I want to be clear I am NOT advising people to not buy a house, just to consider all factors and costs involved before making the decision. Buying a house can be a great decision when done right, just in my situation(wanting flexibility, valued my stock portfolio more), it wasn't a great decision for me. Good luck with your decision!
Could not agree more. I think there are absolutely times to rent and times to buy. Social media has driven this home ownership thing through the roof and so many people don't understand what it truly takes to be a landlord. It is not a passive investment and one bad tenant can literally cost tens of thousands of dollars.
I’m glad you didn’t just dismiss buying a house outright instead of renting, but instead gave reasons for when buying a house might be right for someone. Great take 👍
Awesome video and channel. This video came at a perfect time. My lawn care business is growing rapidly and I need a house/townhouse with a garage, instead of working out of a storage unit. In the back of my head I pretty much know im not ready to buy (23 y/o). But I can easily swing rent for a townhouse if it makes growing my business easier. I feel like im a perfect example of what youre talking about in this video. I have immaculate credit, a healthy stock portfolio, no debt, but only 1 year (all though successful) in business. I could finance a house right now, but I wont. I need to grow my business to guarantee myself income, but also income history. Keep up the great work WhyLearn!
You made really excellent points here. Honestly watching this video made me realize how good I have it as a veteran. I don’t have to worry about PMI or property tax. Zero down payment as well.
This is an awesome video and topic man. My wife and I currently rent a house. (we weighed our options and even went to look at a few houses to purchase) We decided based on rates and our credit at the time, the better option was to rent. Our youngest is still in school and we take that into consideration, as we want to get an actual mortgage later but somewhere further not in town with land (this would be a hinderance for his schooling, commuting, etc) We plan on moving again in the next 5 years once he's over 18. Renting is a great option as it also allowed us to learn what we DON'T want in a home as well, very nice money saving features that we didn't even consider/know as well.
I’m 28 and in a similar situation where I felt renting a house and investing the rest in index funds was a better decision. It’s easy to say that housing prices have gone up a ton in the last 5 years, but so have stocks and not many people talk about that
Yes, stocks outperform real estate in terms of average % gains. But the advantage to real estate vs stocks is the leverage you have. With a 10% down payment, you are essentially leveraging your investment by 10x. So if a property goes up 10% you can make more than stocks going up 10% in comparison. Unlike with stocks, most people don’t use leverage unless they are professional traders or gamblers. I also don’t own a house and rent because I rent a place from my parents cheap. I invest the rest and it’s better for me too
@@creeperender69 most places that’s not really legal or advised because you literally aren’t using the loans for what you asked them for. Probably against part of the contract signed. But I’m not certain
Hey let’s go, you made a video on my topic suggestion! You mentioned mowing the lawn as a con, but yard work is honestly one of my favorite things about home ownership. I have Shure SE215 in ear monitor headphones that make listening to music or podcasts a joy, I get some mild exercise in, it’s fulfilling to see real-time progress, and nothing beats an refreshing ice cold beer when all is done (though sometimes I throw some back while cutting lol) 🍻 Most of my expenses with my house were purchasing appliances up front. I’ve had to do a handful of minor repairs and installed ceiling fans in the extra bedrooms, but with the help of UA-cam, I can do a lot of it myself. It also helps that I purchased a modest house in a cheap state in 2021, so my mortgage is half of what equivalent rent would be. 🏡 The biggest take away is knowing what situation is best for you at a certain stage of life. You summarized it perfectly in that regard. Either way, make sure to set some funds aside to save and invest! 💸
haha tbh i kind of enjoy mowing the lawn as well. I just want people to consider all the factors of home ownership before making the jump. it can be a great decision if done right. Thanks for the video idea hahaha
I could see myself renting until I get a kid years down the line. Currently focused on paying down student loan debt aggressively, then will be on to investing aggressively once the debt is all paid off. I can’t take that chance to be house poor. Also doesn’t help that the houses in my current living sell on average around $650K
I think buying a multi family and living in one unit is a smart way to break the system. I have not paid a penny for my 4plex technically since it’s cash flowed since day 1. I live in one unit. It’s going to make me very financially well off in my thirties. I’m 25 now. The difficult part is you need to be assertive, confident and fix things when they come up. The other hard part is coming up with the down payment. If you can do this however, it will literally shave 10-20 years off the time needed to work before retiring
Great video man! I feel like owning a house is a huge responsibility and if you can't afford it. I think it's best to rent until you can increase your income to afford a house.
