Renting Is Cheaper Than Buying in All 50 Major Metro Areas in the United States
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Re: Renting Is Cheaper Than Buying in All 50 Major Metro Areas in the United States
#2Fixed rate mortgage payments are constant, but rents rise with inflation. If people expect high inflation, that may explain why rents look cheap compared to current mortgage payments on comparable residences.
Re: Renting Is Cheaper Than Buying in All 50 Major Metro Areas in the United States
#3Fixed rate mortgage payments are constant, but rents rise with inflation. If people expect high inflation, that may explain why rents look cheap compared to current mortgage payments on comparable residences.
This is true--we've owned our house since 2009, so our mortgage is about half of what it would cost to rent around here now.
But in the short term, there really shouldn't be such a big gap between renting and owning. That means that there isn't a global shortage of housing in the market, but distortions in the market because of external factors. Clearly, right now, a renter is better off waiting and putting the difference in the bank.
Re: Renting Is Cheaper Than Buying in All 50 Major Metro Areas in the United States
#4Fixed rate mortgage payments are constant, but rents rise with inflation. If people expect high inflation, that may explain why rents look cheap compared to current mortgage payments on comparable residences.
If there is high inflation, the Fed will raise interest rates, crashing the housing market. Not saying you're wrong, but there are many factors to be considered.
Re: Renting Is Cheaper Than Buying in All 50 Major Metro Areas in the United States
#5Fixed rate mortgage payments are constant, but rents rise with inflation. If people expect high inflation, that may explain why rents look cheap compared to current mortgage payments on comparable residences.
Rent control is the norm in our most expensive rental markets.
Re: Renting Is Cheaper Than Buying in All 50 Major Metro Areas in the United States
#6As far back as I can remember this has always been the case. Sometimes there’s weird situations where buying is cheaper but generally, when looking at the immediate term renting is cheaper.
But it’s pretty dumb to do an analysis like this NYT article as it’s important to factor in some amount of time for decision making. These can get pretty complicated but just a basic personal model factoring in 2-3% annual increases in rent compared against ownership costs is what I used to choose rent over buy.
It can be used for a specific decision (eg, “I’m going to live in Fooberg for 5 years, what should I do?”) or macro life planning (eg, “I’m going to live for 60 more years, what should I do?”).
It’s funny how these articles are so clickbaity and missing on basic reporting and analysis. I think it’s based on the few people who actually sub to the NYT like reading about populist stuff (eg, landlords bad, can’t afford to buy).
Of course these things are true, but they’re always true. Maybe it was awesome in 1945, but it was super hard for someone in their 20s to buy a house in the 80s and 90s and it’s super hard now. Tl;dr; you probably still want to buy a place in 9/10 situations since rent goes up and mortgage is fixed and eventually ends (although taxes and insurance and maintenance sort of index to inflation).
Re: Renting Is Cheaper Than Buying in All 50 Major Metro Areas in the United States
#7Fixed rate mortgage payments are constant, but rents rise with inflation. If people expect high inflation, that may explain why rents look cheap compared to current mortgage payments on comparable residences.
If there is high inflation, the Fed will raise interest rates, crashing the housing market. Not saying you're wrong, but there are many factors to be considered.
High inflation is actually good for homes and other assets. The market will be dampened, but home values will rise with inflation.
Holding assets is a good hedge against inflation.
That and your mortgage is locked so your payment gets super cheap in high inflation situations.
Re: Renting Is Cheaper Than Buying in All 50 Major Metro Areas in the United States
#8This is literally a no-brainer, especially when the hidden costs of home ownership aren't even factored into this: Septic tank needs emptying? Years of built-up termite damage finally rears its ugly head? HVAC broke in the middle of the night? Don't have to worry about those costs when renting.
Re: Renting Is Cheaper Than Buying in All 50 Major Metro Areas in the United States
#9Something I've thought about quite a bit here - for renters don't you worry about being unable to control housing prices long term? I have maintenance on my house and taxes, but I can generally control both (for example I can have my house painted now or wait a year or 2). Rent prices may go up 20% without any input from you. Secondly - do renters move more than owners? How does that work if you have kids in school? I would think ownership provides more stability than renting, but I have no data on whether renters move more or not.
Re: Renting Is Cheaper Than Buying in All 50 Major Metro Areas in the United States
#10As far back as I can remember this has always been the case. Sometimes there’s weird situations where buying is cheaper but generally, when looking at the immediate term renting is cheaper. But it’s pretty dumb to do an analysis like this NYT article as it’s important to factor in some amount of time for decision making. These can get pretty complicated but just a basic personal model factoring in 2-3% annual increas…
I think it's quite common for people to waste all of their money on consumption and not save or invest, so a mortgage in a way is a forced savings account which helps to average person build or at least save some wealth over time.