Reply to I know why Millenials can't afford houses and pay off their student loans..

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]When you look at buying houses, it is best to think of it from a cash-flow perspective.

Lets say, after taxes, the house is neutral cost compared with an apartment (I do not know if this is the case today).  In 30 years, no matter what happens to the price, you have paid off the mortgage.  You have value.

Now, while the price of the rental usually goes up, the mortgage is constant.  So, as things inflate, the percentage of my income (which inflates) going to housing drops.  Today, it is 9% of my income, down from 29%....
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So dumb. Do you think people who don't buy houses just let their down payment sit and gather 0% interest? Your mortgage might be constant but the tradeoff is that you are drowning in opportunity costs. There is nothing stupider than investing 30%+ of your net worth in a single asset. Most people are better off renting and investing the down payment in REITs to hedge for real estate appreciation. [/quote]

I put 20% down.  50K.  Lets say I put in in the S & P 500 based fund.  O n the day I pulled the money out, the fund, S & P 600 was about 1335 on the day  bought the house.  Today, it is 2270.  So it would be 85000.  By comparison, in those intervening years, I have paid the mortgage down 75K.  If the house value had remained constant, the 50K would now be 125K in equity instead of 86K if it was invested in SP500.  Note that my cash flow was actually better than if I was in an apartment on day 1.

Now, if I rented, my rent would be about 3K today, doubling since I bought my house.  The cumulative difference would be about 240K extra for rent vs mortgage (mortgage after taxes).  Granted, I have had to do some maintenance.  That is probably on the order of 3K per year, or 54K.

Factoring it all in, I have paid out 190K less owning the home.  If my house has been constant  value, I am 190K+125K-86K = 229K ahead owning vs. renting over 18 years. That is my daughters college for 4 years.

The kicker is my house, which I paid 275 for is now worth about 700K.  So, that decision to buy has netted me an extra 229:+425K, or 654,000.  That is real money.

So, making the decision to buy put

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Thanks for confirming you don't know what a REIT is. [/quote]

You can't live in a REIT.  [/quote]

No kidding. You live in a rental with the flexibility to relocate whenever you want without suffering massive transaction costs and earn interest from real estate appreciation without having to invest an idiotic proportion of your net worth into one asset. Buying is for suckers who bought into the marketing that caused the last recession. Millennials are smart to keep renting until they are ready to settle down. Threads like this just confirm that the Millennials bashers are just holier than thou whiners who are too stupid to realize how dumb they are.[/quote]

So even though my mortgage is less than my rent was you think I should be renting instead?   Because if I were renting I'd have even less money to invest in the market (ex in a reit). I have to live somewhere.  [/quote]

How would you have less money if you rented? Did you not put a down payment down on your house...?[/quote]

Yes, but this downpayment was only 20 percent and is a small portion of the money I save/invest.  I need to diversify as I don't want all my money in the market.  I also want a paid off house in retirement or in my case my late 40s.   I also wanted room to grow into and didn't want to have to keep moving from apartment to apartment.  I want to be locked into a school for my children and to be able to make my home my own.  Life isn't only about money.

I get that maybe renting would be better financially.  But that's not what I wanted to do.  We invest over 12-15k each month in the market and I'm fine having a mortgage on top of that and having a nice place for my family to live.

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