For me, it was a good decision to buy a home. Well, it’s a duplex. I live on one side and rent out the other. All things considered, I’m paying about how much I was paying renting my apartment. I do most of the maintenance on the property and it has not been an issue for me. I’m mechanically inclined, and I’m able to fix most of everything that breaks just by watching UA-cam videos. In the long run, this property will be a great investment for me, so it made sense for me to buy. Now, if I wasn’t mechanically inclined, I would for sure be paying more than I’d want to, as I’ve had to fix both furnaces, fix a plumbing leak, replace a faucet, fix a door, and a couple other miscellaneous things. If I were to pay someone to do all of the work, I’d be out thousands of dollars. As for finding tenants, I do that myself, and I don’t need a property manager. That saves me a ton of money too, and it’s a really not that hard. I’ve yet to come across a bad tenant, finders crossed. I’m pretty good at reading people and if you make sure people have good credit scores and stable income, it really shouldn’t be an issue imo.
glad to hear it's working well for you. In this video I am mainly talking about buying a house as a personal residence and not house hacking or using it as an investment in the way you are doing. Any time you can have tenants and have good skills to fix the house, it is a game changer
I bought my first place when I was 19, and I have mixed feelings on it. on one level, I'm expecting to profit around 30K over a 3 year period, which is great, but it has locked me into staying in my boring home town as a young man for years longer than I would have otherwise: it locked me into an area and I can't leave until I sell it, probably in January coming. I think I might be happier just having invested my money and gained the freedom to move where and when I want to.
In the U.K. it’s a choice of two options. Expensive rent (you will not create the necessary large deposit to buy). Buy, you will not buy as you will not have the necessary deposit. Unless you live in a cheap area, or both have very good jobs it is really hard. Also even if you do buy there are lots of problems, leasehold flats with high and increasing service charges.
yeah it's getting harder and harder. Which is why for most people, i think stocks is the better investment. But it varies from person to person, just my opinion
I think a big problem is if you only make min payments at todays interest rates, you're paying more than double the sale price of the home over the term of the loan. Literally, the first years are all interest.
I have this argument all the time with my dad. He swears by home ownership and thinks im crazy for not buying one. He has a self-bias though as he bought his in the early 000s and still has it, so its gone up about 400% since then. However, im not only unsure of where i want to live, but which country i want to live. So ive been renting for freedom and lived in 3 different countries, saving on travel expenses. Im not investing, but im putting my money into my software company which is going well.
Interesting video and some great points! I’m not sure if you missed it or I missed it. However, what is your view on home ownership and renting when it comes to retirement? It would appear that home ownership (mortgage paid off) would be beneficial in retirement due to simply having a home and not needing to worry about pension depreciating going towards rent. However, i understand that - that same money could be used to say repair a roof, heating, or electrical work if it not been updated in a number of years. Also it’s worth mentioning that it is something to pass down to family members after your time has come. Do you or anyone else have any other takes on this?
What are your thoughts on NACA? They handle down payment, pmi, and closing costs. Not every income eligbible but using the 0% down payment you could buy a home and invest the down payment instead (minus of course some savings for repairs or emergencies). Investing that difference in Index Funds would offer both stock market growth and home ownership. Great videos as always thought and I can't wait to see more as this channel grows!
