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Is it dumb to sell stock now to buy a house?

Buying a house when they have a pretty low income was what people were encouraged to do before 2008 ...
 
while having income that is "pretty low right now". Yes, I did read it. And my advice remains the same: do not make a huge purchase when you have a low income. Unless, of course, you happen to have vast wealth already accumulated. A few dozen times the purchase price of the house in question. If that is the case, if Minoosh is a multi-millionaire, then income doesn't matter and I withdraw my advice. If that is the case then Minoosh probably wouldn't be asking for any advice in the first place, as even a house would be a trivial purchase to someone possessing the kind of wealth to make income a nonconsideration.

I realize homeowners are frequently desperate to reassure themselves their gamble was a wise investment powered by their sheer financial genius but that doesn't mean they should encourage others to plunge into tremendously precarious financial positions like buying a house when they have a pretty low income.
But she doesn't plan on a mortgage.

I don't think your concerns fit the situation.

So what you are saying is be careful how low your accessible cash is. Sure, you can't sell a house quickly if you need access to the equity. But the general rule of not over-extending yourself with a house really falls apart here with the exception of no quick access to the equity.

She's paying rent now. How is that any different from paying homeowner expenses?

There are always credit cards to get you past a low cash situation.

There are a lot of things to consider. I guess I found your blanket warning: "Do not make a huge purchase if your income is low right now," to not apply here for the reasons I stated.
 
Buying a house when they have a pretty low income was what people were encouraged to do before 2008 ...
That wasn't the exact issue in 2008. One issue was people taking cash out of their equity in the form of new mortgages. Lenders were encouraging people to over-extend themselves with the planned increase in the housing market, aka assuming increasing equity that didn't happen. So they got underwater.

AND they overextended themselves buying properties with things like 95+% or even 100% mortgage to equity. The idea they needed to put 20% down became putting -5% or more down (i.e. zero down). The housing prices blew up in a faux bubble.

None of that applies to someone cashing in stocks to buy a house with no mortgage (i.e. 100% down).
 
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But she doesn't plan on a mortgage.

I don't think your concerns fit the situation.

So what you are saying is be careful how low your accessible cash is. Sure, you can't sell a house quickly if you need access to the equity. But the general rule of not over-extending yourself with a house really falls apart here with the exception of no quick access to the equity.

She's paying rent now. How is that any different from paying homeowner expenses?

There are always credit cards to get you past a low cash situation.

There are a lot of things to consider. I guess I found your blanket warning: "Do not make a huge purchase if your income is low right now," to not apply here for the reasons I stated.



When you have a low income and you are renting, the landlord is responsible for upkeep. When you have a low income and you own a house, you are. When that AC fails or the roof leaks or some other mini-disaster happens -and it will- that low income may mean that the repairs have to wait. At least in a rental situation, the landlord is obligated to fix the problem.

Credit cards to cover emergency situations, for the vast majority of people, is not a viable solution. That’s why there’s such a debt problem in the US.

All of this depends on the complete financial picture for Minoosh. No way we can truly answer her question with our understanding everything.

1. How much liquid savings? Not retirement accounts.
2. What exactly is her income and what are other outstanding debts? Is she living paycheck to paycheck barely making it?
3. Would she put her former rent payment (or what’s left after insurance) into a savings for repairs/taxes or would she have other things she needs to put that money into or would she perhaps tend to spend more on lifestyle upgrades?
4. If she pulls money out for the house (and 10% penalty and 20% ish income tax), how much longer will she wait to retire and will she be able to/want to wait that long?

These are the big questions, in my mind, and they need answers. She needs the advice of an independent financial planner, not an Internet forum, lol.

ETA: Just realized I’m assuming that the investments are retirement related. But that’s exactly the problem, we don’t know enough to advise.
 
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When you have a low income and you are renting, the landlord is responsible for upkeep. When you have a low income and you own a house, you are. When that AC fails or the roof leaks or some other mini-disaster happens -and it will- that low income may mean that the repairs have to wait. At least in a rental situation, the landlord is obligated to fix the problem.

Credit cards to cover emergency situations, for the vast majority of people, is not a viable solution. That’s why there’s such a debt problem in the US.

