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The Rise of Renting in the U.S

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Re: The Rise of Renting in the U.S

#131

Post by d4rkph1b3r »

nugget wrote: post #109
jpmattia wrote: post #73

I'm a little surprised that there hasn't been a populist rebellion over interest rates. Low rates have inflated pretty much every asset class. This is especially so in housing: The Fed needed to reinflate housing prices in order to make many systemically important players (banks, AIG) solvent again. I have to wonder though: In re-inflating house prices, have we just off-loaded the bad investment to non-systemic insti…

Bernie Sanders, a proud socialist and outspoken advocate of wealth redistribution, just pulled even with Hillary Clinton for the Democratic nomination for President. In the Iowa and New Hampshire primaries, voters under the age of 30 broke for Sanders by 70% (compared to 57% for Obama in 2008). Meanwhile Donald Trump, who has the most liberal social record of all the GOP candidates, and who continually insults the GO…

Did...you reaed what he wrote at all? Bernie sanders supports inflating assets with QE (and affectively robbing the middle class due to asset inflation).

Re: The Rise of Renting in the U.S

#132

Post by SilasX »

rayiner wrote: post #6

I don't think I'd have any interest in every buying a house if it weren't for the insane tax deductions for mortgage interest. Why be stuck in one house when your living situation changes over time (new kids, kids get bigger, kids move away, job changes).

But the deduction itself raises what people are willing to pay, bidding up the price, so homes are more expensive for the same reason.

If it weren't there when you were first looking, houses would be somewhat cheaper, perhaps enough to still seem like a good deal.

Agree on the point about embrittlement and being stuck -- I'm reading Taleb's Antifragile now, and that's exactly the kind of thing that makes your ability to plan for the future more fragile, especially because it comes with debt. However, it has the offsetting benefit of "locking in" (a bulk of) your costs of living, which has historically been a good deal.

Re: The Rise of Renting in the U.S

#133

Post by d4rkph1b3r »

> In broad strokes, this makes them good for the poor and bad for the rich

The stupidity in this comment hurts my soul.

Let me ask you this, out of the poor and the rich, which one is more heavily leveraged into assets (using debt).

Re: The Rise of Renting in the U.S

#134

Post by toomuchtodo »

cylinder wrote: post #128
toomuchtodo wrote: post #95

Earlier quoted context omitted.

I might be able to answer that. My wife and I are early 30s. I spent my 20s in the rat race, working 60-80 hour weeks for material possesions (nice vehicle, luxury townhouse, etc). At some point, I got tired of it and said, "Can we try something different?" I switched to a fully remote job. We disposed of the townhouse (no equity in it). We downsized our lives (1 car! I ride a bicycle everywhere! You would not imagin…

Well you got a remote job, so you did a little locational arbitrage. Most people leave the small towns because of lack of opportunity. The cost of living is low because incomes are low. Can someone come up with a model that's sustainable and applicable to the majority of people?

My remote job pays the same I'd make locally in my tech niche. The benefit comes from no longer having to own a car for myself to commute, gas, insurance on that car, etc. It freed up the $20K in equity I had in the vehicle, and saves me $5-8K/year in commute costs.

If I lived in SF, I would pay at least $2-3K/month for rent alone (that's $24K-$36K/year after tax money you're just burning up). Yet, you can spend under $1K in almost any non-major metro in the US.

> Can someone come up with a model that's sustainable and applicable to the majority of people?

Make more than you spend and save combined, live frugally, spend judiciously. This is not rocket science.

Re: The Rise of Renting in the U.S

#135

Post by prostoalex »

Animats wrote: post #117

Cheerleading for higher house prices used to be widespread, and was a big part of the problem. It's inflation, people. It's still the same house, for more money. The median house historically costs about 2.2x the median income. That number hit 4x nationally in 2007, and 10x in California. It's not that high this time, but it's still very high by historical standards.[1] San Francisco hit 10.5x in 2007, and now it's a…

> It's still the same house, for more money.

It's a slightly worse house due to the wear and tear, scheduled obsolescence and rising maintenance costs.

Re: The Rise of Renting in the U.S

#136

Post by floppydisk »

Phlarp wrote: post #124
floppydisk wrote: post #76

Earlier quoted context omitted.

The basic premise behind that idea is rents are (historically were) cheaper than a mortgage so you could take the mortgage-rent delta, invest that, and generate a return greater than the interest rate on the mortgage and end up ahead. A lot of the mortgage calculators have a 3-5yr inflection point where renting, traditionally, was always cheaper if you planned on staying somewhere for 3-5yrs and moving. The problem i…

>Tack on the millennial generation's hesitancy to settle down in one location and you get a set of economic conditions that encourage renting and regular rent increases. Are we hesitant to "settle down" or are we trapped in a death spiral of student debt, rising rents and underemployment?

As always, it depends. Speaking anecdotally, most of the millennials I know speak rather forcefully about their desire to not settle down, marry, or begin a family prior to 30. I can count the number (amongst my friends) on one hand who discuss factors like underemployment and debt as being significant in their decision to delay settling down. Most seem to enjoy the party/city lifestyle and spend their time focusing on their career/traveling instead.

