Very interesting thread. The "home as investment" mentality is pretty ingrained in our culture. While I don't agree with the mentality, I do believe it follows some of the "efficient market" principles in setting prices due to the rampant speculation we've seen. So, saying "buy now" in a good market means you're probably already paying a premium if many folks share that opinion. I don't try to pick stocks for the same reason.
I've also read here that it's a good idea to move to an expensive area young and buy the biggest house you can afford to take advantage of the fact that market salaries will reflect the market income needed. My take on this approach is a bit different. People should choose to live wherever their absolute savings rate is maximized and I highly doubt this will come from buying the biggest house over time. Here's a few examples:
1) Single engineer makes $60k / year living in the midwest and can either rent a nice place for $600 / month or buy a decent house for 100k. Either housing choice is fine financially and is more a matter of preference. Figure they live on $30k / year and save $15k after taxes. If purchasing a house, then some of this savings is principle.
2) Single engineer lives in expensive city and gets their income to 100k. They can buy a tiny house at 600k or rent for $2000. If renting, they manage to live on 60k / year and still save that same $15k after taxes. I know quite a few of these folks. Trying to pay that mortgage, they probably save nothing outside of mortgage principle. Very risky if they lose that job and I've never heard anybody acknowledge this risk.
3) Work in the expensive city making that same 100k, but get really creative regarding cost of living. Rent a room for $600, don't have a car, enjoy the free culture stuff, etc. I know a couple people working / living in SF for around 30k / year and saving around 45k each year.
So, option 1 gives almost no chance of a high absolute savings rate. The income just isn't there so you have to live in poverty to get the savings up. Note, this only applies to a salary job where market rates force the income down. Having a business in a low cost of living area can be quite a different story.
Option 2 has no chance of savings due to the expenses. This is a high risk option if you buy a place you can barely afford (classic middle-class trap here). The risks actually double if a dual-income family can't pay the mortgage without both incomes. Elizabeth Warren wrote an OK book on the topic.
Options 3 is a fun path IMO and one many here take / took. It can be even more fun with geo-arbitrage if that's an option. "Thrift" seems to be cool again in some circles too so our single engineers' dating life might survive.
I've also read here that it's a good idea to move to an expensive area young and buy the biggest house you can afford to take advantage of the fact that market salaries will reflect the market income needed. My take on this approach is a bit different. People should choose to live wherever their absolute savings rate is maximized and I highly doubt this will come from buying the biggest house over time. Here's a few examples:
1) Single engineer makes $60k / year living in the midwest and can either rent a nice place for $600 / month or buy a decent house for 100k. Either housing choice is fine financially and is more a matter of preference. Figure they live on $30k / year and save $15k after taxes. If purchasing a house, then some of this savings is principle.
2) Single engineer lives in expensive city and gets their income to 100k. They can buy a tiny house at 600k or rent for $2000. If renting, they manage to live on 60k / year and still save that same $15k after taxes. I know quite a few of these folks. Trying to pay that mortgage, they probably save nothing outside of mortgage principle. Very risky if they lose that job and I've never heard anybody acknowledge this risk.
3) Work in the expensive city making that same 100k, but get really creative regarding cost of living. Rent a room for $600, don't have a car, enjoy the free culture stuff, etc. I know a couple people working / living in SF for around 30k / year and saving around 45k each year.
So, option 1 gives almost no chance of a high absolute savings rate. The income just isn't there so you have to live in poverty to get the savings up. Note, this only applies to a salary job where market rates force the income down. Having a business in a low cost of living area can be quite a different story.
Option 2 has no chance of savings due to the expenses. This is a high risk option if you buy a place you can barely afford (classic middle-class trap here). The risks actually double if a dual-income family can't pay the mortgage without both incomes. Elizabeth Warren wrote an OK book on the topic.
Options 3 is a fun path IMO and one many here take / took. It can be even more fun with geo-arbitrage if that's an option. "Thrift" seems to be cool again in some circles too so our single engineers' dating life might survive.
Kansas City of course. That's where I met a Missouri farm girl/widow and got married at age 70. 
