imagine making 400k+ a year and still not having a place of your own.

That person could rent entire 4 BR house to themselves, and be stuck with an equivalent of a measly 340k+ a year. It's obviously out of choice.

Having roommates can be a lot of fun. I loved it and am still close friends with all my roommates.

You're also stuck renting, with three other people, with a $400k salary. Conversely, I bought an 1800sqft house in upstate New York, alone, and the total per month is roughly $1400(mortgage, property/school tax,utilities).

He’s not “stuck” renting, he’s choosing to rent because he wants to save money and doesn’t mind having roommates. You can absolutely afford your own apartment on far less than 400k/year in the Bay Area.

So he's still renting then?

So? Not everyone is brainwashed by their banal suburban upbringing into thinking that home ownership is the highest state of enlightenment a human can achieve. I can afford to buy a place outright in cash but I still rent because I like the flexibility and have no interest in betting a large fraction of my net worth on the direction of real estate prices.

Home ownership is the strongest correlating factor with financial independence and overall net worth. Even in the Bay Area, owning a home and the equity in it is generally the most critical asset financially independent people have.

I'm not going to claim renting is universally bad, as it has some upsides (mainly flexibility), but it's definitely financially less savvy than buying, and is generally something you wouldn't want to optimize for at high salary.

> strongest correlating factor with financial independence and overall net worth

If the only way people save is "force saving" by diving headfirst into something that sucks all of their other assets in, sure.

How could we make housing a terrible investment?

* It should be illiquid. We’ll make it something that takes weeks, no – wait – even better, months of time and effort to buy or sell.

* It should be something that locks its owner in one geographical area. That’ll limit their options and keep ’em docile for their employers!

* It should be leveraged! Oh, oh this one is great! This is how we’ll get people to swallow those low returns!

(copied from amusing thought experiment for another perspective: https://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terri...)

That said, I bought a place to live anyways.

You know whats an even stronger correlating factor? Having $400k liquid per year.

Homeownership is advertised as owning an extremely leveraged illiquid asset whose margin calls take years, which is the only reason why it works for people that don't have enough cash to be financially independent another way.

Thanks for the response, I appreciate the feedback. With that type of capital, wouldn't it be best to invest in real estate, and rent them yourself?

Dunno, what’s the return on property, less maintenance turnover and annual wealth taxes vs the market? What’s the risk of dumping so much capital into exactly one asset vs a stock portfolio?

I'm not planning to buy a house until after I'm married.

Also, houses here tend to all be over $1M, good ones well over $1.5M. The average sold house price last month in Palo Alto was $2.76M with an average ~1900k sqft: https://www.redfin.com/city/14325/CA/Palo-Alto/housing-marke....

Additionally, I'm slightly concerned about a possible real estate bubble + I'm not sure if I plan to live in South Bay for 5+ years (the usual amount of time needed to keep your house for it to be worth it financially).

It's not that I can't afford a house, I can; I'd just rather have my money in an index fund and rent instead right now.