On Buying a House
Buying a house is mostly guessing. Nobody selling you one will say that.
Whether or when to buy differs for everyone, even across stages of one life. I’ve lived in a few homes through different life stages. These are the patterns I’ve come to believe.
Buying is mostly guessing
Markets rise and markets fall. Almost no one predicts which. Some purchases look smart in hindsight. Some look foolish. The difference is mostly luck dressed up as strategy.
A house too big
The common mistake: more house than you need. Resale is the usual excuse — smaller homes supposedly sell worse. A bigger place does raise life satisfaction. But humans adapt fast. The novelty fades. Then a smaller home, even an apartment, satisfies just as much. The extra square footage mostly buys a bigger number on your FIRE target. Put both house sizes into the FIRE calculator and watch the retirement year move.
Small and central beats big and far
The best place to live isn’t the biggest. It’s small, central, and walkable, with everything in reach. Life there beats a large house in the suburbs.
Stocks beat houses
For most people, real estate loses to index funds held till death. It grows slower. It’s illiquid. It piles on transaction fees, property tax, insurance, maintenance, and risk. Exceptions exist — the right place at the right rate — but they’re rare.
Property does help when you have no money. A loan is leverage and forced saving. But put the same money in stocks and you can borrow against them through a Securities-Backed Line of Credit. With a large enough portfolio, the rate can beat a mortgage. Hold and die also avoids most of the tax.
The catch: stocks are too easy to sell
Stocks are probably too liquid. Too easy to give in, sell, and spend to live “better.” Too easy to trade, trying to time the market. For the undisciplined, plain hold-and-die is the hard part. The house never tempts you to sell on a bad Tuesday.