Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The Rise of Renting in the U.S

citylab.com

Post reply on HN
Print view View original

321–330 of 380 posts

Re: The Rise of Renting in the U.S

#321

Post by distances »

turar wrote: post #156
JackFr wrote: post #142

Earlier quoted context omitted.

> On top of that, it also depends where you think the interests rates will be in 10-20 years from now. If you believe that they will be higher than they are currently, then that's even more reason to keep that loan locked in for 30 years instead of paying it off sooner. That makes no sense. You'll be better off paying a lower interest rate than you would be not having a loan in a high rate environment?

Remember, the loan is locked in. Everything around you may be a high rate environment, but your loan is still 3.5% when regular bank savings account would be paying, say 7%. So, if you bought shares of an Emerging Markets ETF [1] with the money that you would have otherwise paid for accelerated mortgage payments. Today these shares are paying you around 3.5% in dividends alone. Fast forward ten years to a high rate e…

A bit offtopic, but is it normal to have interest rates locked for the whole duration of the loan? Around here the interest rates usually follow 1, 6, or 12 month Euribor[0] with a small bank margin on top.

So yes, technically some people now could have loans with negative interest rates, but there is usually an extra clause for a minimum or 0% or 1% or somesuch.

[0] https://en.wikipedia.org/wiki/Euribor

Re: The Rise of Renting in the U.S

#322

Post by thanatropism »

SilasX wrote: post #181
turar wrote: post #42

Earlier quoted context omitted.

I would argue in the current situation of 3.5% mortgage rate, the best scenario is to invest the cash in the stock market. If your returns are anything above 3.5% over the 30 year load amount, you're good.

I've worked through the same logic myself. I don't deny that it generates better financial returns. However, the devil is in the details. Let's say after 30 years you have a big bag of money. Well, now you have to invest it for the passive income to continue paying rent. But, per my recent comment[1], inflation-protected passive income will pay something like 2.1%. Oh, and you're taxed on the interest income. So, mor…

> less optimal for your lifestyle

That's a tiny bit racist.

Re: The Rise of Renting in the U.S

#323

Post by ant6n »

juped wrote: post #316
superuser2 wrote: post #190

Earlier quoted context omitted.

I'm not sure it's the "American Dream" you're arguing with. To my understanding that phrase specifically refers to owning a home in a suburb. It is formulated explicitly against having a landlord, living paycheck-to-paycheck, and living in an urban center.

>having a landlord, living paycheck-to-paycheck, and living in an urban center One of these things is not like the others.

Three of these things are not like the others.

Re: The Rise of Renting in the U.S

#324

Post by ant6n »

lostcolony wrote: post #272
marincounty wrote: post #246

Earlier quoted context omitted.

I think you should write a book, but don't go through the vanity press ripoff. Publish it yourself. I have known people who live out of a van/truck camper until cops realize what's going on. They will harass you to no end. The tickets are expensive. The days of " Just move on." are over. That said, in most counties, there is nowhere to park a vechicle overnight. We need to desiginate areas, in commercial areas, where…

I'm surprised. I'd think with a van or camper or similar you can just park in any 24 hour walmart (or similar) parking lot.

Apparently there are some Walmarts where it's allowed to stay overnight, and some where is not. There's a list of where it's allowed. Then there's the whole culture aground it, for example is considered courteous to ah permission, and one shouldn't stay for more than few days... It so I read.

Re: The Rise of Renting in the U.S

#325

Post by jensen123 »

I find it interesting that many people look at governments differently than they look at say grocery stores or auto mechanics. If a grocery store or auto mechanic is charging too much or providing poor service, I would go to another one. Why don't people do that with governments? Obviously, because they're kinda "stuck". Moving can be a serious pain in the rear.

So how to make moving easier? If you're renting a home, then it's certainly easier to move than if you're owning. However, it's still a major pain if you own a lot of physical stuff. But as far as I can tell, owning lots of physical stuff is becoming less and less necessary. You no longer need a huge amount of music records, paper books, VHS movies, billiard table, pinball machine etc., since you can fit all those things into a tiny computer. Also, online shopping makes finding/buying any item easy, so keeping things just in case you might need them someday makes less sense now than it used to.

I currently own a home, but I'm tempted to become a renter.

Re: The Rise of Renting in the U.S

#326

Post by minimax »

distances wrote: post #321
turar wrote: post #156

Earlier quoted context omitted.

