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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

#81

Post by jacques_chester »

cletus wrote: post #77
jacques_chester wrote: post #69

Earlier quoted context omitted.

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 sew…

FWIW http://www.wired.com/science/planetearth/magazine/16-06/ff_h... As far as stamp duty goes, IMHO that system needs to be abolished. Property taxes should be applied smoothly rather than transactionally. For one thing, stamp duty reduces the flexibility of the labour market. Consider: someone owns a house in Sydney worth $1 million. They're offered a job in Perth for, say, $150,000. Now to sell up and buy a new ho…

You're right that the carbon footprint is lower, but that doesn't change the fact that the collision of politics and economics has prevent urban density from increasing in Australia. We need both to release land and increase density or will are beggaring ourselves unnecessarily.

As for stamp duty, the states rely on it too much to give it up.

Re: Rent vs. Buy Visualization of Top 50 Cities

#82

Post by mrtron »

tomsaffell wrote: post #76
mrtron wrote: post #32

Earlier quoted context omitted.

available now on 5 year ARMs -- you can always go back to renting in 5 years, and if rates soar then that means the economy has recovered, which means your house is worth more.. Rates soaring could also push the real estate prices drastically down.

The 'govt' will only raise rates substantially when they feel the economy requires a cooling effect ( taking away the punch bowl just as the party gets started , and all..), by which time house prices will have gone up. The circumstance in which we could have high rates and falling property prices is the crash after the next rally (if market cools too quickly), which is a ways off.

I know the Bank of Canada better (econ prof from there) than the Federal Reserve. Their goal is to keep inflation at ~2%. Basically there are only a few tools they use, money supply and interest rates.

It is hard to bet on when inflation will become a concern and to what level. Banks are already betting on it happening with their 5 year fixed rates increasing before the actual rate has changed.

But it comes back to the point that if rates do skyrocket within 5 years at the end of your fixed term you could be stuck with a house lower in value than you purchased it and monthly rates you can't afford.

Re: Rent vs. Buy Visualization of Top 50 Cities

#83

Post by shashashasha »

ianferrel wrote: post #45
shashashasha wrote: post #20

Earlier quoted context omitted.

(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...…

That's definitely the map's weakness. We are using a force-based model which is nice in that it is dynamic (if lazy), but does not have the same consistency as the NYTimes example. For the NYTimes I understand they baked and tweaked the layouts in advance in order to play it as an animation as well as keep the layouts in the same position, which we should probably do on future vaguely geographic explorations like this :)

Re: Rent vs. Buy Visualization of Top 50 Cities

#84

Post by kscaldef »

jacques_chester wrote: post #63

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…

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

Neither of these things is binary.

Re: Rent vs. Buy Visualization of Top 50 Cities

#85

Post by zach »

showerst wrote: post #40
Daisy wrote: post #31

Hi everyone, Thanks for your feedback & questions. Just wanted to chime in and hopefully clarify the methodology that goes into Trulia's Rent vs. Buy Index. To make an apples-to-apples comparison, we only looked at the median list price and annualized median rent for two bedroom apartments, condos and townhouses in the 50 largest U.S. cities based on population. As such, this index does not look at single family home…

This is a great infographic idea, but the census 'incorporated city' boundaries/populations is not that good of a data set for this use case. Metropolitan statistical areas would've been a more reasonable choice here, since in many cities the city proper (as defined by incorporated bounds) is either vastly under or vastly over-priced compared to where people actually live, not to mention throwing off the relative pop…

The difference between metropolitan statistical areas and cities is particularly noticeable with respect to Miami.

The city itself is only the 42nd largest in the country (population 450K) but the MSA (which includes Fort Lauderdale and many suburbs) is the country's 7th-largest (population 5M+).

Re: Rent vs. Buy Visualization of Top 50 Cities

#86

Post by klochner »

tomsaffell wrote: post #71
klochner wrote: post #37

Earlier quoted context omitted.

> 30 year ammortization of loan with a 4% rate (available now on 5 year ARMs) You realize that's how a ton of people lost their homes, right?

That's only a part truth. My example specifically deals with San Francisco (because Trulia showed it to be a 'rent not buy' city). In SF there have not been anything like the level of defaults seen elsewhere in the US. Elsewhere in the US, rate adjustments on ARMs were just one part of the problem. The other bigs ones behind the recent crisis were: over inflated house prices (in SF, prices were only down ~15% on peak…

My point is that you're taking on significant risk with a cavalier attitude. Let me try another:

  > if rates soar that means the economy has recovered and your house is worth more
You realize that LTCM went bankrupt betting on asset price correlations?

Re: Rent vs. Buy Visualization of Top 50 Cities

#87

Post by jacques_chester »

kscaldef wrote: post #84
jacques_chester wrote: post #63

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…

> On one axis, housing purchases are cheap or expensive. On the other axis, the local economy is vibrant or moribund. Neither of these things is binary.

If it wasn't clear, I'm using "axis" in the sense of continuous values.

Re: Rent vs. Buy Visualization of Top 50 Cities

#88

Post by dminor »

tomsaffell wrote: post #22
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. 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

For definitions of "always" where the real estate market never tanks and houses are easy to sell.

Re: Rent vs. Buy Visualization of Top 50 Cities

#89

Post by rdouble »

vaksel wrote: post #43
cletus wrote: post #29

I'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.

I lived in NYC during 2009-2010 and looked at a number of rental 1BRs under $2000 in Chelsea/Flatiron/Murray Hill & that area around Gramercy that isn't really Gramercy.

I wouldn't say the buildings were falling apart but they did have dated architecture, and not dated enough to be classic. (think 70s/80s).

Likewise, I thought it would be a good time to buy, and there are a lot of 1BR Maintenance fees were indeed always too expensive, but was more around $600.

Your prices do apply, but more to brand new buildings, or buildings in "hot" neighborhoods.

Re: Rent vs. Buy Visualization of Top 50 Cities

#90

Post by 100k »

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?

As an American I noticed that when I visited Toronto, Canadians would always compare things to "North America" (as in "Toronto has the 7th largest metro area in North America").

Interestingly, the meaning of this would typically exclude Mexico and Central America, which by geography it should not.

Whereas in the US, we typically compare things to "America" and exclude Canada and Mexico as a matter of course.

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