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Rent vs. Buy Visualization of Top 50 Cities

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Re: Rent vs. Buy Visualization of Top 50 Cities

#61

Post by jacques_chester »

cletus wrote: post #47
keyle wrote: post #38

Earlier quoted context omitted.

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…

> Frankly I think any system that encourages people to create homes for others to rent as doing a public good.

All good and well, but land releases have not kept up with demand. A supply of cheap money from the US, the mining boom and negative gearing have lead to massive increases in housing prices in the past 10 years. It's not sustainable, IMO.

We in Australia brag about sailing through the GFC, but if inflation breaks out, the Reserve Bank will hike up rates mercilessly and a lot of people won't be able to cover the interest on their $3-500k McMansions.

Re: Rent vs. Buy Visualization of Top 50 Cities

#62

Post by jacques_chester »

prawn wrote: post #56
keyle wrote: post #38

Earlier quoted context omitted.

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…

Amusingly, there are media stories here in Australia about people working in Australia and buying property in the US. Might have the details wrong, but one woman had sold an investment property (in Darwin maybe?) and bought five apartments (in Florida, I think?) in the US with that money.

Not surprised. The Australian dollar has surged against the US, and Darwin has the most overpriced capital city market in Australia (I live in Darwin, the prices are bonkers).

Re: Rent vs. Buy Visualization of Top 50 Cities

#63

Post by jacques_chester »

I have come to the conclusion that buying to occupy is no longer a rational decision.

Consider a grid. On one axis, housing purchases are cheap or expensive. On the other axis, the local economy is vibrant or moribund.

Hence:

  * Cheap + Vibrant: Basically doesn't exist.
  * Cheap + Moribund: Bad place to buy, you're tied to a high-risk location.
  * Expensive + Vibrant: Purchase cost will eat up the advantage of the local economy.
  * Expensive + Moribund: Get out ASAP.
Why buy anywhere?

Similar logic applies to buying to rent. Why not diversify? Long term rates of return on share indices are competitive with property and do not have mortgage risk. They also don't have local property market risks. Vanguard will set you up with an international share fund, hedged or unhedged, very cheaply and easily.

Re: Rent vs. Buy Visualization of Top 50 Cities

#64

Post by natrius »

mryall wrote: post #16
natrius wrote: post #12

Earlier quoted context omitted.

This same page for the largest 50 cities in the world would be useless. Unless you're very rich or European, it's very likely that the only comparisons that matter are domestic.

The top cities for buy/rent ratios are not necessarily the largest. And I know quite a few people who own properties in other countries who are neither rich nor European. One was an English IT contractor living in Australia who bought a small property in Auckland. Your "domestic" is not the same as everyone else's.

I realize that emigrants of modest means exist. My point is that they're few in number.

I also realize that "domestic" depends on one's frame of reference. It is irrelevant to my point. International comparisons of rent-vs.-buy ratios are mostly useless unless you're very mobile or investing in international real estate.

Re: Rent vs. Buy Visualization of Top 50 Cities

#65

Post by louislouis »

yummyfajitas wrote: post #26
iwwr wrote: post #25

The decision to buy is prone to two major risks: 1. That the value of the property will fall. 2. That you will be offered a better job in another town and it's too expensive to move

A third risk (technically subsumed by 1): your local economy tanks, driving down both your income and the value of your house. Buying a home to live in is a form of un-diversification.

A fourth risk: Fed raises interest rates then your monthly mortgage payments cost more than renting and hopefully not more than you can afford.

Re: Rent vs. Buy Visualization of Top 50 Cities

#66

Post by cletus »

jacques_chester wrote: post #61
cletus wrote: post #47

Earlier quoted context omitted.

> 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…

> Frankly I think any system that encourages people to create homes for others to rent as doing a public good. All good and well, but land releases have not kept up with demand. A supply of cheap money from the US, the mining boom and negative gearing have lead to massive increases in housing prices in the past 10 years. It's not sustainable, IMO. We in Australia brag about sailing through the GFC, but if inflation b…

> All good and well, but land releases have not kept up with demand

This point I've heard too often and it's one I vehemently disagree with.

Australians need to get over this quarter acre with a 250sqm house nonsense. What's more the government should stop subsidizing it to the degree that they are. It's not simply a question of land but all the infrastructure that goes along with it: water, power, roads, schools, etc.