With dating, can you do an extensive video on ways to approach girls and playing the numbers game to build a reliable rotation successfully? Edit: and if you could, prob do a video on ways to cutout unnecessary expenses
i'm not a fan of "building a rotation", I think finding one person to build a life with is the better long term thing to do. I can for sure make one on cutting expenses! thanks for the idea
*Buys a house yesterday* *Why learn uploads this video a day later * I actually considered renting but I’m looking at a multi family home. Also have a landscape business so a house with a garage would be good to nice to have If one day I want to leave a move across the country I got family in this town and we help each other out
Homes are overhyped as an investment but it seems guys like you and I understand that it should probably be treated as a liability just like a car or appliance. The equity argument only really makes sense if you plan on using the house you live in as an investment and in that way imo it's one of the worst investments as it's highly illiquid and you only really make money upon selling, at which point you're out of a home and have to buy or rent another place to live. Other investments, especially ones that pay you regularly just for owning them, make a ton more sense.
I have about 150k and unfortunately lost my dad who i was dependent on. Whats your opinion on paying for a 1k sqft mobile home thats 20k and paying $500 a month for lot rent? And then investing the rest? Or another option is buying a manufactured home for 70-100k with land and invest the rest? I dont want to rent simply due to the fact ive moved all my life and hate it. I just want some stability in my life and have something that i own.
Hot topic with a good breakdown. My take is most people are just better off investing in a boring index fund rather than stressing about owning a house. If you can comfortably do it, go for it. But most are house poor anyways, and the freedom of more or less being maintenance free when you rent is a huge +. Plus the liquidity of the stock market is something I wish more people understood. Being able to wake up and know your net worth down to the dollar is amazing.
I appreciate your analysis but think you are not taking into account long term costs of NOT owning a home. You're absolutely right that historically, the stock market outperforms real estate on a year to year percent appreciation basis, but this is irrelevant. -If you have $50k invested in stocks, and have an amazing year that your money goes up 10%, you now have $55k. -If a house costs $300k, and goes up 10%, that house now costs $330,000. -Rent also goes up year to year and will never go down in a substantial way or for a long period of time -The raw $ amount is significantly higher, and this is how people price themselves out of the real estate market. *Your stock market gains absolutely do not keep up with the raw $ pace of inflation that houses do due to their higher price (unless you have $500k in stocks), and one could potentially find themselves paying hundreds of thousands more for the same property if they wait 2-3 years to buy a house, and at worst they will be totally priced out of their local real estate market if the prices have gone up a lot more than expected/or even as expected. I firmly believe that if you have the means to buy a property, especially if it's your first, if you consider yourself even marginally responsible for the future, then it is an obligation to buy a property if you have the means to do so. In the USA, the way I see things is that the next 5 years will be the last opportunity for most regular people to buy a property. In my local city, I am disgusted by what I've seen - houses that costed $250k 3 years ago are going for $450k and this is not stopping anytime soon as more and more people immigrate to the USA and people leave expensive states for the more affordable ones like the south, mid west. The real estate you mentioned in Wisconsin seems similar to the one in my area - I recommend not taking it for granted as it's highly likely in the next 5-10 years those values will be at least double or triple and therefore unaffordable to the average person (Incomes historically don't track with inflation). You seem like a smart guy, but please take my advice. Also worth noting, if you did get a house, you can house hack it and get a roommate to help out with the payment situation and selling is always an option. It's not ideal - but I consider this serious enough that I'm scared of not being able to buy my own place ever and be forced to rent forever.
hey man thanks for the comment. I agree that housing prices will continually go up and continue to be harder to afford. I want to be clear I am NOT advising people not to buy a house, only to consider all the factors involved. When buying a house you are basically leveraging your money which is why real dollar returns can be higher if you have a smaller stock portfolio. however, where I disagree is that the stock market gains will not keep pace with inflation. Once you invest enough to accumulate a large stock portfolio, this will help drastically. In my situation I'm way better off because i chose stocks instead of a home in a booming stock market, since I have an asset that is both paying me monthly and appreciating. Normal people can accumulate a good sum of money in the stock market, then be able to comfortably afford a home later. It is a situational thing. There are many cases where it makes sense to own a house, just not in mine at the moment.
