The average person has no idea how much they actually pay for their house with a mortgage
An example:
Mortgage: $500,000
Term: 30 years
Rate: 6%
Interest: $610,000
Total cost: $1.1 MILLION
The banks won't tell you this
The schools won't tell you this
And it's by design
It's all smoke and mirrors
Real estate is a scam
So u think real estate in general is a scam or only in combination with a mortgage?
All aspects.
Extremely overvalued IMO
Full discussion 👇
RE is crazy overprice because of the monetary premium but it’s not a scam when you have children. They deserve a consistent place to come home to every day
Agreed.
The video is about rentals - not homes that people actually live in.
But it's still a rip off.
search for the meaning of mortage in France. It's literally 'Death Pledge'
Not to mention that is $1.1M worth of TODAY’S purchasing power. If you consider 7-10% debasement over 30 years, the cost of that $500,000 home is even greater.
In Switzerland the scam is different but it's still a scam in a way.
Every housing is overvaluated by a factor 2 to 4 (depending on the demand in your area), because mortgage is low, 1 to 2% long term, it was even below 1% for 10 years fixed rate 5-6 years ago. You can use your retirement money to fund the mortgage and if you have a high income you only need 10% additional downpayment.
Also you are incentivized to have a mortgage as high as possible because you get tax reduction and as we have a wealth tax, all your debt is deduced from you wealth, so you can pay much less wealth tax (even if it's usually less than 1%).
Then there the fact that you never need ro reimburse your mortgage, one you paid back 60%, you can stop paying back and just pay the interest on the rest for life.
So the highest your income, the higher debt you can take, so more you can keep to invest, and beating 2% return is not that hard in stock market. So basically you get free additional income for being rich and owning a house.
The result is that the prices are crazy high, as people need only 10-15% down payment in most cases, they csn buy house they would not be able to afford. Almost nobody pay a house in full and if you do you are loosing money. On top of the in area with high demande, price of housing increase faster, which push people to pay even more as they think they will anyway sell it for more in the future if needed.
So the scam is not what you pay as interest, like where you have 5-8% interest (or more) but the fake high price you have to pay to really own your place.
I really wish Bitcoin break this circle, make real estate not profitable as an investment, at least much less and much more risky than Bitcoin. Buying would get more affordable as only people would want to leave in the house would consider buying. Which would eventually relief pressure on rent for those who cannot afford to buy anyway and allowing to save more (in Bitcoin) to maybe buy later if you wish.