There is no God-given right to build out rather than up.

Re: Rent vs. Buy Visualization of Top 50 Cities

#67

Post by thehickmans »

cryptoz wrote: post #3

"...of Top 50 [American] Cities" It's odd seeing lists like this that focus only on a specific country, ignoring important neighbors. Take Toronto, for example. That city is more important than 40-45 of the cities listed, but since it's a few miles North of some border, it gets completely ignored. Why not focus on a geographic region instead?

I did a few quick searches and Vancouver would be at 25 on their scale for a single-family detached house. That's using a median listing price of $900,000 and median rent of about $3000/month.

The data is out there and the Canadian real estate sales market could certainly use the shakeup of someone like Trulia.

Re: Rent vs. Buy Visualization of Top 50 Cities

#68

Post by chrismetcalf »

leelin wrote: post #8

Very 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 that the cutoffs are a bit low, and, at least for Seattle, I think the numbers for buying ($400-500K) are a bit high of reality.

I was able to buy last summer, trading in a rented two bedroom condo at $1350/mo for a two bedroom house in the same neighborhood, and I'm paying less than $50/mo more for my 30-year fixed mortgage than I was paying in rent. Yes, I've got more skin in the game with my downpayment, but it's in a growing neighborhood and I'm pretty confident that values in my area will go up in the next 5 years or so (its already appraised for higher than my purchase price).

Plus there are a lot of benefits to home ownership that I can't really assign a dollar value to. When I come home from my tech job and I don't want to sit in front of a keyboard anymore, I hack on my house. I've done a bunch of plumbing and electrical upgrades on the house, and I'm planning on building a backyard office / guest house "shed". And nothing can erase the stress of a long day quite like taking your shoes off and walking around in YOUR grass and relaxing in the backyard hammock.

If that stuff doesn't appeal to you, you'll probably be happier renting anyway. If I'd looked at it in purely financial terms I'd probably be in a rental myself.

Re: Rent vs. Buy Visualization of Top 50 Cities

#69

Post by jacques_chester »

cletus wrote: post #66
jacques_chester wrote: post #61

Earlier quoted context omitted.

> Frankly I think any system that encourages people to create homes for others to rent as doing a public good. All good and well, but land releases have not kept up with demand. A supply of cheap money from the US, the mining boom and negative gearing have lead to massive increases in housing prices in the past 10 years. It's not sustainable, IMO. We in Australia brag about sailing through the GFC, but if inflation b…

> All good and well, but land releases have not kept up with demand This point I've heard too often and it's one I vehemently disagree with. Australians need to get over this quarter acre with a 250sqm house nonsense. What's more the government should stop subsidizing it to the degree that they are. It's not simply a question of land but all the infrastructure that goes along with it: water, power, roads, schools, et…

I've heard your argument too. It's been the guiding thought behind slow land release -- that it will lead to higher density. That and the fact that it expands stamp duty receipts.

But that overlooks the fact that overly complex zoning laws, NIMBYist resistance from residents and the odd spot of outright corruption has basically prevented density from increasing.

Density has its costs too. It's cheaper to extend a sewerage and water network in a greenfield project than it is to dig up and replace it in a densely settled area. It's cheaper to maintain small streets than large streets.

Re: Rent vs. Buy Visualization of Top 50 Cities

#70

Post by robryan »

jacques_chester wrote: post #61
cletus wrote: post #47

Earlier quoted context omitted.

> 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…

> Frankly I think any system that encourages people to create homes for others to rent as doing a public good. All good and well, but land releases have not kept up with demand. A supply of cheap money from the US, the mining boom and negative gearing have lead to massive increases in housing prices in the past 10 years. It's not sustainable, IMO. We in Australia brag about sailing through the GFC, but if inflation b…

I don't really understand land releases, surely this could happen faster, it feels like its geared towards maximum profit to only release in small chunks when there are large areas they will eventually be subdividing.

Somewhere like Melbourne though, I think things need to become a little less inner city focused. As in new suburbs are popping up but not a lot of employment is close to them meaning that transportation becomes worse as there are ever increasing numbers of people making long trips to work from the outer suburbs. I've always thought it would make sense to stick another inner city like hub somewhere and put high speed rail or something between them, rather than forever branching out from a central hub.

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