Yep, it’s stupid to buy a house you can’t afford.

It’s also pretty understandable.

I’m not talking about buying a McMansion when you can really only afford a normal sized house.  But when it’s the difference between buying a house and not buying a house, I can understand how people screw up the calculation.  Most people believe that they’ll be better off in five years, for one thing, and it’s natural--if shortsighted--to expect the value of the property in question to go up during that time, too.

But cognitive biases aside (and at what point does a bias that nearly everybody shares become outright, obstinate stupidity?), I think it’s understandable because there’s a huge, and I mean GINORMOUS, amount of pressure to buy that house.

Ever had someone insinuate that you’re a lousy parent because you live in an apartment?  Ever had someone, however indirectly, suggest that you shouldn’t have had kids if you can’t afford a house for them?  And then there’s the straight-out mockery.  There are all of the people who try to push you to buy because they bought back when it made some sort of economic sense and are living in their retirement funds and keep telling you that you’re ruining your future if you don’t invest in real estate.

Hell, even the United States Government pushes the idea that home ownership is some sort of necessity.  It’s considered vital enough to the future of the nation that they give you a tax break for it, right?

In short, there’s an entire society out there telling you that you’re an asshole and somehow not a real person if you’re not in a house.  Combine that with the tendency to assume that the future can’t get worse, and you’ve got a setup wherein people are very happy to be talked into shit they can’t afford.  It may still be stupid, but it’s not stupid-stupid.  It’s people-are-people stupid, which is a whole other thing.

(In response to Rachel, with whom I rarely disagree, but stranger things happen every day...)

Posted by on 08/10 at 11:03 AM
  1. Of course the flip side of the thing is when you want desperately to purchase a house you CAN afford and the idiot banks want to charge you up the hong-yu for said house.... and try to keep you from getting your mortgage.

    Posted by caltechgirl  on  08/10  at  05:01 PM  from 
  2. Indeed.  But for that I do tend to truly blame the banks, because there was nobody forcing them to hand out the loans that caused the current panicky sphincter-tightening even when faced with a good risk.

    If it makes you feel any better, I’d estimate that with our decent-but-not-perfect credit, we’ll now be able to buy about 10 years after we’re dead.

    And you win euphemism of the day, hands down.

    Posted by Deb  on  08/10  at  05:44 PM  from  my scary brain
  3. We’ve had a house for 20 years and the government hasn’t given us a tax break for it. Granted that that is because we have never paid enough interest to be able to claim it - even when the interest rate was at 9%, way back in the early days.

    Now that interest rates have fallen, the taxes on the house have risen to take their place, but still they aren’t quite enough to break that barrier so we still only get to take the standard deduction.

    Meanwhile, I’m sure we’ll be bailing out all those stupid people that can’t figure out how to live within their means (sorry if that sounds harsh, but figuring out that with X amount coming in, X and only X is the maximum amount that can go out - Y is not an option, is not rocket scientry). Those are my tax dollars at work (the tax dollars that don’t get reduced by a deduction for owning a house)

    Posted by bogie  on  08/11  at  08:33 AM  from 
  4. Oh, I’m not particularly in the mood to bail them out.  I’m just pointing out that it’s one of the more understandable miscalculations a person can make.  And there’s willful stupidity and there’s miscalculation, and I’m really into giving people the benefit of the doubt.  Because I have a hard time believing that anybody really wants to be thrown out of their home, or have the government save it for them.  Where I’m from, that’s still shameful unless you’re old.

    If the banks are giving people loans with payments bigger than their entire income, or even bigger than what they know damned well from decades of experience that people can handle, then it’s the banks who are the idiots and the bad guys here.  And really, after watching how Congress dealt with the airlines, they probably did it figuring they’d get bailed out so not to worry.  Seems to me that the real problems lie there, not with Joe Blow homeowner.  Because yeah, Joe’s responsible for himself, but it’s not like he held the place up at gunpoint.

    Posted by Deb  on  08/11  at  10:41 AM  from  my scary brain
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