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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

#281

Post by kchoudhu »

dsp1234 wrote: post #104
kchoudhu wrote: post #55

Earlier quoted context omitted.

Because in theory, they own the deed to the property, which can in a pinch be sold to pay off the debt. I know this is an unpopular opinion, but it is true: if done correctly, the purchase of a house should have zero effect on the buyer's net worth.

if done correctly, the purchase of a house should have zero effect on the buyer's net worth. What is the hedge here against falling home prices? In other words, if you purchase a home a reasonable price of $500k, but changes outside of your control cause the market for that house to fall such that you could only sell it for $400k, how is your net worth not affected?

Sorry, I should have been clearer: at the time of purchase, there should be a zero-impact on your net worth.

As time passes, a delta opens up between the value of your house and the amount owed. This can be positive (your house went up in value, and you are now richer) or negative (you are underwater on your mortgage).

If you are underwater, you have options. I wouldn't recommend it, but strategic default[1] ("jingle mail") was a huge problem for mortgage lenders during the 2008 crisis, and allows you to cut your losses if you deem your position to be untenable.

[1]https://en.wikipedia.org/wiki/Strategic_default

Re: The Rise of Renting in the U.S

#282

Post by jdubs »

taurath wrote: post #203
roymurdock wrote: post #185

Earlier quoted context omitted.

Well, they earned the financial stability to raise you and your brother and put you through school, which I'm they wouldn't consider a waste. It's a competitive world we live in, and I often feel like I'm wasting every minute that I'm not actively working towards learning something new/planning my next cool experience/my next job opportunity. I wonder when I'll have the time to settle down and raise a family. Hopeful…

They put my brother through a bit of school - I left home at 18 on unamicable terms over my sexual orientation. Its a competitive world but spending every waking minute of your time on things that will give you resources will not give you the skillset needed to enjoy the resources you get. If you're trying to climb the socioeconomic ladder make sure you ask yourself whether its really worth it.

Hindsight is 20/20.

Re: The Rise of Renting in the U.S

#283

Post by melted »

toomuchtodo wrote: post #140
hueving wrote: post #138

Earlier quoted context omitted.

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…

>> on about 24k per year

Horseshit. A family of 4 will spend about 2/3rds of that amount on healthcare (meaning insurance + deductibles and copays) alone. Then there's real estate tax as well, utilities, food, necessities. I'd say $50K is bare minimum, and $75k could actually be quite comfortable after some belt tightening.

Re: The Rise of Renting in the U.S

#284

Post by phamilton »

hkmurakami wrote: post #207
awakeasleep wrote: post #154

Earlier quoted context omitted.

Property taxes should basically kill the dream of "and don't pay a fucking thing to anyone" for anyone that lives in the US. Especially city dwellers. I was surprised to see tax for properties I could technically afford cost more per year than I had been paying in rent.

fwiw you do get to deduct property taxes from your taxable income.

Not under AMT.

Re: The Rise of Renting in the U.S

#285

Post by rahimnathwani »

Tsagadai wrote: post #222
rhapsodic wrote: post #121

Earlier quoted context omitted.

> It may be time to look at applying antitrust laws to rental real estate. Or better yet, look at repealing or modifying the laws that keep the supply of housing from rising along with the demand.

Have you been to China lately? Many Chinese cities are what happens when you allow supply to meet demand. Prices don't necessarily come down with increased supply because it also increases speculation (and contrary to economists believes we are not rational actors). Demand also follows supply, if you increase supply there is often an increase in demand because now people can move to $desirable_location.

But that speculation only affects the value of a property. It doesn't affect rent levels, which are determined by short term supply/demand.

The increased supply may not make it easier to buy, but it sure makes it cheaper to rent a place.

Re: The Rise of Renting in the U.S

#286

Post by rahimnathwani »

seizethecheese wrote: post #225
Tsagadai wrote: post #222

Earlier quoted context omitted.

Have you been to China lately? Many Chinese cities are what happens when you allow supply to meet demand. Prices don't necessarily come down with increased supply because it also increases speculation (and contrary to economists believes we are not rational actors). Demand also follows supply, if you increase supply there is often an increase in demand because now people can move to $desirable_location.

> Many Chinese cities are what happens when you allow supply to meet demand. Um, no. Chinese cities are a direct result of government policies to boost GDP through construction and are the supply of housing has little to do with market forces.

You are both right.

Re: The Rise of Renting in the U.S

#287

Post by chillwaves »

toomuchtodo wrote: post #140
hueving wrote: post #138

Earlier quoted context omitted.

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…

It is not "willpower" that is preventing most people from high earnings.

Re: The Rise of Renting in the U.S

#288

Post by chillwaves »

ahh wrote: post #256
madengr wrote: post #239

Earlier quoted context omitted.

Move to DC. The amount of single woman is crazy.

Yeah, I know that now. Too late to move at this point, I have two dogs , own a home in the city, have an established career...moving would be incredibly expensive and risky. Going back to any previous move I made in the past, I'd never consider anything other than DC, New York, or Austin (perhaps a few others in the South, but I don't know the area too well.) Anywhere on the West Coast is a cripplingly bad decision.

As someone who lives in DC and always wanted to live in a west coast city, if only for a little while, I wonder if this is "grass is greener" syndrome or maybe DC really is as good as it gets?

I did not enjoy NYC. Too dirty, too busy, too crowded.

Re: The Rise of Renting in the U.S

#289

Post by gnaritas »

gozur88 wrote: post #275
gnaritas wrote: post #263

Earlier quoted context omitted.

Houses tend to cost more than apartments, you upgraded, of course it cost more. It's generally cheaper to buy a place than to rent the same place; your rent is paying the landlords mortgage on that property + a little extra for him and buffer for time between tenants. People don't rent out places for less than it cost them unless they're desperate.

Yes, of course. I moved from a single bedroom unit in a building with dozens of apartments to a house with three bedrooms and two bathrooms, a yard, an attic, better appliances, better carpet, and a much better kitchen. That's sort of normal, I think. You get a better standard of living for that extra money. My point was, originally, that if you're in an apartment you'll most likely be able to save for a downpayment…

Ah, yea I didn't get that at all from your first post; thanks for clarifying.

Re: The Rise of Renting in the U.S

#290

Post by chillwaves »

joelwilliamson wrote: post #257
serge2k wrote: post #238

Earlier quoted context omitted.

> Being financially independent can be done on a median wage, full stop. Do you make median wage? If so, good for you. If not, why don't you go do that before telling people how easy it is.

He never said it was easy. It's simple, but not easy.

The term is not meaningful. It is much more complicated to save money when you are making poverty levels than it is working at decent wages. There are more costs associated with being poor.
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