All of this depends on the complete financial picture for Minoosh. No way we can truly answer her question with our understanding everything.

1. How much liquid savings? Not retirement accounts.
2. What exactly is her income and what are other outstanding debts? Is she living paycheck to paycheck barely making it?
3. Would she put her former rent payment (or what’s left after insurance) into a savings for repairs/taxes or would she have other things she needs to put that money into or would she perhaps tend to spend more on lifestyle upgrades?
4. If she pulls money out for the house (and 10% penalty and 20% ish income tax), how much longer will she wait to retire and will she be able to/want to wait that long?

These are the big questions, in my mind, and they need answers. She needs the advice of an independent financial planner, not an Internet forum, lol.

ETA: Just realized I’m assuming that the investments are retirement related. But that’s exactly the problem, we don’t know enough to advise.

Oh come on. :rolleyes:

First, landlords can also jack the rent up.

Second, Minoosh is a big girl, I'm sure she can calculate what she needs to budget for in terms of expenses.

Some of you are acting like you are advising a teenager.

Third, what I meant by using credit cards were for something like a huge expense that can come up with owning a house. For example, my boiler blew up (not literally). That cost >$6K to replace. It's a twice in the life of a house expense. While I didn't need to use my credit cards, had I needed them the one time expense could have been divided up into more manageable payments. You can even get low interest cards that are called home equity line of credit. There are multiple options.

Fourth, she also posted that she was seeking professional advice as well as posting here.

I think having bought 3 houses, knowing that the stupid mortgage people care about one's income in spite of having a million dollars in equity, having dealt with cashing in stock for college when the market was crashing, and knowing full well what renting an apartment or house entailed, I can at least offer some advice based on the experiences I've had.

Minoosh knows full well (because she said as much) that she can take or leave the advice of people posting here.

My objections are to the standard answers that, like I said, sound like one is advising a teenager. Your post is more well thought out than that, but it's still full of the standard one-size fits all answers. I'm sure Minoosh will find some of what you've posted to be very useful.
I'm not sure "the landlord is responsible for upkeep" is valid, however. That depends on the landlord.
 
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But she doesn't plan on a mortgage.

I don't think your concerns fit the situation.

My advice is to not make a huge purchase from a position of financial weakness. "Having a pretty low income right now" is financial weakness-- unless one also happens to have vast stores of accumulated wealth. Vast, meaning not just enough to buy this item in question, but enough to buy the item in question and then not worry about money for twenty years afterward as well. But again, if the OP had that kind of wealth at the moment I doubt she'd be asking for advice on what would be to her a trivial purchase.


So what you are saying is be careful how low your accessible cash is. Sure, you can't sell a house quickly if you need access to the equity. But the general rule of not over-extending yourself with a house really falls apart here with the exception of no quick access to the equity.

"Keep thy wealth and it will keep thee" is an old Arab proverb. It's not just about liquidity, it's about overall total wealth. A large heap of money plus an income is always better than no heap of money plus a very low income plus a large object that isn't money.

She's paying rent now. How is that any different from paying homeowner expenses?

It's fixed, regular, limited to a monthly amount, and in most cases if it becomes untenable the maximum time you can be stuck with it is 12 months.

There are always credit cards to get you past a low cash situation.

I seldom LOL but here I did. "If you're low on money just go into more debt!" There's bad advice and then there's urging to folly.


There are a lot of things to consider. I guess I found your blanket warning: "Do not make a huge purchase if your income is low right now," to not apply here for the reasons I stated.


The nature of advice is to suggest the course of action one would take oneself, and I am extremely cautious with money. I would never advise moving from a position of strength to weakness, and certainly not from a position of weakness to greater weakness. I'm more cautious with larger expenditures than small ones, I don't make large purchases based on emotion, I don't try to time the markets, I buy and hold investments, and when I do sell off investments for something it's only a fraction of the whole. These practices are working out quite well for me, I believe they would work well for others.
 
Yeah. It would appear now is not the right time. Stocks are down, house prices are up, and interest rates, as I've been reminded upthread, are also up. Two years ago would have been better.
 
