never-ending things.

99 percent of human beings are experts at tying up their time and guaranteeing that they can't be the best they can be. Owning a house unless you are totally financially independent pretty much guarantees that you will become one of the rat racers who really doesn't live up to your potential.

In order to really think big, you have to be able to imagine a bunch of new experiences, and that may require being in another place. You can't do that if you are trapped in a house and don't have multiple years worth of living expenses in a semi-liquid net worth.

Freedom of movement and the ability to not be bogged down by the little things that take up lots of time is what everyone really wants, but they let society trap them.

Mental accounting. Rent payments are accounted for as consumption, with mortgage repayments accounted for as investment (even though only the principal repayment part, which is very small in the early years, is really investment).

Forced savings is excellent for a lot of people though. Especially with 1980-2005 appreciation rates. I think the forced savings that 401ks/403b's allow is replacing this though.

Without those appreciation rates it will a lot worse though.

Maintenance/property tax/insurance costs higher than ever as well (inflation adjusted)

Buying a home for 90% of people is an emotional purchase not an investment decision. Rarely does any potential buyer run any kind of investmentment type calculation or rent vs buy comparision. This "American Dream" mentality is exactly what real estate agents love to sell you. It's a very similar sales pitch to buying whole life insurance vs term and new car salesmen - lease vs buy.

What buyer never consider when buying a house is what happens if they lose money on the sale. Buyers usually put barely any money down and finance over 30 years which doesn't shift any risk of ownership to the buyer. These real estate bubbles could be controlled by a few simple rules:

1. Minimum 20% down on home purchases
2. No 2nd mortgages
3. No mortgage that would exceed the appraised value of house the previous 3 yrs.

By following these rules you would get home prices that closely correlate to the average family income in the area and totally avoid boom and bust cycles.

I would probably never buy in an area that has lots of new construction which constantly depresses the price of real estate. Mature, developed areas with great school systems are the best choices when buying a home.

I agree with the general idea but one thing I wonder is if buying is such a fishmove unless it's a long term plan, how is it profitable to buy places to rent out? Where's the profit in it if buying is a bad idea short term and not that great an idea long term?

My rent has gone up 50% in 4 years, so maybe they make their money from suckers like me who are too lazy to move/probably overpay?

It's also a terrific inflation hedge. You have just borrowed a huge sum of money at a low interest rate for what ends up being at a minimum 4:1 leverage... on an asset that keeps up with inflation. **** gold I'll use mortgaged real estate to protect my holdings from inflation any day.

Where do you live and what was the rent history before that. There are also other factors that contribute to rent increase like taxes, repairs and utilitties costs (if included) and just higher rental demand.

In some areas like Atlanta, home prices are plummeting but nobody has the cash to buy thus rental demand has increased.

I don't think it's that great of an inflation hedge, but mortgage money is certainly being lent out on the super cheap right now. I have a 30 year fixed 400k mortgage at 3.4%, which strikes me as absurd. OTOH, rent in the area has gone up quite a bit.

Although it wasn't really my intention when I bought the place, I think I will be quite happy if interest rates were to shoot up.

How did that work out if you bought a house in Vegas, Phoenix or Florida in 2007? No inflation hedge and total investment disaster.