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Comment by Syonyk | Hacker News Reader

I'm in the US. I certainly could do something like that. I just won't.

I hope it works for you. That's a level of debt-based risk that neither myself nor my wife have any interest in. There have been a lot of people throughout history who thought similar arrangements were "sure things," and they were, up until they weren't and it all came down around their ankles.

We live in a very modest (manufactured, gasp!) home for our income, our "new" car is a decade old, with other vehicles ranging far older (the tractor is about 80), but still maintained in perfectly good condition and they all do exactly what we ask of them. Mostly. One of the Urals got demanding lately.

It's low stress and high slack/flexibility. Those seem useful to us.

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Concern over US natural gas supply is not warranted. At all.

If producers decided not to produce during a period of high prices (unlikely), we have gas in storage, right now, to last through the typical winter.

https://ir.eia.gov/ngs/ngs.html

(unfortunately, export capacity is a rounding error, so we can't do a whole lot to help Europe out. https://www.eia.gov/dnav/ng/ng_move_expc_s1_a.htm )

> Concern over US natural gas supply is not warranted. At all.

How'd that work for Texas a couple winters ago? Or a decade ago? Supply is more than just what's in the ground - it's the entire infrastructure related to delivering it to the various loads, and we've demonstrated at various points that it's not in as good of shape as people like to assume.

Also, someone is literally blowing up pipelines over in Europe. Don't think US infrastructure is better guarded.

If you don't think it's an issue, great. Hopefully you're right. If you're wrong, hopefully the outages are short lived. Because otherwise people die.

Texas is a broken theocracy.

Cold places have pretty robust gas infrastructure, but cannot grow it because of the green people with gas heat who want all new installs to be heat pumps.

Texas didn't suffer a gas shortage? There was a weather-caused generation capacity crisis, which is a rather different resource. Is that what you're thinking about?

2/3 of my debt payments are a sure thing as they are fixed and inflation is also a sure thing as deflation is catastrophic so governments won't allow it and deflation is trivially easy to fix with helicopter money.

The only thing that isn't a sure thing are wages but they have over the long term gone up [0] and when they do go down it is usually only for a few years.

The last one is a risk but I think it is well worth the risk.

[0]: https://fred.stlouisfed.org/series/MEPAINUSA672N

I mean the bank took on the risk instead of you, and the bank owns your house. So… sure thing?

You do you. But assets like real property are historically good investments. It doesn’t make sense to not buy the best house you can afford.

I’m with you with cars… but even then the maintenance expense starts to catch up.

> But assets like real property are historically good investments.

This is wrong and might be misleading for some people. Real-estate where you live is certainly a good investment (if you are planning to live there). However, real-estate is a risky investment. I have passed through lots of abandoned commercial and residential buildings now that I'm pretty sure I'm never going to invest in real-estate.

That's great advice, so long as you don't have to pay property tax.

> It doesn’t make sense to not buy the best house you can afford.

I heard that a lot in the 2006-2007 era. And plenty of people lost that "best home they could afford" back then. Fortunately, I couldn't afford a four-figure car, much less a house - though some other grad students seemed able to convince someone to offer them loans. No idea how all those worked out, I do hope some of them were able to keep the houses.

I know quite a few people who are able to afford their houses, but wish they'd purchased smaller. A larger house, all other things being equal, will cost more to heat and cool, take more time to clean and maintain, and will generally have far higher carrying costs. You can mitigate some of them, but they're quite a bit more expensive than something smaller, simpler, and cheaper to maintain.

I don't own a house as an investment. I own it as a place to live, with some land to do things outside. And at this point, our "minimum monthly spend" to keep the house climate controlled and lit is pretty darn low. Again, I recognize it's not a particularly popular point of view, especially in the tech circles, but I find "buying a big house as an investment when you don't need it" to be entirely absurd.

Buying a bigger house just allows you to park more of your net worth in real estate. As a diversification it makes sense. But also as you make more money the payment becomes less and less of your monthly income.

It’s not absurd. It’s just a different reason for buying a house.

> It doesn’t make sense to not buy the best house you can afford.

I don’t understand how buying more of one thing is diversification.

Some idea that makes more sense to me is to buy 2 smaller houses, live in one and rent the other one.

This diversifies more and is an example that it can make sense not to buy the biggest house you can afford.

I wasn’t saying “you do you” sarcastically. You ultimately decide what you can afford.

Being conservative debt is a valid strategy, but has risks. Buying the house you need at 25 may not be the optimal strategy if you’re going to be there when you’re 35. Bedrooms and school districts may matter more.

In my own case, my wife and I decided that we would send our kids to private schools and wanted to maximize our family time. So we bought a house in an urban area that was perfect for our goals, had a 10 minute commute and much less expensive than a suburban house of similar nature. We borrowed, but not excessively.

Financially, it’s not a high rate of return (probably about 3% annually). My same house in a town with a good school district would have generated a 10% return. But for me, liberating 150 hours of commuting time and not having a big mortgage was valued higher.

Those all sound like examples of people who didn't realize what went into a house and bought one they couldn't afford.

I'm very curious if this will hold with the changing shape of demographic curves with aging populations. Right now in the US, two very large generations - Boomers and Millennials - want houses, and I'm guessing this is a large driving factor in the home supply-demand issues. I wonder what happens once the boomers start seriously downsizing or just dying off in earnest.

Real property is an investment ... if you own it. If you don't own the land, property is a liability. That is because you have no idea what the land's value may be on the market at the time you may be forced to liquidate to make payments. More often than not, the value of the land will decrease if you're forced to liquidate. This is a huge risk that goes completely unappreciated by many.

If you own property that you do not use that you rent out for a consistent income stream, then it can be an asset even if you have debt on it. This is because you can easily sell this property in anticipation of hard times (whereas you cannot with a home). And moreover, it should be cashflowing even with the debt service, and anything that produces a real income is an asset. Although, still a risk.

I'm totally in favor of property, but frankly many property 'investors' are not investing. They're either consuming (your current home is a consumable and if an investment, an incredibly speculative one), or flat out speculating (owning property in the hopes appreciation will keep up is actually a bet on monetary policy and the interest rate, not on the actual value of the land / property). Property is only an investment if it makes you money in cash each month.

Also, cars are not a risk-free loan unless you live in an area in which you can accomplish most tasks via walking / public transit / cheap private transit. Most Americans do not. Thus the car is a necessity and the loan ought to be seen as a tax on living in a spread out area. Of course, no one actually thinks about it this way.

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