

Wall Street is Buying Homes - Will Main Street Follow? - philipdlang
http://blog.suitey.com/wall-street-buys-will-main-street-follow

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makomk
One thing you're not considering is that buying a home ties you down to a
particular area. With the jobs market the way it is, jobs for life a mythical
thing for most people, and major structural shifts in employment, buying a
house is not really an option for most people. Also, I'm not sure there's that
much credit availability for consumers wanting a mortgage and it'd certainly
involve a major upfront deposit.

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philipdlang
That's a valid point and I'll follow up with a future post about the economics
of buying, but to realize a return on a home you need a time horizon of 5
years. With the shift to more urban life, I don't think that 5 years is an
unrealistic amount of time to live in one place. In major metropolitan areas,
there are often plenty of alternative jobs available and people tend to be
tied down due to family obligations.

~~~
makomk
That's all well and good until you lose your job during a dip in the housing
market and no-one is buying - for example, due to a major recession.

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pseudometa
To get to a $3k/month payment on a 500k apartment unit, the author assumes
that people have $100,000 in cash to drop on a down payment. People renting
often don't have that much cash on hand and are already trying to pay their
school loans.

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philipdlang
Yes, that is an assumption I make in the article. A 20% downpayment is going
to be the minimum that you would need for any bank to approve you for a
mortgage. Many readers either have that cash in their bank account or the
ability to get help from (extremely) generous parents.

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Domenic_S
Eh? There's FHA (2.5% down), I did that myself. Was easy. Messes with your
overall purchasing power because your monthly is so high, though.

> _Many readers either have that cash in their bank account or the ability to
> get help from (extremely) generous parents._

LOL

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coder5
You have completely ignored the effect falling interest rates have had on
buying power and thus nominal home prices.

Absent something extraordinary, watch out when rates rise. Affordability will
be crushed quickly, and absent rising incomes, prices will have to fall.

One could argue we'll see a Japan-style era of low rates, but in your article
you're urging folks to "Buy now before it's too late!". If rates spike
suddenly, this will be a very, very bad time to be long such a levered
investment.

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jbdeboer
The math in this post is funky and one-sided.

Is $3k/mo a good price to pay for a place to live? To answer that question you
would need to know the alternatives:

* how much does it cost to rent the same apartment? * if you have $100,000 on hand, what is the ROI of other investments you could make?

Whether buying your home is a good idea is much more involved than a short
blog post and always comes down to individual circumstances.

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yannisp
I have an issue with this article. How many people have $100k available in
their bank account? I've never been over $50k of remotely liquid assets.

That said, I received helped from my parents for the down payment and couldn't
be happier of the move to mortgage over rental.

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bcoates
If you have the income to support a $3k/mo housing cost you should be saving
enough to afford a $100k downpayment in a few years. Also, as another poster
pointed out, it probably qualifies for an FHA loan with much lower down
payment.

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philipdlang
Would love feedback from the HN community on this post!

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jbdeboer
It looks like realtor spam with funky math. I'm not sure why it is on here.

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pseudometa
As with most blog headlines ending in a question mark, the answer is NO.

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JustinBlaird
Text obscured by annoying overlays.

