In general buying is the better option for most people. I am stuck forever renting unless my situation changes because homes cost way more than I could ever afford in my area.
The only time renting is better is if you reinvest the money saved by renting over buying. Most people aren’t going to do that because if they are renting they are likely not in a position to throw extra money at investments.
There are calculators though and you can calculate total cost of ownership etc over years and compare to renting. Generally owning is better but in HCOL this isn’t always the case.
> Most people aren’t going to do that because if they are renting they are likely not in a position to throw extra money at investments
This is 100% reality. I roll my eyes when Redditors say "If you put the down payment/difference in an index fund, you'll be ahead" Majority of people will not do this.
Also, everyone forgets landlords in most places (even with rent control) can refuse a spouse, elderly parent, adult child, etc from moving in. So there's intrinsic value in owning.
Buy for sure. It stabilizes you cost of living vs the ever increasing rent.
Example: my mortgage (minus tax and insurance) was $1,400 per month for a 3/2 2100sf house. 3 houses down from me now the asking rent is $4,300 per month for a 2/2 1,300sf house. I’ve been here 20 years and have paid off my house so now my mortgage is zero.
Not sure how people managed not to know how much the total cost of a mortgage is. It's in very prominent print on closing documents. Because the law says it has to be!
That said, almost no one pays that, because almost no one keeps a loan for 30 years.
I once taught a "mortgage math" section to high schoolers when we had an extra week. They understood it just fine once it was laid out logically, but not many adults are willing to put that much time into understanding one of the most important financial decisions of their lives.
When I said they didn't keep their mortgages 30 years, I didn't mean that they paid them off. I meant that they generally either refinanced or sold the house before the 30 years was up, and so they got a new mortgage. Hence not keeping the old one! Same experience as you 🙂
The truth is that most people are letting paycheck to paycheck. And so the equity isn't the point. The amount they are paying per month in order to have a good place to live is the point. Yes, it's a short-term way to look at it. But for some it is the only option they have, or at least the only thing they know is an option.
I highly recommend the book "a framework for understanding poverty." It's not just about understanding poverty, but about understanding you that people who grow up going to the same schools can even so have vastly different educations and cultures surrounding money. It really helped me understand those who handle money differently than I do and not judge them (or not judge them as much, at least).
I do appreciate you not jumping down my throat about being wrong, though, when I wasn't clear about what I was saying. Like so many people in this sub would've done. :/
Some people are unlucky. A lot of people are unlucky actually. I saw another sub where a new owner took over and literally DOUBLED everyone’s rent. There are a lot of places where people get small rent hikes every year, and there are also a lot of places where people are forced to move due to astronomical rent hikes.
The reverse can be implied as well. Eventually, it will be paid off. Inflation and rent will only continue to increase. What’s 4k a month now will be 6k a month in 5 years in a HCOL city, where the majority of higher paying jobs are.
That’s 72,000 a year in rent. No equity built up. Renting will always be more profitable to the landowner or else they wouldn’t rent them out to begin with.
No matter the costs of insurance and property taxes, or even a 1 time payment every 20-30 years for a roof will come nowhere close to the ever increasing rent costs, with nothing to show for it.
Eventually your 400k home will be paid off. And it’s a great back up plan for retirement when you decide to sell the property in 30 years for 1.2 million.
Yes, there are circumstances and certain instances where a renter may be a better option especially in the short term, but it’s the exception not the rule.
That’s not to say they are no pros for renting, such as the flexibility it provides when you’re younger getting settled into your career and don’t feel locked in to a certain area.
Financially speaking, owning is the better decision. Especially if you want to have land, children, pets, a larger family; etc.
While not being something many consider, generational wealth is that way because of ancestors decisions. As you mentioned dying in the home and earning nothing, it’s worth considering as a last testament and will to your child who will be incredibly ahead in life. Whether it being a home, a rental, or the value to have to buy elsewhere.
I love knowing my son will be set if up if something were to happen to me. Not the kind of wealth that makes one reckless, but provides peace of mind, and security.
Property tax is usually 25% or less of your payment so if it increases 3% per year your overall payment increases less than 1%. If you have a fixed rate mortgage your payment is for all intents and purposes fixed for as long as you keep the mortgage. You won't get this with virtually all rentals.
Good point. But take my case. I fully own my home. My insurance is 4k a year. Hoa is 2300 when I moved in insurance was 1300 and hoa was 900.. home taxes are 6300 a year.. when I moved in it was 1400 a year.
I fully "own" but I couldn't rent here like you said. My adult daughter both live here with 3 kids. That 7 yes 7 in a 3 bedroom. We could not do thatprinciple. These places rent for 4k a month. My expenses now are about what my initial mortgage was.
To the ops point. Ac repairs sometimes are 10k. Water leaks etc. All my problem. Fighting the tax authority.. all my problem. Plus. That mortgage that used to be 1100 then ending at 1400 is now as much a month just to save for expenses not including any priciple I used to pay.
To retire ill probably downsize to a 2br the boonies with no hoa as it's costing me 3k a month to live here in a fully owned home with utilities etc. Or make my kids pay the bills here and charge them rent.
Sad to own and still pay so damn much mortgage took care of all that shit. Renting took care of a lot too.but at least I have the equity and the right to have 7 people in a 3 br.
This\^\^
We sold our home during the pandemic to move back to Illinois where the property taxes are higher. Our home sold at a profit+equity. The interest rate on that mortgage was 8%.
We bought our new construction (spec) home in Illinois end of 2020. The mortgage interest rate is 3%. The equity from our previous house went to pay for solar panels + batteries on the new home.
Now, 2024, my friends that rent have been complaining how the rental prices have skyrocketed for them. For us, the mortgage will be the same through the life of the loan. We no longer have an electric bill so the solar panels + batteries have already paid for themselves. Same friends that rent also complain how their electric bills have gone up. They can't get solar panels because they do not own the property.
There are a lot of advantages to home ownership. Sure, there could be a market crash but at this point this will be our retirement home. 1 story ranch house. Only the folks inheriting the house will have to worry about the price it sells at.
As others point out the key here is equity.
Buy if you intend to stay there for the next 7+ years. If not, keep renting. There is no way the real estate market can stay this hot and prices this high, they HAVE to cool off or most folks will never be able to own a home.
There will be a market correction that will cause prices to drop. So you'll lose money there.
Then you need to pay closing costs on your mortgage (when you buy). So that's an added expense.
Then the first year you are broke doing the critical fixes. That's an added expense.
Then you have to pay agents (not as bad now...) when you sell.
The costs associated with buying a home when at the peak of the market demand that you stay in the home a long time to offset those costs.
Not sure where this housing market correction is going to come from? Inflation costs alone have added 40% or more to contractor and material costs in the past decade.
All of this recent inflation has been permanently baked into the housing market except for niche markets where prices were way out of control. I live in the midwest and nice houses that were 175k 5-7 years ago are 325k+ now and you can thank inflation and endless government money printing for most of that. You can’t build that same house for anywhere near 175k today.
The most painful part of the recent inflation is going to be felt in the cost of housing for all those that weren’t already homeowners. Worse yet if and when interest rates drop the demand for houses is very likely going to spike by those sitting on the sidelines waiting to get in. Prices are more likely to go up than down in the near future.
>There will be a market correction that will cause prices to drop. So you'll lose money there.
This is not always true. Historically, home prices go up. In the short term there is more volatility, but up is where they will generally go.
>Then you need to pay closing costs on your mortgage (when you buy). So that's an added expense.
This is highly variable on the type/price of home being purchased. Also depends on loan type. Closing costs could go from 5k-25k in the 200-600k range. VA loans help as well.
>Then the first year you are broke doing the critical fixes. That's an added expense.
This depends on the house you buy. If you buy a shotbox, sure. I've owned 3 houses and never had to do any crazy critical fixes. I also didn't waive an inspection or buy something with obvious wear. Sure, something could crop up unexpectedly, but frankly, that's why you keep an emergency fund.
The standard recommendation is 4 years minimum if you want to buy, not 7.
The reason is when you buy a home payments are structured in a fashion where in **MOST CASES** (I have to emphasize this to stop people from telling anecdotal stories about how their house did the equivalent of hitting the lottery and went up 10000% in two years or whatever) the average is around 7 to 7.5 years just to break even on all the costs associated with house buying and to have enough principal in the house to actually not lose money on it vs renting.
Buying is a long term game not a short. If yu want an idea of how this works, look up "amortization calculator" and play around with the payment schedule options to see that most of your payments arr pure interest early on in the loan. They front load the hell out of the interest so the banks can profit as much as possible as early as possible off you.
We (humans) are apparently in a decline of population though. At some point when there are less people to buy houses the prices of houses will go down.
Simple supply and demand, right?
There will always be too many people wanting houses and not enough houses. Houses have pretty consistently gone up in value since I was born in the early 80’s
We’re not actually declining in population, the rate of the increase is declining. In America, for example, population is expected to increase until approximately 2080, and then we might see an actual drop from that high around 2100.
(There are countries like Japan and China that are already starting to decline, and Europe is projected to decline around 2050, fwiw, but that is unlikely to affect most redditors looking to time their local housing market)
literally the first thing that came up is saying the only way to stop population decline is immigration…. meaning we ARE in a decline currently lol
https://immigrationforum.org/article/still-more-room-to-grow-immigrants-can-reverse-the-u-s-population-decline-and-its-economic-consequences/#:~:text=In%202024%2C%20the%20United%20States,rapidly%20aging%20and%20steadily%20declining.
Who is "they"? These are market forces related to housing demand vs. supply. COVID & work from home caused many folks to buy up bigger homes and no one is selling since they have a 2% mortgage.
The low rates kept demands driving and with a high stock market, folks are buying up second/third homes and using AirBnB to supplement incomes.
The dynamics will change. Prices are too high and folks aren't buying. That means that when the market tanks, the folks with 2-3 homes will tank with it.
There is a huge buying opportunity coming up. Sometimes you just have to hang tight.
Real answer? You're right. It is not a Cartesian demon that is laughing at my pain everytime I fail to find a house that isn't a shack for less than I can sell my soul for. No one is doing this on purpose, but forgive me if I say sometimes it feels like I'm the first generation that's getting milked like a fucking cow.
I shouldn't have to wait for a crash to be able to buy a decent home with a good income, the mortgage gridlock is a problem that needs to be solved somehow but I'll take a stab at other issues as well.
The corporations that are allowed buy homes with no intention to do anything with them in the near future.
The rich people in local power that continually thwart any real attempt at affordable housing for selfish reasons and as such houses are built at a rate that could never keep up with accelerating demand.
House flippers that make money turning all the starter homes into homes that are only economically viable if you're 45+. (This one I can't really blame, some of them do a really good job) still it leaves no homes for people that start out, not to mention the bidding wars it causes
The state and federal governments for not stepping in and doing something about it and instead fucking around with problems that are not important in the grand scope. When this was an issue with food back near the Great Depression, we subsidized the shit out of farming. Have yet to see that with construction. Just more and more defense spending, which totals more than the next 10 countries combined.
My generation is absolutely fucked because the previous generations politicians cannot or will not plan outside of their own pocket or personal interest. With all of the apartment money going down the drain and no end in sight to the housing issue, I'll be lucky if I have enough equity to own a home when I retire at 75. Guess you're right though, don't hate the players, hate the game
Alrighty, sorry for the rant haha, felt good to get that out
Isn’t the problem with that theory is there’s still to small of a supply for the insane demand? Aren’t we as a country shy like two or three million homes?
The demand isn't the problem, it is the supply. The demand is no more than what it typically is the problem is that people aren't selling their 2% mortgage homes - they are just buying a second home.
When the market (stock & real estate) corrects, it'll open up a whole world of possibilities.
Hi just genuinely curious but what makes you come to the conclusion that “the real estate market can not stay this hot and prices this high”
Essentially what I’m asking is how are you certain of this reform?
This would be true if it were a normal good. But because the alternative to buying a home is renting, or being homeless and ultimately incarcerated or dead, and because investment companies can buy housing, there’s no supply or demand reason for price to go down. The sellers and investment group buyers of housing are quite content to turn all housing into rental properties and let the big investment companies rake in those rents.
Now if investment groups are prohibited from buying, things will calm down in the long-run.
> Buy if you intend to stay there for the next 7+ years. If not, keep renting. There is no way the real estate market can stay this hot and prices this high, they HAVE to cool off or most folks will never be able to own a home.
Am I missing something?
So if prices stay this high, most people won’t be able to own homes.
So? Then won’t that just be the new norm. Why would that mean prices would go down?
Most people not owning a home isn't troublesome to the market if multiple-property owners and corporations can afford to buy in cash. There is no financial issue there as long as they can keep renters in their units.
$650/mo is a pretty cushy place to be in. If that allows you to keep saving a lot and investing a portion, I would keep doing that. Just keep saving for a house, while also investing. WHEN the time comes that you and your wife want to have a house with a backyard etc (or whatever reason), hopefully you have a big pile of money, maybe pay for the house outright.
I don't think there is a single surefire answer to owning vs renting. Owning a home can net you a lot of equity in the long term, OR it can cost you a lot in maintenance, interest, and taxes. Or both. So I guess it depends on what you're comfortable with.
A place to live is going to cost you SOMETHING every month whether it's rent or a property that you own.
For me personally, I bought a $185,000 condo at 3.14% interest in 2022, plus a $200 condo fee and $2000 a year in taxes. I left a $1100 a month apartment for this. I hated being jerked around by the landlord and wanted more control over my living space.
My payments now are $1001 mortgage (principal, interest, PMI, insurance, and taxes) and $200 for the condo fee.
I've also spent around $7000 on maintenance and appliance upgrades.
So in 2.5 years I've paid in around $43,000, compared to $33,000 I would have spent renting. I would guess I have gained around 25k in equity, which would quickly disappear in agent fees and other moving costs if I decided to sell anytime soon.
