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Show HN: Should I Get a House? a better rent vs. buy calculator

shouldigetahouse.com

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Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#81

Post by nick0garvey »

drfuchs wrote: post #47

Where do I enter the intangible value of owning: "Don't have to worry about getting priced out if the neighborhood becomes popular; can do any improvements I want, when I want, how I want, and they become an asset; don't have to worry about not getting lease renewed at an inconvenient time (perhaps in the middle of a school year) when the owner's nephew gets divorced and needs a place; on the other hand, don't have t…

This is the whole point of doing the calculation. If you determine that you're going to have $10,000 less in pocket per year, then you can make the call whether the freedom of owning a house is worth it for you for that price or not.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#82

Post by seattle_spring »

ozarkerD wrote: post #74
waylandsmithers wrote: post #43

One piece of millenial defeatism I hear a lot is "Ugh, I'll never be able to afford a 20% down payment, home ownership is impossible" I'm not sure where this myth came from, but as a millenial who went through the buying process in 2012 and again in 2016, I remember both times the lender just asked how much we wanted to put down. We could have gone as low as 3%, or maybe even lower. Yes, you have to pay PMI (private…

Very true. FHA loans let you put as little down as 3.5% for first time buyers. I wouldn’t recommend it but the opportunity is there.

FHA loans in a competitive market put the buyer at an extreme disadvantage versus conventional or cash.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#83

Post by ska »

mattgibson wrote: post #40

These calculators seem to miss the point for me. If I spend less overall by renting, I don't care because I can't pass the property as an inheritance to my kids. If I buy, they get a house for free when I pass on. Also, if I rent, I have to continue to pay the same (high) rents through retirement where my income will likely drop drastically once I stop full time work. The aim of buying is to be mortgage-free when you…

You aren't looking at the calculations correctly, where the rent is a "win" it's because your overall net worth is higher than if you had bought.

You might not have the house to pass to your kids, but you would have more cash than the value of the house. As to your second point, think of it this way: the tipping point on these two means you could just buy the house cash when you retire, and end up with more money in the bank also.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#84

Post by hardtke »

drfuchs wrote: post #47

Where do I enter the intangible value of owning: "Don't have to worry about getting priced out if the neighborhood becomes popular; can do any improvements I want, when I want, how I want, and they become an asset; don't have to worry about not getting lease renewed at an inconvenient time (perhaps in the middle of a school year) when the owner's nephew gets divorced and needs a place; on the other hand, don't have t…

A hidden intangible that cannot be measured is that owners are much more likely to know and socialize with their neighbors. Even in a mostly homeowner neighborhoods, "the renters" often don't develop social ties the same way that owners do. There is something about knowing you are stuck there quasi-permanently with the same people.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#86

Post by ska »

alach11 wrote: post #8
pestatije wrote: post #6

House prices are not included in inflation estimates, rental prices are. That's another thing that should be considered.

There's a separate parameter to control the increase in house prices. My assumption is that houses have tended to increase faster than inflation in most markets.

> My assumption is that houses have tended to increase faster than inflation in most markets.

Historically this is usually true, but also usually less than the equivalent amount in say (equivalent to) index funds. Not sure where/how this is factored in.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#87

Post by HideousKojima »

Finnucane wrote: post #7
alach11 wrote: post #2

My wife wants to buy a house, but I'm unable to make life decisions without trying to minmax them. I wasn't satisfied with existing rent vs. buy calculators, so I decided to build my own! I'm not a developer, so I apologize if it's a little rough looking... Some things it takes into account: - The actual rate of return on your down payment and extra costs of a house - Inflation - Itemized deductions on your taxes - T…

Probably want to allow for the possibility of rent rises over time. One thing that I think this actually shows pretty well is the notion that part of the answer depends on how long you intend to stay in a place. If you expect to move in two or three years, it's probably not worth the hassle/expense of buying. If you intend to stay 5+ years in one place, it makes more sense to buy.

>Probably want to allow for the possibility of rent rises over time.

Most definitely, my apartment before buying a home was ~$100/month less than my current mortgage, now (3 years later) the rent for the exact same apartment is ~$300/month more than my mortgage.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#88

Post by secabeen »

epic9x wrote: post #23

You might want to include rental income as an option here, lots of folks may have a place that includes an attached unit.

The Deluxe calculator here is the one I used 10 years ago, it's quite good, but it doesn't have the best SEO, so it hide on the second page of the Google results, after a swarm of advertisement pages from mortgage companies:

https://michaelbluejay.com/house/rentvsbuy.html

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#89

Post by anotherman554 »

alach11 wrote: post #2

My wife wants to buy a house, but I'm unable to make life decisions without trying to minmax them. I wasn't satisfied with existing rent vs. buy calculators, so I decided to build my own! I'm not a developer, so I apologize if it's a little rough looking... Some things it takes into account: - The actual rate of return on your down payment and extra costs of a house - Inflation - Itemized deductions on your taxes - T…

The best/ most powerful rent vs buy calculator I am aware of is the one offered here:

https://michaelbluejay.com/house/rentvsbuy.html

browsing it might give you some ideas of features you can add to your calculator. It's also a small thing but having the choice to select the downpayment based on percentage down might be nice.

I don't know why your calculator tells me getting a house is not worth even if it thinks the transaction is profitable. It states my cumulative profit is $29,030 but I shouldn't get a house.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#90

Post by duped »

waylandsmithers wrote: post #43

One piece of millenial defeatism I hear a lot is "Ugh, I'll never be able to afford a 20% down payment, home ownership is impossible" I'm not sure where this myth came from, but as a millenial who went through the buying process in 2012 and again in 2016, I remember both times the lender just asked how much we wanted to put down. We could have gone as low as 3%, or maybe even lower. Yes, you have to pay PMI (private…

I mean this is the definition of a strawman argument. Whether it's 10 or 20% down payment is not that significant. Even 5% is un-affordable.

The median sale price of a home was $347,000 last month (0). 5% down on that is $17,350, accounting for closing costs you're going to need around $24,000 in cash to purchase a home.

Which isn't all that much money, except if you consider that it's more than 1/3rd of the median family income (1) and nearly 3 times the median household savings balance (2).

The takeaway from these numbers should be that swathes of people cannot afford homes.

(0) https://fred.stlouisfed.org/series/MSPUS#

(1) https://www.census.gov/library/publications/2020/demo/p60-27...

(2) https://www.valuepenguin.com/banking/average-savings-account... (perhaps there is a better source for this).

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