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My thoughts on renting versus buying

milesbarr.me

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Re: My thoughts on renting versus buying

#171

Post by bdangubic »

bluefirebrand wrote: post #155
9x39 wrote: post #136

Earlier quoted context omitted.

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 peopl…

It is way better to be house poor than to be a renter, because at least the house is generally an appreciating asset

this is a fantasy people have bought in the last X years because government has done everything imaginable to get people to own homes.

Re: My thoughts on renting versus buying

#172

Post by milesbarr »

benregenspan wrote: post #9
streetcat1 wrote: post #2

You forgot the tax advantage and the protection against inflation (if you have to fix rate mortatge).

I think he covered these by his mention of "spreadsheets". A good spreadsheet for rent-vs-buy would include the values in the sliders seen on https://www.nytimes.com/interactive/2024/upshot/buy-rent-cal...

Exactly. The tax advantages are tangential to the behavioral factors I mentioned.

Re: My thoughts on renting versus buying

#173

Post by milesbarr »

encoderer wrote: post #57

All else being equal, a house is too personal a thing for me to rent. It would be like renting a complete set of clothes. I don’t want to be a real estate developer writ large, but I do want to develop my own space and optimize it for my family as it grows and changes over time.

That's fair. I was mainly trying to push back against the idea that owning a home is always a good investment. There are definitely other major advantages to owning a home.

Re: My thoughts on renting versus buying

#174

Post by shoo »

rob_c wrote: post #147
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…

> Because few people can afford the 20% downpayement needed for mortgage. Current state of the British economy is the state is looking to allow 40yr 5% deposit mortgages. We're not quite there yet but it's heading that way. Be very thankful if your country isn't that bad!

Interesting. Down here in Australia our economy has been doing OK, we've had a great run of dodging recessions, but due to house prices appreciating so much since the 90s, there's similar problems with house down payments being far out of reach of many people.

Recently, our government is making a change to allow first homebuyers to purchase properties with only a 5% deposit.

Historically the Australian government set up the Housing Loans Insurance Corporation in '67, to provide insurance for banks against the risk of borrowers defaulting, to support home buyers. In 1997 the Howard government privatised the HLIC by selling it to GE, and we've had a private sector for mortgage insurance since, compulsory if borrowers are borrowing more than 80%.

Now in 2025 the current Albanese government is rolling out a scheme where the government will act as a public mortgage insurer again to allow first home buyers to buy with only a 5% deposit.

I'm not quite sure what to think. I heard an economist interviewed who reckoned this was a great idea to make it easier for young people to get into the property market, arguing that Aussie homeowners historically hardly ever default on mortgages. But naively it seems like this is yet another change that is going to push up house prices even further by increasing demand, without doing something to increase supply.

I also wonder if systemic mortgage default risk appears like it is lower than it actually is because Australia has been lucky enough to escape a major recession for so long.

Re: My thoughts on renting versus buying

#175

Post by bombcar »

tomjakubowski wrote: post #153
devonkim wrote: post #81

Earlier quoted context omitted.

That would be an HOA moreso than the features of a condo, although a condo tends to imply an HOA in the US. The irony of my experiences with an HOA is that its actions tended to suppress my property value rather than preserve or grow it.

I don't know how a condo building could operate without some kind of shared ownership structure for the common areas and shared infrastructure. What are the alternatives to an HOA in a condo building?

actual laws about such things, I presume.

hoas only make sense to me in condo situations - but even then you’re at the mercy of others

Re: My thoughts on renting versus buying

#176

Post by mauvehaus »

filoleg wrote: post #64
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…

> the stability of buying It depends. Personally, after witnessing both sides of the coin second-hand, I am not leaning in the direction of either buying or renting in absolute. It is highly dependent on the context and circumstances of a specific situation/market. I am aware that this is just an anecdote (i.e., it isn't going to say much about the overall state of things across all states in the US), but there is a…

If you're renting, getting the landlord to deal with an acute issue is pretty clear cut. They usually get it done. It's the slow burn neglect shit that's almost impossible to get fixed.

Anecdote of my own: The last place we rented before buying had a minor roof leak. Minor, but still a roof leak. The landlord was old, her daughter was responsible for a lot of stuff, and they were both remote for at least part of the year. It took 3 years for them to finally get the roof replaced, evidently about a year after we left.

And these were good landlords. They took care of a bunch of minor disasters in good time: dishwasher, washing machine, thermostats for the baseboard electric heat, stack vent got clobbered by ice coming off the roof? All dealt with promptly. But the roof, important though it was, wasn't a big enough problem to merit quick attention. The place was a log home, and by appearances, hadn't been subjected to any kind of refinishing for a good while too.

Re: My thoughts on renting versus buying

#177

Post by sothatsit »

estimator7292 wrote: post #109
wavemode wrote: post #92

Earlier quoted context omitted.

> 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.

When renting a 1br costs as much as my mortgage on a 3br, I don't think that really tracks.

"If I set up a scenario largely in favour of buying, then buying makes more sense"

I have never seen a 1br costing anywhere near as much to rent as a 3br costs to buy. In what markets is this even remotely close to accurate? Or are you just ignoring the cost of ownership entirely?

Re: My thoughts on renting versus buying

#178

Post by Aeolun »

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.

I don’t know. The effect of many families with young children all going and buying a house at roughly the same time is absolutely a thing. My street was filled with children when I was young (newly built neighborhood), and the same thing is true again now that I’ve bought a house. The street is filled with parents and children at roughly the same place in life. It’s nice when the only thing you need to do to find playmates is make noise in the street.

Re: My thoughts on renting versus buying

#179

Post by com2kid »

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.

Counterpoint in Seattle - We talk to our neighbors regularly and are good friends with a few. Having kids helps.

Re: My thoughts on renting versus buying

#180

Post by mauvehaus »

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…

This presumes that the value of the property doesn't go down. I had more than one friend who bought before the 2008 financial crisis who was pretty stuck with their home. And who the hell has a second down payment for a home after a couple years of mortgage payments, upkeep, and fixing the "surprises" one finds after buying a home?
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