My advice is to not make a huge purchase from a position of financial weakness.
You are just repeating yourself now. You haven't addressed the issue of collateral loans nor the relative merits of holding on to depreciating stock vs exchanging it for a house.
 
You are just repeating yourself now.

Yeah, because I still think it.

You haven't addressed the issue of collateral loans

Idiocy. If Minoosh had the kind of money in stocks that was capable of getting someone interested in loaning against it, she wouldn't be asking for advice in this thread. That is something multimillionaires do, not ordinary people with a few hundred thousand. And even if it were possible I would still advise against it because it's foolish to borrow unnecessarily.

nor the relative merits of holding on to depreciating stock vs exchanging it for a house.

I'm pretty sure I did. Do not try to time markets. Hold, hold, hold. Trading in stock for a house when one has "a pretty low income" is a bad idea. If you must participate in the modern madness of considering one's residence an investment at the very least you should stay aware that is it not a swift, mobile, liquid asset. It should be undertaken only when one has a) a good and steady income, b) a considerable amount of savings and investments other than property, or preferably c) both.

"Oh, you could then borrow against the house if you need money!" is just as foolish as taking on credit card debt. If you cannot afford to live properly after buying a house it means you can't afford that house. Full stop. No "but you could!", no "oh, but there's always!" because there's not. Do not gamble what you cannot afford to lose. The higher the stakes the more cautious you should be.

That's my advice, and by following it myself all I've gotten is a comfortable lifestyle with ever-increasing financial security. But by all means, everybody do their own thing.
 
If looking purely at the objective, quantifiable nature of it, you are almost always better off with a house to live in.

Rent is typically 2x the mortgage on the same property (in my area). While "market timing" may not be the most ideal it could be, it is almost never an outright bad move.

Now, of course it really sucks if you purchase the day before the bubble bursts. That will certainly mean it will take a great while to "build equity," but you can play that game in your head forever.

If you can afford it, get a (quality) home. Get a 30 year note and pay down principle as fast as you can. You take the longer term so that if you have to belt-tighten, you have the option to pay the minimum only.

There may be other factors there, as well, though. Always maximize paying down your highest interest debts first. Consider whether market growth makes investing and generating a higher return than your interest growth is worth it (additional factor of risk assesment).

ETA: a straight-up cash purchase is a whole other can of worms. A home is not as "liquid" as investments.

But I still almost always come around to the bottom line that rent on a property just can't possibly be less expensive (ongoing expense) than owning unless the lessor is really bad at math.
 
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Housing prices are already trending down because interest rates are climbing. Listings are staying on the market longer. Prices are not crashing as I believe would occur if a bubble had popped.

Home prices have begun falling in these 10 cities, according to Realtor.com
The housing boom may be leveling out as higher prices push some buyers out of the market.

While low housing inventory continues to pose a problem for homebuyers, rising mortgage interest rates appear to be dampening demand and leveling out home prices in select regional markets, according to a new report from Realtor.com.

"Many would-be buyers are being priced out of homeownership as higher mortgage rates mean more expensive monthly housing payments," the report reads. "But when there are fewer buyers competing for homes and bidding them up, prices typically go down."

Still, these smaller price decreases "don't portend another crash" like the 2008 housing bubble that spurred the Great Recession. Some of these dips can be attributed to fewer larger homes on the market and an increase in new listings.

Having the ability to cash in stocks and buy a house with no mortgage is quite the buying advantage.
 
...

ETA: a straight-up cash purchase is a whole other can of worms. A home is not as "liquid" as investments.

But I still almost always come around to the bottom line that rent on a property just can't possibly be less expensive (ongoing expense) than owning unless the lessor is really bad at math.
Both of these are the main considerations if one is trading stocks (more liquid) for a less liquid home asset.

All that other business about making a major purchase, yadda yadda, is not all that relevant.

The housing prices will go down a little more for a while, but so are stock prices continuing to fall.

Rent is not going down but on an individual basis that depends on where you are currently renting.
 
But I still almost always come around to the bottom line that rent on a property just can't possibly be less expensive (ongoing expense) than owning unless the lessor is really bad at math.

