On Buying a House
A letter to my kids, and to a younger me. Whether or when to buy a house differs for everyone, and even across stages of one life. Having lived in a few homes through different life stages, these are the patterns I’ve come to believe. So as always, this is just my own opinion — the principles, not the paperwork.
Buying is mostly guessing
Markets rise and markets fall, and almost no one predicts which. Some purchases look smart in hindsight, some look foolish, and the difference is mostly luck dressed up as strategy. That’s the first lesson: when you treat a home as an investment, you are guessing, and it’s honest to call it guessing.
A house too big
The common mistake is choosing more house than you need — often justified by resale, since smaller homes are said to sell worse. A bigger place does raise life satisfaction. But humans adapt fast. Once the novelty fades, a smaller home, or even an apartment, satisfies just as much. The extra square footage mostly buys a bigger number on your FIRE target.
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. When a location is genuinely good and cheap to finance, it can work out. But that’s the exception, not the rule.
Stocks beat houses
For most people, real estate is worse than buying index funds and holding till you die. It grows slower. It’s illiquid, with high transaction fees, property tax, insurance, and maintenance. There are exceptions — 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 — something hard to do with property.
The catch: stocks are too easy to sell
Stocks are probably too liquid. Too easy to cave, sell, and spend to live “better” — or to trade, trying to time the market. For the undisciplined, plain hold-and-die is the hard part. The house doesn’t tempt you to sell on a bad Tuesday. The brokerage account does.