So in your example, a house goes up 10% in value, but you didn't consider that after maintenance, taxes, HOA, renovations, inflation, etc., that 10% gain has surely been eviscerated and is probably closer to 0%. You didn't truly make a gain.
@@whylearntech I want to push back on the idea that normal people can/should accumulate a large sum in the stock market (using total market index funds) to then use in the home purchase later and be just fine. Assuming someone has the means to buy a home, I believe it should be their first priority over everything else for a couple reasons: -If I have $100k to buy a home that costs $350k to $400k, that locks me in that current price. If I tried to wait 3 years and instead invest the money, I might come out with $126,000 assuming an 8% return. Now, lets say that house which costs $350k experiences 5% annual returns in price appreciation, that puts it at $405k. That is an increase of $55k. It outpaced the stock market gains. You've lost money in terms of buying power for the real estate. Someone could argue that if you only want to put 20% down then this is not relevant because you don't have to pay the entire $55k increase all at once, but it's even worse if they wanted to argue this because now you're going to have take additional mortgage which carries a high cost. Ontop of this, the payment may not even be affordable anymore since incomes don't track with inflation. -Assuming someone did do this successfully, it still puts them behind. If they did take the money from investments in the market to buy a home, they're still going to be paying more for the same house. As opposed to locking in the home price, and investing later.
@@3452soxfan You have to have somewhere to live...I'm not talking about value in terms of investment returns I'm talking about it in terms that's what you would HAVE to pay to own the same house. Rent also goes up with inflation, renovations are optional, and taxes are a cost that are unavoidable. None of these negate anything that I said.
@@3452soxfan I'm trying to reply to this but youtube keeps blocking my comment. I'm not referring to the 10% value as a a return, i'm talking about it as a cost that makes the house more expensive over time. If one did not own the property, they would have to pay this new price and eventually the price will be so high they can't afford it.
I don't condone purchasing a home with bad value or little value. However, I do urge people to act soon. In 5-10 years, houses WILL NOT be attainable for the average person. We are slowly but surely following the UK and CA. People simply cannot purchase a home under normal circumstances without being gifted money or making top 5% income. Stocks are definitely not assets, they are debt. Comparing stocks or a house is comparing apples to oranges, they are not in the same class even though both stocks and primary residences are liabilities.
Wow this guy just made mw2 gameplay brain rot and put charts like a business class and actually taught me something. Please mention this in your next video and actually give your thoughts on current academic views and if “brain rot” is healthy? To study because looking at charts and white paper is boring now? And the younger generation grew up on iPads so entertainment is needed? Did we accidentally or purposely hurt the generation?
I want to be clear I am NOT advising people to not buy a house, just to consider all factors and costs involved before making the decision. Buying a house can be a great decision when done right, just in my situation(wanting flexibility, valued my stock portfolio more), it wasn't a great decision for me. Good luck with your decision!
A someone who has worked 8-12 hours a day every day since June, I needed to hear this
What kind of work do you do to get that much overtime?
Could not agree more. I think there are absolutely times to rent and times to buy. Social media has driven this home ownership thing through the roof and so many people don't understand what it truly takes to be a landlord. It is not a passive investment and one bad tenant can literally cost tens of thousands of dollars.
I just think too many people jump into it without fully thinking through the hidden costs
@@whylearntech yeah, most people just look at the monthly mortgage payment
Houses are litterzl drainholes. Rent multiple appartements >>>>
I’m glad you didn’t just dismiss buying a house outright instead of renting, but instead gave reasons for when buying a house might be right for someone. Great take 👍
Thanks man. A house can be a good call IF you plan on being there for awhile and IF you can comfortably afford it/the risks
Awesome video and channel. This video came at a perfect time. My lawn care business is growing rapidly and I need a house/townhouse with a garage, instead of working out of a storage unit. In the back of my head I pretty much know im not ready to buy (23 y/o). But I can easily swing rent for a townhouse if it makes growing my business easier. I feel like im a perfect example of what youre talking about in this video. I have immaculate credit, a healthy stock portfolio, no debt, but only 1 year (all though successful) in business. I could finance a house right now, but I wont. I need to grow my business to guarantee myself income, but also income history. Keep up the great work WhyLearn!
