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My thoughts on renting versus buying

milesbarr.me

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Re: My thoughts on renting versus buying

#91

Post by al_borland »

A_D_E_P_T wrote: post #36
eweise wrote: post #4

All I know is my mortgage is $1,800 a month and to rent my place now is at least $6K/month. I love knowing that my monthly payment can't go up.

Something I've noticed is that some cities are better for renters, and others are better for buyers. My current city in central Europe is very renter-friendly. A nice apartment would cost $600k, but rents practically never exceed $1500/month. Under such circumstances an apartment doesn't seem like a great investment. I've also lived, briefly, in Canada -- where rents were often extremely high relative to home prices.…

I saw this when I lived in the Chicagoland area. A co-worker was giving me the business for renting instead of buying something. The he let it slip that his property tax alone was $35k/year, almost 2x what I was paying in rent, and that didn’t even include the mortgage.

Re: My thoughts on renting versus buying

#92

Post by wavemode »

zeroq wrote: post #79

Counterpoint: buying is always better, people just can't afford it. Here where I live the minimum price for rent is monthly mortgage installement, meaning that you'll pay for rent at least as much as you'd pay for mortgage. But after you pay your mortgage you still have an asset in your hand. You can pass it on to your children or you can sell it when you're old, downsize (or even rent) and get some cash for your ret…

> If you rent you're left with nothing.

Well, no. You're left with the cash you would've spent buying a house.

Whether that's financially better or worse, depends entirely on the mortgage interest, taxes, and maintenance costs of the house, as well as the money you could have earned investing the cash elsewhere, compared to the rent you would have spent over the same time period.

Re: My thoughts on renting versus buying

#93

Post by AfterHIA »

kibwen wrote: post #15

> The Flexibility of Renting Is Undervalued And the stability of buying is undervalued. It's telling that this article frames housing as an investment vehicle rather than as a basic necessity. And it's not just a necessity because it shelters you from the elements and gives you storage for your stuff; it anchors you in a neighborhood and allows you to begin forming a local community. The flexibility of renting that t…

I live in a traditional middle class neighborhood and half the houses are rentals for college kids and people who can't buy. I'm not sure who to agree with here.

Re: My thoughts on renting versus buying

#94

Post by bdangubic »

kibwen wrote: post #15

> The Flexibility of Renting Is Undervalued And the stability of buying is undervalued. It's telling that this article frames housing as an investment vehicle rather than as a basic necessity. And it's not just a necessity because it shelters you from the elements and gives you storage for your stuff; it anchors you in a neighborhood and allows you to begin forming a local community. The flexibility of renting that t…

I owned for the last 25 years (3 houses, 8, 8 and 9 years) and am very social person. I do not have a single neighbour friend in all these years. what you are describing is (in vast majority of cases especially in urban areas) just wishful thinking.

Re: My thoughts on renting versus buying

#95

Post by al_borland »

bthrn wrote: post #12
eweise wrote: post #4

All I know is my mortgage is $1,800 a month and to rent my place now is at least $6K/month. I love knowing that my monthly payment can't go up.

Property taxes and insurance go up pretty much every year.

Where I’m at there is a limit on how much property tax can increase. It is reassessed when a home is purchased by a new owner.

This is done to allow people to age in place, and not price someone out of a neighborhood they’ve live in all their life.

Re: My thoughts on renting versus buying

#96

Post by __turbobrew__ »

HardCodedBias wrote: post #55
zahlman wrote: post #31

Earlier quoted context omitted.

> does not really hold when taking leverage into account. Detailed analyses exist, e.g. https://www.youtube.com/watch?v=j4H9LL7A-nQ .

Ben is fantastic. As Ben notes the tax advantaged status of primary homes has more capacity than most tax sheltered alternatives. But a lot of this depends upon income. This reminds me, I need to buy more DFA. :)

Where do you buy DFA from? Here in Canada I think you can only buy it through brokers?

I want to buy some small/medium CAP ETFs but there is nothing really in Canada you can buy off the TSX.

Re: My thoughts on renting versus buying

#97

Post by ghaff »

zeroq wrote: post #79

Counterpoint: buying is always better, people just can't afford it. Here where I live the minimum price for rent is monthly mortgage installement, meaning that you'll pay for rent at least as much as you'd pay for mortgage. But after you pay your mortgage you still have an asset in your hand. You can pass it on to your children or you can sell it when you're old, downsize (or even rent) and get some cash for your ret…

>Counterpoint: buying is always better, people just can't afford it.

>Renting has it's charm for youngsters

You're sort of contradicting yourself. So long as you think you're sort of settled in an area, buying is probably better.

But, if it's your first job out of school, even if you have a nice bunch of money you could put towards a down payment, it's not clear that buying is a great idea except maybe if you're in an area with lots of jobs for your chosen profession.

Once I bought, somewhat belatedly, I was in an area that offered enough possibilities in my (broadly speaking) field even if a couple commutes were on the long side.

Re: My thoughts on renting versus buying

#98

Post by david-gpu »

__turbobrew__ wrote: post #83
david-gpu wrote: post #75

Earlier quoted context omitted.

As an approximation, condo fees make explicit a number of recurring costs that are only implicit when you own. E.g. heating/cooling, maintenance, landscaping, accumulating an emergency fund, etc. Thus, if a condo is half-renting, so is buying a house.

My condo owning friend got a special assessment of $40k to replace the siding. There are A LOT of costs which are not explicit when owning a condo.

Some condo corporations are poorly managed and lack sufficient emergency funds, or proper maintenance, and thus resort to special assessments that are not funded in advance. The same is true of many homeowners.

Re: My thoughts on renting versus buying

#99

Post by milesbarr »

andy99 wrote: post #30

This is written from the perspective of someone who doesnt have kids or other ties that reduce flexibility (and from that perspective I agree a house is a huge liability in term of being able to make big life changes). It also sucks if you have neighbors you can't stand. The main advantage of a house imo is that you can't typically rent something comparable, at least where I've lived. The rental market for 4 bedroom…

Fully agree on this. If you have kids, stability is important so that can be a good reason to buy, regardless of whether it's an optimal financial decision.

Re: My thoughts on renting versus buying

#100

Post by __turbobrew__ »

saulpw wrote: post #44
kleinsch wrote: post #25

Home prices have dramatically exceeded inflation for a long time, so you're getting advice from people who reaped huge appreciation gains. Now housing prices are hitting affordability limits, interest rates are less appealing, so it's unclear if the future will look like the past.

Interest rates for home-ownership are a ratchet, though. If they ever go down (and they do fluctuate over the course of decades), and you are financially stable (this may or may not be the case at the right time) you can generally refinance to lock-in the lower rate.

That only applies to mortgages in the US for the most part. Everywhere else you only finance for 3-5 years at a time.
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