Economics

I think there’s a basic narrative missed by folks discussing this 60% of net worth is a “bad investment”.

Personally think the reality is that you can live in this asset, it’s appreciated so much that it’s overweight in the investment basket, and if you want to avoid cap gains, it’s best to roll them into the next house.

We started paying a mortgage in 2014.  There is zero chance we could afford a rental home in our community today that would fit our family, the 30 year fixed mortgage is what allowed us to settle in one place as we raise our kids (and farm).

Not saying we should have promulgated real estate as an overvalued investment class.

🚨FRIEDBERG: "60% of middle class household's net worth is in their home. Only 10% is in owning the S&amp;P 500, index funds, whatever in their retirement accounts.

By creating this American dream around housing and allowing the Federal government to provide loans on housing, we've… https://t.co/SuCvCdiCsB

Autism Capital 🧩

I think there’s a basic narrative missed by folks discussing this 60% of net worth is a “bad investment”.

Personally think the reality is that you can live in this asset, it’s appreciated so much that it’s overweight in the investment basket, and if you want to avoid cap gains, it’s best to roll them into the next house.

We started paying a mortgage in 2014.  There is zero chance we could afford a rental home in our community today that would fit our family, the 30 year fixed mortgage is what allowed us to settle in one place as we raise our kids (and farm).

Not saying we should have promulgated real estate as an overvalued investment class.



https://x.com/autismcapital/status/1900770128041832800?s=46&t=TVy9rDl3UkuxmVj4e18bOA

Growing veggies for the fine folks of Southeastern Massachusetts, w/ a focus on nutrient quality. Always interested in the evolution of digital payments.  🎩 

I think his point is not that it doesn’t make sense given current circumstances, it’s that it would be preferable for it to not be the case. 

Not just for personal wealth reasons but also for cost of housing reasons.

If that’s your biggest asset, you have to sell it to capitalize on it, and that’s where you live. Ideally you’re able to sell assets you don’t need to live in to get cash to retire.

“I think it’s more a reflection that it’s an “incidental” asset, less a result of “investment” and more a result of living.” - yes I agree, I think he’s saying it’s unfortunate that in order to just have a house you have to pay so much of your income that you end up with your house being such a high % of your net worth 

On the retirement thing yeah, if you can end up fully owning vs renting/paying mortgage before retirement then that also makes sense in that aspect. I think big picture Friedberg is saying it would be good if people didn’t have to even think about owning vs renting when thinking about retirement. Owning your own place you live should be so much more accessible that it’s not a factor in retirement or investment that you need for cash to live on

I think it’s more a reflection that it’s an “incidental” asset, less a result of “investment” and more a result of living.

As for retirement, while true you have to sell it to realize it’s cash value, as a paid off asset (our house will be paid off before retirement / no plans for a HELOC) the monthly savings of not having a mortgage vs paying rent will be one factor for us “affording” retirement.

Or if we decide to move than the asset becomes liquid.

Of course this is coming from someone who bought a house with plans to live there for a much longer time period than the average residency of newer mortgage holders.