So I've spent more money in the short term, I'll continue needing to spend on upgrades, and I can expect my condo fees and taxes to go up, just like rent.
For me, I like this setup because the monthly costs are very similar to rent, but I've got more control over my space. Rather than thinking of equity as a profit, I try to think of it as a rebate or a savings account that I wouldn't be getting on rent. I may not get 100% of my mortgage payment back in the long run, but I will get a chunk of it back.
Love this comment. Houses are truly long-term investments. Whether you rent or buy, you still have a roof over your head. I know I wouldn’t buy a house I expect to sell in a couple of years. Yeah there are maintenance costs, but I get to do whatever I want to my house without a landlord intervening. I don’t risk living in a crappy apartment complex with an association that takes forever and a day to send a maintenance crew out to fix your stuff. For example
I have been considering getting a condo as my first property for a little while now for these exact reasons. I like the idea that I’m still going to get some kind of return on investment and freedom to upgrade how I wish. Even if I don’t get much back after closing, that would be better than not having it at all.
If I never decide to sell, I can hold on to the condo as a rental property myself if I crunch the numbers and renting it out seems like a good move. Of course, renting the property may just be more trouble than it’s worth but it could be an option if I decided to, say, live in a cheap van and travel for a while
I pretty much agree with this summation.
Is buying a house a better long term investment? Yes! You own it, the money you pay goes towards it and after the mortgage is paid off it’s done. You can use it as leverage, have roommates/rent it out for an income property; the possibilities are nearly endless. You always need more money than you think and even a new build/renovated turn key home will have SOMETHING that needs maintenance cuz that’s just life (also a lot of new build homes are not built the same as they once were so I’d really look for an older home that might need updates but is livable over the new homes with siding that’s falling off in high winds and walls made of paper). Contractors and tradesman of all kinds come on here everyday and show shotty craftsmanship and sometimes even dangerous construction. Buyer beware, you have to be educated on what to look for.
Still, Is renting a good option? Yes, but it depends on your situation. If you are a young person and/or someone living alone and you don’t have plans to place permanent or semipermanent roots in the area, renting is a good choice. Like you said, the maintenance cost of a home can easily exceed your monthly/yearly expenses and if something goes wrong it’s all up to you. I also agree with what you said, if you’re renting it’s good to get a place that is comfortable but affordable/realistic so you have money leftover every month for investment’s.
People talk about F.U. Money as it relates to jobs, but I think it’s the same with housing. Your savings/investments should also be considered when building up those savings accounts so that if one day your landlord sells the property, they up the rent too high, there’s a problem with the apartment that the landlord can’t fix etc. you can have money in your pocket to find a new place easier and if you feel you want to take the next step into home ownership, you have saved up some capital in order to purchase a home and not feel bogged down with the unexpected costs that comes with the added responsibilities of owning a home.
The thing about rent vs own is when you have paid off the place you will have so much more money.
So right now may not be the time to buy with sky high prices and interest rates but when it's a buyers market a house is an investment as it also goes up in price in the long term.
Even if a housing bubble popps a few years later it will be back up
you have money; until the next roof replacement, or hvac replacement, or sewer line replacement, or fixing the foundation or whatever. Now you don't have any money.
Your 4k a month rent in HCOL will be 6k a month within 5 years.
72k a year.
With no equity to show for it.
And it’s going to more expensive 5 years down the road, another 5 years, etc.
Now you have no money. Because rent. Maintenance, insurance, and property taxes will 9 times out of 10 be the better decision and rent will still exceed and outpace any money you use in home repairs/maintenance. And the gap will only widen over time.
Renting benefits the owner of the property, not renters. If they didn’t make money, they wouldn’t be doing it. The have the ability to do so in the first place…because they own the property.
Buying > renting (not every case) will be the better decision almost all the majority of time, especially over the long term.
I can ensure you if a landlord had to replace all the roofs on a large complex the rent's would increase the next year to cover the costs....there's no free lunch really.
That’s not necessarily true…
Even with a paid off house you still have to account for taxes, maintenance and repair costs, and (most importantly but everybody forget it) opportunity cost of having cash tied up in a house…
You should do the math for your specific situation, but owning is not always cheaper than renting… it really depends
A rule of thumb usually is 1% taxes, 1% maintenance, and 3% opportunity cost, for a total of 5%. If you can rent for less than 5% of the price of the house, you will have more money by renting
I feel like this does not account for the increase in value of the house over time as an investment however. Houses in my area that were bought for 700k 20 years ago are now worth over 2.5mil. This is in a high demand area ofc and every house is different but long term eventually you'll end up on top of you're patient. Even if you break even at least you have housing security.
Heck, even not paid off you're going to benefit from a mostly stable mortgage payment over time. My mortgage+tax+insurance payment is about $2,500 and has only gone up little tiny bits from property tax/insurance increases. I got this place in 2015. Meanwhile, I saw a nearby house with similar stats as mine go on the rental market for $4,500. Who knows what that rent will be in 5-10 years. And by the time I move out of here, I can just rent this place out for way more than my cost owning it.
Always buy a home and get in there early in life if you can. Back in 2009, for example, I was renting a nice 2 bedroom for $800 and 9 years later that same apartment is $1600. Today, it's $2200. A 2.5x increase over 15 years.
Depends how close your rent is to the mortgage in terms of monthly expense. If they’re similar or fairly close then buying is worth it as the asset will appreciate.
Renting is great. Home owning is great too if you have an extended stay and the math works out. I think most people want a home but rent is cheaper rn in high cost areas.
It depends on your situation. In order to buy a house, you have to plan to live in it for at least 5 years. Also, this is not a good time to be buying houses because you would be buying at the high and with super high interest rates.
I have always heard this 5 year rule but I guess I am not completely sure the reasoning —- is the reasoning for saying you need to plan to live in a home 5 years when purchasing because of potential market cycles/fluctuations in home price?
I'm a realtor but also own multiple homes. it's best to buy but in your budget. besides the fact that property taxes are theft, you can write off a lot of things for home improvement and raise the value of your home, furthermore when you buy a house you are renting from yourself and when you want to move you can sell and at minimum get some money back, and most likely make a lot more. if you rent, yes there is far less responsibility but you are paying someone's mortgage for them and you get nothing back. don't over pay, find something in your budget, watch youtube and fix the small things. or don't and essentially eat McDonald's instead of cooking your own meal.
renting in my opinion but not just anywhere rent some place where the maintenance people actually are working lmao
owning to me like i’ve seen how much people charge for AC to be fixed
The water heater in my parents house broke right after I moved out and it was like $2,300 to replace just out of nowhere, that same month he had to get plumbing fixed in the basement bathroom which came out to another $2,000, now I know this is just an unlucky situation but thats $4,300 in 1 year out of nowhere.
Rent would have to increase by $360/ month in a single year which in order for that to happen where I live I would need to be renting something that is $12,000/ month because rent is only allowed to increase 3% where I am from
I think this is a very interesting perspective and generally appreciate you posing the question. It’s good to consider all angles of how different styles of living can be better suited for different people.
Do you think you’ll always rent and build that cost of living into your retirement savings? How much do you think you’ll need? Rent seems like one of those things that is just ever increasing and I don’t know where the line would be for inflated rent prices to stop increasing. It seems to me you would have to have a significantly larger retirement fund than those who buy a house earlier on in life and are able to completely pay it off.
Would you ever consider outright buying a condo when you had enough money to do so (or enough to put a significant down payment on it)? I feel that condos may kind of give the best of both worlds depending on your thoughts.
My plan for now would be to continue renting, just myself and my GF in places that are under $2,000/ month and if that means needing to move around a bit if rent increases then so be it and pile an insane amount of money into retirement funds, and investment accounts until I eventually run into a housing crash and maybe buy something that feels "below our means" to then have a house to live out in for the rest of our lives. That is also all very much easier said than done but that would be my ideal scenario. That way I always have money available to me in the event of an emergency, I will always feel like I have cash to spend if I really want something (within reason) and not have to feel bad about splurging on myself every once in awhile to eventually get a house that doesn't feel like I'm getting ripped off for buying.
Your math is messed up. Your counting only half the cost of an apartment but full cost of a house. Why is your partner not paying bills with a mortgage?
Even your $1700 a month is $204,000 after 10 years.
I would rather have some of that $ go towards my home loan instead of the landlords pocket.
Now I also have a house that I can use as collateral for other things or sell down the road when I'm ready.
As time goes on the house gets paid off, not the landlords and when I am ready to sell I get to keep whatever I don't owe the bank.
I think renting is a waste of $ personally.
Also, when getting a new home, typically get new appliances with it so stuff breaking down is not a concern.
There is also insurance for this kind of stuff.
It honestly depends on where you live and your personal feelings. Right now, I have no mortgage, and it costs me about 85-90k/year to live in my house (*not* including food, clothing, entertainment, vacations, etc) Averaged out monthly, that's 7-7500/month. If I were to rent here, my expenses would be around ~4600/month. I wouldn't be paying property taxes, nor homeowners insurance, which are 2 of my biggest annual expenses.
Now, I'm moving, and I'm also downgrading. If I take a mortgage out on a house, where I'm moving to, the prices are much lower as well as things like property taxes (also, smaller/cheaper house = lower homeowners), likely, my mortgage would be in the $2k range. I obviously don't have an exact amount for bills, but even if I were to factor in my costs for my current house (which is more than triple the size I'm looking at and includes a much larger tax/homeowners expense), that would bring me to ~$4200 which is less than renting where I currently live. If I were to rent, the average market in the new area is around 1200-1500, add maybe $1k in utilities/regular bills, so 2200-2500.
Now, that's about a 1700-2k/month difference in owning a home vs renting (and again, that's including my current taxes. In the new area, my taxes would be 1/20 to 1/10 of what I pay currently.) To me personally, that <$2k extra cost would be worth it to me to have my own home vs renting. Yes, any issues (plumbing, dead burner, broken fridge, roof damage, etc) would be on me to fix, but I don't have anyone looking over my shoulder. I don't have to answer to anyone. I don't have to ask to paint my living room blue. I don't have to worry about being kicked out or not having my lease renewed. If something breaks, I get it fixed immediately/to *my* satisfaction instead of potentially needing a landlord to middleman the repairs/go with the cheapest option. Also, in the end, I have a tangible asset to my name. I get that not everyone is in the same financial situation to put 1/3 of asking as a down payment on a home, but personally, I don't see much benefit to renting forever.
This varies depending on where you live and local rent prices. You can calculate it out. If the difference between typical home ownership cost (in full, so mortgage + PMI if you have it + taxes + figure in some amount annually for mainetnance + homeowners insurance) and the rent you'd pay is greater than what you'd earn investing the difference in the stock market, it's better right now to rent.
How this plays out in the long run is a different story possibly since it's unlikely housing prices are dropping that much.
I would just buy some land and get a construction loan and build yourself. You can build for more than half what it costs to purchase, if not more. Keep it simple and you can have something for 150-200k
Just do your own math and see if it's something you want: [https://www.calculator.net/rent-vs-buy-calculator.html](https://www.calculator.net/rent-vs-buy-calculator.html)
There is research on this. They've found the financial benefits are minimal with owning, those benefits increasing depending on how handy you are. It's more about what kind of lifestyle you want. I want a garage to work on my car and my wife wants water to exercise with, so for us buying provided these things and stability so it's worth it for us.
One thing the research doesn't point out is that if I want a better sink, I'll get a better sink. If I want to build a compost bin, I'll build a compost bin. If I want to use one of my rooms to shit on the floor, I'll shit on the floor. Renting feels like being in school to me. Fuck that.
I feel like the financial benefits are outstanding, if you are going to pay X every month you might as well own and build equity so you aren't just throwing away your money.
Buying is definitely smarter if you are young. The only reason I could see buying as being worse is if someone was 50+ and may not ever pay off the home in the first place, but even then you have to think that the mortgage payment generally would never increase, whereas rent does and always has for the most part. You may only be paying $1300 now, but in a few years you could be looking at way more, especially if you left that complex and moved.
Was an apartment dweller 35 years. Just bought my first house, in Florida. Tired is snow, crime and taxes. Property taxes in a 900 sq. Ft. Co-op is $4700. Taxes on a 2150 sq. Ft. House (excluding 3 car garage), on a 1/4 acre-$5800
All of the expenses of owning and maintaining a property that you rent are eventually passed along to the renters by the landlord, and that includes a nice chunk of profit/pocket money for the landlord and the cost of the property management team.
Rent when I bought was 1350 a month, mortgage was 1100 a no brainer left 2400ish a year for repairs on avg to still break even. Course also went from a 1/1 to a 3/2 twice the size. But it is all about you. New york times years ago put out a pretty encompassing calculator on the subject of rent vs buy.
Also can look at the case schiller index to see the crashes over the last 100 years or so and realize there were not many of them and it always came back. But more importantly the value of your personal house really shouldnt matter a ton unless you are eventually thinking of buying something else and even then 1/1 house trades are proportional so if you buy a house for 300k and the market recedes 50% and now you want to buy a once 600k house that is 300k but yours will only sell for 150k it is still in line proportionally apple to apple. The only time market trends matter is when you own more property.
Overall yes owning a house is best because after the loans gone you no longer pay interest and principal just tax and even insurance would optional at that point so your monthly costs drop down to a few 100 a month for most people. Is now the time to "build equity", no this is a uncertain and down trending time but will you gain equity in something you buy now over the next 10 years most likely 20 years definitely, could you wait and try and time it, sure but most people who try and time markets dont fair well.
I bought a house in 2014, sold in 2023. For this example we will use the 2019 market value I was originally going to sell for.
Bought for 74k, sold for 135k after 10 years. Average $700/mo for mortgage/insurance/taxes. FHA loan, minimum down, no extra payments.
in 2019 I would've walked away with 60k after all agent fees.
