Episode summary
Should You Buy a House Right Now?
Ask The Compound
· · Hosts: Ben Carlson, Duncan Hill · Guests: Bill Sweet
Summary
The episode argues that housing is a bad short-term investment right now, but not necessarily a bad homebuying decision if the buyer plans to stay put. Ben Carlson says nationwide home prices have rarely fallen since 1950, and the risk is less about timing the market than about whether a buyer can extend their time horizon, choose a larger down payment, and avoid a quick trade-up that would amplify frictional costs. The host and Bill Sweet both stress that location matters more than the national average.
Bill Sweet takes a strongly pro-Roth stance on retirement saving. For a couple in the 22% bracket, he says the behavioral advantage of paying taxes now and eliminating future tax uncertainty outweighs the spreadsheet case for traditional contributions. He gives similar advice to a 22-year-old California worker making a little over $100,000: at that age, with income likely to rise, he prefers Roth 401(k) contributions.
On margin, Sweet is more cautious but says a disciplined borrower with ample income, low debt, and a long time horizon might use a small amount of leverage. He emphasizes that leverage cuts both ways and should be contained, planned, and understood. For older savers with large traditional IRA balances, he says Roth conversions can make sense when paired with estate, IRMAA, and charitable planning.
Key takeaways
- Ben Carlson says national home prices have almost never been down over 5-, 10-, or 15-year periods, so the key housing decision is time horizon, not just entry price.
- Bill Sweet says he would 'go full Roth' for a couple in the 22% bracket because people rarely regret taxes already paid.
- Sweet says a disciplined investor might use about 10% leverage, but only with a plan and enough liquidity to handle a margin call.
- For Cheryl’s large IRA balances, Sweet says Roth conversions can be reasonable when estate taxes, IRMAA, and charitable planning are part of the same decision.
- Sweet recommends Roth 401(k) contributions for a 22-year-old high earner because future income is likely to be higher and the tax drag is probably smaller over a long career.
Notable quotes
“I think you should just always go full Roth in this situation”
“housing prices rarely go down. So, let's do the chart that I talked about”
“I don't see the downside”
“if you're going to do it do it lightly have a light touch”
“I would I would go full Roth”
How the episode opens
This seems like a lot of fun, but with this kind of life, you'd depreciate. So why not put your money to work? — Put my money to work. — That's right, Mr. Finchley. You can own a share of American business. There are over,200 companies listed on the New York Stock Exchange. Companies which employ more than 11 million people produce half of all the goods made in America.
Welcome back to Ask the Compound, the show where you ask and we answer. I am Ben Carlson. Let's say you are lucky enough to be a first-time home buyer who can afford a home.
Maybe you've been married for a few years in your late 20s. Buying a house isn't only about the numbers, but is now an absolute horrible time to buy a house from an investment perspective. Are you out of luck?
What's a scenario where this works out for home buyers right now? I'll answer that question and more on today's show. Welcome back after a week long hiatus.
Does that count?
Took the last week off of the year. Ask the compound show@gmail.com is our email.
Hello to everyone in the live chat as always on YouTube and watching live on Twitter. On today's show, a bunch of new questions from our compound viewers about should a couple in their late 20s buy a house right now. Does a Roth 401k make more sense than a traditional?
We get a lot of those Roth 41ks now. Those are all all the rage these days. Does it ever make sense to use just a little bit of margin in your portfolio?
Um, how should you balance a pension versus taxable assets versus tax deferred assets in retirement? And what's the best way for a 20some to save for retirement?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- housing market timing
- roth ira
- margin investing
- roth conversions
- traditional vs roth 401k
Watch the episode
Watch “Should You Buy a House Right Now?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Ask The Compound
Ask The Compound, this episode and its artwork belong to The Compound. Octagon is not affiliated with the show; this page is an independent summary.