Why would someone pay more to rent a house than they could pay to own it? It defies common sense--ownership grants more rights in real estate than tenancy. I recommend you go down to a local realtor's office and tell them you want to buy a house and rent it out for twice the mortgage. Be a good sport when they start laughing.
 
But I still almost always come around to the bottom line that rent on a property just can't possibly be less expensive (ongoing expense) than owning unless the lessor is really bad at math.

Usually but not always. I rent a condo i bought 45 years ago at about 40% below market. Current typical payments on a mortgage would be about 5k/mo plus another 1.5k/mo for HOA fees and property taxes. Far over their rent.

I make a really good income from it since my property tax is only about 1/10th what it would be for a new owner. And I have no mortgage. I value a tenant that reliably pays their bills through covid (when they didn't have to) and keeps the place up.
 
I think missing from this discussion are some critical bits of information. One is what the investments in question are, and what their expected rate of return and appreciation might be. Not all investments are the same. And another is just what, in the OP's world, small income entails. Other issues come to mind too, one being what rents and buying options exist in the area, what sort of neighborhood is being looked at, and what the potential homeowner's maintenance skills might be.

I'm put in mind of this by another thread in which MinnesotaBrant casually mentions that his wife is finishing painting the house! My wife is a good roofer, but refuses to paint the house one more time.
 
Usually but not always. I rent a condo i bought 45 years ago at about 40% below market. Current typical payments on a mortgage would be about 5k/mo plus another 1.5k/mo for HOA fees and property taxes. Far over their rent.



I make a really good income from it since my property tax is only about 1/10th what it would be for a new owner. And I have no mortgage. I value a tenant that reliably pays their bills through covid (when they didn't have to) and keeps the place up.

Exceptions prove rules.

Also, there's some quantifiable value to "keeps the place up" which is a private understanding you and your tenant have outside of typical statutes that say property maintenance is the owner's responsibility (otherwise an expense that would be factored into what to charge).
 
...rent on a property just can't possibly be less expensive (ongoing expense) than owning...
Why would someone pay more to rent a house than they could pay to own it? It defies common sense--ownership grants more rights in real estate than tenancy. I recommend you go down to a local realtor's office and tell them you want to buy a house and rent it out for twice the mortgage. Be a good sport when they start laughing.
It's a double negative. I don't think you understood it. Or maybe I don't understand your post? :boggled:

Rent is more (can't be less) than home-owning expenses.

And on that note: MotleyFool: Why Your Rent Is Going Up
Key points
The average monthly rent increased by around 14%, outpacing inflation, which rose 7.5% the past year.
According to FreddieMac, the number of starter homes is at a five-decade low.
The housing crunch, booming demand for rentals, and high inflation have contributed to rising rents.
 
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Exceptions prove rules.

Also, there's some quantifiable value to "keeps the place up" which is a private understanding you and your tenant have outside of typical statutes that say property maintenance is the owner's responsibility (otherwise an expense that would be factored into what to charge).

It's a condo. HOA fees take care of all external maintenance. I take care of major things like plumbing, appliance repair/replacement. But they keep the place decent and clean. And, of course they know they are getting it cheap and value that. In a sense we both benefit. Which is the essence of any good contractual/financial relationship.
 
It's a condo. HOA fees take care of all external maintenance. I take care of major things like plumbing, appliance repair/replacement. But they keep the place decent and clean. And, of course they know they are getting it cheap and value that. In a sense we both benefit. Which is the essence of any good contractual/financial relationship.
I acknowledge your...restraint? Gracious consideration?

On the other hand, it is not exactly.a situation one can shop around for with much hope or form the basis of a plan of how to make the most sound financial decision.
 
It's a double negative. I don't think you understood it. Or maybe I don't understand your post? :boggled:

Rent is more (can't be less) than home-owning expenses.

And on that note: MotleyFool: Why Your Rent Is Going Up
Brainster: it is a vicious cycle that high rent prevents accumulating the downpayment necessary. It can also push people into other credit burdens due to the same lack of expendable income for unplanned emergency expenses.

SG: that article highlights another self-reinforcing issue, "high demand for rentals" as a reason why new home construction is low.

