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A monthly mortgage payment comparable with the rent of one of the apartment (1,500 USD) buys you a 20-30 years old house in Tempe AZ. Not comparable with a brand new apartment.
The additional money compared to rent you spent on a mortgage you can invest in ETFs or stocks and the return will be much higher as what you get out if you sell your home after 40 years. Buying a home is lost money.
Even the article you cited notes a 50% rise in home values in 2.5 years (or 17.4%/year) from December 2019 - June 2022 compared to 5.9%/year in the 5 years before that. That's an unusual rate of increase but the equity belongs to the homeowner, not the renter. Your stock and ETFs didn't do as well and you can't live in them.
That increase in combination with an increase in rates does make it harder for new purchases now but these things do adjust over time as housing prices fall and interest rates vary.
In addition, home owners can deduct property taxes and the mortgage interest payments from income taxes - yet another financial incentive that renters do not get.
So homeowners get the appreciation in value plus deductions for property taxes paid plus deductions for mortgage interest if they've financed the purchase. If they own the home outright they can also take out home equity loans if need be. In addition, when you sell up to $250K gain if single or $500K gain if married is excluded from income for federal income tax. Meanwhile if you had that kind of gain in Germany you'd lose 45% of it in taxes. Whether the house increases or decreases in value is irrelevant until you sell - which is usually at a time the owner chooses - but it provides housing throughout changes in valuation regardless. Can't say the same for stocks, bonds, etc.
As much as you wish to denigrate "culture", etc. in the U.S., the policies here are designed to reward longer term ownership and investment, not transient "renter" type conduct.
Even the article you cited notes a 50% rise in home values in 2.5 years (or 17.4%/year) from December 2019 - June 2022 compared to 5.9%/year in the 5 years before that. That's an unusual rate of increase but the equity belongs to the homeowner, not the renter. Your stock and ETFs didn't do as well and you can't live in them.
That increase in combination with an increase in rates does make it harder for new purchases now but these things do adjust over time as housing prices fall and interest rates vary.
In addition, home owners can deduct property taxes and the mortgage interest payments from income taxes - yet another financial incentive that renters do not get.
So homeowners get the appreciation in value plus deductions for property taxes paid plus deductions for mortgage interest if they've financed the purchase. If they own the home outright they can also take out home equity loans if need be. In addition, when you sell up to $250K gain if single or $500K gain if married is excluded from income for federal income tax. Meanwhile if you had that kind of gain in Germany you'd lose 45% of it in taxes. Whether the house increases or decreases in value is irrelevant until you sell - which is usually at a time the owner chooses - but it provides housing throughout changes in valuation regardless. Can't say the same for stocks, bonds, etc.
As much as you wish to denigrate "culture", etc. in the U.S., the policies here are designed to reward longer term ownership and investment, not transient "renter" type conduct.
Congratulations, your home is now as much worth as it was before 2005.
You and many Americans are making a big loss.
Of course home prices increased over the past 10 years, because they crashed in 2005-10 and it took more than 10 years to recover to the previous level.
If you had invested in 1990 your gain was +1000% in S&P 500 and just 300% in real estate.
The money you pay on top for mortgage compared to my rent I can invest in a more profitable asset.
And apparently you have no idea how the tax system works in Germany. We have similar incentives for home buyers, but renting is very attractive. On the other side we get free college for our children and subsidized daycare, which costs a fortune in the US. Not to mention your insane healthcare costs.
I have long wished I could live in a semi car-free community, where you can walk to all amenities and cars are not allowed within the community so they don't compete for open space with pedestrians and outdoor facilities. Kind of a European model where all of your routine shopping and living needs are nearby, right down to Doctors and Dentists.
It would have been great to have the choice to live this way. I really like the European model. I am too old for it these days, as regards walking everywhere and having the strength and stamina to carry everything home, without making several trips over time. I sure wish I had been allowed the choice.
Suburbs just suck to me, requiring you do drive everywhere for everything. I like the peace and quiet of them, but I always wished I had amenities withing walking distance if I chose to use them.
I would not like this community, with no parking spaces for residents. I love my car and want it immediately accessible. I do like the concept, but not as far as they pushed it. I do agree you have to ban cars from the core of the community as you can't have a really walkable area if cars are constantly trying to compete for travel within the core.
Like I said, I prefer the European model to either suburbs or this experimental planned community which I think takes a good thing too far. It is interesting though.
So what happens when someone needs to replace their furniture or refrigerator or anything heavy? Do they make make the truck park on the outskirts and have the delivery people do a lot of extra work?
