Tactical / Adjusting Cash Allocation

[europeanwizard]

What about owning a house is important to you?

[Kriegsspiel]

And if you really want to buy a house, you can move somewhere where they're affordable.

[sophie]

What about owning a house is important to you?

Getting to use high quality kitchen & bathroom appliances!

I'd just totally had it with standard rental apartment stoves, fridges, sinks, showerheads etc. And lousy "cave" closets. Basically, living in a rental just sucks. On the other hand I've never paid more than $2K/month for an apartment (and that was in a nice neighborhood in Manhattan), so maybe this is a biased view.

[vnatale]

What about owning a house is important to you?

Control and no one telling me what I can or cannot do.

Vinny

[pmward]

There are very few times in history that housing has taken a substantial dip. It's so rare that in the early 2000's the famous quote was that "housing never goes down". Housing crashes are like a once in a lifetime event. You've already missed that boat for your lifetime. I would pay more attention to interest rates. If you can lock in and afford a 30 year fixed at current prime rates there's no reason to wait. If you hold a house for 30 years at these rates, you will profit on the whole. You're more likely than not to just keep watching prices go up as you sit and wait. I mean, if the corona virus doesn't bring home values down, nothing will. Eventually the government will succeed in their goal of bringing inflation back, and you'll be able to laugh all the way to the bank with your 3% fixed rate.

[pmward]

Another thing worth mentioning... for those that are afraid of bonds going up... a 30 year mortgage is basically a reverse 30 year treasury. To anyone who is afraid of bonds blowing up, holding a 30 year fixed rate mortgage may be one way to help you sleep at night. Our mortgage/house isn't something we think of in our portfolio, but it is still a substantial part of your overall net worth.

[Kriegsspiel]

What is your housing budget, tomfoolery?

[mathjak107]

Another thing worth mentioning... for those that are afraid of bonds going up... a 30 year mortgage is basically a reverse 30 year treasury. To anyone who is afraid of bonds blowing up, holding a 30 year fixed rate mortgage may be one way to help you sleep at night. Our mortgage/house isn't something we think of in our portfolio, but it is still a substantial part of your overall net worth.

mortgages are thought to be bonds in reverse when it comes to being an inflation hedge but that really isn't the fact ....

it is the asset the mortgage buys that may be the inflation hedge or the assets you would buy if you had money to invest without having the mortgage . not the mortgage ..

as kitces points out :


EXECUTIVE SUMMARY
Having a mortgage is often framed as a way to hedge against inflation. As the conventional wisdom goes, with a mortgage your monthly payment is locked in (assuming it’s not an Adjustable-Rate Mortgage [ARM]), even if inflation goes up and interest rates rise. In fact, rising inflation would just devalue the mortgage in nominal (future) dollars.

Yet the reality is that ultimately, a mortgage may be paid off with inflation-adjusted wages, free up funds to be invested into inflation-hedging vehicles (from TIPS to equities), used to create a reserve for investing in bonds at higher rates in the future (a form of call option on interest rates), or be deployed to purchase a residence that provides a hedge against rising rents. In all of these scenarios, though, it is actually how the mortgage-related funds are deployed, or the income sources used to fund it, that are the actual inflation hedges… not the mortgage itself!

Ultimately, this doesn’t mean that a mortgage can’t indirect lead to beneficial outcomes if inflation (and interest rates) rise. But in the end, the benefits will not actually come from the use of the mortgage itself as an inflation hedge, but the other inflation-adjusted assets and income an individual has to support the mortgage instead! Of course, the caveat is that the use of leverage to hedge inflation can cut both ways, and magnify the unfavorable outcomes in non-inflation scenarios as well!

https://www.kitces.com/blog/why-a-mortg ... -that-are/