/facepalm

ETA: there is, if I'm not mistaken, a more appropriate thread covering those issues, so I digress.
 
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That's my advice, and by following it myself all I've gotten is a comfortable lifestyle with ever-increasing financial security. But by all means, everybody do their own thing.
Unless you have at times exercised the option to live in a trailer park home (or even a tent) during times of hardship it is not terrific advice.

Whether you are renting or paying a mortgage, you will always need a roof over your head. So the real issue isn't guessing which investment gives you the biggest bang for your buck but your relative mobility.
 
Unless you have at times exercised the option to live in a trailer park home (or even a tent) during times of hardship it is not terrific advice.

I don't follow that. Because I haven't been extremely poor that means my advice on financial matters isn't valid? If anything the fact that I've kept out of extreme poverty might be a point for my advice, not against.

Whether you are renting or paying a mortgage, you will always need a roof over your head. So the real issue isn't guessing which investment gives you the biggest bang for your buck but your relative mobility.


And food, and some other things as well. Which would be at greater risk of acquiring easily if one spent too great a portion of one's limited wealth upon the single item of shelter. "Everyone needs a roof over their heads" is not a license to purchase a mansion. You fulfill your needs as best you can with the resources you possess. I maintain that it is unwise to expend too great a portion to fulfill a desire. Shelter is needed. Ownership of a house is not the only means to fulfill that. "Oh, but it's a better deal if" is the sort of thinking that leads people to purchase items they didn't intend to purchase "because they were on sale!" The math that should be done is how much did you spend versus how much you can afford, not how much did you spend versus some other amount you might have theoretically spent on that or a similar item.

Which is why "bang for your buck" is the wrong way of thinking about it. The first question is "should I spend the buck", not are you getting a particular value from doing so. And in the case of a person who has "a pretty low income" my advice is not to spend that buck yet.
 
I don't follow that. Because I haven't been extremely poor that means my advice on financial matters isn't valid? If anything the fact that I've kept out of extreme poverty might be a point for my advice, not against.
That is a poor attempt to construct a strawman argument.

The fact remains that you are either paying a mortgage or paying rent. At least, in a rental situation you have the option of moving to a lower rental accommodation without much cost if your circumstances demand it. If you are forced to sell a house you are buying to move then the costs could be much higher.

If you haven't been forced to downsize then for all of your arguments, this is just an academic exercise for you.

"Everyone needs a roof over their heads" is not a license to purchase a mansion..
I take it back. THIS is a poor attempt to construct a strawman argument.
 
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That is a poor attempt to construct a strawman argument.

The fact remains that you are either paying a mortgage or paying rent. At least, in a rental situation you have the option of moving to a lower rental accommodation without much cost if your circumstances demand it. If you are forced to sell a house you are buying to move then the costs could be much higher.

How is that an argument in favor of buying a house? It sounds like the opposite.

If you haven't been forced to downsize then for all of your arguments, this is just an academic exercise for you.

And? I must have missed the part in the OP where it was stated the advice sought must come only from people who've been in that situation.

And I have been in the situation where I had to give up my own rental place and move in with a friend because I could no longer afford the rent.


I take it back. THIS is a poor attempt to construct a strawman argument.

Advice can be taken or not. You seem to want to prove my advice to be wrong as if it were a question of mathematics or science with a correct answer. This isn't that kind of question. Minoosh asked what we think about buying a house while having a pretty low income. I answered with what I think, as did others. Agreement isn't required. Minoosh can choose to consider the advice, take it or not, whatever. If you want to try to persuade her to follow some advice and disregard other advice then you can try that, but you're not going to succeed in persuading me that my advice is bad. If I didn't think it good advice I wouldn't have given it.

It's probably better for Minoosh to have heard advice going both ways on the matter before making a decision, whichever way she ends up choosing. Large decisions require careful consideration of all the options... at least, that's my advice on decisions. No doubt you'll disagree and can tell me why that's wrong?
 
When Minoosh contemplates buying a "mansion" I will give the same advice as you.

In the mean time, I will deal with the situation as given in the OP.

