This exactly sums up my position on housing. I bought 3 years ago in a major metro at exactly the cost of my rent. Somehow prices and rents have continued rising at 8% per year, if the market crashed 50% I’d be under water - otherwise I’m still up. Regardless I’ll have a house 27 years from now.
Now the real crux of it is that I do not have unlimited cash flow to pay peak rent. The previous rental I moved out of has somehow gone up by 85%, a number which would push me into savings or have me calling my boss for a raise.
Shorting housing by renting risks you burning savings or moving to stay out of the bubble. Buying when the market is high is a hedge against the market going higher.
> Now the real crux of it is that I do not have unlimited cash flow to pay peak rent.
Yeah. But you only look at it from the perspective at staying at one place.
What if you want or have to move somewhere else, but in the meantime your house lost its value ("marked crashed"). Now you have to pay both rent in the new place as well as your mortgage (that his now way to high for what you have).
In other words: you can't afford to move anywhere anymore, because of your high mortagage. If you had just rented, you would still be flexible and could move whereever your current pay allows.
Don't fall for survivorship bias. Prices rise for a longer time, but in the short times when they fall, they fall much faster.
Now the real crux of it is that I do not have unlimited cash flow to pay peak rent. The previous rental I moved out of has somehow gone up by 85%, a number which would push me into savings or have me calling my boss for a raise.
Shorting housing by renting risks you burning savings or moving to stay out of the bubble. Buying when the market is high is a hedge against the market going higher.