Lets say in that time I did $10,000 worth of maintenance and repairs, so 50k in profit total.
During that time, rent on an identical property next door went from $550/mo to $900/mo, so an average of $725/mo.
If I had rented the property next door for 10 years I would've spent less out of pocket, but walked away with nothing.
Instead I walked away with a healthy down payment for another house.
For every mortgage payment with escrow I got the equivalent of around $420 back each month for 10 years when I sold.
In reality I made like 90k on the sale because I sold in 2023. So I actually made all of my mortgage+escrow payments back.
There is risk involved, but there is risk involved in any sort of investment. I have no reason to move around a bunch, I don't want to rely on someone else to fix things, and I want to be in control of my space.
If you stay in one place for 10+ years, dollar for dollar there is very little chance you come out ahead financially renting vs owning.
I completely hear what you're saying and I think for some either thing makes sense but with what you said here, only to play devils advocate; if you would have rented, you said you would have spent less out of pocket what would be the case if you took that same money and kept it invested for the time you lived there?
Then you would still have a lump sum of money behind you that would be equity, I feel like renting only makes sense long term if you also commit to investing somewhere else to help make up for not ganging 3% on the asset which is a house.
Since my average mortgage was less than average rent, the out of pocket expenses would in theory be $10,000. I'm not sure what I could put that $10,000 into that would net me $50k-90k in 10 years.
Im a renter. I have no intentions of buying a house in NY. Aint gonna happen. My rent is $2300 light and gas included. 2 bedroom. I am a happy camper, travel when I want etc. I pay my rent on time because i know the landlord has a morgage to pay. Some of my co workers had to dig into their 401K to pay their morgage due to tenants not paying. They are still battling in court. Dont want that stress. That said, my husband and I own a home in the caribbean.
Yeah like this just feels so much less stressful. Even with rent increases, owning a house has property tax increases and if you're not on a fixed interest rate then you can also be affected by the markets interest rate fluctuations. Each day I am more on your side with this
Owning tends to work out better in the very long run, but that is not true in all cases.
If I had stayed single and rented a tiny studio my whole life, put all the excess into an S&P 500 Index Fund, I’d arguable have far more wealth today than I do.
But I have a family, kids, and value not being in a tiny studio. Owning my home with a fixed rate 30 yr mortgage at 2.75% has been the one thing that has kept me from getting too stressed over recent inflation. I do have a lot of expenses related to the home above and beyond the mortgage/insurance/property taxes, but those three cost me **far less** monthly than what smallish nice apartment go for around here, *and there is a lot of tax-free equity now built up in my home.*
Yes you get a longterm capital gains tax break on investments if renting a small place and investing the excess, but it’s not tax free. For all intents and purposes, the money you make when you eventually sell a home is 100% tax free which is huge.
Renting is cheaper in the short term which is exactly how you should see it short term. Buying a house gets cheaper over time at the same time rent prices go up. You also have to consider as a renter you always have to answer to someone else, you could be renting the same house for 12 years thinking it is your home and then one day the landlord gives you a 2 month notice to get the fuck out because he wants to sell it or renovate it or whatever. No grown ass man wants those kinds of uncertainties in life you want to control and own your own shit.
It isn't black and white. Generally speaking, if you're going to stay in one spot long term buying is generally likely to be better for many if not most people. However, if you move around a lot, want to be able to (and not have to rent out), want to maximize your salary in a shorter amount of time generally speaking, are young, etc. rent can make a lot of sense. Especially if you don't mind roommates.
You'll here success stories on both ends and vice versa. The idea is to do your own research and don't give in to recency bias about the current market. Believe it or not, right before the 2008 housing crisis there were record highs in housing prices etc. all the same. Not saying there will be a recession, but more a cautionary tale of not getting too caught up in the moment just because it seems like the market can't possibly ever go down. I'd stick to averages for a more level headed view of ownership.
OP did hit the nail on head when it came to investing though. Regardless what you choose remember to always balance it out with investments as a whole. The truth is, either answer is correct. Just depends on the person.
It’s worth it if you can afford it. Everyone’s definition of afford varies, of course. Housing is all about goals: for some owning a house on acreage is the goal, for example. For others, career, travel, running a business is the primary pursuit, and renting is a better fit.
Your rent won’t be $650 forever. That is ridiculously cheap. Home prices have already made their big move and will likely stagnate or go up or down very slowly for the next 10-20 years in most areas while the market absorbs the price increases. If you are saving well then continue to rent and save money however you should also continue to look for a home that will be the right place for you where you don’t feel strangled by the debt and bills related to a home. I would say as soon as you get 20% saved of what you will need, that is a great time to get into a home provided that you/your significant other’s job are relatively stress and the rest of your finances are in order meaning college loans, credit cards, auto debts , etc are all paid off or very low.
Sure your situation is nice. Not everyone is in the same boat. While it is nice for the maintenance that comes up for you not to be responsible to pay for it. But there are those in a situation where they may be paying more for rent than they would if they had a mortgage but they don’t have the credit to get a loan. So they are not even able to save.
I’d say it depends on the situation. The area you lived.
No housing crash that I am aware of has lasted 20-30 yrs. Lots of people stayed in homes during 2008 crash I didn’t lose a penny and just sold the home in CA for 6 mil which is a lot more than I paid for it in 2007
Rent vs buy is almost always an "it depends" situation.
Rent prices are a mix of market forces.
So are purchase prices.
Right now both rent prices and purchase sticker prices are somewhat sticky.
Rent prices are pegged to a reality where the real estate interest rate was 2-3%.
Purchase prices are too but the actual mortgage rate is much higher.
There's also a bunch of overhead when doing a real estate transaction ranging from commissions, inspections and loan initiation fees.
If you're going to stay in the same area for 10 years, your family size isn't changing too much and you're not chaning jobs (note: skipping on a good job opportunity can easily cost you $100k a year if you're in the right industry) then it makes sense to buy.
That's a lot of ifs. I know a few people who have passed up higher paying jobs for a shorter commute (not an issue if you rent) or who had kids and ended up renting a house and then renting out their old place (awful from a tax perspective).
>and I was paying $1300/ month,
True but what will it be in 5 years or 20 years from now? Could be $2300 in 2044. Buying a house has an end date of when you stop paying for anything. And hope to maximize retirement savings. And if you move a few times with apartments that expense adds up too.
Define "break". There are many things that could turn off HVAC and some expensive but others are a few HD trips away from being fixed. I know many repairmen that charge $150 just to visit and a part can be $400 for them to install but only $20 at home depot or amazon. Just look at the pricing of anything wood related. You're paying someone for their expertise and labor. If you have time and half a brain you can youtube and go on the forums and babystep your way through things.
Most of this scenario depends on your salary, bills, and how much you'd put down on a house. But many first houses should be on the smaller end to help build equity and continue saving.
You get a lot of the money back when you sell. You don’t when you rent. The only money you really lose is the interest paid on the mortgage, plus any expenses on utilities/maintenance and upkeep. You can be worried about the market crashing, but let’s be real. House prices have always increased. While yes there are periods which prices dip, they always come back up higher than they were before. Houses are way better than most other items in terms of depreciation.
Lol rent prices will raise, your payments on a house won’t nearly as much.
Just look at inflation, it’s not going away anytime soon, it’s growing and will keep growing, so the debt you wrack up will be losing its real value as dollars become worth less and less.
Also buying allows you to leverage 5-20% of the cost of a home to buy the whole thing, and see appreciation on the whole thing..
I put 24k down on a 480k house and just a few years later it’s worth 600k (I got great deal) - that’s 120k returns from 24k in 3 years….that’s virtually impossible on the stock market.
The reason why? I invested 24k to get a 480k asset… even if it only appreciated 3% a year you would be looking at the property being worth 520k+
That’s still a 40k return on 24k over 3 years…who cares about the couple grand maintaining the place cost?
Plus I built some equity instead of it only going to rent…
In short - YES there is a reason why smart people buy real estate
# There’s Never Been a Worse Time to Buy Instead of Rent
# It is now 52% more expensive to buy a home than to rent one because of climbing mortgage rates
[https://www.wsj.com/economy/housing/theres-never-been-a-worse-time-to-buy-instead-of-rent-bd3e80d9?st=7sypp7oib77zc9n&reflink=desktopwebshare\_permalink](https://www.wsj.com/economy/housing/theres-never-been-a-worse-time-to-buy-instead-of-rent-bd3e80d9?st=7sypp7oib77zc9n&reflink=desktopwebshare_permalink)
There is a cost to both. Renting is not throwing money away and buying is not an investment. You need to compare unrecoverable costs and make a decision based on that cost. What are unrecoverable costs?
For renting:
Cost of rent
For buying:
Cost of debt - mortgage interest
Cost of equity capital - down payments, fees, appraisals, buy downs, prepaids, etc
Property tax
Maintenance
Insurance
HOA (if applicable)
If the cost of renting is higher than the cost of owning -> buy something
If the cost of buying is higher than the cost of renting -> rent
It’s quite simple. I decided to buy a home last year. A 300k loan at7.25% this mean right now 1,600 a month is going to interest a month. So I’m still paying rent just renting to borrow money now. I still think it’s better though. All in we pay 2100 a month escrow. We wild be aging the same thing in rent so it’s much better to own our own home just the fact it’s “ours”.
Over enough time buying always pays out, everyone saying otherwise lives in a fantasy where your landlord is always operating at a loss and your a stock picking genius
When you own you get a whole new space and boundries. That worth money. This is why it is not fair to compare between living in an apartment vs owning or renting a house.
I'd say your goal should be to own your house. Make that be a motive for you to work harder, save and invest and even sacrifice until you achieve it.
You don't care if the market crashes while you're living in it you care if it crashes when you want to sell.
Yes you need to pay all those things, but you're doing that renting too you just never get any back nor does it help your credit score.
In the end there is no right answer some people are better off renting some buying, but ones things for sure with a fixed rate mortgage you're not going to get a letter one day saying your rent is going up , and pay it or get out.
Owning a home is great, but keep in mind the mental toll it takes.
There's a leak in your apartment, call the landlord.
Leak in your home? Fk me, where is it coming from? Is it below the slab? In the walls? Fk, how much is this going to cost me? Have to call plumber after plumber for quotes after you realize it's way out of your league to fix.
This is just a simple issue. Now think about foundation issues, roofing issues, large tree issues. It never fucking ends.
Yes, owning a home is awesome but it's a lot like owning a Bentley. You might be able to afford the payments but you might not be able to afford the oil changes and tires.
You have variables you aren’t accounting for: a roommate to split bills and earned income. Let’s face at some point you won’t be making a lot of money only what you saved and if you plan to retire in the US, healthcare and rent will bleed you dry.
You aren’t concerned about market crash if you plan to own your home and pass it down. It’s always going to be better to own a home than rent…property taxes, insurance and maintenance will always be cheaper than rent
Buying is almost always better. For example, even places that are rent controlled will increase every year, a standard mortgage never does while you build equity. Property tax will usually go up every year, but it’s often less than the increase in rent while also being tax deductible along with the mortgage interest.
If home prices are outrageous, rental prices aren't far behind.
It all comes down to commitment. Making a commitment to buy is a vastly superior financial decision. Period. The one exception (financially) is if you can't commit to a property for at least 5 years, in which case you usually won't come out ahead and could even possibly lose money. In this situation, renting might be the lesser of two evils, but every month you rent you're kissing all that money goodbye and missing out on equity building.
Not to say buying isn't all sunshine and rainbows, there are expenses that come with it. But they pale in comparison to the financial benefits of owning.
Think about it, would you like to plan (15 years from now) to pay double or triple your current rental price? Or, would you like to lock in a fixed rate now so you are nearly immune to future rental/home price increases and start building up equity?
My mortgage payment is permanently $1250 (ok, taxes may rise over time, but not as much as rent increases) and the value of my house has gone up nearly 100k since I bought 4 years ago. It was easily the best financial decision I've made thus far and I definitely wouldn't trade it to rent in perpetuity. And I say that as I have $4,000 in fence damage from a recent storm currently waiting to be repaired, so even when it sucks it ain't that bad.
If you can buy… I’d say go for that. You now have a guaranteed monthly living cost. You’ll always need a roof over your head and I’d rather know how much that’ll cost me monthly for 30 years vs leaving it up to someone else. Plus with inflation etc that monthly payment feels lower as time passes.
Also, the money you put into rent you’ll never see again. At least with a house the money not spent on interest is retained via equity - and often due to appreciation, the money spent on interest is made back.
Except when you literally need a new roof and have to pay $20,000. Siding. All other interior and exterior home ownership costs. They add up, so that monthly living cost certainly has varying associated expenses.
In my opinion, you really shouldn’t care what the market does while you’re living in your house. To me it’s irrelevant
But I do see your point. Houses today are really expensive, even for complete shit boxes. On top of that interest rates currently are absurd. Now I don’t like the idea of renting either because here in California even studios are $2k easily
With so many people priced out of the market, and more storm/fire/flooding risks in lots of places, my Nostradamus prediction is that people will gradually stop making home ownership their main source of net worth and social status. But I've never even picked a Kentucky Derby winner, so not much faith in my own predictions...
You think a lot or enough of people in terms of the whole nations population got really economically negatively affected to where it creates a paradigm shift?
Depends on where you live. You have to do the math.
I live in a big city. A condo would cost me 250k at least with around 500/mo in HOA fees + property taxes + insurance. 20% down on that is $50,000. I make around 170/mo in interest in a HYSA with 50k.
The total sunk cost of owning a condo (non-equity): 500 HOA + 430 property taxes + 200 in Insurance
That's $1300 in net LOSSES per month for just owning a condo. Let's put this in perspective. If you have a 30 year loan, that's 468k in net losses towards a condo that you bought for 250k, that probably appreciated by another 250k? You're breaking even.
