You conveniently pick a case where someone bought a house on the cheap. What do you recommend all those who are leaving university right now? To buy into sky high housing prices? Are you claiming there is no risk involved in home ownership regardless of when someone times a home purchase? I would in that case completely disagree. When comparing mortgage purchases and renting one has to factor in all aspects of the trade.
Facebook engineers struggling with sky-high rents ask Mark Zuckerberg for help Tech workers making six figures in Silicon Valley say they're still struggling. Read more: http://www.cnbc.com/id/104319084 Sent from the CNBC app. Available on the App Store Sent from my iPhone
Buying RE is mostly about "forced saving". Even an idiot son pays the mortgage for fear of losing his house. Equity indexes outperform RE *after costs*. On a aside - How many wealthy technical analysts / chartist traders do you know?
The rental yield on high end property is generally much lower than median range. You can rent it for less than your capital cost.
Obviously make money while renting it out? Or sitting long, and waiting for prices to rise - renting it out to reduce their negative carry slightly? In some countries you must make a property "available for rent" in order to expense the mortgage interest pre-tax. The interest can be sometimes offset against other income un-associated with the RE investment too... Renting a property out while waiting for a capital gain is a tax trade as much as anything. You can end up paying bank interest instead of tax to some degree - which is interesting. There seem to be cultural aspects also / ego / status - and lying about net returns.
Some people are unwilling to live within their means. Like you, I lived below my income level when I was in a corporate job. When I left that job to trade 21 years ago I had paid off my mortgage and had no debt. Some people want to keep up with the Jones'. Others live within, or below, their means and accumulate wealth. If this guy is having to borrow $$$ now and then to get by then he's a poor manager of his finances or is making some bad spending choices.
Depends on where you live and when you bought. Rent is money down the drain. Owning gives you a chance to have $500K tax free gains multiple times in your life.
This is false. There are many spots along the peninsula in San Mateo county that are *not* more expensive than the city proper. You cannot take Palo Alto, Menlo Park, etc and represent them as the peninsula because they are outliers. My wife and I live just outside of SF and through frugal living / hard work / not buying unneeded bullshit, have been able to save up quite a bit of money. I'm also the only high wage earner in the family unlike these tech DINKs with an advantage who can't seem to not let a dollar go unspent. Been here for 20+ years and this is yet another typical SF/Bayarea bubble that will end in tears. Stop eating out all the time. Stop buying things you don't need. Stop buying things on credit and creating liabilities for yourself.