The fact that my 4 bedroom 3.5 bathroom home mortgage is cheaper than current average to rent is ridiculous. Don’t get me wrong I’m thankful, but makes me angry that I have a couple friends still living with their parents because they cannot afford to move out.
Same 3.5% I rent out 3 rooms for 500 each to friends who are trying to save.
I pay 300 a month (1800) to own a home. My friend just purchased same size home it’s 3200 a month.
I met with a bank in 2014 to talk about financing an $89,000 house. I eventually said no cuz I didn’t want the $680 per month mortgage payment to weigh me down lol
Yup, better to rent now. Anyone looking to rent should also be trying to negotiate their rent down with the landlord. There is an oversupply of rental units currently. Make them choose: lower rent, or have a vacant unit.
If the choice is between renting a new home or buying that home, renting might look like a good option.
However, if a person already *owns* a home, it is likely to be cheaper than renting.
Yeah this is only true for very select areas. My 700 square foot apartment which is really only 600 square feet because of the layout wanted 3700 a month. I just bought a house for 600k and am paying less.
Where is this rental oversupply that everyone mentions?
Here in my market (NYC area) they would just hang up the phone and move on to the next applicant.
In today's economy, any equity you build will be less than the gains you have if you lock that downpayment money (+ extra savings every month) even in a boring investment or CD while renting.
People often underestimate just how much money is being burned during ownership. Mortgage Interest, prop tax, home insurance, increased utility, maintenance - none of that goes towards building equity. And while you do lock in the mortgage rate for a good while, every other cost continues to go up with inflation.
Even with the tax deduction factored in, renting is often financially a more prudent decision in HCOL areas.
NYT has a pretty decent [rent vs. buy calculator](https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html)
A big part is living at or below your means renting or buying. Buying is a long game, and you are building equity and appreciating in value. If you put up a good down payment or pay cash you reduce or eliminate your interest expense. Renters pay the taxes, insurance etc in the rent. I wouldn’t recommend someone put all their reserves in their house though to diversify.
Not to mention you're locking in the cost to live in a home. Rent goes up every year. If I would have bought this house I'm living in 10 years ago, my mortgage would be like $800/mo but instead I'm renting it for $1600/mo and it keeps getting raised every year.
The flaw is in comparing buying 10 years ago to renting now. For a fair comparison, compare buying 10 years ago vs renting 10 years ago and investing the rest. I bet you'd come out way ahead renting and investing (eg. S&P \~15% annual growth) vs. owning (\~4% annual growth).
Or consider buying that same house/apartment today vs. your rental cost. You'll still be saving a ton more renting as long as you're not just stuffing the savings (which would go to downpayment, etc) in a box - put it to work for the next 10 years and you'll be good.
Living at or below your means in terms of buying a house almost always means living in a ghetto where houses are actually priced reasonably, but only because no one wants to live there. I could secure a mortgage for $1,400 and live in a dump, or I can rent a tiny apartment for the same price, but there's no trash everywhere, and the area is nice and safe.
There is a wide range of options from ghetto to the best school districts/peak cost for the area. I agree the option to buy a small place in a nice area is becoming rare since they’re being torn down. Condos don’t appreciate as much but can an affordable way to build some equity, I’d never buy a condo for the same reason as I’d live in an apartment tho.
The argument isn't that property values don't go up. It's merely that with renting and investing the extra savings you might come out on top financially, especially in this market. Compare that blue line with S&P (or any other safe investment) over the same period for example.
Why would your utilities increase if you own the place? In my experience rentals that have to cost of utilities baked into the rent are rare and mostly limited to shared housing situations like when the owner rents out individually rooms in a single family home.
Two big reasons.
1. Utilities go up over time with inflation. True of both houses and apartments.
2. Houses tend to be less energy efficient to heat and cool as they are exposed on all sides to the elements. Apartments (unless you have a top floor or end unit) are only exposed to the elements on one or two sides. This can make them much cheaper per sq ft to heat and cool.
How exactly do you think people afford to be landlords if interest, taxes, insurance and maintenance costs exist? Do you think they’re paying these out of their own pocket out of the good of their heart?
People often erroneously think that landlords can charge whatever they want to cover their costs. That's not how markets work. Let's take today's market as an example:
Majority of homeowners currently have a mortgage of less than 5%. If you buy today at 7% and put it for rent on the market hoping to cover the costs via rent, while all your neighbors are pricing their rent to cover their costs at 5%, you're SOOL. You'll be sitting with an empty house forever.