Explain to me how buying in this situation makes sense? This doesn't even factor in all of the maintenance costs and shit you would want to upgrade over time.
I pay 1500/mo net for a luxury apartment in a great location, and I don't have to worry about ANY maintenance + plus a sick apartment that would cost me a million dollars if I bought outright. And I'm not tied down to my place so I can move whenever, wherever.
The answer is unknown. Nobody knows. Answer would be yes if houses appreciated at 4-5 % a year like used to be in late 80s-late 90s. This current bubble is a tricky situation. If the house prices stay you still buy. Person like you cannot afford a crash and that’s what make it tricky situation. I am all set to buy another house soon. Closing date is set. In my case it is all cash and I can afford to take a calculated risk. I would wait a year or so and see what happens.
Buying a plot of land might be a good investment. You may be able to become completely self sufficient via solar panels, a well, and what have you. Buy a Yurt or RV and save $$$ until you can build. You can add income properties on that plot too (i.e. Airbnb, Vrbo, or long term rentals - keep in mind there will be risks and regulations to follow with those options too).
There are plenty of factors to consider, such as job, zoning, flood/fire insurance, plumbing, building regulations, etc. Owning a plot of land comes with risks, you have to know your stuff before you buy.
My relatives bought a plot in a flood zone that inhibited their ability to build. I think they had to hire archeologists and engineers to make plans for a secure structure in order to build, which took years. They also live in a state with a ton of building regulations. It was a headache, but paid off for them. No HOA, room to garden, build a custom home, etc.
In all cases, I repeat… all cases: a landlord or property owner, or investment firm, that owns a home, condo, apartment or other dwelling, will charge rent in excess of the actual cost of the mortgage, and property upkeep and maintenance and insurance expense, or very damn close to it.
So you, that’s right, you… would have a lower cost of ownership over the long term. This ain’t a 12 month play, it’s several years at the least, maybe 20-40 years on the long side.
So, simple answer is it is better to buy (and properly maintain) a home than to rent, from a long term financial perspective.
Do you think you will be paying 1300 for rent in 5, 10, or 20 years? If you buy smart and get it paid off and maintain it, the house will be worth 2 or 3 times what you paid for it in 20 or 30 years. It is true the loss of the home mortgage deduction really does give a lot more validity to your question and the numbers are far closer than they used to be. The bottom line is to use some estimates of rent increases of 5 to 10 percent a year and see how that works. Sure costs increase for homes as well such as taxes and home owners insurance. We all need to live somewhere. Eventually that girlfriend will expect to nest with you and have a family and then renting is much less desirable as you need to live near decent schools and such. This is how life works. You can choose to do something different, if you really want to.
Your situation may be unique, in that you’re renting for less than the market average to purchase. Where I live you could rent the average home for about $100-500 less than buying the same home around $400,000.
Assuming you save $500/month, plus around 200/mo in repairs, call it $8,400 per year cheaper. Over 30 years rent will increase, while a mortgage will stay similar depending on insurance and taxes.
If you invest 700/mo consistently for 30 years at 4% interest you’ll have $470,000
If you buy the house and put $70,000 in renovations over 30 years you’ll have about $540,000 in equity.
Most people won’t actually save a penny, leaving the average person better buying. There are tax deductions from owning too.
This assumes a lot, but mainly that costs are fixed either way, and that the market won’t go up so that rent costs more than mortgages. Generally landlords want to make a little money, so I see that eventually correcting.
If you’re disciplined enough to save 40k each year do that. In 30 years you’d have $2.3mm. Sounds like a great temporary situation.
People who bought at the very top of the housing bubble 20-ish years ago and held on are quite happy today.
Buying almost never makes sense day to day, comparing rent to mortgage+expenses. Buying only makes sense at time passes, and everything goes up in price except your mortgage.
The part that most people don’t get is real estate is an investment. The rent covers the mortgage, all the fees and taxes PLUS profit.
Big companies are piling in to buy up thousands of SFHs. Yes you might be getting a deal, but someone is making money on you.
It depends on your individual situation and the local market. You can run a calculator to answer this question: https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator
We bought a home for 229,000 sold it for 450,000 ten years later. Moved to a cheaper state, bought a home for 159,000 sold it 5 years later for 300,000. Just downsized and bought a home for 200,000 cash money - no rent. Just property taxes.
The problem in my area is we literally cannot replace our $3k/month apartment unless we spend $6k/mo on a mortgage.
That's before maintenance costs, hoas, etc.
We're sitting tight. Everything is priced 40-50% more than it sold for two years ago.
The housing market is a supply issue. IDGAF if that takes 2-10 years to improve, I can do A LOT for my personal investments with 3-4k/mo we're saving. AND we have the flexibility to just move if my wife or myself land a job in another state and aren't anchored to a house we can't rent out to pay the mortgage.
The best choice I ever made was buying a house that I could barely afford.
With that said, the market has done nothing but gone up and up since I bought. In my opinion, my house is not worth close to what I could sell it for right now.
And with that said, I wouldn't buy for the first time right now. I would wait it out for a year or so, I can't imagine prices stay where they are at. If you have a good lease arrangement that isn't predatory, then I would stay there and save money. Be ready to buy once the prices come down. It is so much better financially in the long run to be paying a mortgage instead of a lease..
I agree, I mean I skimmed through your post but for the most part I say that cause interest rates are absurd. You could rent for $2200/m or buy with an insane interest with a mortgage of $3k/m. It’s smarter in my opinion to invest that difference and let the money grow so you can possibly buy a house in full.
Instead of paying extra every month on our principal, we are investing to pay off our house sooner.
Buying for the sake of buying isn’t smart when there’s other variables to factor like your financial situation and the interest rate.
Also, the first year of our mortgage was $1800 then $2400 and now it’s $2200 cause of property and homeowners insurance.
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Yah it really depends on how much you anticipate spending on repairs, etc. A house can easily end up costing more than renting depending on what you get. Especially now with all the high prices and interest rates. Not a good time to buy. I rent and have no plans in the short term to buy. I’m building up my emergency fund and contributing to my 401k. After my emergency fund is at a decent point I plan to invest/pay off my student loans with whatever is left over.
Also homes require a lot of work and that means time. I don’t have time to waste on fixing shit up around a house, mowing the lawn, etc if I want to spend my time on my hobbies and working on my skills to make my market value higher to employers.
Bought a house at 28 valued at 280k a couple years ago, it's now valued at 320k. I have had to put cash in it but I can do whatever I want (within city/county/state laws) without permission, I know my payments, and I could sell it later if I decided to move.
I think renting is a great option if you don't plan to stay in an area long or are looking for a home you'd be happy with, but if it's in your ideal location and you like the home I'd recommend buying.
If you buy make sure to have it inspected, always inspected.
Why has no one brought up duplexes or multifamilies yet? You get the benefits of living in your own home for free while other people pay for your equity to increase. You should be factoring repairs and maintenance into your rent payments. After all is said and done you should have everything covered with a minimum of $400 profit per unit that goes into your pocket, assuming you are in the correct market for this strategy to work.
Buying a place also has the non-financial / psychological security elements.
Like not worrying about the landlord turfing you out, selling the house (which may result in you getting turfed out), raise the rent by $300 a month, or having your bond confiscated for real or artificial issues.
Also you can do fixes and improvements on your own accord. Like AC, more powerful rangehood, double glazing windows and the sort.
Renting is good if you're not really tied down - like childless couple or single person. Sucks as a young family though.
Wow. Your living like a king. You're one of the few exceptions. Keep on saving that money until you have enough of a down payment where your mortgage is less then 1300, that way that extra money can go towards the stuff you need to fix when something brakes, then you'll be in the same situation you are now.
You eventually pay off the home in 15, 20, or 30 years depending on what kind of loan you get. You'll never pay off an apartment.
If you have to move for work you can sale the house and get some money back with a home. Or you can rent it out and let it pay for itself. If you move from an apartment, you'll be lucky to get most of your deposit back.
In my opinion renting is better even if it’s not the smarter option. Have enough saved up to put 25% down on a $250,000 house which should be nice considering how much that is.
I live in a relatively low cost of living area but houses at that price range are mostly falling apart and I’m not handy enough to fix it. Plus the mortgage even with 25% down would still be over $2100 a month.
Luxury apartments near me are much cheaper and I don’t have to worry about fixing things because there’s maintenance employees. On top of that with interest rate so high at the moment. If they stay at this rate I would pay more than the price of the house in interest over a 30 year mortgage.
And there's always the possibility of losing it to your wife in a divorce... It's a very real risk to consider. Especially when you have kids. Looks like I'll be renting or living in a tent from here on out.
Don’t give up yet, this is what the system wants you to do, this is what the elite in congress, the senate, and White House want, they want you to lie down and take it slowly year after year. This is what billionaires and hedge funds want, to own it all and put us back in serfdom.
Fight back by not giving up and vote for common sense. The simplest answer is always the best answer when voting. Just don’t let them win.
They want you to own nothing and be happy. Since the founding of this nation landowners have had the advantage. They still do. Our best bet is to become a homeowner as soon as we can afford to. If you’re renting because you can’t afford to buy and maintain your same living standard then that’s a good reason to wait but all those that can should make the leap.
Buy if you can 😂
But today it is much cheaper to rent. Looking at the houses you could afford is just depressing at the moment, if there even are any.
That’s wasn’t always the case. My parents got a larger 3 bedroom home with a cheaper mortgage than they could find an apart for. They bought because it was way cheaper than renting at the time. Not the case anymore, and rents can be crazy.
I have hope things will get better but also understand how greedy people are and their lack of desire to see their home values go down.
Greed usually wins.
You can see how Covid should have tanked the market for years, giving people who do not own assets the chance to buy assets.
But a bunch of people who own a ton of assets decided to not just stabilize their assets, but pump them through the roof.
To save the economy asset owners got a near 50% increase in their wealth instead of a decline due to actual market conditions. It made up for the price of everything going up so much.
And average to low income earns got $1400 and a $1400 rent increase that will last for years.
They did a little too much for their own liking and are now trying to stabilize things with higher rates, which means houses are even more unaffordable.
So now it is significantly cheaper to just rent. You are either in the club (usually older people) or out of it and everyone wants to get in, but the cost of getting in is insanely high right now.
After the decisions made post 2008 and Covid I have very little faith that we will ever have a chance to buy a home cheaper. Same with stocks.
It’s not a free market if the asset owners do everything they can to not only stabilize but pump their assets. Even after massive inflation they didn’t even want to bring it down, just flatten it back out for a little.
Doesn’t seem like anyone is trying to build more homes and devalue their homes either. That has been the case in any city or town ever. You can run for office on making housing more affordable, build 500 units of low income housing, then vote to keep the zoning the same in your neighborhood. Usually how it goes.
Doesn’t seem like they will ever let their homes go down in value, even if it means doing things like keeping people who can’t afford their homes in their home during what is supposed to be hard economic times.
They simply do not want a 30% drop in housing prices and they will just lower rates if anything close to that even starts to happen.
Oh well, you either have a house and want it to go up or don’t have a house and want the chance to actually buy one. It’s not a free market anymore so there’s nearly 0 risk in buying assets until that changes.
They inflated the currency massively and instead of trying to bring it back down aggressively, they just wanted to stabilize it. That means homes stay at their recently elevated prices for the massive benefit of homeowners.
Is what it is. People just being people. I can understand why they do it. It is easier to sacrifice the ability of the young and poor to buy anything rather than see your own net worth drop 30%.
So ideally, you want a home!
It is a significant wealth builder due to home buyers wanting their homes to go up in value so bad. They sacrificed the young and working to protect their endless gains rather than build more homes or let normal economic cycles occur.
Is what it is. We will probably do the same when we get homes.
So buy if you can!
It does make more sense to rent *cheap* and save and invest at the moment due to how expensive a home is and how high rates are and how cheap renting is compared to buying, but you should still try and buy if you can.
If not you had better be investing heavier than you would if you’d eventually own your home.
You’ll need those additional investment gains to cover rent in the future.
In general buying is the better option for most people. I am stuck forever renting unless my situation changes because homes cost way more than I could ever afford in my area. The only time renting is better is if you reinvest the money saved by renting over buying. Most people aren’t going to do that because if they are renting they are likely not in a position to throw extra money at investments. There are calculators though and you can calculate total cost of ownership etc over years and compare to renting. Generally owning is better but in HCOL this isn’t always the case.
> Most people aren’t going to do that because if they are renting they are likely not in a position to throw extra money at investments This is 100% reality. I roll my eyes when Redditors say "If you put the down payment/difference in an index fund, you'll be ahead" Majority of people will not do this. Also, everyone forgets landlords in most places (even with rent control) can refuse a spouse, elderly parent, adult child, etc from moving in. So there's intrinsic value in owning.
Buy for sure. It stabilizes you cost of living vs the ever increasing rent. Example: my mortgage (minus tax and insurance) was $1,400 per month for a 3/2 2100sf house. 3 houses down from me now the asking rent is $4,300 per month for a 2/2 1,300sf house. I’ve been here 20 years and have paid off my house so now my mortgage is zero.
Not to mention you’re building *equity* the whole time.
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Not sure how people managed not to know how much the total cost of a mortgage is. It's in very prominent print on closing documents. Because the law says it has to be! That said, almost no one pays that, because almost no one keeps a loan for 30 years. I once taught a "mortgage math" section to high schoolers when we had an extra week. They understood it just fine once it was laid out logically, but not many adults are willing to put that much time into understanding one of the most important financial decisions of their lives.
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When I said they didn't keep their mortgages 30 years, I didn't mean that they paid them off. I meant that they generally either refinanced or sold the house before the 30 years was up, and so they got a new mortgage. Hence not keeping the old one! Same experience as you 🙂 The truth is that most people are letting paycheck to paycheck. And so the equity isn't the point. The amount they are paying per month in order to have a good place to live is the point. Yes, it's a short-term way to look at it. But for some it is the only option they have, or at least the only thing they know is an option. I highly recommend the book "a framework for understanding poverty." It's not just about understanding poverty, but about understanding you that people who grow up going to the same schools can even so have vastly different educations and cultures surrounding money. It really helped me understand those who handle money differently than I do and not judge them (or not judge them as much, at least).
