Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

My thoughts on renting versus buying

milesbarr.me

Post reply on HN
Print view View original

251–260 of 318 posts

Re: My thoughts on renting versus buying

#251

Post by barchar »

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…

As the owner builds equity it produces more and more drag on their finances, basically like a big cash pile.

The renter doesn't have to deal with this.

Re: My thoughts on renting versus buying

#252

Post by barchar »

theptip wrote: post #90

Unfortunately, a bit of a one-sided article. The most convincing argument for buying housing is that it hedges you from potential large future cost of living increases. If you can’t afford repeated rent increases then the consequences will ripple through your life. I’ve heard this pithily stated as “you are naturally short housing”. https://thezikomoletter.wordpress.com/2012/12/10/you-are-nat... Another newer argumen…

It hedges the cost of living _in that particular house_. However, housing costs are driven by the area's income, so your hedging against something that's likely to benefit you anyway.

Otoh renting hedges you against collapsing local incomes, because your rent would then go down, and you could move without being a forced seller.

Re: My thoughts on renting versus buying

#253

Post by barchar »

CSSer wrote: post #24

The framing makes it seem as if valuing stability is somehow inferior while elevating financial growth. This makes me think our financial and housing systems have become so distorted that it has infected our thinking. Adult humans are often super resilient, but kids aren't. Moreover, even adults have limits. I don't want to live in a system filled with chaos just because it makes some intangible number go up. We're a…

The stability comes from the wealth, not the house.

Re: My thoughts on renting versus buying

#254

Post by barchar »

pjmv wrote: post #17

The argument the author makes about the returns in stocks being higher than returns in real estate does not really hold when taking leverage into account. In my country, buying a home is the only way to get cheap debt for the vast majority of people.

The returns to real estate are only remotely competitive _after_ leverage. Unlevered returns are extremely pathetic.

Also, there's leverage baked into most stocks. Corporations will lever up.

Re: My thoughts on renting versus buying

#255

Post by dnissley »

rob_c wrote: post #149
milesbarr wrote: post #99

Earlier quoted context omitted.

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.

In what possible scenario is burning cash vs keeping a fraction of it a bad financial decision? I can only imagine it makes financial sense to rent if you live somewhere where you're not paying off someone else's mortgage and are paying a fair renting price. (Otherwise paying your own mortgage just makes more sense) As an actual honest question, where in the world is like that any more?

In most HCOL cities it's cheaper to rent than to buy

Re: My thoughts on renting versus buying

#256

Post by kennywinker »

Panzer04 wrote: post #224
kennywinker wrote: post #84

Earlier quoted context omitted.

In theory rental prices are just the market price. In reality there is a very high pressure on the price to be above whatever the landlord’s mortgage is. I understand why, but i’d still rather pay my mortgage than my landlord’s.

Landlords who rent at their cost and not the market price won't rent. I don't see how your statement follows at all. I'm sure landlords would prefer rents to be higher than their mortgage but that will be determined by supply and demand, not their desires. The housing market is huge, with lots of alternatives and competition, so you can't exactly price fix it either.

You can choose to not see it, and I can struggle to explain it, but i dare you to find a landlord in a city larger than 100k who is renting at a loss.

I suspect it’s some kind of uncoordinated price fixing. E.g.

1. landlord buys property, optimistically sets rent at $mortgage+30% even tho that’s above the market rate

2. Everything cheaper is rented, or highly sought after, so renters are forced to take the higher rent.

3. Other landlords see places renting for higher than their current rent, and raise prices accordingly.

But i’m no economist. I’ve just never seen a landlord take a loss except as a result of special circumstances. Economic crashes, fire, etc.

Re: My thoughts on renting versus buying

#258

Post by DoctorMckay101 »

The interest rate on my mortgage has been below inflation for 5 years now. I'm 7 years shy of paying it fully. I pay around 850€ a month for my mortgage + 110€ monthly community costs + 400€ on property taxes annually. Lets round it up to 1000€ a month. Meanwhile, the average rent around me is about 1150€. If I was renting whilst sharing with other 2 people I could be paying about 400€ and have about 600€ a month for investing, that is true. But that would mean I'd be changing places every 10-16 months, increasingly paying more, and gambling on landing good flatmates. A ton of stress and almost ensured mental health issues. I´d know because that was my life from when I was 18 to when I bought my home at 26. If I wanted to rent my spare rooms I could be racking about 800€ a month - 20-27% set aside for taxes. Always cherrypicking my flatmates and increasing their rent every now and then. However, I wanna live alone for a while, be calm whenever I'm at home.

Even if that "math" does not work for you, take into account those 600€ monthly investment would have to compete against my home's value. My property has appreciated about 90% in the last 10 years, practically doubling my potential earnings compared to the original cost. From 300k to 570k on 10 years. There is no way somebody with 0 investing knowledge could pull that off.

Renting is just better if you have enough fuck you money to rent whatever you want, whenever you want, with the flexibility of choosing to be alone or accompanied.

Re: My thoughts on renting versus buying

#259

Post by jjav »

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

> I know three families that owned and had to move cause they could not afford to live in the house they own (gerrimandering- related…)

And this is why, despite some negatives, Prop 13 (California) is so valuable. People don't get priced out of their own homes.

Re: My thoughts on renting versus buying

#260

Post by bdangubic »

phillygta wrote: post #129
bdangubic wrote: post #94

Earlier quoted context omitted.

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.

Making friends with your neighbors requires a commitment to community

I can make all the commitment I want to date Beyonce but at the end of the day it takes two to dance :)

Post reply on HN