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Is It Better to Rent or Buy?

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Re: Is It Better to Rent or Buy?

#151

Post by ForHackernews »

TillE wrote: post #64
sliverstorm wrote: post #51

Earlier quoted context omitted.

Broaden your horizons, perhaps? Manhattan & downtown San Francisco are not the only interesting places in the world.

If one of your major criteria is a walkable city (ie, no car required) within the US, that list is very short and very expensive. Leaving the country broadens your options considerably, but that also adds its own complications.

> that list is very short and very expensive

It's not really THAT bad.

Off the top of my head: Chicago, Portland and Philadelphia are all fairly inexpensive with good transit.

If you're willing to pay a bit more: Seattle, DC, Boston, NY outside of Brooklyn and Manhattan, the unfashionable parts of LA.

If you're willing to live in the city center or put up with infrequent buses, Minneapolis, Louisville, St. Louis, Austin and Atlanta are all possibilities.

Re: Is It Better to Rent or Buy?

#152

Post by jbarham »

usaar333 wrote: post #150
jbarham wrote: post #108

This calculator ignores the fact that the market for real estate buyers is increasingly global but the rental market is local. If you are in your 20's and grew up in a middle class family in Vancouver, Toronto, Sydney, Melbourne or Auckland, and have a middle class job, it is virtually impossible for you to be able to afford to buy a house in the city in which you grew up. E.g., here's a New Yorker article on the imp…

> This calculator ignores the fact that the market for real estate buyers is increasingly global but the rental market is local. How is the calculator ignoring this fact? If you think that increasing globalness will cause home price growth to be higher than inflation/rent growth, you can modify that parameter.

My point is that for young people who grew up in cities like London or Vancouver, the choice is not buy or rent, the choice is rent or move away from the city they grew up in if they want to be able to buy a house on a middle class salary.

Re: Is It Better to Rent or Buy?

#153

Post by mattm »

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…

To add to this, people don't usually lose their jobs in a bubble. If you are losing your job, chances are a lot of other people in your area are also losing their jobs which makes it even harder to sell.

Re: Is It Better to Rent or Buy?

#154

Post by nitrogen »

mbostock wrote: post #103
pessimizer wrote: post #94

Earlier quoted context omitted.

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.

Definitely. We actually designed something like that, but due to time constraints weren’t able to ship it (yet). One complication is that a reasonable range for a given variable can depend on other variables. But hopefully we’ll figure it out. And thank you!

I'm sure you've seen TangleJS by Bret Victor. Its performance wasn't quite good enough for the way I wanted to use it, but it looks like that level of meta-interactivity is what you're going for.

Here's my favorite demo of the concept, discovered here on HN: http://worrydream.com/#!2/LadderOfAbstraction

Re: Is It Better to Rent or Buy?

#155

Post by moogleii »

millstone wrote: post #116
blub wrote: post #79

Earlier quoted context omitted.

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

This was in the USA, where the law states that landlords and their hired contractors may enter during "reasonable hours" for "improvements." Probably rendering the apartment inhabitable for hours every day is not legal, and I could have sued for some compensation, but living there had gotten so miserable with the construction noise and random water shutoffs that I just wanted out.

I don't think a court would have found those hours to be very reasonable if you were asleep or still getting dressed.

Re: Is It Better to Rent or Buy?

#157

Post by bane »

Doesn't have the fancy d3 visualization, but here's a better analysis over the long run (30 years). It even stacks the deck against owning at the start by assuming 100% financing. There's a few missing components (mortgage insurance etc.) but even if you add those numbers into this rather detailed analysis, the conclusion doesn't change. It's actually a good enough analysis that you can just added or subtract a few other scenarios from it yourself and until you're describing some very bizarre circumstances, the basic conclusion holds. All the calculations and reasoning are provided here. Buying is unambiguously a better use of your money over the long term. It's not even close.

http://assayviaessay.blogspot.com/2014/04/rent-or-buy.html

Lots of people here describe renting as having an upside because you can remain location mobile, but that's true of owning as well. The only option at that point isn't to sell your home and then buy one somewhere else, you can also rent out your current home, and buy a second one. You can continue doing that ad nauseum, except now you've convinced other people to pay for your mortgage instead of you. In the end you'll own a few properties and all the people who rented from you will own nothing.

Something mentioned in my link but not explicitly in the OP, rent goes up, mortgage payments stay the same or can go down. Over 30 years, your housing burden goes down significantly providing you with increased monthly liquidity.

At the end of the day, you own the property at the end and for all years >30 you effectively live for "free" (minus taxes).

I urge everybody reading the OP to take a few spare hours and run the numbers themselves and see if the easy conclusion here holds out for them.

Re: Is It Better to Rent or Buy?

#158

Post by bane »

webwright wrote: post #85
larrys wrote: post #48

Earlier quoted context omitted.

"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 can do that when you own as well. You have to sell your house. " This is so incredibly wrong. Selling a house can be a massive and expensive undertaking. Assuming agents are involved, you can expect to pay 6-9% of the value of the house in costs (agent fees, closing costs, etc), assuming the buyer doesn't find something that is against code or something that is starting to fail (furnace, roof, etc). You buy a ho…

Why would I sell my house when I can get somebody else to rent it and make my mortgage payments on that house for me?

I'll just buy another house at my new location. In the end I'll now own two houses I do whatever I want with and my renter will own nothing.

Re: Is It Better to Rent or Buy?

#159

Post by bane »

swalkergibson wrote: post #90
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…

This is unequivocally accurate. I own three investment properties plus my own home. Each one is profitable, including the house that I live in. It seems to me that the majority of this argument is that rents will not increase. That is a fallacy. All else being equal, each time you move from a place, you will likely be paying more rent because of the inevitable march of time.

And the only things a renter can do to reduce their monthly housing burden is downsize or move to less desirable location.

A homeowner's monthly burden is either static or reducing (if they're paying down the principle early), and they have all kinds of things they can use to offset that monthly housing burden, like rent spare rooms out, or use part of their home for a business.

Re: Is It Better to Rent or Buy?

#160

Post by bane »

wkd415 wrote: post #36

Would love to see this for lease or buying cars...

Buy a reliable cheap car that's easy and cheap to maintain and repair. Pay it off as quickly as possible and run it for 10+ years. Your operating cost per mile over a vehicle lifetime like that gets measured in fractions of a dollar per mile.

My almost 13 year old car costs me something like <$.30/mile right now and getting cheaper the older it gets. So far, I've never had a repair that cost more than $300 and gas mileage is comparable to some hybrids. It cost me $12k new and I paid it off in 2 years so my actual purchase cost was something a bit higher, but I didn't let the financer recoup even half of their expected interest off of me.

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