This visualization assumes that a condo for sale is the same quality as an apartment for rent. At least in Seattle, that is not true--there has been a rash of (ill advised) condo construction in the area which has resulted in a lot of really nice two bedroom condos for sale, with new construction and spectacular views. Two bedroom apartments on the market are nowhere near as nice--and, of course, nowhere near as expensive. That's not to say that the condos aren't overpriced, just that the distribution of supply may not be uniform in every city.
Rent vs. Buy Visualization of Top 50 Cities
41–50 of 151 posts
Re: Rent vs. Buy Visualization of Top 50 Cities
#42[deleted]
Re: Rent vs. Buy Visualization of Top 50 Cities
#43I'm from Australia but now live in NYC and I've been debating the question about whether to buy or rent. It's amusing to me to see a big red circle on this graphic for NYC. I can understand why. NYC is a special case in many ways. For one thing, from a purely financial perspective, your best bet is to find a rent stabilized apartment that is well under market value and then invest your money elsewhere, possibly on bu…
Your numbers seem to be a little off, unless we are talking about places that are closer to bronx or buildings that are falling apart.
In midtown, that 1BR will run you ~$2,500 to rent and close to $1 million to buy.
Maintenance fees should also be higher, at least $800.
Re: Rent vs. Buy Visualization of Top 50 Cities
#44Very very cool! I'm wondering why they chose 15 / 20 as the cutoff ratios though. I'm a licensed real estate agent in NYC and I've helped a number of clients make purchases where it was actually cheaper to buy than rent (usually a studio or 1BR, or outside Manhattan). It seems like you can finance a home purchase these days at 5% or less on 30-year fixed. Add in the mortgage interest tax deduction and you are really…
I agree. I just ran the numbers for SF. Based on mid-point of Trulia's buying and renting price ranges ($750K to buy, $3.25K monthly rent), I get the following annual real costs: buying: ~$24K renting: ~$36K That is based on the following assumptions: 40% margin tax rate, principal repayment is not a real cost (it's a saving account...) 15% down payment (renters invest the equivalent amount in a 3% annual return fund…
"you can always go back to renting in 5 years"?
You mean sell the house? Fees alone would hammer you pretty hard if the value was flat for 5 years. Selling houses costs a LOT of money. Also, you need a 20% downpayment to dodge mortgage insurance, I think.
http://www.nytimes.com/interactive/business/buy-rent-calcula...
That gives a pretty clear picture. The moving parts that matter are interest rate, appreciation of the purchased home, and inflation of rent.
Re: Rent vs. Buy Visualization of Top 50 Cities
#45Earlier quoted context omitted.
It looks like it does not attempt to preserve geographic location exactly. It seems to load them in alphabetical order and fits the next one as best it can given the already plotted bubbles.
(I made this) Sorry if this is confusing! This visualization is a Dorling Cartogram, which sacrifices geographic location accuracy in order to not have overlapping points (the East Coast would be a tight unreadable bundle otherwise, as well as the Bay Area). The basemap is intentionally left as just an outline to provide some visual context. A great example of this in action is the Olympic Medal count visualization b…
Thanks for the info.
I understand and accept that the location is not accurate to the map, but what was so confusing was that the locations didn't seem to be accurate even with respect to other locations, and that the location wasn't deterministic. That doesn't happen on the nytimes example.
If I toggle back and forth between sorting by population and sorting by Rent Price, the bubbles bounce around and end up in... some random arrangement. Sometimes it's reasonable, and sometimes it's bizarre.
Here's a particularly egregious example http://i.imgur.com/ZPAno.png
Los Angeles is SouthEast of San Diego, Oakland is West of San Francisco and San Jose is Northwest of both of them. It's hard for me to avoid being pulled out by that.
Re: Rent vs. Buy Visualization of Top 50 Cities
#46I'm confused about the populations. For example, it mentions the population of Kansas City is 143K. Wikipedia says 482,299, and "greater" KC is closer to a million. What exactly is measured here?
The population of Kansas City is 143,000--Kansas City, Kansas, that is. (They're mistakenly using population data for Kansas City, Kansas, instead of the much larger Kansas City, Missouri.)
Re: Rent vs. Buy Visualization of Top 50 Cities
#47I'm from Australia but now live in NYC and I've been debating the question about whether to buy or rent. It's amusing to me to see a big red circle on this graphic for NYC. I can understand why. NYC is a special case in many ways. For one thing, from a purely financial perspective, your best bet is to find a rent stabilized apartment that is well under market value and then invest your money elsewhere, possibly on bu…
Hey mate. Interesting perspective. without knowing your financial situation, I'd suggest to keep working in the U.S. and invest in housing back in Australia. Both are great prospects but you might be able to buy 2 houses near the beach in Australia (say Perth / Adelaide) for the price of one in NYC. In a way, it gives you diversification that NYC doesn't. Also buying walking distance from the beach gives you that sec…
> I'd suggest to keep working in the U.S. and invest in housing back in Australia.
