I have a different take. Even with the high prices of today's homes, chances are they will be much higher in 50 years.
The only real way out of the money trap these days is to load up on debt and invest into assets/stocks that can outperform said debt.
A 50 year mortgage is about as loaded as you can get, debt-wise.
So, in 20 years, as long as you can afford the monthly payment (and maintenance) there's a decent chance that new home owners may have amazing appreciation.
Do you have a different take on the deflation narrative of embodied AI and the store of wealth rotation out of realestate into bitcoin? I wonder how these narratives would impact the utility of a 50 year mortgage?
Yeah. There's definitely risk in all assets in relation to bitcoin...
Still, as homes are desired and not currently deflating, a 50 year mortgage (as long as you can afford it) still beats rent... probably.
I have been doing research on the US housing market. From what I can gather there is a catastrophe brewing because there actually is a deflation effect occurring. I am curious to know how this will impact both the residential and commercial markets. Some predictions have a collapse in 26/27. It’s very interesting to study.
I've heard a little about that potential. Mostly though, I read that modest appreciation is expected in the short term (next 2 years).
Money printing (which seems likely in the cards) typically flows into assets like real estate.
Will it be different this time? Always a gamble. But I'm gonna say no. It's not.
If interested, look into the work of Melody Wright on YT and Substack. nostr:nprofile1qqsywt6ypu57lxtwj2scdwxnyrl3sry9typcstje65x7rw9a2e5nq8spz3mhxue69uhkummnw3ezummcw3ezuer9wcqs6amnwvaz7tmwdaejumr0dsh6049m did a nostr:nprofile1qqsgt0d4sa0pz0wvn9yck36xxezf3qhwzksu0q254vruqed5wvuavuspzfmhxue69uhky6t5wd6xzcmt9eshquqpz3mhxue69uhkymrpwd68ytnxxaazu7re0gr80m5k interview recently. Many other interviews available as well. Her take seems solid, a GFC style meltdown on its way.
I'll check these for sure.
I'm not sure what the utility/upside is for the banks/gov in trapping folks into low interest debt for 50 years though. Like, what's the motive? Seems there are better ways to force fiat on the backs of the working class. He'll, rent itself creates quite a bit of taxable income.
The wackiest idea that comes to mind is that one of the promises of AI is lifespan extension. Both a higher quality and much longer. Kind of a brilliant move to fleece the masses by taking advantage of much longer lives. 🤷♂️
I like that. Improve their lives. Lengthen them. Then offer long-term loans in depreciating assets that they need.
Thats diabolical. Probably accurate.
50 years is a long time to pay off a mortgage, at half a century it almost IS rent for life
Only rent never has an upside... no chance to take a profit on your way out.
True, it’s just an enormous amount of time in general. Lots of things could change in the world within a half century
There is definitely an uptick in the speed of general development now and the near future. The technological singularity is coming (unless aliens have a different opinion 😉)
When houses can be built quickly and for cheap, we're all fucked as property owners. And when quantum computers crack encryption we're all fucked as bitcoin holders.
Everything is a risk. The 50 year mortgage gives a chance to people who would like to take that risk but could not otherwise.
Obviously, a sound monetary system and plentiful high paying jobs would be preferable, but barring this... what could be done?
From this perspective, it definitely makes sense. It is a shame that so many housing developments are going up next to each other though.
Here in Maryland all the new houses/condos look identical and they’re ridiculously expensive.
Honestly, even if I could afford a $750k house, I wouldn’t want to see into my neighbors’ living rooms.
That’s just me, being frustrated at the same-ness of architecture these days.
I bet by 2075 society in general will be a lot different.
the concept of a mortgage will look nothing like what we’ve got now and this whole 50-year mortgage idea will be a moot point.
But who holds their property for 50 years anymore? Most will leave, maybe move up, maybe move due a new job... and if you do plan on staying, an extended loan may be an effective tool/strategy.
Besides, you can always pay more than you owe and reduce the time-span of your loan on your own.
But when people move, they tend to just get a new mortgage right? Maybe that one’s shorter because they’ve already paid a few years and perhaps better terms but they’re still mortgaged.
Yes! And with a 50 year mortgage, their monthly payments are cheaper.
Personally, if I could afford the 30 year, I'd still take the 50 (unless the difference in interest was substantial).
That way, I could choose to pay more, but not be forced to, in case the new job didnt work out, etc.
It just gives more leeway.
That would definitely be nice to have a bit of a safety net just in case things don’t pan out for whatever reason
