Skip to main content

Why I Would Be Nervous About Buying a House

Matt Yglesias does a bit of armchair psychoanalysis about why people my age are reluctant to buy a house despite the fact it can be radically cheaper than renting:
In the real world, I doubt we'll see a surge in homeownership.
For starters, a lot of people are now locked out of credit markets. But what's more, anecdotally most of the creditworthy renters in their late-twenties or early-thirties who I know are now totally paranoid about buying a place. This is the number one cognitive malady of investors. If prices go up, people hear about lots of people making huge returns and want to buy into a market. If the market crashes, instead of hunting for bargains people find themeselves haunted by nightmare stories.
I think he is partially right here. People my age graduated from college into a hellish economy burnt to a cinder by a massive housing bubble—it's only natural for us to be a bit wary of that smoking crater. But there's more to the story.

First, to buy a house first you have to come up with a down payment. Especially in an expensive-ass market like DC, this will take years to save up. (At my wages, decades.) I'm not certain where I'll be next year, let alone in five. Second, and probably more importantly, buying a house isn't just an investment—it's a massive commitment. Where buying stocks back in late 2008-early 2009 (something at the time even I realized would have been likely to pay off) only involves the money you're putting up at the time, a house is a whopping great claim on 30 years or whatever of future wages.

In other words, it's not the investment aspect of buying a house that freaks me out, it's the leverage. Policy elites worldwide have not exactly impressed of late with their ability to properly manage effective demand, and while I think the Dodd-Frank financial reform is underrated, none of the root causes of the crisis—too-large banks, too-large and influential financial sector, and galloping income inequality—have been addressed. I would estimate the likelihood of another global financial cataclysm in the next ten years at ~50%, and in the next 30 years ~100%.

So you can understand how young folks these days might be just a little leery of making a hugely leveraged bet on anything, housing or otherwise. It's very easy for me to imagine taking on a $300,000 mortgage just in time for the next bubble to pop, causing another recession, where I'm stuck holding the bag with no job and no savings. No thanks.

(And somewhat more idiosyncratically, I find the whole investment mindset—High Capitalism as practiced today—vaguely distasteful. Wall Street, banking, finance, investment, and "consulting" seem to me largely the province of thieves in suits, and I want no part of it if at all possible. But that's just me.)

Comments

Post a Comment

Popular posts from this blog

Why Did Reality Winner Leak to the Intercept?

So Reality Winner, former NSA contractor, is in federal prison for leaking classified information — for five years and three months, the longest sentence of any whistleblower in history. She gave documents on how Russia had attempted to hack vendors of election machinery and software to The Intercept , which completely bungled basic security procedures (according to a recent New York Times piece from Ben Smith, the main fault lay with Matthew Cole and Richard Esposito ), leading to her capture within hours. Winner recently contracted COVID-19 in prison, and is reportedly suffering some lingering aftereffects. Glenn Greenwald has been furiously denying that he had anything at all to do with the Winner clusterfuck, and I recently got in an argument with him about it on Twitter. I read a New York story about Winner, which clearly implies that she was listening to the Intercepted podcast of March 22, 2017 , where Greenwald and Jeremy Scahill expressed skepticism about Russia actually b

Varanus albigularis albigularis

That is the Latin name for the white-throated monitor lizard , a large reptile native to southern Africa that can grow up to two meters long (see pictures of one at the Oakland Zoo here ). In Setswana, it's called a "gopane." I saw one of these in my village yesterday on the way back from my run. Some kids from school found it in the riverbed and tortured it to death, stabbing out its eyes, cutting off its tail, and gutting it which finally killed it. It seemed to be a female as there were a bunch of round white things I can only imagine were eggs amongst the guts. I only arrived after it was already dead, but they described what had happened with much hilarity and re-enactment. When I asked why they killed it, they said it was because it would eat their chickens and eggs, which is probably true, and because it sucks blood from people, which is completely ridiculous. It might bite a person, but not unless threatened. It seems roughly the same as killing wolves tha

Caffeine Is Not a Bioweapon

I got into a discussion with Yves Smith about caffeine here , and somehow my comment got eaten, so I'd like to finish it up here. She said about this Raw Story piece about a girl who allegedly died from drinking two Monster drinks in two days, "The FDA lapse here is terrible. Caffeine is extremely toxic. We just happen to get highly diluted doses in coffee and tea." I commented: Yves, your implication about caffeine is incorrect on several levels. Most Monster drinks have about 10 mg of caffeine per fluid ounce, which is much less than even drip coffee (18 mg/oz) and WAY less than espresso (51 mg/oz). ( Source ) The whole idea of dilution is misguided in any case. The relevant measurement for caffeine intoxication (and most poisoning generally) is the total amount taken, not the concentration. Concentration is something to worry about, as it can make a lethal dose easier to take on, but the main concern there is pure caffeine pills, not energy drinks which are mostl