As it happens I do own a house in Australia that is rented out but when you're paid in one currency and your costs are in another you open yourself up to exchange rate risk. So I'm way of overweighting myself in AUD liabilities. It's not a currency I'd be betting against in the next 10 years. Likewise, the USD looks like it'll only get weaker in the short to medium term. Pretty much every government here has a budget in deficit and you may find local and possibly even state governments defaulting in years to come.
The US governments (at every level) seem to have made the same mistake as many individuals: when times are good they simply increase spending to match or exceed revenue. When revenues drop they're in a bad position. The US has this huge Sword of Damacles hanging over its head in the form of Social Security. It's ultimately unsustainable in its present form. Everyone knows it. Nobody wants to do anything about it.
At least in Australia we've been moving towards funding our own retirements for decades. We're not there yet but we're a damn sight better off.
As for buying houses near the beach, not in any capital city I know about (except maybe Brisbane now). Certainly not Perth or Sydney. In Perth you'd have to go 50km+ north of the city to get anything remotely close to the beach for under $500k.
And the idea that property near the beach "will never go down" is exactly the kind of thinking that led to the subprime meltdown.
As for the Australian tax system, mine was't a criticism, merely an observation. Frankly I think any system that encourages people to create homes for others to rent as doing a public good. After all, when someone rents, somebody else by definition has to own that house.
One other difference worth pointing out between the US and Australia is that in Australia interest rates are typically variable. They move mostly in lockstep with the official (Reserve Bank) cash rate. You do get fixed mortgages but they're rarely for more than 5 years.
In the US, mortgages seem to be fixed for the 30 year life of the loan. This actually makes buying in the short to medium term attractive in the US as interest rates can only really go up. 4% fixed for 30 years is a hell of a deal.
Re: Rent vs. Buy Visualization of Top 50 Cities
#48I'm from Australia but now live in NYC and I've been debating the question about whether to buy or rent. It's amusing to me to see a big red circle on this graphic for NYC. I can understand why. NYC is a special case in many ways. For one thing, from a purely financial perspective, your best bet is to find a rent stabilized apartment that is well under market value and then invest your money elsewhere, possibly on bu…
Your numbers seem to be a little off, unless we are talking about places that are closer to bronx or buildings that are falling apart. In midtown, that 1BR will run you ~$2,500 to rent and close to $1 million to buy. Maintenance fees should also be higher, at least $800.
Are you talking a modern condo? If so I believe it. If not, you can find places for cheaper than that. Put it this way last month I rented a 1BR in a Chelsea brownstone for $2,000/month (which is generally more expensive than Midtown).
But think about those numbers for a second. $2500/month is $30,000pa or a 3% gross return, even less once you factor in maintenance. To put that in perspective, 5% gross return seems to be the benchmark in Australia (although in Australia there tends to be a tradeoff between capital growth and annual income).
In London I've seen the gross return be 10% or even higher.
So who would invest $1 million for a On a side note, some may consider it strange that I'm talking about the rent figure as a return. I've certainly spoken to many people who can't look past the speculation but that income is really important as it does relate to the asset price. They simply can't get too far out of whack sustainably.
Commercial or industrial property tends to be judged much more on viewing the property as an asset that generates income (Las Vegas casinos notwithstanding).
Re: Rent vs. Buy Visualization of Top 50 Cities
#49I see it as a visualization of where "old money" has gobbled up the realestate.
Re: Rent vs. Buy Visualization of Top 50 Cities
#50Very very cool! I'm wondering why they chose 15 / 20 as the cutoff ratios though. I'm a licensed real estate agent in NYC and I've helped a number of clients make purchases where it was actually cheaper to buy than rent (usually a studio or 1BR, or outside Manhattan). It seems like you can finance a home purchase these days at 5% or less on 30-year fixed. Add in the mortgage interest tax deduction and you are really…
I agree. I just ran the numbers for SF. Based on mid-point of Trulia's buying and renting price ranges ($750K to buy, $3.25K monthly rent), I get the following annual real costs: buying: ~$24K renting: ~$36K That is based on the following assumptions: 40% margin tax rate, principal repayment is not a real cost (it's a saving account...) 15% down payment (renters invest the equivalent amount in a 3% annual return fund…
Principal repayment is a savings account if and only if real estate never declines in value.