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Comment by barrkel | Hacker News Reader

It's interesting to see just how sensitive the scale is to initial assumptions. But more important to me is the inefficiency created by the drag on movement - when you're renting, it's much easier to move, even when you've got furnishing and the whole lot etc. When you've bought, and you want to move, you may be at the mercy of the current state of the property market as to whether you make a loss or a gain, or even need to stay for a few years more.

I grew up in rented homes. Perhaps the most poignant thing is that the house I remember best (age 9 to 18 or so) has been renovated, sold etc. It's not somewhere I can ever go back to. But that may have been the case with a bought home anyhow.

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I believe that it would necessarily be irrational to ever "need to stay for a few years more" because of the state of the housing market. (I do agree in general that you're more mobile as a renter, I just think think you've overstated it.)

An extreme example: You buy a house and then the value plummets to a fraction of what you paid. Why might you need to stay in that house? Other house prices presumably fell along with yours so you can still sell yours and buy a similar one. I think people find it painful to sell at a loss because it makes a loss on paper become explicit. If you don't sell then you can tell yourself that you're speculating -- you really think your house is worth more than it will currently fetch so it's imprudent to sell. But probably you're not smarter than the market in that regard. In other words, there's no harm in turning a loss on paper into an explicit loss.

Bottom line, if you want to move from house A to house B and the price difference (plus moving costs) is worth it, then do it, with no thought at all to the price you happened to have paid when you bought the first house.

Of course, moving costs when realtors are involved are huge so the original point partially stands. You're never stuck in the sense the parent implied, moving is just more expensive when you buy vs rent.

> Other house prices presumably fell along with yours so you can still sell yours and buy a similar one.

Not if the house lost more value than your down payment. If you're underwater (and a lot of people are), you need to either arrange a short sale or bring money to the close. Either way it's nowhere near as easy as you imply.

If you owe more than the house is worth then theoretically you should default and walk away. I know that question has been debated endlessly and I don't understand all the practical implications like what it means for your credit rating, or even whether it should be considered ethical.

I concede that if defaulting is not an option then you may be stuck if you owe more than the value of the house and can't borrow more money. Good point.

Defaulting differs in different countries. You may be forced to liquidate other investments to make up the shortfall. Nonrecourse loans are not usual outside of California, AFAIK.

Also, people don't usually sell their house and buy a similar one in the same place -- they either upgrade or downgrade, or move to a different neighborhood or city, and in either case, the prices are likely not to have moved in the same direction at the same pace. In my neighborhood, 1-BR coops have dropped in price more quickly than 2-BRs, for example.

Housing markets in different areas and countries are not necessarily synchronized with respect to cycles.

This is a huge factor. A large amount of the real estate boom and bust has been concentrated in a fairly small section of the US: CA, NV, FL and maybe AZ. If you want to move out of CA's central valley to a job in, say, Boston MA, you're going to be screwed: the fall in home values in the Central Valley is much much larger than the fall in home values in the Boston metro area. And that's not an isolated example: people don't generally leave on economically ruined area for another. They want to go to places that are not economically ruined, and such places tend to have more stable real estate markets where prices took much less of a cliff dive over the last few years.

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