Because you stipulated there was a 15% chance of having to move if, after a year, no job was found locally.
No, I said that there is a 15% chance that the man will never find an equivalent job locally. I think your position is that with a sufficiently large emergency fund, you will never ever have to sell your house and that you should not buy a house unless you have such a fund. So I don’t understand why the fund needs to include money for selling the house.
In no particular order, DC, NYC, Bay Area. This may turn out wrong in 5 or 10 years
Again, I am confused. You said you were “confident.” So I don’t understand why you would hedge yourself by saying “This may turn out wrong in 5 or 10 years.” What is the probability that in 5 or 10 years DC will turn out to be a lousy place to be looking for an IT job? Same question for NYC and the Bay Area.
Hardest? Way too many to be a good question,
Well let me put it this way: What areas would it not be a mistake for an IT professional to buy a house in right now?
No, I said that there is a 15% chance that the man will never find an equivalent job locally.
Yes, you said that, which I take to imply that he has to move, because he would be unable to afford his mortgage otherwise. What else did you mean by it, if not that?
I think your position is that with a sufficiently large emergency fund, you will never ever have to sell your house
Well that’s just silly. Nothing is 100% (“never ever”). That should be a given here at LW, shouldn’t it?
If we want to be closer to “never ever” having to move, we could stipulate having enough money spread over “safe” fixed-return bonds such that the interest on those bonds pays for the mortgage. But that’s well beyond “emergency fund.”
You said you were “confident.” [and yet you acknowledge things could turn out differently]
As above, since nothing is 100%, I’m confused at your confusion. Of course any assessment of the future could turn out wrong. Of course I can still be confident in my assessment. How confident? Hmm… 75%? 85%? I’m not going to put the time in to assess & calculate better than that, since nothing of import actually rests on it—I am not in the middle of re-evaluating my own job-and-financial-security scenario, with which I am quite comfortable.
Side question: Why do the exact percentages I have for my scenario matter to this discussion? Why does it matter which areas are a mistake or not? What are you getting at? That you think this is too impossible to determine? You really think you can’t compare place X and place Y and get a good gauge of where it’s financially safer to live, and that it’s just a waste of time? Or is there something else you’re after?
I meant exactly what I said, nothing more and nothing less. Anyway, if you accept that there is a reasonable chance that a person might be forced to sell his house, then my original point about re-sale stands. And your claim that it’s a “non-issue” is wrong.
Well that’s just silly. Nothing is 100% (“never ever”)
Then what exactly did you mean when you said that the re-sale issue I raised was a “non-issue”? You seemed to be saying that if you started with a big enough emergency fund, then there is essentially no chance that you will have to sell the house.
How confident? Hmm… 75%? 85%?
Well in that case, it seems a bit presumptuous to assume that a person who has to move for his new job necessarily made a mistake by buying a house in an area with a bad economic outlook.
Why do the exact percentages I have for my scenario matter to this discussion?
Because they make it easy for me to demonstrate the problems with your position. You say that a person who is laid off and unable to find an equivalent job in his local area made a “mistake” by buying in an area with a “poor economic outlook.” You seem to be “confident” that you can pick out the areas with good economic outlooks. And yet there is sizeable uncertainty in your own predictions.
The bottom line is very simple: When you buy a house, the cautious and prudent thing to do is to give a lot of priority to the issue of re-saleability.
Then what exactly did you mean when you said that the re-sale issue I raised was a “non-issue”?
That the risk of having to sell can be reduced via location choice and emergency fund, such that one does not need to pay $X more for too-much-house just to re-sell it. I’m sure there are scenarios whereby the extra cost is worthwhile. Exceptions don’t invalidate general rules or preferences, which is all I stated earlier.
give a lot of priority to the issue of re-saleability
I concur on considering it, but apparently not to the extent you do. Not knowing all the particulars of your situation, I can’t really say if I agree or disagree with your decision to pay more to have something easier to re-sell.
That the risk of having to sell can be reduced via location choice and emergency fund, such that one does not need to pay $X more for too-much-house just to re-sell it
Seems to me that’s very different from this:
If you don’t have a sufficient emergency fund to weather lay offs without being forced to sell your house, you don’t have enough money to buy a house, so this is a non-issue.
Well do you agree that the second statement asserts that the risk of being in a situation where you have to sell your house is minuscule under certain circumstances?
No, I said that there is a 15% chance that the man will never find an equivalent job locally. I think your position is that with a sufficiently large emergency fund, you will never ever have to sell your house and that you should not buy a house unless you have such a fund. So I don’t understand why the fund needs to include money for selling the house.
Again, I am confused. You said you were “confident.” So I don’t understand why you would hedge yourself by saying “This may turn out wrong in 5 or 10 years.” What is the probability that in 5 or 10 years DC will turn out to be a lousy place to be looking for an IT job? Same question for NYC and the Bay Area.
Well let me put it this way: What areas would it not be a mistake for an IT professional to buy a house in right now?
Yes, you said that, which I take to imply that he has to move, because he would be unable to afford his mortgage otherwise. What else did you mean by it, if not that?
Well that’s just silly. Nothing is 100% (“never ever”). That should be a given here at LW, shouldn’t it?
If we want to be closer to “never ever” having to move, we could stipulate having enough money spread over “safe” fixed-return bonds such that the interest on those bonds pays for the mortgage. But that’s well beyond “emergency fund.”
As above, since nothing is 100%, I’m confused at your confusion. Of course any assessment of the future could turn out wrong. Of course I can still be confident in my assessment. How confident? Hmm… 75%? 85%? I’m not going to put the time in to assess & calculate better than that, since nothing of import actually rests on it—I am not in the middle of re-evaluating my own job-and-financial-security scenario, with which I am quite comfortable.
Side question: Why do the exact percentages I have for my scenario matter to this discussion? Why does it matter which areas are a mistake or not? What are you getting at? That you think this is too impossible to determine? You really think you can’t compare place X and place Y and get a good gauge of where it’s financially safer to live, and that it’s just a waste of time? Or is there something else you’re after?
I meant exactly what I said, nothing more and nothing less. Anyway, if you accept that there is a reasonable chance that a person might be forced to sell his house, then my original point about re-sale stands. And your claim that it’s a “non-issue” is wrong.
Then what exactly did you mean when you said that the re-sale issue I raised was a “non-issue”? You seemed to be saying that if you started with a big enough emergency fund, then there is essentially no chance that you will have to sell the house.
Well in that case, it seems a bit presumptuous to assume that a person who has to move for his new job necessarily made a mistake by buying a house in an area with a bad economic outlook.
Because they make it easy for me to demonstrate the problems with your position. You say that a person who is laid off and unable to find an equivalent job in his local area made a “mistake” by buying in an area with a “poor economic outlook.” You seem to be “confident” that you can pick out the areas with good economic outlooks. And yet there is sizeable uncertainty in your own predictions.
The bottom line is very simple: When you buy a house, the cautious and prudent thing to do is to give a lot of priority to the issue of re-saleability.
That the risk of having to sell can be reduced via location choice and emergency fund, such that one does not need to pay $X more for too-much-house just to re-sell it. I’m sure there are scenarios whereby the extra cost is worthwhile. Exceptions don’t invalidate general rules or preferences, which is all I stated earlier.
I concur on considering it, but apparently not to the extent you do. Not knowing all the particulars of your situation, I can’t really say if I agree or disagree with your decision to pay more to have something easier to re-sell.
Seems to me that’s very different from this:
I don’t see how.
I’m glad your decision worked for you, though. Cheers.
Well do you agree that the second statement asserts that the risk of being in a situation where you have to sell your house is minuscule under certain circumstances?