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

221–230 of 318 posts

Re: My thoughts on renting versus buying

#221

Post by phil21 »

__turbobrew__ wrote: post #114
david-gpu wrote: post #98

Earlier quoted context omitted.

Some condo corporations are poorly managed and lack sufficient emergency funds, or proper maintenance, and thus resort to special assessments that are not funded in advance. The same is true of many homeowners.

As a homeowner, that is 100% in your control whereas with a condo it isn’t. I have seen so many times in the local news about condos who are underwater because the board decided to not proactively save and fix things which was a democratic decision made by the board. Honestly I have such low trust in the ability for humans to plan for the future over the now. It is like a bug in our psychology.

Nothing keeps the condo owner from realizing how underfunded the association is and saving that amount each month for the inevitable emergency.

Most home owners don’t do this either, but it’s pretty much the same thing short of an association leaving stuff so long it ends up being more expensive overall.

Stuff like siding isn’t really all that hard to predict - it typically has a useful life and easy to calculate like a roof. Might get lucky or unlucky but it all averages out in the end over time. If you’re not saving/spending about 2% of your property value each year for maintenance you are almost always running on hopes and prayers.

Granted, the outlier cases a condo owner has far less control over the situation- including neglect to the point of building collapse.

Re: My thoughts on renting versus buying

#222

Post by Panzer04 »

shoo wrote: post #174
rob_c wrote: post #147

Earlier quoted context omitted.

> Because few people can afford the 20% downpayement needed for mortgage. Current state of the British economy is the state is looking to allow 40yr 5% deposit mortgages. We're not quite there yet but it's heading that way. Be very thankful if your country isn't that bad!

Interesting. Down here in Australia our economy has been doing OK, we've had a great run of dodging recessions, but due to house prices appreciating so much since the 90s, there's similar problems with house down payments being far out of reach of many people. Recently, our government is making a change to allow first homebuyers to purchase properties with only a 5% deposit. Historically the Australian government set…

There's some pretty poor economists out there, and don't underestimate ethe ability of journalists to find someone conforming to their biases.

I think giving the government an interest in keeping house prices high is an awful idea and we should get over this obsession with homeownership.

Re: My thoughts on renting versus buying

#223

Post by necovek »

gruez wrote: post #85
bnchrch wrote: post #62

I've seen these critiques for years. and while its not necessarily wrong, I believe it under weights a few points: - Fixing your housing costs against inflation: You can't count on housing price increases, but you can count on inflation. If you buy a house and your mortgage payment is > rent. Overtime it will naturally flip. $1 no longer buys me a chocolate bar, and $800/month no longer gets me a 2 bed apartment. - L…

>- Fixing your housing costs against inflation: Any sort of serious buy vs rent calculator already takes this into account, for instance the one on nytimes >- Capital Battery: As I build equity in my home it can become an asset I take loans against to pursue other opportunities. That feels absolutely insane to me, especially when you consider that by the time you built up significant amounts of equity you'll have sig…

> How is this more flexible than the counterfactual of renting?

I read that as "similarly flexible" not "more flexible".

Re: My thoughts on renting versus buying

#224

Post by Panzer04 »

kennywinker wrote: post #84
Simulacra wrote: post #18

Earlier quoted context omitted.

Because of the price, and the market willing to pay that price. If nobody was willing to pay $2500 for an apartment, nobody would rent it, and the landlord wouldn't have any money. For one person that can't afford a place, there are 10 who can. So landlords quite naturally match the market demand.

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.

Re: My thoughts on renting versus buying

#225

Post by phil21 »

estimator7292 wrote: post #109
wavemode wrote: post #92

Earlier quoted context omitted.

> If you rent you're left with nothing. Well, no. You're left with the cash you would've spent buying a house. Whether that's financially better or worse, depends entirely on the mortgage interest, taxes, and maintenance costs of the house, as well as the money you could have earned investing the cash elsewhere, compared to the rent you would have spent over the same time period.

When renting a 1br costs as much as my mortgage on a 3br, I don't think that really tracks.

Sure, but this is not universal.

I could have bought 15 years before I did. But because rent was less than half a mortgage (not even including maintenance), I was able to put that extra money into the market and save enough for more than a down payment on a forever home vs starter home when I was ready.

It’s certainly not like for like, but it would have been a poor financial decision to buy vs rent.

Where I live now this math is more or less inverted. Makes more sense to buy vs rent.

In the end your primary residence is a lifestyle decision, not a financial one. It’s not an investment in the traditional sense. It’s speculation at best.

