Over the next 5 years, what could be the better position to be in:
Existing home owner or renter?
Discussion
Today I would NOT encourage any young person to go out and borrow a million bucks for a descent house in a descent area.
Better hustle a cheap rent and be free. Save your salary in all other assets than Fiat. Gold, Silver, Stocks, Crypto, ETF's, REIT's.
Leave the country after 10 years and live of the interests.
I tend to agree. The cost of getting into the housing market when prices and interest are so over inflated seems risky, and similarly, I think there is a risk of house prices crashing which would be a problem for existing homeowners.
I am dubious about going back to renting though.
Depends what your ideal “better position” means. If you mean purely net worth, probably the renter, if they’re allocating excess funds to bitcoin. Really just depends on where you are in life though. If you want to live nimble and move as needed or if you want a place to hunker down and build local resilience.
“Zillow season” bitcoiners are going to continue having a hard time separating with sats to buy a continually depreciating house though. Yes, their purchasing power will skyrocket, but the nominal price of houses after the next big print will be astronomical. Sticker price is still hard to swallow even if you live on a Sat standard. My other concern is that most people don’t immediately move into their forever home (me). I already paid an exorbitant amount for my current house compared to isn’t actual worth. How many nocoiners will be able to afford my house when I try to sell after the next big print?Homeownership is already out of reach foremost and that’s only going to get worse.
I mainly wonder if housing will continue to go up in price as it has been, or if something is going to give and a correction comes in. I suppose there are good arguments for both possibilities.
I’m sure we’ll see corrections. We already are in my area of FL which was one of the most overheated in the country. I don’t think there is any going back to pre 2020 prices within 5 years if that’s what you’re waiting for. I’d love to be wrong even though it’s looking like I got my house at the local top, because this is not our forever home.
So a home is an asset that has a lot of utility that other assets don’t have. If you want to grow food, learn woodworking, and have a place to sleep - you can’t find that utility on-chain.
It may be difficult to find that combination renting as well, and anything you build may not be able to go with you and must be abandoned, destroyed, and/or restarted at your next residence.
I say this because the ability to spin-up projects, learning, family, and community that a home provides often don’t make it into spreadsheet calculations, but they are more valuable than net worth.
Since you have a timeline and use the word “position” though, I gather you are asking about investment timing as well.
Rates & prices are currently historically high. If a 2008-like event occurs in the next 5 years, then that might change dramatically, and you might want to buy.
If they keep inflating the ballon, or if they are slowly trying to deflate it, then prices and rates may stay elevated for some time.
Myself and others in our Bitcoin community are asking the same questions, and looking to make real estate buys *sometime soon*, so we’re in the same boat.
Great point about having some land giving you benefits that renting can't provide. I have a suspicion that the current trend in pricing can't be sustained and something is going to give. I wonder to what extent - if any - the state plans on 'punishing' homeowners. Such a regulatory requirements to make homes green, for example.
I bought my house shortly after 2008. I can see prices getting back down there at some point, but I can also entertain the idea they will continue up for a while still.
Agreed about current trend in pricing, and how hard it is to forecast the future in the current environment.
Enforcement of any punishment would be at a local level, usually through sheriffs, so location is crucial. Sheriffs have a lot of power to say “no”.
For others who might read this and currently view a domicile through the net worth lens, consider these about renting.
You usually can’t control security, maintenance, impact of neighbors (especially in a multi-unit), rental price, or the moral character of the individual you have dependencies on (the landlord).