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

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

#351

Post by joshmn »

sakopov wrote: post #344
lumost wrote: post #330

Earlier quoted context omitted.

220 is a wage at the upper end of what can be typically made by the time your 30 if you’ve chosen the right careers. There are notable exceptions with recent top tech offers - but I work for a fang as a software engineer and didn’t break 200 take home until I turned 32. If you need 2x those incomes to afford A basic necessity such as housing than we’re likely to have a problem.

> 220 is a wage at the upper end of what can be typically made by the time your 30 if you’ve chosen the right careers. This is typically true if you work for a fang. These insane salaries rarely exist anywhere else.

I’ll offer a slight disagreement. They are more common than you think, and you don’t need to be exceptional to receive such a package. Positioning your strengths during negotiation is helpful. Knowing the market and laying out what you (presumably a developer) bring to the table goes a long way.

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

#352

Post by theptip »

yboris wrote: post #100

Mega-Classic from The New York Times: https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal... A beautiful, in-depth calculator to answer "Is it better to rent or buy?"

This is the one to use, the OP is overly simplistic. The NYT model is great, if only to realize that only two variables drive the output; what do you forecast the stock market to do, and what do you forecast the housing market to do.

The compound interest from allocating your resources to the faster growing of the two vastly overwhelms small compounding or even large fixed costs.

The real question is therefore - how long do you believe housing prices will keep increasing in your chosen area?

A secondary concern that is harder to price and seldom included in these models is that buying housing is a good hedge against being priced out of the area you work & want to live.

Of course it’s not a purely financial decision but I think it’s important to be aware of what you’re leaving on the table whichever option you choose.

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

#353

Post by jachee »

chii wrote: post #334
nwatson wrote: post #281

Earlier quoted context omitted.

Or work remotely. One can make way above prevailing local salaries working remotely for SF Bay Area companies.

I think this cannot last for long - supply and demand would push wages down as more people are available for the position. May be not this year, or next, but the long term trend of work-from-home will make this true.

I’ve been seeing this sentiment since the late 90’s. All signs point to the market staying irrational longer than I stay on the market.

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

#354

Post by dazc »

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…

I was renting a great place last year, reasonable rent, fantastic location, etc. But my landlord lived next door and believed, with him being the 'owner', he could call round for a chat anytime he felt like it, this would go as far as him coming up to the kitchen window as I was making dinner and hanging around at the usual time I would return from work.

Within a couple of weeks I was staying at work later, leaving in the morning earlier and generally avoiding the place at every opportunity.

I left a few months ago at significant expense and don't regret doing so one tiny bit.

There is much more to the equation than money.

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

#355

Post by forz877 »

dragontamer wrote: post #213
ramraj07 wrote: post #172

Earlier quoted context omitted.

Eh, almost no one I’ve seen has ever spent less by moving to their own home. They’ll typically end up spending at least half of what they spent as rent just on things other than the mortgage (which would typically be much higher than the rent by itself). Now of course they often would get a larger, nicer place that’s exactly what they wanted, but let’s not kid ourselves that home ownership is somehow cheaper. It neve…

But you don't "lose" or "spend" the equity portion of your mortgage bill. That's the difference. If you have a $2500/month mortgage, by year 10 or so that's probably $1000 equity + $1500 interest. The "interest" portion gets tax-deducted (so you get a portion of it back), while the $1000 equity is literally yours. When you sell the house, that's the portion you get back. --------- So really, $2500/month mortgage (aft…

You lose it until you sell it. It's unfair to say just because it's an illiquid equity that it's same as cash.

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

#356

Post by chii »

kube-system wrote: post #95
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…

> Versus, of course, for renting: "don't have to worry that the roof will need replacement, etc." This is kind of a tangent, but worrying about maintenance is exactly why I own a house. When I rented, poor maintenance issues were my problem whether or not they were my responsibility. I'd much rather be empowered to do preventive maintenance or fix things immediately, than be forced to wait until something fails plus…

presumably for a renter, if the roof fell off, you leave and stop paying rent. The owner will have to fix it at their own expense, before putting it back up on the market.

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

#358

Post by ramraj07 »

dragontamer wrote: post #241
missingrib wrote: post #238

Earlier quoted context omitted.

You are ignoring costs that are truly just lost and don't exist with a rental payment, like repairs and insurance and HOA, etc.

But I'm not ignoring them. I'm currently paying a $1600 / month mortgage, of which $1000 is principal, $400 is interest and $200 is escrow (tax / insurance) in an area with $2000/month rent. So I'm really paying $600 / month for interest, tax, insurance. It's another $1400/month before I get to rent prices. And even with a new roof and new deck last year, I'm no where close to renters prices in terms of actual cost.…

If your mortgage is lower than the rent that means your location appreciated very significantly. Given stagnant prices mortgage being lower than rent doesn’t make sense. Now the question for someone buying today is if they expect that to happen in the future. For me the answer is not positive enough to gamble buying a place.

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

#359

Post by chii »

tiborsaas wrote: post #42
bachmeier wrote: post #27

There's no way to put this into a calculator, but this decision isn't purely monetary. Do you enjoy having to maintain a home and property? If not, maybe buying a house isn't for you. Even if you hire someone, that can be a massive hassle, you have to worry about being ripped off, ... If you're not settled in your career to where you can comfortably take off long stretches of time during the day, you probably shouldn…

> If you rent, you call the landlord and have them replace those things. You also have to negotiate everything with landlord: color of paint, removing walls, replacing stuff you don't like because of the design alone. Home ownership gives you almost infinite options to fit the place 100% to your needs. So I agree that there are things hard to express with money. One can reverse the question: buying could set you back…

> negotiate everything with landlord ... Home ownership gives you almost infinite options

that's the point of ownership. If renting gives you _almost_ as much rights as ownership, who would own!?

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

#360

Post by forz877 »

hardtke wrote: post #84
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.

A hidden major problem too can also be your neighbors, who can be incredibly annoying and won't go anywhere anytime soon. If you rent, oh well, go somewhere else.

Not so easy with a house, also excluding neighbors who do legal things that devalue your home.

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