Show HN: Should I Get a House? a better rent vs. buy calculator • Hacker News Board

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#361

Post by fragmede » Tue, Jul 20, 2021, 5:47 AM UTC

JMTQp8lwXL wrote: post #254

hnhousingthrow wrote: post #188

These calculators don't reflect the reality/absurdity of the current economy. Anecdotal, but I bought a house in eastern California last year for $600k, now Zillow says it's worth $835k. Also, I'll unlikely ever be able to afford a house in the Bay Area, even though I make $220k/year at a company there. Still don't know what I'll do if my employer makes us return to the SF office in a few months. Relatedly, a ~70 yea…

If you had a significant other with a similar upper middle class wage, e.g., $220k * 2 = $440k you could probably swing it with more breathing room. You are wise to avoid the burden, in the chance you technically qualify for the mortgage but barely so in the Bay Area (e.g., leaving you house poor). The fact that home affordability requires a HH income in the top 2-3% is, to put it mildly, highly concerning. It makes…

The nihilism doesn't make sense from someone making $200k/yr though. If you're in a career with little advancement and making minimum wage then yeah sure, but if you write software at a FAANG, then lets back of the envelope for a second.

$200k is like 130k take home pay after taxes, (which is just shy of $11k/month). 20% down on a million dollar house is 200k. If you're able to put $4k/month towards a future down payment, that's 50 months, or just over 4 years. If you were making that when you are 30 years old, if nothing changes from then (which it won't), you can buy a million dollar house before you're 35.

If you put it into stocks instead of holding it liquid for those 4 years, then before long term cap gains tax (California and Federal), then you'll need closer to $300k. Which still seems like it should be doable before you're 40. (If you bought AAPL at the height of the 2008 bubble, you'd be doing quite well today.)

Does it seem reasonable to me that housing is this expensive in the Bay area? No! Does it seem feasible for someone who's software development career is going well, to be able to afford a house, eventually, if they make that a priority? Quite.

There are many directions someone making $200k/yr at 30 can choose to go with their money, and I don't begrudge anyone the agency to make their own decisions. But let's not say that someone making those kinds of wages can't afford a house. They may prefer to use DoorDash for every meal and extravagant vacations instead of buying a home, but people who make less money are forced to make much tougher, more existential choices on how to spend their money.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#362

Post by forz877 » Tue, Jul 20, 2021, 5:52 AM UTC

kube-system wrote: post #113

asdff wrote: post #103

Earlier quoted context omitted.

>Whereas you can easily call and have it fixed within 5 hours if you owned it. The caveat with these sorts of fixes is these service companies will sometimes upcharge a big fee for "emergency work" to have it fixed within 5 hours rather than in two weeks. I literally had water shooting out of my ceiling and the property manager admitted as much to me when I asked why the owner left me without water for days.

True, but at least you get to answer that question, instead of your landlord.

Honestly dealing with some of the contracts I've dealt with, it's not much better

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#363

Post by jandrewrogers » Tue, Jul 20, 2021, 6:06 AM UTC

sakopov wrote: post #344

lumost wrote: post #330

Earlier quoted context omitted.

220 is a wage at the upper end of what can be typically made by the time your 30 if you’ve chosen the right careers. There are notable exceptions with recent top tech offers - but I work for a fang as a software engineer and didn’t break 200 take home until I turned 32. If you need 2x those incomes to afford A basic necessity such as housing than we’re likely to have a problem.

> 220 is a wage at the upper end of what can be typically made by the time your 30 if you’ve chosen the right careers. This is typically true if you work for a fang. These insane salaries rarely exist anywhere else.

It is more common than you might expect across industries if you are good at what you do. I know a biz dev person at a mediocre book publisher that earns that much and they’ve worked remote much of their career.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#364

Post by kube-system » Tue, Jul 20, 2021, 6:10 AM UTC

chii wrote: post #356

kube-system wrote: post #95

Earlier quoted context omitted.

> Versus, of course, for renting: "don't have to worry that the roof will need replacement, etc." This is kind of a tangent, but worrying about maintenance is exactly why I own a house. When I rented, poor maintenance issues were my problem whether or not they were my responsibility. I'd much rather be empowered to do preventive maintenance or fix things immediately, than be forced to wait until something fails plus…

presumably for a renter, if the roof fell off, you leave and stop paying rent. The owner will have to fix it at their own expense, before putting it back up on the market.

