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My thoughts on renting versus buying

milesbarr.me

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Re: My thoughts on renting versus buying

#131

Post by Esophagus4 »

cramsession wrote: post #120
Esophagus4 wrote: post #118

Earlier quoted context omitted.

But a mortgage isn’t the cost of owning a house. Rent payments are the cost of renting. If you want to compare the costs of renting and buying, you need to compare renting=(rent payments + renter’s insurance) vs. owning=(mortgage payments + property taxes + insurance + maintenance and repairs + equity appreciation / depreciation)

Landlords bake those costs into the rent price.

Too hand waivey and doesn’t tell the whole story - even with the carry costs “baked in”, renting is generally cheaper in the short run because those costs are lower anyway.

> Average rents are cheaper than average mortgage payments (homeowners insurance and property taxes included) in all 50 of the largest U.S. metros in 2025, with the cost difference between the two growing in all but 12 of those metros since last year, according to Bankrate’s Rent vs. Buy Study.

> Over the last year, the study found average mortgage payments (including principal, interest, homeowners insurance and property taxes) increased while average rents either declined or remained stable in nearly all the metros we analyzed.

> Housing experts said the fact that it’s cheaper to rent in all 50 metros in 2025 is a broader reflection of rental and housing market conditions across the country.

[1] https://www.bankrate.com/real-estate/rent-vs-buy-affordabili...

Re: My thoughts on renting versus buying

#132

Post by xyzelement »

The fact that the author writes about his buying decision in first person singular is telling. Home "as a product" (vs investment) is contingent on your situation in life.

If you are a single person who is likely to get married and/or move for work, why would you buy? The transaction costs of buying and then selling are non trivial.

On the other hand if you are with your wife and kids, the potential ability to move for a job is less important (objectively) than community you are establishing for your kids and family. So it's not just those who value stability vs flexibility as a behavioral trait but as a realistic reflection of a situation.

It's like a bike guy becomes a minivan guy when he has 3 kids.

Re: My thoughts on renting versus buying

#133

Post by ghaff »

zeroq wrote: post #111
ghaff wrote: post #97

Earlier quoted context omitted.

>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 a…

Not really. If it's viable for you then buy your first property as soon as possible and keep saving. When you want to move just buy another and rent the previous one. In most cases people will need to get a half decent job and save for a few years first but they can keep saving and have enough for another property in few years. And if you really have to move - then you can still sell that property. People are getting…

>And if you really have to move - then you can still sell that property. People are getting new cars every 2-3 years and it's not that different from swapping real estate.

Of course it is. I think the average American car age is 11 years or something like that. But, if I wanted to swap cars like that, I can go into a dealer and basically transact it in 30 minutes. Good luck doing that with a house.

Re: My thoughts on renting versus buying

#134

Post by cramsession »

Esophagus4 wrote: post #131
cramsession wrote: post #120

Earlier quoted context omitted.

Landlords bake those costs into the rent price.

Too hand waivey and doesn’t tell the whole story - even with the carry costs “baked in”, renting is generally cheaper in the short run because those costs are lower anyway. > Average rents are cheaper than average mortgage payments (homeowners insurance and property taxes included) in all 50 of the largest U.S. metros in 2025, with the cost difference between the two growing in all but 12 of those metros since last y…

That compares average mortgage and average rent, but the average house you buy is going to be much bigger (and include a yard) than the average rental. They’d need to compare equal properties to have a meaningful study.

Re: My thoughts on renting versus buying

#135

Post by avianlyric »

kritr wrote: post #122

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…

> 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.

You seemed to have missed one unique attribute of land. They’re not making any more of it.

Re: My thoughts on renting versus buying

#136

Post by 9x39 »

bdangubic wrote: post #108
firecall wrote: post #82

Earlier quoted context omitted.

Absolutely agree with this! We need, as a society, to bring back generational communities. Our workplaces are not our families! I'll also add, that once you have children, owning your home is a very welcome level of stability. Nothing worse than looking for a new rental and potentially being forced to upend all your routines and find new schools for the kids as you cant rent in the same area anymore!

I know three families that owned and had to move cause they could not afford to live in the house they own (gerrimandering- related…) owning does not shield you from shit like that, maybe in rural america but definitely not in/around the cities

Almost everyone I know has a significant portion of their wealth in home equity. The renters I know tend to have much lower wealth. This is reflected broadly in the US wealth distribution.

You brought up a good point though, and that’s the trap of being house poor. Too many owners fail to look / have not been taught to factor local property taxes and maintenance costs into their homes. My network definitely has people caught unaware by escrow shortages, siding costs, roof costs, HVAC stack costs.

Despite it all, US homeowners seem to edge out renters, but it doesn’t have to be causative, either.

https://www.aspeninstitute.org/wp-content/uploads/2024/11/AS...

Re: My thoughts on renting versus buying

#137

Post by jfim »

novaRom wrote: post #101
firtoz wrote: post #20

It's interesting to paint the homeowner as an emotional person and the renter as the pragmatic, however both are roughly equally emotional. As the rent prices keep rising, the renter in the end will end up spending much more money in the same duration as a mortgage, won't they? After a few years, when they end up owning more of the property, they can secure a good deal with better monthly mortgage payments. They can…

How about the act of buying itself? Here where I live, you need to pay 12% on top of the home price simply for taxes and notary service. IMO it's one of the biggest obstacles and why most Swiss people prefer to rent.

Switzerland is a bit different from the US. From what I understand, property ownership entails paying the imputed rental value in taxes, which makes property ownership much less desirable. In the US, mortgage interest is tax deductible up to a certain limit, property taxes are deductible, and there's an amount of capital gains that's excluded from taxation when selling one's primary residence. Compared to other places in the world, the benefits of property ownership are pretty bonkers.

Re: My thoughts on renting versus buying

#138

Post by saulpw »

apwell23 wrote: post #50
saulpw wrote: post #47

Earlier quoted context omitted.

You can refinance your mortgage when interest rates are lower.

you can also win a lottery

At least 10^7 people have refinanced their homes at lower rates, while only 10^5 people have won the lottery. So refinancing is substantially more likely than lottering.

Re: My thoughts on renting versus buying

#139

Post by carlosjobim »

wavemode wrote: post #92
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.

What? That cash goes to the landlord.

Re: My thoughts on renting versus buying

#140

Post by al_borland »

ndriscoll wrote: post #113
al_borland wrote: post #89

Earlier quoted context omitted.

Making that much, I wouldn’t want to put anymore than 25% of my take-home toward rent. That would mean making $312k take-home… after taxes, retirement, etc. Maybe I’m conservative, but being house poor while making $300k is insane. I’m thinking someone would need to be pushing $400-500k for household income. That would put them in the top 3%. I don’t get the supply and demand curve on it. Making that much, and rentin…

I wouldn't want to purely out of the waste, but from a risk perspective, why not? Your other costs don't scale with housing or income, so if you're spending $70k on housing, you might be at $100k overall expenses. Add another $50k for income taxes and $50k for retirement savings and you're still at 50-100k left over for whatever you like (using 250-300 household income). 6k for a mortgage would be scary in case of jo…

The lease terms would be important. Not all leases let you out whenever you want.

Plus, if a sizable portion of that household income is in the form of stock or a bonus, that isn’t showing up each month in the paycheck, lowering the monthly cash flow. If there is a layoff early in the year before the bonus pays out, and you can’t exit the lease, that would be a bad spot to be in.

There is still risk on the table, depending on how some of this is structured.

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