Bros dropping nukes AND knowledge.
haha not nukes in this one unfortunately
Retiring abroad where healthcare and other costs are lower and quality of life is higher instead of buying a house in the US can be smarter too.
You made really excellent points here. Honestly watching this video made me realize how good I have it as a veteran. I don’t have to worry about PMI or property tax. Zero down payment as well.
This is an awesome video and topic man.
My wife and I currently rent a house. (we weighed our options and even went to look at a few houses to purchase)
We decided based on rates and our credit at the time, the better option was to rent.
Our youngest is still in school and we take that into consideration, as we want to get an actual mortgage later but somewhere further not in town with land (this would be a hinderance for his schooling, commuting, etc)
We plan on moving again in the next 5 years once he's over 18.
Renting is a great option as it also allowed us to learn what we DON'T want in a home as well, very nice money saving features that we didn't even consider/know as well.
Buying an apartment at a young age can set you up real good, if you are living in it for 5+ years.
I’m 28 and in a similar situation where I felt renting a house and investing the rest in index funds was a better decision. It’s easy to say that housing prices have gone up a ton in the last 5 years, but so have stocks and not many people talk about that
bingo, stocks outperform houses most years too
Yes, stocks outperform real estate in terms of average % gains. But the advantage to real estate vs stocks is the leverage you have. With a 10% down payment, you are essentially leveraging your investment by 10x. So if a property goes up 10% you can make more than stocks going up 10% in comparison. Unlike with stocks, most people don’t use leverage unless they are professional traders or gamblers.
I also don’t own a house and rent because I rent a place from my parents cheap. I invest the rest and it’s better for me too
You can use debt for stocks. Me and my wife took out 400k dollars in Norwegian student loans, and invested it in index funds
@@creeperender69 most places that’s not really legal or advised because you literally aren’t using the loans for what you asked them for. Probably against part of the contract signed. But I’m not certain
W vid I’m 21 turning 22 my life is in shambles an cost of living in nyc is flabbergasting
Really appreciate these videos man
Thanks! I’m glad you’re enjoying them 👍🏼
Hey let’s go, you made a video on my topic suggestion!
You mentioned mowing the lawn as a con, but yard work is honestly one of my favorite things about home ownership.
I have Shure SE215 in ear monitor headphones that make listening to music or podcasts a joy, I get some mild exercise in, it’s fulfilling to see real-time progress, and nothing beats an refreshing ice cold beer when all is done (though sometimes I throw some back while cutting lol) 🍻
Most of my expenses with my house were purchasing appliances up front. I’ve had to do a handful of minor repairs and installed ceiling fans in the extra bedrooms, but with the help of UA-cam, I can do a lot of it myself. It also helps that I purchased a modest house in a cheap state in 2021, so my mortgage is half of what equivalent rent would be. 🏡
The biggest take away is knowing what situation is best for you at a certain stage of life. You summarized it perfectly in that regard. Either way, make sure to set some funds aside to save and invest! 💸
haha tbh i kind of enjoy mowing the lawn as well. I just want people to consider all the factors of home ownership before making the jump. it can be a great decision if done right. Thanks for the video idea hahaha
I could see myself renting until I get a kid years down the line. Currently focused on paying down student loan debt aggressively, then will be on to investing aggressively once the debt is all paid off. I can’t take that chance to be house poor. Also doesn’t help that the houses in my current living sell on average around $650K
how come you're paying off your student loans aggressively?
@ we have no other debts and want to be debt free. The only “good debt” in my opinion is a mortgage
@@kevinrehn3259 I imagine being in any debt does have some sort of toll on ones mental health.
Well this is freakily relevant
I think buying a multi family and living in one unit is a smart way to break the system. I have not paid a penny for my 4plex technically since it’s cash flowed since day 1. I live in one unit. It’s going to make me very financially well off in my thirties. I’m 25 now. The difficult part is you need to be assertive, confident and fix things when they come up. The other hard part is coming up with the down payment. If you can do this however, it will literally shave 10-20 years off the time needed to work before retiring
Great video man! I feel like owning a house is a huge responsibility and if you can't afford it. I think it's best to rent until you can increase your income to afford a house.
exactly, it's not a decision to be taken lightly!