Lots of people already live without owning cars or even having a drivers license.
It's called Manhattan.
I knew lots of young people in San Francisco who refused car ownership because rent was already killing them. They used car share or transit or walked. Some relied on friends with cars. They managed.
That is not the same thing as living in a community where all of your daily shopping and service needs are just a few block walk away from your front door. It would be great to be able to live like that.
So you'll have no friends or family to visit outside this community? Or is there robust enough public transit to make that a moot point? What if you want to take a road trip?
Lots of people already live without owning cars or even having a drivers license.
It's called Manhattan.
Manhattan has a very robust public transit system of subways and buses that will take you even to the outer boroughs and New Jersey, if you were so inclined. I live in a small southern city that also has this utopian vision of a car-free city. But our public transit system is a joke. It only goes from a few areas into downtown, and even then, infrequently. But the planning people want their utopia.
A monthly mortgage payment comparable with the rent of one of the apartment (1,500 USD) buys you a 20-30 years old house in Tempe AZ. Not comparable with a brand new apartment.
The additional money compared to rent you spent on a mortgage you can invest in ETFs or stocks and the return will be much higher as what you get out if you sell your home after 40 years. Buying a home is lost money.
A 20-30 year old house has still got lots of life left. I grew up in a house that was much older than that. Age of house has little to do with property values. There are million dollar houses made of wood, in San Francisco that are 100 years old. A old house can sell well and you can sell anytime you like provided the bank goes along with it and you either have cash or sell for more the what is still owed. You can do anything you want to a 20 year old house on the interior. New appliances, no problem. Additions or renovations not much problem at all.
If you are paying $3,000 a month for rent, you are spending enough to buy a house in most places in the United States for less and most houses in the United States are 3 bed room houses. If you have a family, having 2-3 bedrooms trumps the 1 bed room place in Culdesac that goes for $1,300.
Also, having a car is handy when taking children to daycare because you likely are going somewhere else afterwards(like work) and you need to be able to pick the child up before they charge extra for not picking up the child on time. Public transit and bikes are often slower esp. when traveling the distance to work(which might not even be in your city).
Congratulations, your home is now as much worth as it was before 2005.
Nope it's worth considerably more.
Your logic has many holes.
Your argument here is about as nonsensical as your map of "land values" for the United States.
Taking an average across a large area and then comparing it to other averages is useless.
Housing and real estate are very local.
Quote:
Originally Posted by Stadtmensch
You and many Americans are making a big loss.
Well if that were true it's just our problem and none of your concern.
Quote:
Originally Posted by Stadtmensch
Of course home prices increased over the past 10 years, because they crashed in 2005-10 and it took more than 10 years to recover to the previous level.
Again this is rather useless. You are using an aggregate of the stock market and dividing by an average house price.
The stock you actually purchase and sell and the house you actually purchase and sell are the only things pertinent to the individual. Housing prices and the change in housing prices varies greatly across the United States.
Quote:
Originally Posted by Stadtmensch
If you had invested in 1990 your gain was +1000% in S&P 500 and just 300% in real estate.
The money you pay on top for mortgage compared to my rent I can invest in a more profitable asset.
Your numbers are flaky at best. Again the stock you actually purchase and sell and the house you actually purchase and sell are the only things pertinent to the individual. Oh and you might invest in something that you might be able to realize a gain from at some point in the future. But you can't live in it and you don't have the benefit of hindsight as to whether or when it might be profitable.
Also as noted above in Germany you will have to pay 45% income tax IF you realize any gains plus you still have the cost of housing. Here you can gain from the sale of the house and exclude up to $250K/$500K (single/married) of gain from taxation plus deduct mortgage interest.
Quote:
Originally Posted by Stadtmensch
And apparently you have no idea how the tax system works in Germany. We have similar incentives for home buyers, but renting is very attractive. On the other side we get free college for our children and subsidized daycare, which costs a fortune in the US. Not to mention your insane healthcare costs.
I win, you lose on multiple levels.
Guess you have a different definition of "similar" and of "winning". You can't deduct mortgage interest for owner-occupied housing, only investment/rental property. You have a cap on capital gains deductions of 1000 EUR and don't otherwise get to exclude gains from the sale of the house at all. Yup that's not even close to similar.
Your country's policies promote renting, not owning. As a result you rent.
If it was so great there you would not have such narcissistic envy for the United States.
You aren't even in any competition. I prefer living in the United States and that's where I am. I win.
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