this post was submitted on 10 Sep 2025
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Dangerous assumptions.
whether you mean 15.5% ROI or 10%, when you simply assume either you should mortgage your children's kidneys at 9% and it magically pays off.
Historically 3% is long term appreciation rate. Due to closing costs you generally need to stay 5 years in a home to break even. There is significant danger in western housing markets, where in US, high interest rates are making few people give up their precovid mortgage and there is low supply, and few new buyers at high price levels. Insurance rates are skyrocketing, and its better than 50/50 that tariffs will bump inflation and interest rates soon enough, and reduce affordability even more. Population will decline with deportations and fleeing of shithole country. In colonies, rulers gaslighting their people into austerity to fund 5% of GDP on US force amplification, while US destroys their economies, is likely to reduce employment and quality of life that gives homes value.
Rents are declining at the moment in the west. Being defensive with rent+investment strategy can mean more affordable housing later.
I mean the historical average for investment returns in a broad index. Basically, if you invest in the S&P 500 or something like the global world index, you should get about 10% returns before taking inflation into account (inflation adjusted is something like 7%).
I got 4% from this article:
And I ignored the breakeven point at 5%, because I assumed you wouldn't move at all in that time. If you move in that time, you'll have to pay that closing cost again, which impacts the estimate here in favor of renting. People seem to move once every 10 years or so, so add 2-5% closing costs each time you move, which would be a drag on wealth accumulation.
I think there's more to this as well. I haven't verified this yet, so take it w/ a grain of salt, but my coworker (who is looking to buy) told me there have been a ton of foreclosures that banks just haven't put on the market to prevent flooding the market (and reducing value). So it's not just people holding onto old houses, but also banks holding onto foreclosed-on houses at comparable levels to 2008 (coworker claims it's more). Definitely look up a source on that before making decisions based on that, but that's the anecdote I've heard.
I highly doubt that'll be a significant impact here. Let's say we deport 500k people, that's under 1% of the population. I'm guessing if we looked into the demographics here (poor brown people), the impact on housing would be even less (i.e. my brown coworker houses their mom and sister, who would probably live separately if they were more wealthy).
We are seeing a reduction in job creation, and it's unclear how much of that is related to whatever is going on in the White House (I think it's significant, but I don't have data outside "tariffs and deportations bad"). The net result is we're likely to see borrowing rates get cut due to fed rate cuts, which should make buying houses more attractive and is intended to encourage businesses to create jobs. We'll see if that works.
Yes, they're coming off a peak because new construction has caught up w/ demand. House prices are also coming off peak, again, because new construction has caught up w/ demand.