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Is It Better to Rent or Buy?

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Re: Is It Better to Rent or Buy?

#91

Post by mbostock »

pessimizer wrote: post #76
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…

Your mentioning of this made me check out the graphs again - and I noticed that the graph depicting the size of a down payment was flat. That could only mean one thing: the cost of mortgage insurance (that you will be forced to get if your down payment is lower than 20%) hasn't been included. That's a major cost on low down-payment house purchases. Intentional or oversight? https://en.wikipedia.org/wiki/Mortgage_insu…

We’re not currently including mortgage insurance, no. You could approximate it by increasing the mortgage rate, but the tax treatment of mortgage insurance payments may be different and so that may not be accurate. Perhaps this is something we can add in the next iteration of the calculator.

The interaction between down payment rate and mortgage insurance rate also reveals a limitation of our user interface: On the one hand, it’s nice to have all the variables decoupled so that you can set and explore them independently. On the other hand, many of the variables are not independent. If you change one variable, you may need to change other variables to maintain a realistic scenario.

Having the mortgage insurance rate tightly coupled to the down payment would probably be too limiting, but maybe there’s a still a way to better identify when certain variables (or combination of variables) are unrealistic.

Re: Is It Better to Rent or Buy?

#92

Post by gfodor »

larrys wrote: post #48
tolmasky wrote: post #37

Earlier quoted context omitted.

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 P…

"If you rent, you can leave whenever the heck you want and then go live wherever the heck you want. " You can do that when you own as well. You have to sell your house. After all you can't just get out of a lease whenever you want it goes according to a fixed time period. You have constraints as far as lease renewal, term and things like that. If you own you can decide at any point to sell (although certain times of…

You are 100% incorrect on your first point. Selling a home is not easy nor cheap, takes time, and is wrought with uncertainty. It's usually a low liquidity environment.

On the renting side, terminating a lease early is generally trivial. I've terminated several of the leases I've signed over the years mid-term by finding a new tenant for the landlord beforehand and having that person take over or sign a new lease. Landlords are usually happy to do so since they can increase the rent without losing any income.

Re: Is It Better to Rent or Buy?

#93

Post by gfodor »

The problem with this (admittedly very good) calculator is there are two key knobs that require massive amounts of speculation but have a huge impact on the decision: projected return on investment and expected home price growth. Good luck predicting either of these over the next 10 years.

Re: Is It Better to Rent or Buy?

#94

Post by pessimizer »

mbostock wrote: post #91
pessimizer wrote: post #76

Earlier quoted context omitted.

Your mentioning of this made me check out the graphs again - and I noticed that the graph depicting the size of a down payment was flat. That could only mean one thing: the cost of mortgage insurance (that you will be forced to get if your down payment is lower than 20%) hasn't been included. That's a major cost on low down-payment house purchases. Intentional or oversight? https://en.wikipedia.org/wiki/Mortgage_insu…

We’re not currently including mortgage insurance, no. You could approximate it by increasing the mortgage rate, but the tax treatment of mortgage insurance payments may be different and so that may not be accurate. Perhaps this is something we can add in the next iteration of the calculator. The interaction between down payment rate and mortgage insurance rate also reveals a limitation of our user interface: On the o…

Maybe instead of just having reasonable defaults, you could include reasonable ranges through a background gradient on each graph (darker for more common, lighter for less common)? With that, you could manipulate the reasonable ranges through interactions between graphs, while still allowing people to set the actual number anywhere they pleased.

Also: big fan. Thanks for d3.

Re: Is It Better to Rent or Buy?

#95

Post by jakebellacera »

Shivetya wrote: post #75

I will tell you my reason to own a home, large at that, even though I am single. I have seen friends/coworkers have to move after leases were not renewed. I have seen friends/coworkers lose put up with stuff about their rentals I would not tolerate as an owner. Sure it go fixed, but damn. I have also seen them held hostage to rising rents just to renew. Yeah it can be more expensive at times, more work definitely, bu…

Absolutely. I guess lots of people, myself included, choose renting over buying for the main reason that they might find themselves not living in their current location in a couple of years. For me at least, that is the price to pay for the freedom of where I live. I know that once I find a place to settle down I will consider buying, but until then I will rent.

Re: Is It Better to Rent or Buy?

#96

Post by seanmcdirmid »

Frozenlock wrote: post #66
seanmcdirmid wrote: post #31

Earlier quoted context omitted.

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 thi…

I didn't say anything about the good or bad of taxes, just asking why people are using a word when it shouldn't be. Historical reasons? Delusions? Sales tactics?

The right to property has never been without responsibility. I can own a house but then I'm responsible for sharing the costs of infrastructure around the house. You would find lower property taxes in the states in areas with little infrastructure (I.e. the bush in Alaska).

Even the city state kings of the first communities needed to provide defense and such, taxation is the obvious way to do that. Taxation of property is quite reasonable compared to head taxes.

Re: Is It Better to Rent or Buy?

#97

Post by Lost_BiomedE »

jonnathanson wrote: post #38
segmondy wrote: post #21

Earlier quoted context omitted.

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.

Agreed. I like the idea of disallowing pig farms, rooster farms, dog breeding, etc. But much beyond that, no thanks.

Re: Is It Better to Rent or Buy?

#98

Post by seanmcdirmid »

sheepmullet wrote: post #89
NoMoreNicksLeft wrote: post #87

Earlier quoted context omitted.

> The main problem with owning is illiquidity and associated immobility. If you rent you can quickly down shift if you run into trouble. Where are you getting these lease-free rental units? True, you're less on the hook with a 12 month lease, and the liability is lower than a 30 year mortgage... But this is a very mild difference. That job's not going to wait for you to sell your house or for your lease to end. > If…

Breaking lease is far simpler and cheaper than selling. It's never taken me more than 2-3 weeks to find someone to take over the lease whereas it can take months to sell a house. Because of this ease whenever I move jobs I always move house to be closer to work (after passing probation) because in my area changing jobs can easily add an hour a day to your commute.

Depends on the country really...in Switzerland you can be on the hook for a lot more than in the states, where breaking a lease typically only loses your deposit.

Re: Is It Better to Rent or Buy?

#99

Post by jakebellacera »

veemjeem wrote: post #86
greedo wrote: post #73

Earlier quoted context omitted.

I might be missing something, but if house prices rise just 1% annually, your differential would shrink dramatically in favor of ownership.

So I live in rent controlled area in the bay area where I pay around $1500 for a 2 bedroom. Using this calculator, it seems like buying almost any kind of home in the bay area would be a very bad decision.

Sure, until you decide to move. Then you'd have to pay market prices. Rent control, in San Francisco at least, is an exception that favors the renter and "punishes" the landlord. Even though the owner can't increase their current tenant's rent, the owner is still making an increase on equity due to the home's value increasing.

Re: Is It Better to Rent or Buy?

#100

Post by gsnedders »

blub wrote: post #79
millstone wrote: post #57

My wife and I found a great apartment to rent. It was spacious, quiet location, reasonable rent. We were happy for a few years. Then the owners sold the complex, and the new owners set out to remodel everything, very much against our wishes. Construction crews started entering our apartment. They came in while we were out, laying down plastic sheets and moving our furniture around. They sometimes came in while I was…

Which country was this in? I find it incredible...is it everywhere like this?

Certainly in most (all) of Europe (even in places with relatively weak, by European standards, tenancy agreements like the UK!) nobody except the tenant can enter the property unless advance notice is given or in case of emergency (e.g., if a pipe bursts, the landlord is entitled to repair it without having to give advance notice).
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