Quote:
Originally Posted by Via Chicago
right, so why make it even more risky? lets also not forget that wages have remained stagnant for the vast majority of americans over the past several decades and purchasing power is far less than what it used to be...inflation has hit big ticket items like equities, cars, college education, healthcare, and housing orders of magnitude higher. incomes have nowhere near kept up with these things, hence the extreme wealth inequality we are dealing with today.
the opportunity cost to buying less house than i can afford is i can save more of my paycheck on something other than housing (i.e. retirement, which americans are woefully underprepared for). it may even allow someone to stop working early, in turn buying freedom from work obligations as opposed to have a big house to clean and pay off for another 15 years. if you need the space, than by all means take it. but encouraging people to buy at the extreme end of their budget when they dont need to is reckless.
final note, but ageism is a real thing in the workplace and there are more than a few 50-somethings forced into unwanted early retirements who find themselves locked out of careers going to younger people who are willing to work for a fraction of the cost. or who cant get their careers back after untimely late career recessions at the peak of earning power. lots of people plan to work for a certain number of years, and that is not always fully in your control. as automation and AI takes increasingly outsize roles in our workplaces (the numbers are readily available for how many good paying white collar jobs this is likely to impact), ill personally create the financial cushion while i can as opposed to the extra 2 bedrooms and whatever on-trend finishes i dont really need.
back to regular scheduling.
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I have a different view:
the leveraged principle residence is the single best investment available today
benefiting from the power of government subsidized leverage, and the power of inflation, amazing tax write offs, the benefits of gentrification, the power of the protected "homeowner class" via government regulation/building codes and policy, protected by highly restrictive zoning and NIBYism all around the US which caps supply, and paid for by ever inflating wages for almost all working people (not mythical average stagnant wages)
dont finance more than you can pay for - obviously - but even if you cant make the payments at some point in time, you likely will have years to figure it out with lots of handouts and help and free money before anything really bad happens
and if the house value temporarily goes down - who cares - you still get to live in the house until values recover
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