For me, it was a good decision to buy a home. Well, it’s a duplex. I live on one side and rent out the other. All things considered, I’m paying about how much I was paying renting my apartment. I do most of the maintenance on the property and it has not been an issue for me. I’m mechanically inclined, and I’m able to fix most of everything that breaks just by watching UA-cam videos. In the long run, this property will be a great investment for me, so it made sense for me to buy.
Now, if I wasn’t mechanically inclined, I would for sure be paying more than I’d want to, as I’ve had to fix both furnaces, fix a plumbing leak, replace a faucet, fix a door, and a couple other miscellaneous things. If I were to pay someone to do all of the work, I’d be out thousands of dollars.
As for finding tenants, I do that myself, and I don’t need a property manager. That saves me a ton of money too, and it’s a really not that hard. I’ve yet to come across a bad tenant, finders crossed. I’m pretty good at reading people and if you make sure people have good credit scores and stable income, it really shouldn’t be an issue imo.
glad to hear it's working well for you. In this video I am mainly talking about buying a house as a personal residence and not house hacking or using it as an investment in the way you are doing. Any time you can have tenants and have good skills to fix the house, it is a game changer
@ thanks for the reply, been loving the content man
youtube has really become essential lol
I bought my first place when I was 19, and I have mixed feelings on it.
on one level, I'm expecting to profit around 30K over a 3 year period, which is great, but it has locked me into staying in my boring home town as a young man for years longer than I would have otherwise: it locked me into an area and I can't leave until I sell it, probably in January coming.
I think I might be happier just having invested my money and gained the freedom to move where and when I want to.
thanks for sharing the other side of the story! The flexibility is a huge part of renting
In the U.K. it’s a choice of two options. Expensive rent (you will not create the necessary large deposit to buy). Buy, you will not buy as you will not have the necessary deposit. Unless you live in a cheap area, or both have very good jobs it is really hard. Also even if you do buy there are lots of problems, leasehold flats with high and increasing service charges.
yeah it's getting harder and harder. Which is why for most people, i think stocks is the better investment. But it varies from person to person, just my opinion
UK is diabolical right now, considering to move out of the country after 18 years of living here and growing up here
Honestly i see myself staying long term in one location. But the up keep of a house is so draining. I'd much prefer to do a townhome.
I think a big problem is if you only make min payments at todays interest rates, you're paying more than double the sale price of the home over the term of the loan. Literally, the first years are all interest.
This came at the perfect time
Let me know what you think!!
This guy knows what’s up
You know what's up!!!
I have this argument all the time with my dad. He swears by home ownership and thinks im crazy for not buying one. He has a self-bias though as he bought his in the early 000s and still has it, so its gone up about 400% since then.
However, im not only unsure of where i want to live, but which country i want to live. So ive been renting for freedom and lived in 3 different countries, saving on travel expenses. Im not investing, but im putting my money into my software company which is going well.
Interesting video and some great points!
I’m not sure if you missed it or I missed it. However, what is your view on home ownership and renting when it comes to retirement?
It would appear that home ownership (mortgage paid off) would be beneficial in retirement due to simply having a home and not needing to worry about pension depreciating going towards rent. However, i understand that - that same money could be used to say repair a roof, heating, or electrical work if it not been updated in a number of years.
Also it’s worth mentioning that it is something to pass down to family members after your time has come.
Do you or anyone else have any other takes on this?
What are your thoughts on NACA? They handle down payment, pmi, and closing costs. Not every income eligbible but using the 0% down payment you could buy a home and invest the down payment instead (minus of course some savings for repairs or emergencies). Investing that difference in Index Funds would offer both stock market growth and home ownership. Great videos as always thought and I can't wait to see more as this channel grows!