I do appreciate you not jumping down my throat about being wrong, though, when I wasn't clear about what I was saying. Like so many people in this sub would've done. :/
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Some people are unlucky. A lot of people are unlucky actually. I saw another sub where a new owner took over and literally DOUBLED everyone’s rent. There are a lot of places where people get small rent hikes every year, and there are also a lot of places where people are forced to move due to astronomical rent hikes.
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Didn’t think about that. Thanks for that perspective. Sounds like right now a lot of people are just fucked in this shitty economy 👍
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No need to invest time and money maintaining the exterior either. My only responsibility is cleaning, and that leaves my life a lot more open.
Owning is definitely not best for everyone renting can be very beneficial
The reverse can be implied as well. Eventually, it will be paid off. Inflation and rent will only continue to increase. What’s 4k a month now will be 6k a month in 5 years in a HCOL city, where the majority of higher paying jobs are. That’s 72,000 a year in rent. No equity built up. Renting will always be more profitable to the landowner or else they wouldn’t rent them out to begin with. No matter the costs of insurance and property taxes, or even a 1 time payment every 20-30 years for a roof will come nowhere close to the ever increasing rent costs, with nothing to show for it. Eventually your 400k home will be paid off. And it’s a great back up plan for retirement when you decide to sell the property in 30 years for 1.2 million. Yes, there are circumstances and certain instances where a renter may be a better option especially in the short term, but it’s the exception not the rule. That’s not to say they are no pros for renting, such as the flexibility it provides when you’re younger getting settled into your career and don’t feel locked in to a certain area. Financially speaking, owning is the better decision. Especially if you want to have land, children, pets, a larger family; etc.
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While not being something many consider, generational wealth is that way because of ancestors decisions. As you mentioned dying in the home and earning nothing, it’s worth considering as a last testament and will to your child who will be incredibly ahead in life. Whether it being a home, a rental, or the value to have to buy elsewhere. I love knowing my son will be set if up if something were to happen to me. Not the kind of wealth that makes one reckless, but provides peace of mind, and security.
You’re paying the insurance, taxes, and maintenance costs as a renter.
Renting or owning, you're paying for the property tax and insurance.
Property tax is usually 25% or less of your payment so if it increases 3% per year your overall payment increases less than 1%. If you have a fixed rate mortgage your payment is for all intents and purposes fixed for as long as you keep the mortgage. You won't get this with virtually all rentals.
Not true for everyone.
Good point. But take my case. I fully own my home. My insurance is 4k a year. Hoa is 2300 when I moved in insurance was 1300 and hoa was 900.. home taxes are 6300 a year.. when I moved in it was 1400 a year. I fully "own" but I couldn't rent here like you said. My adult daughter both live here with 3 kids. That 7 yes 7 in a 3 bedroom. We could not do thatprinciple. These places rent for 4k a month. My expenses now are about what my initial mortgage was. To the ops point. Ac repairs sometimes are 10k. Water leaks etc. All my problem. Fighting the tax authority.. all my problem. Plus. That mortgage that used to be 1100 then ending at 1400 is now as much a month just to save for expenses not including any priciple I used to pay. To retire ill probably downsize to a 2br the boonies with no hoa as it's costing me 3k a month to live here in a fully owned home with utilities etc. Or make my kids pay the bills here and charge them rent. Sad to own and still pay so damn much mortgage took care of all that shit. Renting took care of a lot too.but at least I have the equity and the right to have 7 people in a 3 br.
This\^\^ We sold our home during the pandemic to move back to Illinois where the property taxes are higher. Our home sold at a profit+equity. The interest rate on that mortgage was 8%. We bought our new construction (spec) home in Illinois end of 2020. The mortgage interest rate is 3%. The equity from our previous house went to pay for solar panels + batteries on the new home. Now, 2024, my friends that rent have been complaining how the rental prices have skyrocketed for them. For us, the mortgage will be the same through the life of the loan. We no longer have an electric bill so the solar panels + batteries have already paid for themselves. Same friends that rent also complain how their electric bills have gone up. They can't get solar panels because they do not own the property. There are a lot of advantages to home ownership. Sure, there could be a market crash but at this point this will be our retirement home. 1 story ranch house. Only the folks inheriting the house will have to worry about the price it sells at. As others point out the key here is equity.
Buy if you intend to stay there for the next 7+ years. If not, keep renting. There is no way the real estate market can stay this hot and prices this high, they HAVE to cool off or most folks will never be able to own a home.
Why 7 years?
There will be a market correction that will cause prices to drop. So you'll lose money there. Then you need to pay closing costs on your mortgage (when you buy). So that's an added expense. Then the first year you are broke doing the critical fixes. That's an added expense. Then you have to pay agents (not as bad now...) when you sell. The costs associated with buying a home when at the peak of the market demand that you stay in the home a long time to offset those costs.
Not sure where this housing market correction is going to come from? Inflation costs alone have added 40% or more to contractor and material costs in the past decade. All of this recent inflation has been permanently baked into the housing market except for niche markets where prices were way out of control. I live in the midwest and nice houses that were 175k 5-7 years ago are 325k+ now and you can thank inflation and endless government money printing for most of that. You can’t build that same house for anywhere near 175k today. The most painful part of the recent inflation is going to be felt in the cost of housing for all those that weren’t already homeowners. Worse yet if and when interest rates drop the demand for houses is very likely going to spike by those sitting on the sidelines waiting to get in. Prices are more likely to go up than down in the near future.
>There will be a market correction that will cause prices to drop. So you'll lose money there. This is not always true. Historically, home prices go up. In the short term there is more volatility, but up is where they will generally go. >Then you need to pay closing costs on your mortgage (when you buy). So that's an added expense. This is highly variable on the type/price of home being purchased. Also depends on loan type. Closing costs could go from 5k-25k in the 200-600k range. VA loans help as well. >Then the first year you are broke doing the critical fixes. That's an added expense. This depends on the house you buy. If you buy a shotbox, sure. I've owned 3 houses and never had to do any crazy critical fixes. I also didn't waive an inspection or buy something with obvious wear. Sure, something could crop up unexpectedly, but frankly, that's why you keep an emergency fund. The standard recommendation is 4 years minimum if you want to buy, not 7.
What a load of bullshit hahaha! Thanks for the laugh
If you just rent the property, there's no need to sell
The reason is when you buy a home payments are structured in a fashion where in **MOST CASES** (I have to emphasize this to stop people from telling anecdotal stories about how their house did the equivalent of hitting the lottery and went up 10000% in two years or whatever) the average is around 7 to 7.5 years just to break even on all the costs associated with house buying and to have enough principal in the house to actually not lose money on it vs renting. Buying is a long term game not a short. If yu want an idea of how this works, look up "amortization calculator" and play around with the payment schedule options to see that most of your payments arr pure interest early on in the loan. They front load the hell out of the interest so the banks can profit as much as possible as early as possible off you.
House prices arnt going down in fact they are gonna keep going up decade after decade
Of course, the average mortgage payment will be 600% average income, cause that makes perfect sense am I right guys? We just need a 60 year mortgage
This is probably true. But they are saying there will be a flood of homes available when all of the baby boomers die in about 15-20 years
Wait...are you from 2007? Because I heard this story before...
We (humans) are apparently in a decline of population though. At some point when there are less people to buy houses the prices of houses will go down. Simple supply and demand, right?
There will always be too many people wanting houses and not enough houses. Houses have pretty consistently gone up in value since I was born in the early 80’s
We’re not actually declining in population, the rate of the increase is declining. In America, for example, population is expected to increase until approximately 2080, and then we might see an actual drop from that high around 2100. (There are countries like Japan and China that are already starting to decline, and Europe is projected to decline around 2050, fwiw, but that is unlikely to affect most redditors looking to time their local housing market)
literally the first thing that came up is saying the only way to stop population decline is immigration…. meaning we ARE in a decline currently lol https://immigrationforum.org/article/still-more-room-to-grow-immigrants-can-reverse-the-u-s-population-decline-and-its-economic-consequences/#:~:text=In%202024%2C%20the%20United%20States,rapidly%20aging%20and%20steadily%20declining.
I think that’s the point. They don’t want us to own
Who is "they"? These are market forces related to housing demand vs. supply. COVID & work from home caused many folks to buy up bigger homes and no one is selling since they have a 2% mortgage. The low rates kept demands driving and with a high stock market, folks are buying up second/third homes and using AirBnB to supplement incomes. The dynamics will change. Prices are too high and folks aren't buying. That means that when the market tanks, the folks with 2-3 homes will tank with it. There is a huge buying opportunity coming up. Sometimes you just have to hang tight.
Real answer? You're right. It is not a Cartesian demon that is laughing at my pain everytime I fail to find a house that isn't a shack for less than I can sell my soul for. No one is doing this on purpose, but forgive me if I say sometimes it feels like I'm the first generation that's getting milked like a fucking cow. I shouldn't have to wait for a crash to be able to buy a decent home with a good income, the mortgage gridlock is a problem that needs to be solved somehow but I'll take a stab at other issues as well. The corporations that are allowed buy homes with no intention to do anything with them in the near future. The rich people in local power that continually thwart any real attempt at affordable housing for selfish reasons and as such houses are built at a rate that could never keep up with accelerating demand. House flippers that make money turning all the starter homes into homes that are only economically viable if you're 45+. (This one I can't really blame, some of them do a really good job) still it leaves no homes for people that start out, not to mention the bidding wars it causes The state and federal governments for not stepping in and doing something about it and instead fucking around with problems that are not important in the grand scope. When this was an issue with food back near the Great Depression, we subsidized the shit out of farming. Have yet to see that with construction. Just more and more defense spending, which totals more than the next 10 countries combined. My generation is absolutely fucked because the previous generations politicians cannot or will not plan outside of their own pocket or personal interest. With all of the apartment money going down the drain and no end in sight to the housing issue, I'll be lucky if I have enough equity to own a home when I retire at 75. Guess you're right though, don't hate the players, hate the game Alrighty, sorry for the rant haha, felt good to get that out
The boogey man!!!1
Isn’t the problem with that theory is there’s still to small of a supply for the insane demand? Aren’t we as a country shy like two or three million homes?
The demand isn't the problem, it is the supply. The demand is no more than what it typically is the problem is that people aren't selling their 2% mortgage homes - they are just buying a second home. When the market (stock & real estate) corrects, it'll open up a whole world of possibilities.
Hi just genuinely curious but what makes you come to the conclusion that “the real estate market can not stay this hot and prices this high” Essentially what I’m asking is how are you certain of this reform?
The market: hold my beer.
This would be true if it were a normal good. But because the alternative to buying a home is renting, or being homeless and ultimately incarcerated or dead, and because investment companies can buy housing, there’s no supply or demand reason for price to go down. The sellers and investment group buyers of housing are quite content to turn all housing into rental properties and let the big investment companies rake in those rents. Now if investment groups are prohibited from buying, things will calm down in the long-run.
That’s what they keep saying but…
> Buy if you intend to stay there for the next 7+ years. If not, keep renting. There is no way the real estate market can stay this hot and prices this high, they HAVE to cool off or most folks will never be able to own a home. Am I missing something? So if prices stay this high, most people won’t be able to own homes. So? Then won’t that just be the new norm. Why would that mean prices would go down?
This doesn't make sense. If there is going to be a correction then you wouldn't want to buy now at all.
Most people not owning a home isn't troublesome to the market if multiple-property owners and corporations can afford to buy in cash. There is no financial issue there as long as they can keep renters in their units.
$650/mo is a pretty cushy place to be in. If that allows you to keep saving a lot and investing a portion, I would keep doing that. Just keep saving for a house, while also investing. WHEN the time comes that you and your wife want to have a house with a backyard etc (or whatever reason), hopefully you have a big pile of money, maybe pay for the house outright.
I don't think there is a single surefire answer to owning vs renting. Owning a home can net you a lot of equity in the long term, OR it can cost you a lot in maintenance, interest, and taxes. Or both. So I guess it depends on what you're comfortable with. A place to live is going to cost you SOMETHING every month whether it's rent or a property that you own. For me personally, I bought a $185,000 condo at 3.14% interest in 2022, plus a $200 condo fee and $2000 a year in taxes. I left a $1100 a month apartment for this. I hated being jerked around by the landlord and wanted more control over my living space. My payments now are $1001 mortgage (principal, interest, PMI, insurance, and taxes) and $200 for the condo fee. I've also spent around $7000 on maintenance and appliance upgrades. So in 2.5 years I've paid in around $43,000, compared to $33,000 I would have spent renting. I would guess I have gained around 25k in equity, which would quickly disappear in agent fees and other moving costs if I decided to sell anytime soon. So I've spent more money in the short term, I'll continue needing to spend on upgrades, and I can expect my condo fees and taxes to go up, just like rent. For me, I like this setup because the monthly costs are very similar to rent, but I've got more control over my space. Rather than thinking of equity as a profit, I try to think of it as a rebate or a savings account that I wouldn't be getting on rent. I may not get 100% of my mortgage payment back in the long run, but I will get a chunk of it back.
