Wait until you have kids and you want to put them through a decent school...then house prices go up to $1M easily. For a good public school district. Or you can try a private school, but they are crazy expensive and contribute nothing to your own equity.
How does a good private school for your children contribute nothing to your equity? That doesn't seem rational to me. I'd think that a great school of any type is going to be very beneficial to equity and life in general.
I think he means equity in pure financial terms. Really it's more about liquidity.
If you buy a house in a good neighborhood with good schools, your property values will likely trend up, even if they are higher to begin with.
If you buy a cheaper house in a bad neighborhood with poor public schools, you'll have to offset the monthly mortgage cost with private school tuition. This extra cost doesn't give you additional equity in your home, and there are no tax breaks like there are with mortgage interest.
In both cases, you'll have a place to live, and hopefully provide your kids with a good solid education. But if times get tough, you can always sell your house and reap some investment if it's in a good neighborhood. That is not always the case in a poor neighborhood.
And to make it plain for everyone to understand the insanity of it: A year in Elementary school is pretty much free in a Public School. It easily costs you $20K in a Private School.
That's for one kid. Tack that on top of your $3K a month rent or mortgage and you quickly see how a six-figure salary does not mean much in this area, for anyone but the single 20-something.
I think it's a bit by design too, as most of the local economy wants young people, with stars and dollar signs in their eyes, who will work 12 hours a day while shacking in groups of 3 in 11x11-foot apartments. LOL
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Wait until you have kids and you want to put them through a decent school...then house prices go up to $1M easily. For a good public school district. Or you can try a private school, but they are crazy expensive and contribute nothing to your own equity.
How does a good private school for your children contribute nothing to your equity? That doesn't seem rational to me. I'd think that a great school of any type is going to be very beneficial to equity and life in general.
I think he means equity in pure financial terms. Really it's more about liquidity.
If you buy a house in a good neighborhood with good schools, your property values will likely trend up, even if they are higher to begin with.
If you buy a cheaper house in a bad neighborhood with poor public schools, you'll have to offset the monthly mortgage cost with private school tuition. This extra cost doesn't give you additional equity in your home, and there are no tax breaks like there are with mortgage interest.
In both cases, you'll have a place to live, and hopefully provide your kids with a good solid education. But if times get tough, you can always sell your house and reap some investment if it's in a good neighborhood. That is not always the case in a poor neighborhood.
You got it right entirely.
And to make it plain for everyone to understand the insanity of it: A year in Elementary school is pretty much free in a Public School. It easily costs you $20K in a Private School. That's for one kid. Tack that on top of your $3K a month rent or mortgage and you quickly see how a six-figure salary does not mean much in this area, for anyone but the single 20-something.
I think it's a bit by design too, as most of the local economy wants young people, with stars and dollar signs in their eyes, who will work 12 hours a day while shacking in groups of 3 in 11x11-foot apartments. LOL