I don’t know much about NACA! I’d have to look into it
I want to buy or build a duplex before I ever consider getting into a home
With dating, can you do an extensive video on ways to approach girls and playing the numbers game to build a reliable rotation successfully?
Edit: and if you could, prob do a video on ways to cutout unnecessary expenses
i'm not a fan of "building a rotation", I think finding one person to build a life with is the better long term thing to do. I can for sure make one on cutting expenses! thanks for the idea
*Buys a house yesterday*
*Why learn uploads this video a day later *
I actually considered renting but I’m looking at a multi family home.
Also have a landscape business so a house with a garage would be good to nice to have
If one day I want to leave a move across the country
I got family in this town and we help each other out
Haha if you did your research and can afford it, should be a good decision my friend 👍🏼good luck
Homes are overhyped as an investment but it seems guys like you and I understand that it should probably be treated as a liability just like a car or appliance.
The equity argument only really makes sense if you plan on using the house you live in as an investment and in that way imo it's one of the worst investments as it's highly illiquid and you only really make money upon selling, at which point you're out of a home and have to buy or rent another place to live.
Other investments, especially ones that pay you regularly just for owning them, make a ton more sense.
Whats your general dividend portfolio? I have been doing SHCD for my dividend etf in a taxable brokerage. I'm doing VOO in my roth ira
bro read "rich dad poor dad" most likely
I have about 150k and unfortunately lost my dad who i was dependent on. Whats your opinion on paying for a 1k sqft mobile home thats 20k and paying $500 a month for lot rent? And then investing the rest? Or another option is buying a manufactured home for 70-100k with land and invest the rest? I dont want to rent simply due to the fact ive moved all my life and hate it. I just want some stability in my life and have something that i own.
Hot topic with a good breakdown. My take is most people are just better off investing in a boring index fund rather than stressing about owning a house. If you can comfortably do it, go for it. But most are house poor anyways, and the freedom of more or less being maintenance free when you rent is a huge +. Plus the liquidity of the stock market is something I wish more people understood. Being able to wake up and know your net worth down to the dollar is amazing.
yeah i didn't even mention that! You can buy and sell stocks basically whenever you want, very liquid. Being house poor is a huge problem nowadays
I appreciate your analysis but think you are not taking into account long term costs of NOT owning a home.
You're absolutely right that historically, the stock market outperforms real estate on a year to year percent appreciation basis, but this is irrelevant.
-If you have $50k invested in stocks, and have an amazing year that your money goes up 10%, you now have $55k.
-If a house costs $300k, and goes up 10%, that house now costs $330,000.
-Rent also goes up year to year and will never go down in a substantial way or for a long period of time
-The raw $ amount is significantly higher, and this is how people price themselves out of the real estate market.
*Your stock market gains absolutely do not keep up with the raw $ pace of inflation that houses do due to their higher price (unless you have $500k in stocks), and one could potentially find themselves paying hundreds of thousands more for the same property if they wait 2-3 years to buy a house, and at worst they will be totally priced out of their local real estate market if the prices have gone up a lot more than expected/or even as expected.
I firmly believe that if you have the means to buy a property, especially if it's your first, if you consider yourself even marginally responsible for the future, then it is an obligation to buy a property if you have the means to do so.
In the USA, the way I see things is that the next 5 years will be the last opportunity for most regular people to buy a property. In my local city, I am disgusted by what I've seen - houses that costed $250k 3 years ago are going for $450k and this is not stopping anytime soon as more and more people immigrate to the USA and people leave expensive states for the more affordable ones like the south, mid west. The real estate you mentioned in Wisconsin seems similar to the one in my area - I recommend not taking it for granted as it's highly likely in the next 5-10 years those values will be at least double or triple and therefore unaffordable to the average person (Incomes historically don't track with inflation).
You seem like a smart guy, but please take my advice.
Also worth noting, if you did get a house, you can house hack it and get a roommate to help out with the payment situation and selling is always an option. It's not ideal - but I consider this serious enough that I'm scared of not being able to buy my own place ever and be forced to rent forever.
hey man thanks for the comment. I agree that housing prices will continually go up and continue to be harder to afford.
