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scarabic t1_j1r8hvq wrote

Reply to comment by Ambitious-Event-5911 in [OC] State by State Housing Price Growth since 1975 by fred_fotch

How is renting a solution though? Rents are skyrocketing everywhere as well. Who do you think is bringing cash to this table and pouring it into speculators’ pockets? Renters.

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iidesune t1_j1wt8rb wrote

Homebuyers are pouring money into the real estate market as well. A house is only as valuable as what the next buyer is willing to spend on it. Hence the delicate balance policymakers must manage when it comes to housing affordability. Homeowners want to see returns on their "investments," but can only do so if a prospective homebuyer pays that return. It's a rat race.

At least with renting you can always vote with your feet or seek better employment in a new zip code or state. Paying rent isn't throwing away money at all. You're paying for the freedom and convenience to move around and find a situation that works best for your current situation.

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scarabic t1_j1wyw9b wrote

The difference is you can buy houses on credit, leverage. In a hot market, borrowing is cheap and speculation drives speculation. Rent, meanwhile, is always paid in cash. Rent is the transfusion of actual blood into what is otherwise a zombie of speculation and credit. It props up the rat race. And renters are getting squeezed hard as the balloon grows.

Sure renting has advantages. Easier to move. Predictable costs. But now we’re on a different subject. We started on rent being some kind of way out of the housing market shit show, and unfortunately it totally isn’t.

Sure, you’re paying rent for something but your rent is often paying the entire mortgage of someone else who is just sitting back gaining equity. It’s hard to say you’re throwing money away but impossible to say you’re winning or not part of the game.

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iidesune t1_j1x1776 wrote

> Rent is the transfusion of actual blood into what is otherwise a zombie of speculation and credit.

I actually have no idea what you mean by this

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scarabic t1_j1xgalo wrote

Yeah maybe that metaphor is pretty obtuse.

What I mean is that speculation bubbles don’t always have much basis in real value. Housing in particular is highly leveraged. People buy a house without having all the money for it. Banks lend them the money but they’re not entirely liquid either. The mortgage gets sold and resold, bundled into investment vehicles and derivatives. Families count on their house to be some kind of “investment” and rely on the bubble to fund their retirement. It’s a big network of over-leveraged actors. It stumbles onward largely on its own momentum, but it can be totally hollow, a bubble, a “zombie.”

Renters on the other hand pay cash in hand everywhere they go. Nothing they do is permitted to be a loan or leverage. Whenever renters appear in the diagram, actual cash is flowing in. “Blood infusion.”

Maybe I meant vampire, not zombie.

To offer an example: I bought my first home in 2006, right before the big crash. I got a loan with very little down during the subprime lending spree. Then the crash happened and I wound up upside down on the mortgage. Shortly after I also needed that freedom to “vote with my feet” and move that you speak of. Know what I did? I rented the place out. I paid the mortgage, taxes, and repairs with the rent cash while the market recovered. Even pocketed some monthly profit. And once the market roared back, I sold the place at a big profit.

I was the person over-leveraged, actually at negative value, the zombie, but by feeding on renters, I was eventually made whole.

So when you say you rent because you l’re disgusted by the whole speculation market, I don’t see how that’s a solution. The buyers/sellers are still feeding on you as a renter. You’re maybe the only party in the entire picture who is always there with ready cash in hand, while everyone else is engaged in a gang-bang of credit leverage.

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iidesune t1_j1xh0vz wrote

This is a fine argument for the merit of being a renter.

Just feel fortunate that you lucked out and found a buyer for your home. I would challenge you to factor in down payment, closing costs, maintenance, interest, selling costs, taxes, insurance, and other housing related costs (furniture, utilities, etc) before determining that you actually made a big profit by selling your home.

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scarabic t1_j1xjq9u wrote

Um. My dude. No, I didn’t just forget about my down payment (which immediately becomes equity anyway - you knew that, right?).

The rest of this we tracked continuously and at tax time. If you’ve never owned, maybe it seems hopelessly complex and expensive to you. I can’t tell if that’s it or you just tried so hard to puff up that list that it became ridiculous. Furniture!

Anyway keep renting since you find it morally superior to be exploited than exploit. I won’t take that away from you, just the illusion that you’re somehow not involved.

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