Then it's the price of the house that matters? What's the cutoff? What's the dollar amount at which your advice flips from "buy a house now" to "don't buy a house now"?

Or is it a percentage of the current valuation of the stocks proposed to sell to fund the purchase? (If the latter then I'd agree -- if the house can be purchased for 25% or under of the total portfolio value then perhaps it might not be a bad move.)
 
Then it's the price of the house that matters? What's the cutoff? What's the dollar amount at which your advice flips from "buy a house now" to "don't buy a house now"?

Or is it a percentage of the current valuation of the stocks proposed to sell to fund the purchase? (If the latter then I'd agree -- if the house can be purchased for 25% or under of the total portfolio value then perhaps it might not be a bad move.)

Lacking much information, it would be unwise to specify the cutoff, but I think there certainly would be.

I don't think it's been specified what the investments are, what they yield or contribute to current income, etc. There's a big difference between, say, a block of dividend-paying stock in Pfizer, and a cash inheritance sitting in a bank CD.
 
Lacking much information, it would be unwise to specify the cutoff, but I think there certainly would be.

I don't think it's been specified what the investments are, what they yield or contribute to current income, etc. There's a big difference between, say, a block of dividend-paying stock in Pfizer, and a cash inheritance sitting in a bank CD.

Or worst of all, a retirement account. A lot of people raid their 401k or IRA if that's all they have, and that's something that should be done only for a true emergency like "I need surgery now" or "Lil' Jimmy's been taken hostage by the Swiss Mafia and we need to ransom him". (IMO, of course; I'm certain someone will pop up momentarily to tell me why I'm wrong and that retirement accounts are perfect vehicles for everything and anything except hanging onto them for retirement.)
 
Then it's the price of the house that matters?
Are you serious??? Do you really think that comparing renting a modest house to buying a mansion is comparing apples to apples? Of course price matters. Unbelievable!

What's the cutoff? What's the dollar amount at which your advice flips from "buy a house now" to "don't buy a house now"?

Or is it a percentage of the current valuation of the stocks proposed to sell to fund the purchase?
These are all the wrong questions. The questions you should be asking are:
  • How does rent compare to paying a mortgage and other owner related costs? (Remember that rent goes up with inflation but mortgage payments don't).
  • Can I still afford the mortgage if interest rates go up?
  • How does the return from my existing investments compare with the rent I would otherwise save?
  • Is the value of my existing investments likely to increase at a faster rate than the value of my home? (stocks tend to be more volatile than housing).
  • Is is still worth it if there are capital gains taxes to pay if I sell my existing investments?
That is just the mathematical aspect. If your life doesn't take a disastrous turn then in time, you will own your own home free and clear and the peace of mind you get from not having to pay rent or deal with a nosy landlord is immeasurable.
 
Are you serious??? Do you really think that comparing renting a modest house to buying a mansion is comparing apples to apples? Of course price matters. Unbelievable!

I was asking about buying a house for one price versus buying a house for another price, not comparing renting versus buying. I thought you were suggesting that you'd advise buying a house if that house were below a certain price and advise against it if it were above a certain price, and I wanted to know what you thought that price should be. Expressed either as a dollar amount or as a percentage of the hypothetical stock portfolio's valuation.

The multiple punctuation points and the lack of reading comprehension suggests you're getting very excited about this exchange. I suggest you chillax a little.

These are all the wrong questions. The questions you should be asking are:
  • How does rent compare to paying a mortgage and other owner related costs? (Remember that rent goes up with inflation but mortgage payments don't).
  • Can I still afford the mortgage if interest rates go up?
  • How does the return from my existing investments compare with the rent I would otherwise save?
  • Is the value of my existing investments likely to increase at a faster rate than the value of my home? (stocks tend to be more volatile than housing).
  • Is is still worth it if there are capital gains taxes to pay if I sell my existing investments?
That is just the mathematical aspect. If your life doesn't take a disastrous turn then in time, you will own your own home free and clear and the peace of mind you get from not having to pay rent or deal with a nosy landlord is immeasurable.

