PEs own a LOT more than whats on the article. All kinds of home repair (HVAC, Plumbing, electric), child care, dental offices and many others. They buy the local companies, keep the same name (so folks think it is the owner/local company with awesome yelp reviews), enshittify, jack up prices and extract as much as possible with smooth talking sales people.
Home ownership is a 30-year bet that you will have continued income to sustain the lifestyle[1] . It is extremely unlikely anyone will have a 30 year home run, without job loss, divorce, bad health and any number of life events. Most people would be considered super lucky to have a decade of good run.
On the other side of the bet are the financial institutions, which will get continued income (as long as you pay) and will own the asset the moment you can't pay.
It is a win-win for one side of this bet. If home ownership was actually profitable, the super rich would have setup all kinds of structures to completely own all housing. The funny thing is the bank does not have the money, they create it out of nothing based on your ability to pay[2]! Extracting rent from money which they don't have. You either rent a home or rent the money (very few buy outright with cash). Bank can rent the money they don't have, as long as you show income + credit history. This is why Warren Buffet owns (some part) Wells Fargo, not homes.
[1] lifestyle = (mortgage + property taxes + insurance + repairs + maintenance) + health insurance + child support
Don’t get a loan til you can save 20% for a down payment and then, never get more than at 15 year mortgage.
Good advice on both counts.
Once you have 20% down you get out of paying PMI (private mortgage insurance) and you can open a an equity line (HELOC) for about 80% of the equity in the house. It’s typically like a super low interest credit card that you can tap for emergencies. I didn’t have an income for 6 months once and had to live on it.
The 15 year is critical. Do the math on a 30 year mortgage and you pay almost nothing toward the principle for a slightly lower payment for the first 10 years.
To further understand how banks win, the interest is front loaded. Proponents of home ownership always point to low interest rate for 30 year mortgage. However, with front loaded interest, the majority of payment goes towards interest payment and not building equity in the first 7 - 10 years.
For a $400,000 mortgage at 6.4%, after 7 years, you'd have paid over $210,000. However, the equity built is only $38,942. The other $171,226 went entirely to the bank.
The average homeowner stays in their home for only 7 to 10 years before selling or refinancing. Which means very little equity building, mostly interest payments.
Owning a home is as much responsibility as having infant which never grows up, can never be potty trained. There are thousands of things that need to continuously monitored and maintained. Time, money, mindspace and the stress are the huge operational costs of owning a home. Property taxes, insurance and repairs/maintenance, these three are increasing YoY will cost 3X the initial cost over a 30 year mortgage.
There is no incentive for homebuilders to build better homes, once they sell, they don't deal with the ongoing costs in multiple dimensions.
Having owned a house for two decades (well two houses because we moved) and having two children, I would say that owning a home feels like a doddle in comparison :-)
I haven't done the sums to compare expenses, but when they are young childcare/lost earnings is definitely more than insurance/repair/maintenance costs (and tax, although in my country you pay tax as a tenant too).
I'm not sure that's true. I own a flat in London and a couple in Spain. With the Spanish ones I have to do something every few years. I gather infants require more maintenance than that.
These are societal changes that are happening in different countries at different times depending on where they are on the development curve.
1) People used to have lots of children because most died in child birth and also over a period of time due to infectious diseases, accidents, etc -- lack of current level of healthcare. There were only a few children that survived.
Medical care increased the survival along these three dimensions: vaccinations, public health programs (clean drinking water, sanitation, etc -- which prevented communicable diseases like cholera, plague), and infant mortality.
2) TV. If there is no other form of entertainment, sex is the only thing to entertain yourself, and without contraception, it inevitably leads to births.
The real misery in the life of man is boredom. Simple desire for sensation. With TV (and now phones and nonstop junk consumption of content), there is a a slow drip of dopamine where you don't get bored. The accidental days you have sex, there are a range of birth control mechanisms.
3) Contraception. Even if people have sex, it is consequence free. Sex is fundamentally biological, biology cares about nothing more than continuous replication, but thats hijacked by contraception.
4) The power of defaults. Marriage and children were the socially constructed defaults for women. Women are required to take care of children, while men's work is considered meritocratic, paid in wages. There is a number, men -- $xx, women -- $0; a woman's work is worthless because it can't be quantitied. In a data driven culture, women are noticing and getting jobs worth $xx and more.
5) Status and evolutionary biology. Women can now make $xx. They need a partner that makes at least $xx++, is 6.5 ft tall, built like Chris Hemsworth, has a number of degrees (academically higher status -- not a plumber!), has legacy wealth and doesn't have to go to work so the man can be there for the woman all the time without having to deal with pesky things like going to work (like Edward Cullen).
6) Media telling women that they shouldn't accept anything less than the absolute ideal of a man. Media has its vested interests. People in families (either happy or unhappy) watch less content, they just get busy with a lot of things.
7) The super rich working extra hard to squeeze everything out of everyone. Two jobs (for a family) was supposed to give greater financial security and freedom. Instead, at least 2 jobs and overwork became the norm. And the loss of job security, you never know when you'll be out of a job and loss of healthcare, housing and everything else.
8) Rentier capitalism. The super rich monopolizing and creating permanent structures to extract wealth from absolute necessities. The basic human infrastructure that Govt should be helping with: housing, health, etc.
9) Idiocracy. Thoughtful people making a decision not to have children -- because of the uncertainties of life and impossible challenge of raising a child, raising a child right, having the time and making the world a tolerable place for their children.
10) Marriage (and hence kids) used to be an economic arrangement to make things work as a family unit when there is extreme scarcity. People made sacrifices. Younger generations grew up in very comfortable environment, there is no forcing function to make any kind of sacrifices, let alone tolerate even the slightest discomfort.
Also, humans went from 100 million on the planet and will be 10 billion soon. I don't think there is any great danger of us running out of people.
Most adults with degrees can't read either. If you worked in a corporate environment, I'm sure you can relate to this. Send an email, you will most likely get a phone call, or they will stop by your desk or set a meeting because they can't read and understand whats written. 99% of work in corporations is explaining things to illiterate, arithmetically challenged coworkers, middle managers and execs.
This is the will of people who voted the current administration into power. Its a democratic country, politicians have to respect what the people want, a recent video which reflects the thoughts of majority:
https://www.youtube.com/watch?v=c3FcCTXRiKo
They don't want legal immigration except in cases where it is in the national interest i.e a Deepseek AI researcher wanting to move to the US - bet your bottom that person ain't waiting for a green card.
reply