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Frequently Asked Questions
If you have a question that is not addressed below, send it to us!
- Why should I take your word on this? What if you are wrong? What if I follow your advice, and because of you I miss out on the unstoppable equity train / escalator / elephant caravan?
- Won't people move to the suburbs when the city gets too expensive?
- What about New York or San Francisco? Lots of people have been priced out forever in those places and others!
- The only way my family will ever be happy is if we buy a house. If we don't buy a house soon, my wife will probably leave me for a mortgage broker. How can I afford not to buy a home?
- How will I know the best time to buy a home?
- Where can I learn more about my specific local housing market?
- You're just a bunch of bitter renters, and you probably live in a bus.
Question 1
Why should I take your word on this? What if you are wrong? What if I follow your advice, and because of you I miss out on the unstoppable equity train / escalator / elephant caravan?
For the love of bacon, whatever you do, don't just take our word on all this. Go out, do some research, and come to your own conclusion. The purpose of this site is not to indoctrinate, but to educate.
Unlike the real estate industry, we do not have a financial incentive to convince you of our preferred version of reality. The only person that is responsible for your financial future is you. We simply ask that you put some critical thought into what is most likely the biggest financial decision of your life.
Question 2
Won't people move to the suburbs when the city gets too expensive?
There absolutely will be some number of people that simply move further and further away from an area where they would like to live, but have been priced out of. However, what happens when people in that now-expensive area need to sell? You have the same scenario as the one described on the learn page.
Question 3
What about New York or San Francisco? Lots of people have been priced out forever in those places and others!
Obviously there are some places that have always been extremely expensive, and always will be. Some cities are more desirable than others—a fact that can be most readily measured by comparing the historic affordability between cities (e.g.: New York will always be more expensive than Omaha). What we are talking about on these pages is not a steady rise in the absolute cost of living in a given area, but a rapid rise in costs that pushes the affordability of home ownership much lower than historical averages.
For example, if historically, only 25% of people in a given city have been able to afford to purchase a home, but in the last five years, prices have increased so quickly that home ownership now in reach of only 10% of people, it is unreasonable to assume that this will continue indefinitely.
Question 4
The only way my family will ever be happy is if we buy a house. If we don't buy a house soon, my wife will probably leave me for a mortgage broker. How can I afford not to buy a home?
How happy do you think your family will be if you are spending 50% or more of your income on the roof over your head? There are many nice places available for rent for much, much less than the cost of buying a home. With all the money you're saving, you can afford to take it easy at work, travel, buy your family some nice things (with cash), and still build up a down payment to use when the price of homes is more reasonable.
Question 5
How will I know the best time to buy a home?
Here's a simple formula: When you can afford to purchase a home with no less than 10% down (ideally 20%), the monthly costs of buying* add up to no more than 30% of your monthly income, and you can find a house that you will be happy in for at least 10 years, then it is a good time for you to buy.
*Fixed-rate 30-year (or less) mortgage, plus homeowner's insurance, taxes, 1% maintenance, and home owner's association fees.
Question 6
Where can I learn more about my specific local housing market?
First you should be aware of where not to seek information about your local housing market. Do not expect accurate, unbiased information from local real estate agents, mortgage brokers, or anyone in the real estate industry. Also, forget finding it in the local press, since a large amount of their advertising dollars come from the local real estate industry. It's not that these people will necessarily intentionally mislead you (although some certainly may), but they are interested in you buying a house, and they're highly unlikely to tell you anything that may make you consider not doing so.
A good starting point is local (non industry affiliated) real estate blogs. We have compiled a list of such local and national blogs for you. You can also use internet home search sites to keep track of the prices and number of listings in your area yourself.
Question 7
You're just a bunch of bitter renters, and you probably live in a bus.
Well technically that's not a question, but we do appreciate your concern for our well-being. In fact, we are a group of concerned citizens that want to do as much as we can to educate the public.
The founder of this site is in fact neither a renter nor an owner, but lives debt-free and rent-free with his wife, two dogs, and four ferrets in a three-bedroom house. With an above-median income, lots of nice tech toys, and as little skin in the home price game as is possible, he is by no means bitter, and quite enjoys his financial freedom.