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My thoughts on renting versus buying

milesbarr.me

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Re: My thoughts on renting versus buying

#121

Post by al_borland »

tomjakubowski wrote: post #106
al_borland wrote: post #91

Earlier quoted context omitted.

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.

Surely this must not have been a like-for-like comparison, unless your landlord is very charitable or somehow secured a much lower property tax rate than your coworker did (as is possible in California through various Prop 13 mechanisms). Have you looked up what the property tax bill is on your apartment?

He had a nice house in an expensive area. I think his wife was someone important at a bank.

I was in a one bedroom apartment, so not like-for-like, but I didn’t need or want anymore space than I had. I was also in a nice area, and in the nicest apartments in that area, as far as I could tell.

A couple people who moved out there when I did bought places, and I heard nothing but regrets from them a year later.

Re: My thoughts on renting versus buying

#122

Post by kritr »

My current assumption is that other classes of assets, assuming technological progress continues at its current rate, will grow significantly faster than demand for land. So the economics that once made homeownership favorable, no longer exist.

Holding the assumption that your landlord operates on favorable conditions (mine is pretty responsive and rent increases are controlled), I’m not sure I have a good reason to opt to purchase a house unless I’m planning on occupying it for the next 2 decades at minimum.

I can’t help but think purchasing is an emotional decision, unless the location you live in allows you to buy for a similar rate to the mortgage pricing, but I’ve only observed this in LCOL areas.

Re: My thoughts on renting versus buying

#123

Post by pandaman »

al_borland wrote: post #72
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.

Who are these people who can afford $6k/month for a rental? It has to be a very small percentage of the population, yet I see these kind of numbers thrown around a lot. Statistically, I’m in the top ~5% of income earners (from the data I can find), with no debt, and I couldn’t afford $6k/month. I bought a house because I don't understand the rental market anymore. I don’t really like being a home owner, but the rent…

People who live with roommates.

Re: My thoughts on renting versus buying

#124

Post by milesbarr »

kennywinker wrote: post #6

If renting doesn’t make sense economically, how is it profitable for the landlord? Because it’s almost always profitable for the landlord.

Real estate can make sense as an investment but most people aren't in a position to treat their primary residence like one.

Re: My thoughts on renting versus buying

#125

Post by hudon »

bdangubic wrote: post #94
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.

yes, because he forgot about the car. The reason we don’t befriend our neighbors is because as soon as we leave our home, we put ourselves in a metal cage, ensuring no one will talk to us if we don’t want them to.

Befriending your neighbors kind of works in a city but only REALLY works in Amish communities.

Re: My thoughts on renting versus buying

#126

Post by cramsession »

wavemode wrote: post #119
cramsession wrote: post #110

Earlier quoted context omitted.

Rents are pretty much always going to be higher than a mortgage for the equivalent housing. It's why people are landlords. He dances around that in the article by saying that people buy "nicer" places than they rent, but that doesn't have to be true.

No, this really is not always the case when controlling for location. (That is, if you're comparing apartments in the middle of the city to houses in the outskirts, you're obviously comparing apples and oranges.)

If you compare equally sized places, rent is pretty much always higher. At least it has been in every city/town I’ve ever lived in. Renting is not cheap, you’re paying a premium to the landlord.

Re: My thoughts on renting versus buying

#127

Post by cramsession »

tomjakubowski wrote: post #115
cramsession wrote: post #110

Earlier quoted context omitted.

Rents are pretty much always going to be higher than a mortgage for the equivalent housing. It's why people are landlords. He dances around that in the article by saying that people buy "nicer" places than they rent, but that doesn't have to be true.

Rent only has to exceed the property's operating costs -- things like mortgage interest, property tax, paying a manager, insurance, repairs and maintenance -- for the landlord to come out ahead. Paying off the principal is a capital expense.

Landlords charge market rate, which includes mortgages.

Re: My thoughts on renting versus buying

#128

Post by ghaff »

foobarian wrote: post #10
FpUser wrote: post #3

I am a home owner since 1998 I think that none of you arguments against owning make sense to me. To me your writing reads like following: due to the world gone crazy I can no longer afford to buy house so let's concoct some soul soothing reason and pretend that all is fine.

Yes and how about also people in older generations who are done paying off mortgages and now live paying just the real estate tax.

I assure you I pay a lot more than just the real estate tax (and insurance). There's a ton of maintenance in general. Even with insurance, I was just out a good $50K with a middle of the night kitchen fire.

Re: My thoughts on renting versus buying

#129

Post by phillygta »

bdangubic wrote: post #94
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.

Disagree that it's wishful thinking. Making friends with your neighbors requires a commitment to community - it has less to do with being a social person and more to do with recognizing the mutual benefits.

Re: My thoughts on renting versus buying

#130

Post by moduspol »

wavemode wrote: post #80
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 don't know many homeowners who formed "local communities" with their neighbors. I know a few, but not many. And I know renters who know all their neighbors well. Seems more like a personality trait than something enabled by owning where you live.

Having kids (and being in a neighborhood with kids) also helps a lot.
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