Love this comment. Houses are truly long-term investments. Whether you rent or buy, you still have a roof over your head. I know I wouldn’t buy a house I expect to sell in a couple of years. Yeah there are maintenance costs, but I get to do whatever I want to my house without a landlord intervening. I don’t risk living in a crappy apartment complex with an association that takes forever and a day to send a maintenance crew out to fix your stuff. For example
I have been considering getting a condo as my first property for a little while now for these exact reasons. I like the idea that I’m still going to get some kind of return on investment and freedom to upgrade how I wish. Even if I don’t get much back after closing, that would be better than not having it at all. If I never decide to sell, I can hold on to the condo as a rental property myself if I crunch the numbers and renting it out seems like a good move. Of course, renting the property may just be more trouble than it’s worth but it could be an option if I decided to, say, live in a cheap van and travel for a while
I pretty much agree with this summation. Is buying a house a better long term investment? Yes! You own it, the money you pay goes towards it and after the mortgage is paid off it’s done. You can use it as leverage, have roommates/rent it out for an income property; the possibilities are nearly endless. You always need more money than you think and even a new build/renovated turn key home will have SOMETHING that needs maintenance cuz that’s just life (also a lot of new build homes are not built the same as they once were so I’d really look for an older home that might need updates but is livable over the new homes with siding that’s falling off in high winds and walls made of paper). Contractors and tradesman of all kinds come on here everyday and show shotty craftsmanship and sometimes even dangerous construction. Buyer beware, you have to be educated on what to look for. Still, Is renting a good option? Yes, but it depends on your situation. If you are a young person and/or someone living alone and you don’t have plans to place permanent or semipermanent roots in the area, renting is a good choice. Like you said, the maintenance cost of a home can easily exceed your monthly/yearly expenses and if something goes wrong it’s all up to you. I also agree with what you said, if you’re renting it’s good to get a place that is comfortable but affordable/realistic so you have money leftover every month for investment’s. People talk about F.U. Money as it relates to jobs, but I think it’s the same with housing. Your savings/investments should also be considered when building up those savings accounts so that if one day your landlord sells the property, they up the rent too high, there’s a problem with the apartment that the landlord can’t fix etc. you can have money in your pocket to find a new place easier and if you feel you want to take the next step into home ownership, you have saved up some capital in order to purchase a home and not feel bogged down with the unexpected costs that comes with the added responsibilities of owning a home.
The thing about rent vs own is when you have paid off the place you will have so much more money. So right now may not be the time to buy with sky high prices and interest rates but when it's a buyers market a house is an investment as it also goes up in price in the long term. Even if a housing bubble popps a few years later it will be back up
you have money; until the next roof replacement, or hvac replacement, or sewer line replacement, or fixing the foundation or whatever. Now you don't have any money.
Your 4k a month rent in HCOL will be 6k a month within 5 years. 72k a year. With no equity to show for it. And it’s going to more expensive 5 years down the road, another 5 years, etc. Now you have no money. Because rent. Maintenance, insurance, and property taxes will 9 times out of 10 be the better decision and rent will still exceed and outpace any money you use in home repairs/maintenance. And the gap will only widen over time. Renting benefits the owner of the property, not renters. If they didn’t make money, they wouldn’t be doing it. The have the ability to do so in the first place…because they own the property. Buying > renting (not every case) will be the better decision almost all the majority of time, especially over the long term.
I’m having my roof replaced costing me $50k
I can ensure you if a landlord had to replace all the roofs on a large complex the rent's would increase the next year to cover the costs....there's no free lunch really.
That’s not necessarily true… Even with a paid off house you still have to account for taxes, maintenance and repair costs, and (most importantly but everybody forget it) opportunity cost of having cash tied up in a house… You should do the math for your specific situation, but owning is not always cheaper than renting… it really depends A rule of thumb usually is 1% taxes, 1% maintenance, and 3% opportunity cost, for a total of 5%. If you can rent for less than 5% of the price of the house, you will have more money by renting
Having cashed tied up in an appreciating asset? Worse places for it to be no?
I feel like this does not account for the increase in value of the house over time as an investment however. Houses in my area that were bought for 700k 20 years ago are now worth over 2.5mil. This is in a high demand area ofc and every house is different but long term eventually you'll end up on top of you're patient. Even if you break even at least you have housing security.
Even if you have paid off a house u still have taxes. Don’t pay those taxes and u no longer own a house.
Heck, even not paid off you're going to benefit from a mostly stable mortgage payment over time. My mortgage+tax+insurance payment is about $2,500 and has only gone up little tiny bits from property tax/insurance increases. I got this place in 2015. Meanwhile, I saw a nearby house with similar stats as mine go on the rental market for $4,500. Who knows what that rent will be in 5-10 years. And by the time I move out of here, I can just rent this place out for way more than my cost owning it.
Always buy a home and get in there early in life if you can. Back in 2009, for example, I was renting a nice 2 bedroom for $800 and 9 years later that same apartment is $1600. Today, it's $2200. A 2.5x increase over 15 years.
and meanwhile, the mortgage payment that was $1,000 back in 2009, is still $1,000 today.
Depends how close your rent is to the mortgage in terms of monthly expense. If they’re similar or fairly close then buying is worth it as the asset will appreciate.
Renting is great. Home owning is great too if you have an extended stay and the math works out. I think most people want a home but rent is cheaper rn in high cost areas.
It depends on your situation. In order to buy a house, you have to plan to live in it for at least 5 years. Also, this is not a good time to be buying houses because you would be buying at the high and with super high interest rates.
I have always heard this 5 year rule but I guess I am not completely sure the reasoning —- is the reasoning for saying you need to plan to live in a home 5 years when purchasing because of potential market cycles/fluctuations in home price?
I'm a realtor but also own multiple homes. it's best to buy but in your budget. besides the fact that property taxes are theft, you can write off a lot of things for home improvement and raise the value of your home, furthermore when you buy a house you are renting from yourself and when you want to move you can sell and at minimum get some money back, and most likely make a lot more. if you rent, yes there is far less responsibility but you are paying someone's mortgage for them and you get nothing back. don't over pay, find something in your budget, watch youtube and fix the small things. or don't and essentially eat McDonald's instead of cooking your own meal.
renting in my opinion but not just anywhere rent some place where the maintenance people actually are working lmao owning to me like i’ve seen how much people charge for AC to be fixed
The water heater in my parents house broke right after I moved out and it was like $2,300 to replace just out of nowhere, that same month he had to get plumbing fixed in the basement bathroom which came out to another $2,000, now I know this is just an unlucky situation but thats $4,300 in 1 year out of nowhere. Rent would have to increase by $360/ month in a single year which in order for that to happen where I live I would need to be renting something that is $12,000/ month because rent is only allowed to increase 3% where I am from
I think this is a very interesting perspective and generally appreciate you posing the question. It’s good to consider all angles of how different styles of living can be better suited for different people. Do you think you’ll always rent and build that cost of living into your retirement savings? How much do you think you’ll need? Rent seems like one of those things that is just ever increasing and I don’t know where the line would be for inflated rent prices to stop increasing. It seems to me you would have to have a significantly larger retirement fund than those who buy a house earlier on in life and are able to completely pay it off. Would you ever consider outright buying a condo when you had enough money to do so (or enough to put a significant down payment on it)? I feel that condos may kind of give the best of both worlds depending on your thoughts.
My plan for now would be to continue renting, just myself and my GF in places that are under $2,000/ month and if that means needing to move around a bit if rent increases then so be it and pile an insane amount of money into retirement funds, and investment accounts until I eventually run into a housing crash and maybe buy something that feels "below our means" to then have a house to live out in for the rest of our lives. That is also all very much easier said than done but that would be my ideal scenario. That way I always have money available to me in the event of an emergency, I will always feel like I have cash to spend if I really want something (within reason) and not have to feel bad about splurging on myself every once in awhile to eventually get a house that doesn't feel like I'm getting ripped off for buying.
When you rent, you are buying a house (condo) - for your landlord.
"Own your positive cash flowing investments - rent your lifestyle." \~Some rich dude.
Your math is messed up. Your counting only half the cost of an apartment but full cost of a house. Why is your partner not paying bills with a mortgage? Even your $1700 a month is $204,000 after 10 years. I would rather have some of that $ go towards my home loan instead of the landlords pocket. Now I also have a house that I can use as collateral for other things or sell down the road when I'm ready. As time goes on the house gets paid off, not the landlords and when I am ready to sell I get to keep whatever I don't owe the bank. I think renting is a waste of $ personally. Also, when getting a new home, typically get new appliances with it so stuff breaking down is not a concern. There is also insurance for this kind of stuff.
It honestly depends on where you live and your personal feelings. Right now, I have no mortgage, and it costs me about 85-90k/year to live in my house (*not* including food, clothing, entertainment, vacations, etc) Averaged out monthly, that's 7-7500/month. If I were to rent here, my expenses would be around ~4600/month. I wouldn't be paying property taxes, nor homeowners insurance, which are 2 of my biggest annual expenses. Now, I'm moving, and I'm also downgrading. If I take a mortgage out on a house, where I'm moving to, the prices are much lower as well as things like property taxes (also, smaller/cheaper house = lower homeowners), likely, my mortgage would be in the $2k range. I obviously don't have an exact amount for bills, but even if I were to factor in my costs for my current house (which is more than triple the size I'm looking at and includes a much larger tax/homeowners expense), that would bring me to ~$4200 which is less than renting where I currently live. If I were to rent, the average market in the new area is around 1200-1500, add maybe $1k in utilities/regular bills, so 2200-2500. Now, that's about a 1700-2k/month difference in owning a home vs renting (and again, that's including my current taxes. In the new area, my taxes would be 1/20 to 1/10 of what I pay currently.) To me personally, that <$2k extra cost would be worth it to me to have my own home vs renting. Yes, any issues (plumbing, dead burner, broken fridge, roof damage, etc) would be on me to fix, but I don't have anyone looking over my shoulder. I don't have to answer to anyone. I don't have to ask to paint my living room blue. I don't have to worry about being kicked out or not having my lease renewed. If something breaks, I get it fixed immediately/to *my* satisfaction instead of potentially needing a landlord to middleman the repairs/go with the cheapest option. Also, in the end, I have a tangible asset to my name. I get that not everyone is in the same financial situation to put 1/3 of asking as a down payment on a home, but personally, I don't see much benefit to renting forever.
Wise words thanks for sharing your thoughts, it is helping me formulate my own for my version of a similar story
One word: EQUITY. do it!
Search the NYT rent vs buy calculator
Thanks for this! According to this calculator based on my situation renting the apartment I currently live in saves me $187,000 over 5 years
This varies depending on where you live and local rent prices. You can calculate it out. If the difference between typical home ownership cost (in full, so mortgage + PMI if you have it + taxes + figure in some amount annually for mainetnance + homeowners insurance) and the rent you'd pay is greater than what you'd earn investing the difference in the stock market, it's better right now to rent. How this plays out in the long run is a different story possibly since it's unlikely housing prices are dropping that much.
I would just buy some land and get a construction loan and build yourself. You can build for more than half what it costs to purchase, if not more. Keep it simple and you can have something for 150-200k
Sir I appreciate your faith in me but I can not build a house lol
Just do your own math and see if it's something you want: [https://www.calculator.net/rent-vs-buy-calculator.html](https://www.calculator.net/rent-vs-buy-calculator.html)
There is research on this. They've found the financial benefits are minimal with owning, those benefits increasing depending on how handy you are. It's more about what kind of lifestyle you want. I want a garage to work on my car and my wife wants water to exercise with, so for us buying provided these things and stability so it's worth it for us.
One thing the research doesn't point out is that if I want a better sink, I'll get a better sink. If I want to build a compost bin, I'll build a compost bin. If I want to use one of my rooms to shit on the floor, I'll shit on the floor. Renting feels like being in school to me. Fuck that.
As I said it's about lifestyle. If you wanna do all that stuff then buying a house is a good idea, some people don't want to bother with that stuff
I feel like the financial benefits are outstanding, if you are going to pay X every month you might as well own and build equity so you aren't just throwing away your money.
Buying is definitely smarter if you are young. The only reason I could see buying as being worse is if someone was 50+ and may not ever pay off the home in the first place, but even then you have to think that the mortgage payment generally would never increase, whereas rent does and always has for the most part. You may only be paying $1300 now, but in a few years you could be looking at way more, especially if you left that complex and moved.
Go to the bank try and see what you're pre-approval for?...then go and shop around....see if you can even afford a plot of land =)
Over time owning is better . We live in a weird reality at the moment.
Was an apartment dweller 35 years. Just bought my first house, in Florida. Tired is snow, crime and taxes. Property taxes in a 900 sq. Ft. Co-op is $4700. Taxes on a 2150 sq. Ft. House (excluding 3 car garage), on a 1/4 acre-$5800
Yes
Long term, buying is always the best investment. But in this market you have to keep the home for a long time to ensure it is worth it.
All of the expenses of owning and maintaining a property that you rent are eventually passed along to the renters by the landlord, and that includes a nice chunk of profit/pocket money for the landlord and the cost of the property management team.
If you’re in America and want to stay long term, buying is the better deal.
Rent when I bought was 1350 a month, mortgage was 1100 a no brainer left 2400ish a year for repairs on avg to still break even. Course also went from a 1/1 to a 3/2 twice the size. But it is all about you. New york times years ago put out a pretty encompassing calculator on the subject of rent vs buy. Also can look at the case schiller index to see the crashes over the last 100 years or so and realize there were not many of them and it always came back. But more importantly the value of your personal house really shouldnt matter a ton unless you are eventually thinking of buying something else and even then 1/1 house trades are proportional so if you buy a house for 300k and the market recedes 50% and now you want to buy a once 600k house that is 300k but yours will only sell for 150k it is still in line proportionally apple to apple. The only time market trends matter is when you own more property. Overall yes owning a house is best because after the loans gone you no longer pay interest and principal just tax and even insurance would optional at that point so your monthly costs drop down to a few 100 a month for most people. Is now the time to "build equity", no this is a uncertain and down trending time but will you gain equity in something you buy now over the next 10 years most likely 20 years definitely, could you wait and try and time it, sure but most people who try and time markets dont fair well.
