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Is It Better to Rent or Buy?

nytimes.com

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Re: Is It Better to Rent or Buy?

#31

Post by seanmcdirmid »

Frozenlock wrote: post #20
dgabriel wrote: post #11

Earlier quoted context omitted.

Not true in many, many cases. HOAs, condo boards, zoning laws, and historical societies can control homeowners pretty well.

And you still need to pay taxes (rent) to your municipality (landlord). So if I summarize, you can't do what you want with it and you need to pay your landlord. Why are people calling this 'owning' a house?

There are countries that lack property taxes, but they tend to be communist (china) and you are only buying a 99 year lease. Also, the lack of property taxes doesn't work very well, as it encourages speculation and then sitting on then property doing much with it waiting for values to rise. Property taxes enforces mandatory deprecation (you have to make it productive enough to at least pay the tax) and also funds things like roads, infrastructure and schools without shady corrupt deals.

Re: Is It Better to Rent or Buy?

#32

Post by hkmurakami »

dgabriel wrote: post #11
marknutter wrote: post #9

If you buy, you can do whatever the heck you want to with the house or your yard. That's true freedom and to some people - myself included - worth every penny.

Not true in many, many cases. HOAs, condo boards, zoning laws, and historical societies can control homeowners pretty well.

I remember reading about one Arizona neighborhood which had restrictions on having a desert style front yard landscape and had an implicit mandate on having a front lawn and a specific kind of front door. The implicitness was the difficulty in getting a fair refinancing deal from the bank, and a devaluation of the home for not being in sync with the neighborhood's uniform appearance.

Re: Is It Better to Rent or Buy?

#33

Post by hkmurakami »

jleyank wrote: post #2

I said this when such a thread came up the last time: If you can (easily) switch jobs without moving it might make sense to buy. If you can't, however, renting is the safer option as you can move if/when there is a problem with the job. Domiciles can be rather illiquid at times, which sucks when you need to move for work. It's a separate question if it's worthwhile to buy at all, as that's dependent on geography, pre…

Some people say "oh you can always rent the house out!" but they often forget that once they move away and have to hire a property management firm, the fees that they'll have to pay will erode the rent revenue below breakeven with the mortgage payments (without such a manager, you can frequently break even or better vs mortgage)

Re: Is It Better to Rent or Buy?

#34

Post by ratscabies »

steven777400 wrote: post #16
mcarvin wrote: post #8

For full disclosure I am a founder of the company but many of the mistakes in math / modeling made in the NYT Tool are corrected at SmartAsset. One example is the tax consequence of ownership - which because of the standard deduction is overestimated for lower value homes (<$250,000).

I just wanted to reaffirm what you're saying about the deduction on lower value homes. When we bought, people were telling us "you get to deduct the interest, it will be a huge impact!" Well, these days thankfully, interest rates are relatively low. We paid a little under $200K for our home, and combined with the married standard deduction, the interest at first barely even pushed us into the itemize category. By nex…

I was only able to itemize for the first 5 years. After that, standard deduction ever since.

Re: Is It Better to Rent or Buy?

#35

Post by mbostock »

dmnd wrote: post #25
mbostock wrote: post #18

Author here. Thought I’d highlight my favorite, perhaps non-obvious feature: the slope of the charts tells you whether the variable is positively or negatively correlated with the cost of buying. And depending on the settings, that slope can change from positive to negative. For example with the defaults, the down payment chart is flat. This means the total cost of buying is relatively unaffected by the size of your…

I've been using the old version of this for a few months. Making it obvious to which parameters the result is most sensitive is a huge improvement, thank you and well done!

Thanks, that’s good to hear. There’s always a risk releasing a new version of a popular tool. For those that still want to use the old one I think we’ll find a new home for it, too.

Re: Is It Better to Rent or Buy?

#37

Post by tolmasky »

marknutter wrote: post #9

If you buy, you can do whatever the heck you want to with the house or your yard. That's true freedom and to some people - myself included - worth every penny.

If you rent, you can leave whenever the heck you want and then go live wherever the heck you want. That's true freedom and to some people - myself included - worth every penny.

Its really interesting the different things people value. I value not fundamentally worrying if there were to be an earthquake and this place would be destroyed. I value one day waking up and deciding, hey, I think I want to go try living in Portland, or just a different neighborhood here. I value not worrying about housing prices. This is just me of course, I totally accept that the other side of the equation has perfectly valid points.

Re: Is It Better to Rent or Buy?

#38

Post by jonnathanson »

segmondy wrote: post #21
dgabriel wrote: post #11

Earlier quoted context omitted.

Not true in many, many cases. HOAs, condo boards, zoning laws, and historical societies can control homeowners pretty well.

So don't buy where there's HOA, Condo Boards or Historical Districts. That leaves you with a lot of options.

That pretty much eliminates a lot of the big cities in the US, and a fair amount of the suburbs and smaller cities. Basically, anywhere where you'd be living in a building and not a single-family home. (Though a lot of single-family homes are coming under the purview of various associations and societies these days).

HOAs are a plague on humanity, but they're very hard to avoid in many circumstances.

Re: Is It Better to Rent or Buy?

#39

Post by mbostock »

Tycho wrote: post #27

zappo had a list of uk cities comparing rent prices with interest only mortgage price. Some cities eg. Edinburgh showed hardly any difference (for comparable sized properties). What I'm not sure about though is how it compares to a traditional principal and interest mortgage. Obviously your interest payments fall as the mortgage amortises... So then how does total interest compare to money spent on rent in that case?…

Interest payments are only part of the story. The equivalent rent we calculate provides a much more direct comparison.
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