231–240 of 256 posts
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Wow, the marginal tax rate pretty much cut the rental limit in half, the difference is that big.
why higher marginal tax rate makes buying better? I don't get it.
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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.
Are you restricting rent to "living with roommates"? And not allowing for owning to be "rent out to others"? In San Francisco, owning is incredibly expensive. But so is renting an equivalent piece of property. So I'm not grasping why the options are limited to rent or "move away". (aside from exceptions such as renting under rent control)
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No, my renter is paying that for me. He's within a few percent of my mortgage in most markets (near the beginning of the loan, then as time goes on gets even more advantageous for the owner) so he's not working with some huge nest egg of capital that's making him loads of money. Especially if I just keeping financing at 100%. I can keep buyinbg properties and keep finding renters to pay them off for me as long as I f…
Keep downvoting. Numbers don't lie. Do the math yourself and show your alternate calculations where you don't own a house at the end of the loan period if you buy and getting somebody to pay your mortgage as their rent makes you own it even cheaper.
"buying is almost always better"
"This nyt analysis isnt correct"
I think the point of what you are saying simply is if you find the correct set of circumstances in terms of the rent you are able to get for the house as well as the market conditions, cost, interest etc. it makes sense to find a renter (taking a whole host of other specifics into account as well) and, assuming housing continues to increase in price it's a strategy to have an asset many years later (could be 15 to 25) that you have no mortgage on and you are collecting rent.
This is a pattern that I have seen many people do and, once again, given the specifics of what you are buying (and when) is something that seems to make sense in many cases.
Oh, one other important thing that I don't feel people are taking into account.
When you use your strategy you also have a form of forced savings because your money is tied up. So when you wake up 20 years later with a paid off asset you have that asset and haven't spent the money on other things.
Here is another example of forced savings.
You own a business and that business has a value at the end of 10 or 20 years and you can sell it. Vs. you are a consultant and have no asset value to your business but make more money than the business owner does.
The consultant could of course take a part of his earned income every year and sock it away. But many if not most people aren't disciplined enough to do that. So making less and building an asset is a form of forced savings.
People can do all the math they want to justify any decision of course but taking psychology into account and people's spending habits (given money in their bank account) is also important as well.
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devise a way for a user to assign a fixed amount to several categories A slider for each category. When one slider is moved up by 1% of the total the others automatically move down in proportion to their current value to collectively lose 1% of the total.
Yes, this is the first instinct. But moving all of the others down/up is in the majority of cases not what you want. Imagine you have 100 to spread out over 4 categories. Let's say you start with setting them all to 25. You set the first to 33, then you want to set the second to a desired values except oops, the first one is now no longer 33. Basically in this scenario you have to way to set them all to a precise val…
Earlier quoted context omitted.
why higher marginal tax rate makes buying better? I don't get it.
Higher marginal tax rates increases the $ value of mortgage interest deduction for the same amount of mortgage interest payment (since a deduction reduces taxable income, but the amount of reduction in actual tax liability is the reduction in taxable income times the marginal tax rate.)
edit: Just check interweb, only mortgage that being used to invest for more incomes are eligible for tax reduction in Canada, thus more trouble to convert a house mortgage to investment mortgage.
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…
Here's the problem I often run into - how valuable is this, really, compared to a good and much simpler heuristic. For instance - how well would this compare to a rule of "buy if you plan to be in the house more than [five/seven/ten] years?" One story they like to tell in operations research classes is about a couple of programmers discussing the implications of rounding when an input (viscosity) had been estimated by a field worker rubbing mud between his fingers and typing something in...
Another factor is that, in my "adult" life (adult being where I made enough money to squeak into the housing market if I so chose), housing has fluctuated wildly. I finished grad school in about 2000. Since then, housing has made a mocker of pretty much every financial decision I've made. The amount I saved was generally eclipsed by the amount San Francisco housing values increased between 2000 and 2007, dropped between 2007 and 2012, rocketed up again since then.