Remember, the loan is locked in. Everything around you may be a high rate environment, but your loan is still 3.5% when regular bank savings account would be paying, say 7%. So, if you bought shares of an Emerging Markets ETF [1] with the money that you would have otherwise paid for accelerated mortgage payments. Today these shares are paying you around 3.5% in dividends alone. Fast forward ten years to a high rate e…

A bit offtopic, but is it normal to have interest rates locked for the whole duration of the loan? Around here the interest rates usually follow 1, 6, or 12 month Euribor[0] with a small bank margin on top. So yes, technically some people now could have loans with negative interest rates, but there is usually an extra clause for a minimum or 0% or 1% or somesuch. [0] https://en.wikipedia.org/wiki/Euribor

In the US, the 30 year fixed rate mortgage is the most popular type of mortgage by a wide margin.

Re: The Rise of Renting in the U.S

#327

Post by ant6n »

paulddraper wrote: post #276
ap3 wrote: post #160

Earlier quoted context omitted.

Yes. Because renters don't pay property taxes /s

Though they do usually pay less since they usually live in less property.

This. I rent a small apartment near downtown. If I bought property, it would most likely be in the same area, but not a small apartment.

Re: The Rise of Renting in the U.S

#328

Post by pc86 »

danielvf wrote: post #84
floppydisk wrote: post #66

Earlier quoted context omitted.

30 year mortgages make the monthly payment smaller, which reduces the monthly cost of housing, BUT you end up paying more interest since you aren't paying principal off as fast which means the total long term cost of the asset is more due to compound interest. A 15yr mortgage takes more out per month, but it's cheaper overall since you're paying off principal faster and interesting isn't accruing or compounding as qu…

I don't think this works, because 30 year mortgages have a higher rate of interest than 15 year mortgages do.

Paying a 30 year note off in 15 years is only marginally more expensive than having the 15 year note to begin with, with the added benefit that if something should happen to your cash flow you have a much lower minimum payment you can fall back to.

Using bankrate.com's advertised rates and mortgage calculators for my zip code and $300k mortgage (which is very nice with some land in my area since with 20% down that is about a $375k house):

  - 30 year fixed rate (lowest):  3.500%
  - 30 year fixed payment: $1,347/mo
  - 30 year fixed total interest paid: $184,968.26

  - 15 year fixed rate (lowest):  2.750%
  - 15 year fixed payment: $2,036/mo
  - 15 year fixed total interest paid: $ 66,455.68
If you make the 15 year payment on the 30 year note you will pay the loan of 14 years early and save $92,302.71 in interest. If you make double payments based on the 30 year note you will pay the loan off in just over 11 years and pay less interest than on the 15 year note with minimum payments.

Re: The Rise of Renting in the U.S

#329

Post by pc86 »

bradleyjg wrote: post #147
maxerickson wrote: post #44

Earlier quoted context omitted.

This makes me wonder if 30 year mortgages even end up making housing more affordable. (I guess it would be a prisoners dilemma situation, where individuals benefit by taking them out but the overall situation is made worse)

>> This makes me wonder if 30 year mortgages even end up making housing more affordable. Everything the government does to subsidize home-ownership ends up getting capitalized into home prices and so acts as a naked giveaway to incumbent homeowners and either does nothing for or actively hurts non-incumbents. Interventions breed more interventions as the prior ones no longer provide the above general inflation price…

How is a 30 year loan on what is usually the largest purchase of one's life a government intervention? Plenty of banks offer these loans with no backing, support, or encouragement from the government.

And what do prepayment penalties have to do with anything? As a consumer I will absolutely not sign any loan that comes with a prepayment penalty. It would be idiotic to.

Re: The Rise of Renting in the U.S

#330

Post by codingdave »

themagician wrote: post #41
chishaku wrote: post #13

Why are mortgage debtors referred to as home owners? Edit: I was being a bit facetious. With liar loans, no down payment mortgages, deferred interest, "prices only go up," etc, it's been too easy to sell home "ownership" to people without their requisite understanding of the risks involved and the constantly changing market realities. I'm all for personal responsibility but the use of language is powerful.

Because in the US we like to sell people on the idea of "ownership", when the reality is that the bank retains all the real value. Only a fraction of so-called "homeowners" actually own more than 50% of their home. Most homeowners just rent from the bank. Many will rent from the bank for life. The way homeownership is sold in the US is nothing more than a way to get people to give up hundreds of thousands of dollars…

And for those 20 years, their monthly payment never goes up. They can make any change they want to the property without asking permission. You end up, 10+ years down the road, with exactly the home you want, at prices that cannot be matched by renting in the same area. And if you pay a little extra each month, in 15 years, it is paid off, and you can keep it forever at the cost of nothing but property taxes.

Just because many homeowners do not stick around one home long enough to get the benefits does not mean that it is inherently a bad idea.

Post reply on HN