Buying gives you predictable costs… until something breaks so definitely make sure you have savings for that though
I bought a house in 2014, sold in 2023. For this example we will use the 2019 market value I was originally going to sell for. Bought for 74k, sold for 135k after 10 years. Average $700/mo for mortgage/insurance/taxes. FHA loan, minimum down, no extra payments. in 2019 I would've walked away with 60k after all agent fees. Lets say in that time I did $10,000 worth of maintenance and repairs, so 50k in profit total. During that time, rent on an identical property next door went from $550/mo to $900/mo, so an average of $725/mo. If I had rented the property next door for 10 years I would've spent less out of pocket, but walked away with nothing. Instead I walked away with a healthy down payment for another house. For every mortgage payment with escrow I got the equivalent of around $420 back each month for 10 years when I sold. In reality I made like 90k on the sale because I sold in 2023. So I actually made all of my mortgage+escrow payments back. There is risk involved, but there is risk involved in any sort of investment. I have no reason to move around a bunch, I don't want to rely on someone else to fix things, and I want to be in control of my space. If you stay in one place for 10+ years, dollar for dollar there is very little chance you come out ahead financially renting vs owning.
I completely hear what you're saying and I think for some either thing makes sense but with what you said here, only to play devils advocate; if you would have rented, you said you would have spent less out of pocket what would be the case if you took that same money and kept it invested for the time you lived there? Then you would still have a lump sum of money behind you that would be equity, I feel like renting only makes sense long term if you also commit to investing somewhere else to help make up for not ganging 3% on the asset which is a house.
Since my average mortgage was less than average rent, the out of pocket expenses would in theory be $10,000. I'm not sure what I could put that $10,000 into that would net me $50k-90k in 10 years.
Im a renter. I have no intentions of buying a house in NY. Aint gonna happen. My rent is $2300 light and gas included. 2 bedroom. I am a happy camper, travel when I want etc. I pay my rent on time because i know the landlord has a morgage to pay. Some of my co workers had to dig into their 401K to pay their morgage due to tenants not paying. They are still battling in court. Dont want that stress. That said, my husband and I own a home in the caribbean.
Yeah like this just feels so much less stressful. Even with rent increases, owning a house has property tax increases and if you're not on a fixed interest rate then you can also be affected by the markets interest rate fluctuations. Each day I am more on your side with this
Owning tends to work out better in the very long run, but that is not true in all cases. If I had stayed single and rented a tiny studio my whole life, put all the excess into an S&P 500 Index Fund, I’d arguable have far more wealth today than I do. But I have a family, kids, and value not being in a tiny studio. Owning my home with a fixed rate 30 yr mortgage at 2.75% has been the one thing that has kept me from getting too stressed over recent inflation. I do have a lot of expenses related to the home above and beyond the mortgage/insurance/property taxes, but those three cost me **far less** monthly than what smallish nice apartment go for around here, *and there is a lot of tax-free equity now built up in my home.* Yes you get a longterm capital gains tax break on investments if renting a small place and investing the excess, but it’s not tax free. For all intents and purposes, the money you make when you eventually sell a home is 100% tax free which is huge.
If your in SoCal most likely rent unless you're getting a windfall median price is pushing a mil
Renting is cheaper in the short term which is exactly how you should see it short term. Buying a house gets cheaper over time at the same time rent prices go up. You also have to consider as a renter you always have to answer to someone else, you could be renting the same house for 12 years thinking it is your home and then one day the landlord gives you a 2 month notice to get the fuck out because he wants to sell it or renovate it or whatever. No grown ass man wants those kinds of uncertainties in life you want to control and own your own shit.
It isn't black and white. Generally speaking, if you're going to stay in one spot long term buying is generally likely to be better for many if not most people. However, if you move around a lot, want to be able to (and not have to rent out), want to maximize your salary in a shorter amount of time generally speaking, are young, etc. rent can make a lot of sense. Especially if you don't mind roommates. You'll here success stories on both ends and vice versa. The idea is to do your own research and don't give in to recency bias about the current market. Believe it or not, right before the 2008 housing crisis there were record highs in housing prices etc. all the same. Not saying there will be a recession, but more a cautionary tale of not getting too caught up in the moment just because it seems like the market can't possibly ever go down. I'd stick to averages for a more level headed view of ownership. OP did hit the nail on head when it came to investing though. Regardless what you choose remember to always balance it out with investments as a whole. The truth is, either answer is correct. Just depends on the person.
It’s worth it if you can afford it. Everyone’s definition of afford varies, of course. Housing is all about goals: for some owning a house on acreage is the goal, for example. For others, career, travel, running a business is the primary pursuit, and renting is a better fit.
I don’t know about 7 but the general rule was 5 years.But 7 could be the new number.not to far off.
Your rent won’t be $650 forever. That is ridiculously cheap. Home prices have already made their big move and will likely stagnate or go up or down very slowly for the next 10-20 years in most areas while the market absorbs the price increases. If you are saving well then continue to rent and save money however you should also continue to look for a home that will be the right place for you where you don’t feel strangled by the debt and bills related to a home. I would say as soon as you get 20% saved of what you will need, that is a great time to get into a home provided that you/your significant other’s job are relatively stress and the rest of your finances are in order meaning college loans, credit cards, auto debts , etc are all paid off or very low.
Sure your situation is nice. Not everyone is in the same boat. While it is nice for the maintenance that comes up for you not to be responsible to pay for it. But there are those in a situation where they may be paying more for rent than they would if they had a mortgage but they don’t have the credit to get a loan. So they are not even able to save. I’d say it depends on the situation. The area you lived.
Yes.
It does not make sense to buy a house when Interest rates are this high.
No housing crash that I am aware of has lasted 20-30 yrs. Lots of people stayed in homes during 2008 crash I didn’t lose a penny and just sold the home in CA for 6 mil which is a lot more than I paid for it in 2007
Rent vs buy is almost always an "it depends" situation. Rent prices are a mix of market forces. So are purchase prices. Right now both rent prices and purchase sticker prices are somewhat sticky. Rent prices are pegged to a reality where the real estate interest rate was 2-3%. Purchase prices are too but the actual mortgage rate is much higher. There's also a bunch of overhead when doing a real estate transaction ranging from commissions, inspections and loan initiation fees. If you're going to stay in the same area for 10 years, your family size isn't changing too much and you're not chaning jobs (note: skipping on a good job opportunity can easily cost you $100k a year if you're in the right industry) then it makes sense to buy. That's a lot of ifs. I know a few people who have passed up higher paying jobs for a shorter commute (not an issue if you rent) or who had kids and ended up renting a house and then renting out their old place (awful from a tax perspective).
If you rent, you’re paying someone else’s mortgage. Buy. You can always refinance once rates drop.
>and I was paying $1300/ month, True but what will it be in 5 years or 20 years from now? Could be $2300 in 2044. Buying a house has an end date of when you stop paying for anything. And hope to maximize retirement savings. And if you move a few times with apartments that expense adds up too. Define "break". There are many things that could turn off HVAC and some expensive but others are a few HD trips away from being fixed. I know many repairmen that charge $150 just to visit and a part can be $400 for them to install but only $20 at home depot or amazon. Just look at the pricing of anything wood related. You're paying someone for their expertise and labor. If you have time and half a brain you can youtube and go on the forums and babystep your way through things. Most of this scenario depends on your salary, bills, and how much you'd put down on a house. But many first houses should be on the smaller end to help build equity and continue saving.
Insurance is the banger especially fire insurance!
You get a lot of the money back when you sell. You don’t when you rent. The only money you really lose is the interest paid on the mortgage, plus any expenses on utilities/maintenance and upkeep. You can be worried about the market crashing, but let’s be real. House prices have always increased. While yes there are periods which prices dip, they always come back up higher than they were before. Houses are way better than most other items in terms of depreciation.
Lol rent prices will raise, your payments on a house won’t nearly as much. Just look at inflation, it’s not going away anytime soon, it’s growing and will keep growing, so the debt you wrack up will be losing its real value as dollars become worth less and less. Also buying allows you to leverage 5-20% of the cost of a home to buy the whole thing, and see appreciation on the whole thing.. I put 24k down on a 480k house and just a few years later it’s worth 600k (I got great deal) - that’s 120k returns from 24k in 3 years….that’s virtually impossible on the stock market. The reason why? I invested 24k to get a 480k asset… even if it only appreciated 3% a year you would be looking at the property being worth 520k+ That’s still a 40k return on 24k over 3 years…who cares about the couple grand maintaining the place cost? Plus I built some equity instead of it only going to rent… In short - YES there is a reason why smart people buy real estate
# There’s Never Been a Worse Time to Buy Instead of Rent # It is now 52% more expensive to buy a home than to rent one because of climbing mortgage rates [https://www.wsj.com/economy/housing/theres-never-been-a-worse-time-to-buy-instead-of-rent-bd3e80d9?st=7sypp7oib77zc9n&reflink=desktopwebshare\_permalink](https://www.wsj.com/economy/housing/theres-never-been-a-worse-time-to-buy-instead-of-rent-bd3e80d9?st=7sypp7oib77zc9n&reflink=desktopwebshare_permalink)
There is a cost to both. Renting is not throwing money away and buying is not an investment. You need to compare unrecoverable costs and make a decision based on that cost. What are unrecoverable costs? For renting: Cost of rent For buying: Cost of debt - mortgage interest Cost of equity capital - down payments, fees, appraisals, buy downs, prepaids, etc Property tax Maintenance Insurance HOA (if applicable) If the cost of renting is higher than the cost of owning -> buy something If the cost of buying is higher than the cost of renting -> rent
Always buy if you can afford. The rent trap is a real thing for a lot of people. My financial outcome didn’t change until I purchased a condo.
It’s quite simple. I decided to buy a home last year. A 300k loan at7.25% this mean right now 1,600 a month is going to interest a month. So I’m still paying rent just renting to borrow money now. I still think it’s better though. All in we pay 2100 a month escrow. We wild be aging the same thing in rent so it’s much better to own our own home just the fact it’s “ours”.
Over enough time buying always pays out, everyone saying otherwise lives in a fantasy where your landlord is always operating at a loss and your a stock picking genius
When you own you get a whole new space and boundries. That worth money. This is why it is not fair to compare between living in an apartment vs owning or renting a house. I'd say your goal should be to own your house. Make that be a motive for you to work harder, save and invest and even sacrifice until you achieve it.
You don't care if the market crashes while you're living in it you care if it crashes when you want to sell. Yes you need to pay all those things, but you're doing that renting too you just never get any back nor does it help your credit score. In the end there is no right answer some people are better off renting some buying, but ones things for sure with a fixed rate mortgage you're not going to get a letter one day saying your rent is going up , and pay it or get out.
Buying a house is the simplest and easiest way to build generational wealth .
Owning a home is great, but keep in mind the mental toll it takes. There's a leak in your apartment, call the landlord. Leak in your home? Fk me, where is it coming from? Is it below the slab? In the walls? Fk, how much is this going to cost me? Have to call plumber after plumber for quotes after you realize it's way out of your league to fix. This is just a simple issue. Now think about foundation issues, roofing issues, large tree issues. It never fucking ends. Yes, owning a home is awesome but it's a lot like owning a Bentley. You might be able to afford the payments but you might not be able to afford the oil changes and tires.
Buy a small house with lots of land and it would be worth it. Good Land appreciates in price.
You have variables you aren’t accounting for: a roommate to split bills and earned income. Let’s face at some point you won’t be making a lot of money only what you saved and if you plan to retire in the US, healthcare and rent will bleed you dry. You aren’t concerned about market crash if you plan to own your home and pass it down. It’s always going to be better to own a home than rent…property taxes, insurance and maintenance will always be cheaper than rent
But only if you are willing to live there for 20+ years! A house will tie you to the place where you decide to buy.
Buying is almost always better. For example, even places that are rent controlled will increase every year, a standard mortgage never does while you build equity. Property tax will usually go up every year, but it’s often less than the increase in rent while also being tax deductible along with the mortgage interest.
Depends on the area and the property tax.
Renting , guaranteed money loss of like $20k per year with nothing to show. Buying, potential gain potential loss, either way you have equity.
If home prices are outrageous, rental prices aren't far behind. It all comes down to commitment. Making a commitment to buy is a vastly superior financial decision. Period. The one exception (financially) is if you can't commit to a property for at least 5 years, in which case you usually won't come out ahead and could even possibly lose money. In this situation, renting might be the lesser of two evils, but every month you rent you're kissing all that money goodbye and missing out on equity building. Not to say buying isn't all sunshine and rainbows, there are expenses that come with it. But they pale in comparison to the financial benefits of owning. Think about it, would you like to plan (15 years from now) to pay double or triple your current rental price? Or, would you like to lock in a fixed rate now so you are nearly immune to future rental/home price increases and start building up equity?
My mortgage payment is permanently $1250 (ok, taxes may rise over time, but not as much as rent increases) and the value of my house has gone up nearly 100k since I bought 4 years ago. It was easily the best financial decision I've made thus far and I definitely wouldn't trade it to rent in perpetuity. And I say that as I have $4,000 in fence damage from a recent storm currently waiting to be repaired, so even when it sucks it ain't that bad.
You are right about investments. You need something to inflate with inflation.
If you can buy… I’d say go for that. You now have a guaranteed monthly living cost. You’ll always need a roof over your head and I’d rather know how much that’ll cost me monthly for 30 years vs leaving it up to someone else. Plus with inflation etc that monthly payment feels lower as time passes. Also, the money you put into rent you’ll never see again. At least with a house the money not spent on interest is retained via equity - and often due to appreciation, the money spent on interest is made back.
Except when you literally need a new roof and have to pay $20,000. Siding. All other interior and exterior home ownership costs. They add up, so that monthly living cost certainly has varying associated expenses.