Re: My thoughts on renting versus buying

#226

Post by foxglacier »

carlosjobim wrote: post #139
wavemode wrote: post #92

Earlier quoted context omitted.

> If you rent you're left with nothing. Well, no. You're left with the cash you would've spent buying a house. Whether that's financially better or worse, depends entirely on the mortgage interest, taxes, and maintenance costs of the house, as well as the money you could have earned investing the cash elsewhere, compared to the rent you would have spent over the same time period.

What? That cash goes to the landlord.

In the same way the interest payments on a mortgage go the the bank. And the interest is often the majority of the payments people make on a mortgage. If you're renting, in a market where rents are about the same or lower than mortgage interest, then you keep the leftover cash that the buyer put into their house and you can put into whatever investment you choose.

Re: My thoughts on renting versus buying

#227

Post by phil21 »

cramsession wrote: post #126
wavemode wrote: post #119

Earlier quoted context omitted.

No, this really is not always the case when controlling for location. (That is, if you're comparing apartments in the middle of the city to houses in the outskirts, you're obviously comparing apples and oranges.)

If you compare equally sized places, rent is pretty much always higher. At least it has been in every city/town I’ve ever lived in. Renting is not cheap, you’re paying a premium to the landlord.

Not all landlords min/max for peak financial outcome.

My landlord for 15 years raised rent exactly once when property taxes had a large jump one year, and was already under market when I started the first lease.

His mortgage was long paid off and he optimized for least hassle vs max money. Worked out for both of us - I called him maybe once a year at most, and he had a decent passive income stream reliably come in without worrying about 2am phone calls because a $50 thermostat broke. He had a nicely appreciated property to sell in his eventual retirement.

It was a 3BR place with a yard larger than I own now. Granted fit and finish is nowhere comparable, but I pay about 4x in mortgage and taxes than what I was paying him for about 1.5x the space.

Such arrangements are increasingly more rare as everything becomes a finance game, but they can still be sought out and developed.

Re: My thoughts on renting versus buying

#228

Post by necovek »

Esophagus4 wrote: post #183
carlosjobim wrote: post #143

Earlier quoted context omitted.

> Average rents are cheaper than average mortgage payments The average mortgage is for a family, the average rent is for a broke young worker or student living in a much smaller and worse accommodation. Renting is always more expensive than a mortgage for the same housing unit, because the landlord needs to make a profit from his tenants. Cooking the numbers won't change reality. The truth beats all the lies, no matt…

The median renter is 42 years old. Even a basic Google search would have saved you needing to post that comment. [1] https://www.zillow.com/research/renters-housing-trends-repor...

> The median age of a renter is 42 years old and about half (46%) of renters are under the age of 40; only 10% of renters are in their seventies or older, and 15% are in their sixties. In other words, the age distribution of renters trends younger than the overall US population.

Which tells us exactly what the GP brought up: renters are younger than buyers.

Re: My thoughts on renting versus buying

#229

Post by mizzao »

bnchrch wrote: post #62

I've seen these critiques for years. and while its not necessarily wrong, I believe it under weights a few points: - Fixing your housing costs against inflation: You can't count on housing price increases, but you can count on inflation. If you buy a house and your mortgage payment is > rent. Overtime it will naturally flip. $1 no longer buys me a chocolate bar, and $800/month no longer gets me a 2 bed apartment. - L…

Yep, and in the US add the mortgage interest deduction, which is a regressive tax cut for people who can afford homes :-)

Re: My thoughts on renting versus buying

#230

Post by litoE »

filoleg wrote: post #64
kibwen wrote: post #15

> The Flexibility of Renting Is Undervalued And the stability of buying is undervalued. It's telling that this article frames housing as an investment vehicle rather than as a basic necessity. And it's not just a necessity because it shelters you from the elements and gives you storage for your stuff; it anchors you in a neighborhood and allows you to begin forming a local community. The flexibility of renting that t…

> the stability of buying It depends. Personally, after witnessing both sides of the coin second-hand, I am not leaning in the direction of either buying or renting in absolute. It is highly dependent on the context and circumstances of a specific situation/market. I am aware that this is just an anecdote (i.e., it isn't going to say much about the overall state of things across all states in the US), but there is a…

In our condominium building (42 floors) the rule is that every apartment owner is responsible for any damages to their apartment, even if they are caused by an apartment in an upper floor. This is because otherwise the owners of the upper floors would have to have million-dollar insurance premiums to cover the possibility of a leak in their apartment causing damages to multiple floors below. We had an event where a burst pipe in the 28th floor caused damages all the way down to the 8th floor.
Post reply on HN