Are you skipping posts? The point was that the OP isn't getting a mortgage, it's a question of cashing in current assets and spending the money all at once on a house. My advice is that the bird in the hand of those assets is worth more than the house plus hypothetical advantages possibly derived from possession of it in the bush. Because the OP's situation is currently "a pretty low income" and there's not been mention of the overall size of the portfolio. If the income stream were increased and stable it might change things. If the investments in question are vast it would definitely change things.

Nobody's mentioned a "nosy landlord". If you must invent scenarios to create emotional appeals to make a purchase...well, I don't make financial decisions based on emotion so clearly we will never agree.

I stand by my advice: it is unwise in this scenario to sell off stocks and use the money to purchase a house. Unless the total asset portfolio is of a very significant size such that selling no more than 25% of it would fund the purchase-- if that were the case then I'd say it wasn't unwise.
 
The stock market is down, the housing market is on fire and I need a place to live. I can rent month-to-month, but for the first time in my life having a paid-for home is really sounding like something I want. Housing prices probably aren't going to go down in my market (desert Southwest).

I know the answer depends on several factors, but what would you do in this situation? I'm hoping to pay cash and that means pulling money out of investments. Of course if the stock market *really* tanks maybe I'll be congratulating myself on my wisdom, but I'm thinking it probably won't. I can't imagine housing prices going up much because I don't understand how people are affording the prices sellers are already getting for just about anything with four walls and a roof.

Can't say what's right for you, but if you need a house and you can finance it selling stocks, why not. Financially, it may not be the optimal solution, but for you it may be what you need. There are, after all, more important things in life than money.

Hans
 
Is there any reason to think of this as "selling stocks"? (I mean, apart from the fact that that is what Minoosh would be doing.)

Wouldn't it be easier to think of it in terms of: what should I do with this amount of money that I have - buy a house? Or buy stocks?
 
Is there any reason to think of this as "selling stocks"? (I mean, apart from the fact that that is what Minoosh would be doing.)

Wouldn't it be easier to think of it in terms of: what should I do with this amount of money that I have - buy a house? Or buy stocks?

If you want to reframe it as OP having no assets at all but suddenly coming into a lump of money, sure. Say OP wins the lottery or their Great Uncle Dracula dies and leaves them $X amount of cold hard cash. Should OP use it to buy a house outright?

My advice would be no, unless $X is at least four times the purchase price of the house. Why? Because OP has at the moment a "pretty low income" and thus shouldn't blow too great a percentage of a windfall.
 
If looking purely at the objective, quantifiable nature of it, you are almost always better off with a house to live in.

Rent is typically 2x the mortgage on the same property (in my area). While "market timing" may not be the most ideal it could be, it is almost never an outright bad move.

The opposite is true in large parts of the UK.

Our flat in Bristol is valued at £400k-£450k. A £400k mortgage would cost a little over £2,000 a month, we rent it out for £1,250 a month.
 
Are you skipping posts? The point was that the OP isn't getting a mortgage, it's a question of cashing in current assets and spending the money all at once on a house.
That shows that you didn't read the bullet points.

If you want to reframe it as OP having no assets at all but suddenly coming into a lump of money, sure. Say OP wins the lottery or their Great Uncle Dracula dies and leaves them $X amount of cold hard cash. Should OP use it to buy a house outright?

My advice would be no, unless $X is at least four times the purchase price of the house. Why? Because OP has at the moment a "pretty low income" and thus shouldn't blow too great a percentage of a windfall.
That is bad advice.
 
The opposite is true in large parts of the UK.

Our flat in Bristol is valued at £400k-£450k. A £400k mortgage would cost a little over £2,000 a month, we rent it out for £1,250 a month.

Whatever the case, the good thing about real estate is that you can live in it.

So when comparing the investment return:

A house: Saved rent + a virtually certain long-term value increase.

Stock: A higher return, but also far higher risk.

Hans
 
If currently renting, then if cost-of-ownership is lower than current rent, that difference can be put back into stocks over time.

Two major unknown variables:

Will housing prices increase faster than stock investment growth?

What is the utility value of owning the home?

Investments intended for use as retirement funds is a factor, yes. But owning a home free and clear is a huge difference maker in QoL of retirement, as well.
 
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