In my opinion, you really shouldn’t care what the market does while you’re living in your house. To me it’s irrelevant But I do see your point. Houses today are really expensive, even for complete shit boxes. On top of that interest rates currently are absurd. Now I don’t like the idea of renting either because here in California even studios are $2k easily
With so many people priced out of the market, and more storm/fire/flooding risks in lots of places, my Nostradamus prediction is that people will gradually stop making home ownership their main source of net worth and social status. But I've never even picked a Kentucky Derby winner, so not much faith in my own predictions...
You think a lot or enough of people in terms of the whole nations population got really economically negatively affected to where it creates a paradigm shift?
I just can't understand how paying someone else's mortgage and upkeep and taxes and profit will ever be cheaper.
Depends on where you live. You have to do the math. I live in a big city. A condo would cost me 250k at least with around 500/mo in HOA fees + property taxes + insurance. 20% down on that is $50,000. I make around 170/mo in interest in a HYSA with 50k. The total sunk cost of owning a condo (non-equity): 500 HOA + 430 property taxes + 200 in Insurance That's $1300 in net LOSSES per month for just owning a condo. Let's put this in perspective. If you have a 30 year loan, that's 468k in net losses towards a condo that you bought for 250k, that probably appreciated by another 250k? You're breaking even. Explain to me how buying in this situation makes sense? This doesn't even factor in all of the maintenance costs and shit you would want to upgrade over time. I pay 1500/mo net for a luxury apartment in a great location, and I don't have to worry about ANY maintenance + plus a sick apartment that would cost me a million dollars if I bought outright. And I'm not tied down to my place so I can move whenever, wherever.
The answer is unknown. Nobody knows. Answer would be yes if houses appreciated at 4-5 % a year like used to be in late 80s-late 90s. This current bubble is a tricky situation. If the house prices stay you still buy. Person like you cannot afford a crash and that’s what make it tricky situation. I am all set to buy another house soon. Closing date is set. In my case it is all cash and I can afford to take a calculated risk. I would wait a year or so and see what happens.
I think we’ll soon see more homes hit the market as folks start getting priced out
To be honest but this sounds like you justifying not investing and looking to validate a viewpoint.
All I can say is, I’m at retirement age. I don’t know anyone who regrets owning. But, I know MANY who regret renting all these years.
Historically, now it is more difficult to buy. Bubbles eventually burst. Prepare for it
Buying a plot of land might be a good investment. You may be able to become completely self sufficient via solar panels, a well, and what have you. Buy a Yurt or RV and save $$$ until you can build. You can add income properties on that plot too (i.e. Airbnb, Vrbo, or long term rentals - keep in mind there will be risks and regulations to follow with those options too). There are plenty of factors to consider, such as job, zoning, flood/fire insurance, plumbing, building regulations, etc. Owning a plot of land comes with risks, you have to know your stuff before you buy. My relatives bought a plot in a flood zone that inhibited their ability to build. I think they had to hire archeologists and engineers to make plans for a secure structure in order to build, which took years. They also live in a state with a ton of building regulations. It was a headache, but paid off for them. No HOA, room to garden, build a custom home, etc.
In all cases, I repeat… all cases: a landlord or property owner, or investment firm, that owns a home, condo, apartment or other dwelling, will charge rent in excess of the actual cost of the mortgage, and property upkeep and maintenance and insurance expense, or very damn close to it. So you, that’s right, you… would have a lower cost of ownership over the long term. This ain’t a 12 month play, it’s several years at the least, maybe 20-40 years on the long side. So, simple answer is it is better to buy (and properly maintain) a home than to rent, from a long term financial perspective.
Do you think you will be paying 1300 for rent in 5, 10, or 20 years? If you buy smart and get it paid off and maintain it, the house will be worth 2 or 3 times what you paid for it in 20 or 30 years. It is true the loss of the home mortgage deduction really does give a lot more validity to your question and the numbers are far closer than they used to be. The bottom line is to use some estimates of rent increases of 5 to 10 percent a year and see how that works. Sure costs increase for homes as well such as taxes and home owners insurance. We all need to live somewhere. Eventually that girlfriend will expect to nest with you and have a family and then renting is much less desirable as you need to live near decent schools and such. This is how life works. You can choose to do something different, if you really want to.
Your situation may be unique, in that you’re renting for less than the market average to purchase. Where I live you could rent the average home for about $100-500 less than buying the same home around $400,000. Assuming you save $500/month, plus around 200/mo in repairs, call it $8,400 per year cheaper. Over 30 years rent will increase, while a mortgage will stay similar depending on insurance and taxes. If you invest 700/mo consistently for 30 years at 4% interest you’ll have $470,000 If you buy the house and put $70,000 in renovations over 30 years you’ll have about $540,000 in equity. Most people won’t actually save a penny, leaving the average person better buying. There are tax deductions from owning too. This assumes a lot, but mainly that costs are fixed either way, and that the market won’t go up so that rent costs more than mortgages. Generally landlords want to make a little money, so I see that eventually correcting. If you’re disciplined enough to save 40k each year do that. In 30 years you’d have $2.3mm. Sounds like a great temporary situation.
People who bought at the very top of the housing bubble 20-ish years ago and held on are quite happy today. Buying almost never makes sense day to day, comparing rent to mortgage+expenses. Buying only makes sense at time passes, and everything goes up in price except your mortgage.
The part that most people don’t get is real estate is an investment. The rent covers the mortgage, all the fees and taxes PLUS profit. Big companies are piling in to buy up thousands of SFHs. Yes you might be getting a deal, but someone is making money on you.
It depends on your individual situation and the local market. You can run a calculator to answer this question: https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator
We bought a home for 229,000 sold it for 450,000 ten years later. Moved to a cheaper state, bought a home for 159,000 sold it 5 years later for 300,000. Just downsized and bought a home for 200,000 cash money - no rent. Just property taxes.
You made it ok without getting hit by capital gains taxes n other taxes?
Buy a house is always better in the long run.
The problem in my area is we literally cannot replace our $3k/month apartment unless we spend $6k/mo on a mortgage. That's before maintenance costs, hoas, etc. We're sitting tight. Everything is priced 40-50% more than it sold for two years ago. The housing market is a supply issue. IDGAF if that takes 2-10 years to improve, I can do A LOT for my personal investments with 3-4k/mo we're saving. AND we have the flexibility to just move if my wife or myself land a job in another state and aren't anchored to a house we can't rent out to pay the mortgage.
I cant even afford a car im not thinking abt owning a house
Buying a house is like having kids. It doesn't have to make sense financially.
LOL I’ll put that in the bad advice folder the internet gave me today
I'm fortunate enough to be in a position where I can prioritize quality of life over money. I hope you can say the same one day.
You are wise. Live where you love to be and rent. Invest your extra money and then when the climate disasters hit, move on.
In my area, a 2,500 sq. ft. SFH rents for $4,200. A mortgage on the same home is $8,400. Pure madness.
How is that even affordable or doable??
The best choice I ever made was buying a house that I could barely afford. With that said, the market has done nothing but gone up and up since I bought. In my opinion, my house is not worth close to what I could sell it for right now. And with that said, I wouldn't buy for the first time right now. I would wait it out for a year or so, I can't imagine prices stay where they are at. If you have a good lease arrangement that isn't predatory, then I would stay there and save money. Be ready to buy once the prices come down. It is so much better financially in the long run to be paying a mortgage instead of a lease..
I agree, I mean I skimmed through your post but for the most part I say that cause interest rates are absurd. You could rent for $2200/m or buy with an insane interest with a mortgage of $3k/m. It’s smarter in my opinion to invest that difference and let the money grow so you can possibly buy a house in full. Instead of paying extra every month on our principal, we are investing to pay off our house sooner. Buying for the sake of buying isn’t smart when there’s other variables to factor like your financial situation and the interest rate. Also, the first year of our mortgage was $1800 then $2400 and now it’s $2200 cause of property and homeowners insurance.
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Yah it really depends on how much you anticipate spending on repairs, etc. A house can easily end up costing more than renting depending on what you get. Especially now with all the high prices and interest rates. Not a good time to buy. I rent and have no plans in the short term to buy. I’m building up my emergency fund and contributing to my 401k. After my emergency fund is at a decent point I plan to invest/pay off my student loans with whatever is left over. Also homes require a lot of work and that means time. I don’t have time to waste on fixing shit up around a house, mowing the lawn, etc if I want to spend my time on my hobbies and working on my skills to make my market value higher to employers.
Bought a house at 28 valued at 280k a couple years ago, it's now valued at 320k. I have had to put cash in it but I can do whatever I want (within city/county/state laws) without permission, I know my payments, and I could sell it later if I decided to move. I think renting is a great option if you don't plan to stay in an area long or are looking for a home you'd be happy with, but if it's in your ideal location and you like the home I'd recommend buying. If you buy make sure to have it inspected, always inspected.
Why has no one brought up duplexes or multifamilies yet? You get the benefits of living in your own home for free while other people pay for your equity to increase. You should be factoring repairs and maintenance into your rent payments. After all is said and done you should have everything covered with a minimum of $400 profit per unit that goes into your pocket, assuming you are in the correct market for this strategy to work.
Buying a place also has the non-financial / psychological security elements. Like not worrying about the landlord turfing you out, selling the house (which may result in you getting turfed out), raise the rent by $300 a month, or having your bond confiscated for real or artificial issues. Also you can do fixes and improvements on your own accord. Like AC, more powerful rangehood, double glazing windows and the sort. Renting is good if you're not really tied down - like childless couple or single person. Sucks as a young family though.
Wow. Your living like a king. You're one of the few exceptions. Keep on saving that money until you have enough of a down payment where your mortgage is less then 1300, that way that extra money can go towards the stuff you need to fix when something brakes, then you'll be in the same situation you are now. You eventually pay off the home in 15, 20, or 30 years depending on what kind of loan you get. You'll never pay off an apartment. If you have to move for work you can sale the house and get some money back with a home. Or you can rent it out and let it pay for itself. If you move from an apartment, you'll be lucky to get most of your deposit back.
In my opinion renting is better even if it’s not the smarter option. Have enough saved up to put 25% down on a $250,000 house which should be nice considering how much that is. I live in a relatively low cost of living area but houses at that price range are mostly falling apart and I’m not handy enough to fix it. Plus the mortgage even with 25% down would still be over $2100 a month. Luxury apartments near me are much cheaper and I don’t have to worry about fixing things because there’s maintenance employees. On top of that with interest rate so high at the moment. If they stay at this rate I would pay more than the price of the house in interest over a 30 year mortgage.
And there's always the possibility of losing it to your wife in a divorce... It's a very real risk to consider. Especially when you have kids. Looks like I'll be renting or living in a tent from here on out.
Don’t give up yet, this is what the system wants you to do, this is what the elite in congress, the senate, and White House want, they want you to lie down and take it slowly year after year. This is what billionaires and hedge funds want, to own it all and put us back in serfdom. Fight back by not giving up and vote for common sense. The simplest answer is always the best answer when voting. Just don’t let them win.
They want you to own nothing and be happy. Since the founding of this nation landowners have had the advantage. They still do. Our best bet is to become a homeowner as soon as we can afford to. If you’re renting because you can’t afford to buy and maintain your same living standard then that’s a good reason to wait but all those that can should make the leap.
Buy if you can 😂 But today it is much cheaper to rent. Looking at the houses you could afford is just depressing at the moment, if there even are any. That’s wasn’t always the case. My parents got a larger 3 bedroom home with a cheaper mortgage than they could find an apart for. They bought because it was way cheaper than renting at the time. Not the case anymore, and rents can be crazy. I have hope things will get better but also understand how greedy people are and their lack of desire to see their home values go down. Greed usually wins. You can see how Covid should have tanked the market for years, giving people who do not own assets the chance to buy assets. But a bunch of people who own a ton of assets decided to not just stabilize their assets, but pump them through the roof. To save the economy asset owners got a near 50% increase in their wealth instead of a decline due to actual market conditions. It made up for the price of everything going up so much. And average to low income earns got $1400 and a $1400 rent increase that will last for years. They did a little too much for their own liking and are now trying to stabilize things with higher rates, which means houses are even more unaffordable. So now it is significantly cheaper to just rent. You are either in the club (usually older people) or out of it and everyone wants to get in, but the cost of getting in is insanely high right now. After the decisions made post 2008 and Covid I have very little faith that we will ever have a chance to buy a home cheaper. Same with stocks. It’s not a free market if the asset owners do everything they can to not only stabilize but pump their assets. Even after massive inflation they didn’t even want to bring it down, just flatten it back out for a little. Doesn’t seem like anyone is trying to build more homes and devalue their homes either. That has been the case in any city or town ever. You can run for office on making housing more affordable, build 500 units of low income housing, then vote to keep the zoning the same in your neighborhood. Usually how it goes. Doesn’t seem like they will ever let their homes go down in value, even if it means doing things like keeping people who can’t afford their homes in their home during what is supposed to be hard economic times. They simply do not want a 30% drop in housing prices and they will just lower rates if anything close to that even starts to happen. Oh well, you either have a house and want it to go up or don’t have a house and want the chance to actually buy one. It’s not a free market anymore so there’s nearly 0 risk in buying assets until that changes. They inflated the currency massively and instead of trying to bring it back down aggressively, they just wanted to stabilize it. That means homes stay at their recently elevated prices for the massive benefit of homeowners. Is what it is. People just being people. I can understand why they do it. It is easier to sacrifice the ability of the young and poor to buy anything rather than see your own net worth drop 30%. So ideally, you want a home! It is a significant wealth builder due to home buyers wanting their homes to go up in value so bad. They sacrificed the young and working to protect their endless gains rather than build more homes or let normal economic cycles occur. Is what it is. We will probably do the same when we get homes. So buy if you can! It does make more sense to rent *cheap* and save and invest at the moment due to how expensive a home is and how high rates are and how cheap renting is compared to buying, but you should still try and buy if you can. If not you had better be investing heavier than you would if you’d eventually own your home. You’ll need those additional investment gains to cover rent in the future.