Yes, it's possible all of those things are factors but I'm going to argue for most it's subconscious rather than explicit factors in a settle/not settle equation. I think a lot of millennials are buying into the "extended adolescence"/party phase/single life/no responsibility/free spirit/high mobility (pick your moniker) lifestyle choices and acting accordingly - based on my anecdotal experience.

Re: The Rise of Renting in the U.S

#137

Post by wavefunction »

cylinder wrote: post #128
toomuchtodo wrote: post #95

Earlier quoted context omitted.

I might be able to answer that. My wife and I are early 30s. I spent my 20s in the rat race, working 60-80 hour weeks for material possesions (nice vehicle, luxury townhouse, etc). At some point, I got tired of it and said, "Can we try something different?" I switched to a fully remote job. We disposed of the townhouse (no equity in it). We downsized our lives (1 car! I ride a bicycle everywhere! You would not imagin…

Well you got a remote job, so you did a little locational arbitrage. Most people leave the small towns because of lack of opportunity. The cost of living is low because incomes are low. Can someone come up with a model that's sustainable and applicable to the majority of people?

@toomuchtodo

>>applicable to the majority of people?

>Have job that pays median US wage or above.

This requirement and solution are a mis-match.

Re: The Rise of Renting in the U.S

#138

Post by hueving »

toomuchtodo wrote: post #134
cylinder wrote: post #128

Earlier quoted context omitted.

Well you got a remote job, so you did a little locational arbitrage. Most people leave the small towns because of lack of opportunity. The cost of living is low because incomes are low. Can someone come up with a model that's sustainable and applicable to the majority of people?

My remote job pays the same I'd make locally in my tech niche. The benefit comes from no longer having to own a car for myself to commute, gas, insurance on that car, etc. It freed up the $20K in equity I had in the vehicle, and saves me $5-8K/year in commute costs. If I lived in SF, I would pay at least $2-3K/month for rent alone (that's $24K-$36K/year after tax money you're just burning up). Yet, you can spend unde…

Right, you have a high paying job so it's easy for you to sit on a perch well above the median and tell people how simple it is.

Re: The Rise of Renting in the U.S

#139

Post by cylinder »

bluedino wrote: post #48

I'd have to save up almost a years pre-tax salary to buy a home. Well, one that I would want . I could save up half a years pre-tax salary and buy my not-ideal house. Nice/modern home, good location/schools, or large size. It seems like you can only pick 2 without spending a ton of $. Until then, I rent.

Do you think it used to be different? You buy a starter home, and move your way up. Why do you expect young people to immediately be able to buy their perfect dream home?

Re: The Rise of Renting in the U.S

#140

Post by toomuchtodo »

hueving wrote: post #138
toomuchtodo wrote: post #134

Earlier quoted context omitted.

My remote job pays the same I'd make locally in my tech niche. The benefit comes from no longer having to own a car for myself to commute, gas, insurance on that car, etc. It freed up the $20K in equity I had in the vehicle, and saves me $5-8K/year in commute costs. If I lived in SF, I would pay at least $2-3K/month for rent alone (that's $24K-$36K/year after tax money you're just burning up). Yet, you can spend unde…

Right, you have a high paying job so it's easy for you to sit on a perch well above the median and tell people how simple it is.

It's simple the same way exercise is simple: knowing what to do is easy, having willpower to do it is hard.

Being financially independent can be done on a median wage, full stop.

https://www.reddit.com/r/financialindependence

http://www.mrmoneymustache.com/

"Is that all too fluffy and philosophical? OK, fine. Here’s how to cut your life costs in half. Start by getting rid of your Debt Emergency if you have one. Live close to work. Move to another city if you enjoy adventure. Don’t borrow money for cars, and don’t buy stupid ones. Ride a bike wherever you can. Cancel your TV service. Stop wasting money on groceries. Give your kids the opportunity to achieve greatness without being pampered. Lose the overpriced cell phones. Learn to appreciate the life-boosting joy of using your own body to get things done. Learn to mock convenience. Practice optimism."

http://www.mrmoneymustache.com/2011/08/01/a-millionaire-is-m...

"A family of four in the US can live comfortably on about 24k per year plus having a paid-off house. With an nice conservative 4% annual withdrawal/return rate on your investments, you need $600k invested to generate this cashflow, inflation-adjusted, forever, plus your $200k house. $800k total. Or, if you want to get off your butt and work very occasionally to earn $12k per year, you can slice the $600k number down to $300k! Or you can save the $600k AND work, and keep saving more and more over the years – ending up a multimillionaire all while doing very little paid work."

You will never get ahead if you live in SF, period (maybe if you strike a startup lottery ticket; with those odds, might as well buy a traditional lottery ticket and save the nights and weekends). I'm sorry to be the bearer of bad news. You can view it as an adventure, but you'll eventually need to dig out financially (overcompensate retirement savings) when you decide to move somewhere else.

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