I want to be clear I am NOT advising people not to buy a house, only to consider all the factors involved. When buying a house you are basically leveraging your money which is why real dollar returns can be higher if you have a smaller stock portfolio.
however, where I disagree is that the stock market gains will not keep pace with inflation. Once you invest enough to accumulate a large stock portfolio, this will help drastically. In my situation I'm way better off because i chose stocks instead of a home in a booming stock market, since I have an asset that is both paying me monthly and appreciating.
Normal people can accumulate a good sum of money in the stock market, then be able to comfortably afford a home later. It is a situational thing. There are many cases where it makes sense to own a house, just not in mine at the moment.
So in your example, a house goes up 10% in value, but you didn't consider that after maintenance, taxes, HOA, renovations, inflation, etc., that 10% gain has surely been eviscerated and is probably closer to 0%. You didn't truly make a gain.
@@whylearntech I want to push back on the idea that normal people can/should accumulate a large sum in the stock market (using total market index funds) to then use in the home purchase later and be just fine.
Assuming someone has the means to buy a home, I believe it should be their first priority over everything else for a couple reasons:
-If I have $100k to buy a home that costs $350k to $400k, that locks me in that current price. If I tried to wait 3 years and instead invest the money, I might come out with $126,000 assuming an 8% return. Now, lets say that house which costs $350k experiences 5% annual returns in price appreciation, that puts it at $405k. That is an increase of $55k. It outpaced the stock market gains. You've lost money in terms of buying power for the real estate. Someone could argue that if you only want to put 20% down then this is not relevant because you don't have to pay the entire $55k increase all at once, but it's even worse if they wanted to argue this because now you're going to have take additional mortgage which carries a high cost. Ontop of this, the payment may not even be affordable anymore since incomes don't track with inflation.
-Assuming someone did do this successfully, it still puts them behind. If they did take the money from investments in the market to buy a home, they're still going to be paying more for the same house. As opposed to locking in the home price, and investing later.
@@3452soxfan You have to have somewhere to live...I'm not talking about value in terms of investment returns I'm talking about it in terms that's what you would HAVE to pay to own the same house. Rent also goes up with inflation, renovations are optional, and taxes are a cost that are unavoidable. None of these negate anything that I said.
@@3452soxfan I'm trying to reply to this but youtube keeps blocking my comment. I'm not referring to the 10% value as a a return, i'm talking about it as a cost that makes the house more expensive over time. If one did not own the property, they would have to pay this new price and eventually the price will be so high they can't afford it.
I I could buy a house I would but am happy with my apartment
nothing wrong with an apartment! has some benefits
Neither i live in a tent my money stays my money fuck the system
I don't condone purchasing a home with bad value or little value. However, I do urge people to act soon. In 5-10 years, houses WILL NOT be attainable for the average person. We are slowly but surely following the UK and CA. People simply cannot purchase a home under normal circumstances without being gifted money or making top 5% income. Stocks are definitely not assets, they are debt. Comparing stocks or a house is comparing apples to oranges, they are not in the same class even though both stocks and primary residences are liabilities.
Completely agree, see my comment above I expand on this.
why are you saying stocks are debt/a liability? unless they are purchased with heavy leverage, that is not true
@@whylearntech Yeah not sure what he means by that either but the gist of his message is accurate.
Stocks build you wealth. Mortgage gives you slavery.
5th
68th
@ I love your videos :)
Wow this guy just made mw2 gameplay brain rot and put charts like a business class and actually taught me something. Please mention this in your next video and actually give your thoughts on current academic views and if “brain rot” is healthy? To study because looking at charts and white paper is boring now? And the younger generation grew up on iPads so entertainment is needed? Did we accidentally or purposely hurt the generation?
What dumb question is this buy a house
Bro did NOT watch the video😂
Wouldn't call it a dumb question to ask at all, life is much more complicated than that
@@whylearntech Ik im just being an a hole but I would say buying is honestly superior