In spite of all that, I think that this is a very worthy tool, especially if it helps people really understand the factors that go into a decision. But considering how unpredictable everything is... do you think it really adds much as a true planning tool, beyond a vastly simpler heuristic?
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Even more complicated: - owning a house may make it harder for you to decide to move and accept a job/opportunity elsewhere, or to travel -- the impact of which is unquantifiable - for some people, by the time they'd finish paying off a house they'd already reasonably expect their parent's to have passed on and left wealth/property; for these people, particularly entrepreneurs, having free capital in the intervening…
> owning a house may make it harder for you to decide to move and accept a job/opportunity elsewhere, or to travel -- the impact of which is unquantifiable Why is it harder? Not sarcastic at all, by the way : it's just that I am in Hong Kong and it's actually quite common for expats here to buy a house, give it out for rent, and never come back to Hong Kong again ! In fact, I know of some cases where people have boug…
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Yes, this is the first instinct. But moving all of the others down/up is in the majority of cases not what you want. Imagine you have 100 to spread out over 4 categories. Let's say you start with setting them all to 25. You set the first to 33, then you want to set the second to a desired values except oops, the first one is now no longer 33. Basically in this scenario you have to way to set them all to a precise val…
Start them all at 0, and only invoke the scaling rule once the total is over 100%?
(The above is a simple example of a personal budget which I always use to illustrate the point, my actual use case is usually something like 'spend more on nature protection and less on road maintenance, but don't change expenditure on social security'. It's easy to see how various political persuasions have some sliders they don't want to budge on, some they want to minimize, and others to maximize).
Usually you need some form of 'reserve' account in your UI; i.e., you're 'spending' from a certain total, and as you increase/decrease some items, that amount is taken from / added back to the reserve. But then how do you guarantee people always spend everything (in some cases that is needed) without introducing modality (i.e., a dialog that says 'you need to spend everything' when you click 'next' or whatever). And sometimes you need a way to move units between accounts, without using the reserve as an intermediate store; plus you usually need a way to move exact amounts, which is hard to do with sliders.
Another approach is something where you stick with the sliders you proposed, and add functionality to 'fix' certain ones, and optionally a way to indicate how much to increase/decrease the others. E.g., proportional to their current values, or distribute the amount equally, or something else, ... The problem with this approach is that it is natural for nerds, but almost instantly becomes unwieldy for 'normal' users. And in that case, the 'fuck it, let's do it in Excel' is better.
If you're interested in this sort of things, I'd love to hear your thoughts or see mockups on other ways you think this could be done. I have talked about this numerous times but usually not with people who know something about UX or even care, beyond their project in front of them.
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…
The format of the old version [1] is so much better. The independent variable is how long I need to live in my house to break even, not how cheap do I need to find a place to rent. [1] http://www.nytimes.com/interactive/business/buy-rent-calcula...
(That’s in terms of buying being cheaper than renting; if you meant making an actual profit on your home, then the equivalent rent has to drop below $0. This typically only happens when the home price growth rate is high.)
But how long you stay is far from the only independent variable. The intent of the new calculator is not just to provide a single, definitive answer — which is essentially impossible given the fundamental uncertainty in predicting the future — but to demonstrate how the variables interact with each other and give you a feel for the space of possibilities. There are many other considerations besides timing.
Earlier quoted context omitted.
Are you restricting rent to "living with roommates"? And not allowing for owning to be "rent out to others"? In San Francisco, owning is incredibly expensive. But so is renting an equivalent piece of property. So I'm not grasping why the options are limited to rent or "move away". (aside from exceptions such as renting under rent control)
The rents in London are depressed by foreign investors who buy up properties and rent them out. This reduces the supply of properties to buy, and increases the supply of properties to rent.
(Or alternatively, you don't yet have enough saved for a down payment. In that case, wait a few years and run this calculation again. If you still won't have enough money in a few years, your rent is too high for your income)