The majority of issues that people face with their dwellings are nuisance issues. Leaky or clogged plumbing. Malfunctioning appliances. Faulty fixtures. These aren’t things anyone would pay a lease break fee for, nor would they be anything that would preclude the sale of a home.

If a roof had a leak in a rental, you could easily find yourself with a landlord who patches it, regardless of the fact it really needs replaced. What do they care if you have to make a renters insurance claim every 6 months? It ain’t their stuff!

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#365

Post by Aulig » Tue, Jul 20, 2021, 6:24 AM UTC

alach11 wrote: post #72

Aulig wrote: post #68

Earlier quoted context omitted.

Selling your house in an emergency would be similarly bad as exiting the stock market at an unfortunate time. The long-term ROI after costs and inflation of stocks (global) is about 3% higher p.a. than of property (global). Unfortunately this source is in german, but it cites research papers too, you can check those for further investigation: https://www.gerd-kommer-invest.de/die-rendite-von-direktinve...

Buying a house can have an advantage over stocks in the leverage you get with a mortgage, and in certain cases tax incentives. Whether that’s enough to compensate for the better returns of stocks is the hundred thousand dollar question.

Tax incentives depend on your legislation, but they can make a difference, yes. Leverage also comes with higher risk, which makes it a bit of an unfair comparison in my opinion. If you really wanted, you could also use leverage on your stock investments, but I personally would never do that.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#366

Post by speedgoose » Tue, Jul 20, 2021, 6:31 AM UTC

It's a much simpler answer in Norway : Yes you definitely should buy unless you can't afford it yet or plan to move in a very short time.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#367

Post by jamil7 » Tue, Jul 20, 2021, 7:00 AM UTC

mapmap wrote: post #347

hatchnyc wrote: post #217

Earlier quoted context omitted.

I think this is not going to make sense if your only point of reference is residential rentals in a typical American city, but this is how it is done in at least some places in Europe. People tend to stay in one place for much longer than Americans. If you're on a budget you can go to Ikea and buy a kitchen...based on my friends' places I'd say that's the norm.

Do you take the kitchen with you when you leave or does the landlord tear it down?

Some people do yes, I’ve heard a few people dismantle and take it with them, more common is that you offer the next tenants to pay for the kitchen at a reduced rate. Keep in mind it’s very difficult to kick a tenant out of a rental here and you can often keep a flat for as long as you want so doing large renovations to a rented flat isn’t uncommon.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#368

Post by asdff » Tue, Jul 20, 2021, 7:05 AM UTC

kube-system wrote: post #139

asdff wrote: post #123

Earlier quoted context omitted.

Not all offers are going to be all cash. People still buy homes putting down 5% or less in these hot markets, even if its not as common.

For sure, I'm just expanding on why it might be smart not to. I bought in a buyers market and still opted to put down as much as I could, rather than as much as I was required, so that I could have a better chance to get my 1st favorite pick. I personally wouldn't want to be in the position to settle on my 15th(+) favorite house. There's a lot of people being forced to make a lot of compromises right now -- will they…

For a lot of people, the thinking is years from now they will walk out with enough equity and gain to put a down payment on what they want without compromises. Hardly anyone gets everything they want in a first house.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#369

Post by EVa5I7bHFq9mnYK » Tue, Jul 20, 2021, 7:45 AM UTC

This fails to take into account the average salary increase associated with moving to another location. For me, it was like 20% every few years. I think, over the years, the faster career advancement for a more mobile person dwarfs all the other costs in that table.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#370

Post by mrep » Tue, Jul 20, 2021, 7:52 AM UTC

refurb wrote: post #338

kelnos wrote: post #321

Earlier quoted context omitted.

If your building has HOA dues, renting doesn't mean you aren't paying it; it just means your landlord built the cost of it into your rent. Same with property tax and the landlord's home insurance payment. After which, if you want to be safe, you then need to spend more to get renter's insurance. And I would expect a landlord would build estimated repair costs into the rent as well, at least to some extent. Of course…

I see this claim a lot - "you can't save on rent because your landlord has to cover their costs". But this is only true if your landlord purchased at the time you rented. I rented a $1.8M apartment for $3,000 per month (~1/3 of total ownership costs). That's because my landlord bought 20 years before when the apartment was worth $200k. His monthly costs were maybe $1,000.

I am extremely doubtful of the claim that an apartment that only nets 36,000 in rent per year is somehow worth 1,800,000. That's a 2% return before any associated costs. I literally just looked at another rental property that was netting 8k a month across all tenants and was listed at 1,150,000. There is no way that other owner could actually sell that place for 1,800,000.