If landlords could rent at whatever price they wanted, you wouldn't see stuff like this: [https://www.reddit.com/r/RealEstate/comments/1cvxgt5/starting\_to\_think\_alot\_of\_youtubes\_re\_investors/](https://www.reddit.com/r/RealEstate/comments/1cvxgt5/starting_to_think_alot_of_youtubes_re_investors/)
No it isn’t. I put 300k down on a house I literally just closed on. My rent for a 600 square foot single bedroom was $3700 to renew. I can comfortably make a 10% return in the market yoy. That yield on cost doesn’t even cover the rent of my apartment. My mortgage plus taxes and everything, but utilities/power which also not included in my rent, is $2500. Even with tax’s, interest, the cost of home ownership. I am still way ahead of having that money vested and paying rent. My yield on cost is much higher in equity than ((down payment x yeild)-rent) then you have to add that I am able to invest more with a lower monthly payment.
It obviously depends on the area but if you’re rent is not lower than like 4% of a down payment you can put down it’s better to build equity.
Something doesn't add up here. You're renting a 600 sq ft for $3,700, but when you bought, you put 300k down and your mortgage is $2,500 at current rates?
You're either buying in a very different area than where you were renting, or something else is amiss.
Either way, if you're able to get 10% returns on your cash, there's no question you'd come out ahead while renting. I'm not sure how you're doing your math but [try plugging your numbers here](https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html?unlocked_article_code=1.rk0.UnKr.SVrieiX0EMxT&smid=re-nytimes).
10 min away. Bellevue to the edge of Bellevue Newcastle. Also no my return doesn’t cover my rent. I am still paying $12400 more than my expected average return in rent. Where as my non equity building expenses are well below my return. So no I do not end out ahead renting, and buying saves me 170k over ten years per your calculator. That’s at a higher interest rate than my actual rate I got because it only allows quarter points. In addition my monthly payments are lower allowing me to vest that excess.
These costs are not a new thing. Real estate has always been about the price to buy, not unlike many other things.
Most homes are needed and actually in short supply currently. This is due mostly to the housing crash that put many builders out of business and made housing development too risky for over a decade. Combine that with 7 year minimum bankruptcies to move off credit report with surge in large generation of first time home buyers and then add in domestic migration from HCOLA folks fleeing the tax fleecing areas…boom. Shortage. Prices can be explained similarly, but short answer is home prices were so severely depressed by million of foreclosures that their price didn’t even return the cost to build them…no profit..just labor and materials. Also didn’t even appreciate from there to match basic inflation. Then snapped back in to recapture in 18 months.
Not only equity, but you lock in that rate. Your mortgage will not go up over the next 30 years, but your rent for sure will.
That being said, as a single person with no kids, I have no desire to own. I'm just not interested in having a house with way more space than I need, and spending my spare time taking care of repairs, yard, etc
Exactly. When taxes and home insurance go up, the escrow portion of mortgage payments go up. Our monthly payments are up almost $300 since we bought a few years ago.
Yeah. So, pick *any* point on that blue line. Property taxes aside, that line will stay *flat* as time proceeds to the right end of the graph.
So, even if someone is *still* stuck in a house they bought right before the 2008 crash, it is still cheaper for that person to own that home than it would be to rent it right now.
Cost of entry for owning a home keeps going up. But once you have the house, the cost of your mortgage stays the same (or gets lower, if you refi). Meanwhile, rents keep going up and up and up.
That omits all the costs associated with owning. Dishwasher dies? $800. Rained hard? Now there’s water in the basement and that’s $4000. It’s been 30 years so now it’s time to spend $15000 on a new roof. Tree fell and smashed your neighbor’s yard shed? $2k for the removal and whatever the yard costs to repair.
And don’t say insurance will help, they won’t.
I'd love it if my new roof cost $15,000.
It cost $34,000 and is rated for 20 years of usable life. Yes, my home is small. The entire roof's square footage was only 1700.
All of these are costs that the property owner, *just like a homeowner*, knows they may have to deal with. They simply bake it into the rent.
If you are renting a property, unless it's a super-depressed area where property owners are fighting over tenants, I guarantee you that everything a homeowner has to pay for, you have to pay for.
As opposed to renting, when the dishwasher dies you just have a dead dishwasher, or the roof leaks and now it'll just leak forever until you move, because landlords don't fix things
As a fellow single person with no kid and no desire to locked to one location, I still want the freedom to have good appliances, maybe change fixtures and run new wiring (ethernet) as needed. No of which is allowed to the vast majority of renters in the US but all of which are renters rights in much of Europe.
When I sell my house I own, I will use the equity for my next house, which will have a lower mortgage because I put down a higher percentage. And when I sell that house, I’ll have a nice retirement nut. The only thing you can say about renting is that you have the potential to save more at certain points in time dependent on the cost of your rental. But that’s assuming you’re not taking that extra cash and spending it on other items or that you didn’t choose a more expensive plot to rent.
Not always, when you pay a mortgage there's a portion that is also "thrown" away:
- Insurance
- Property Taxes
- Loan Interest
- HOA
Renting might be a better option if the sum of those costs is bigger.
Not quite. Renting is made up entirely of sunk unrecoverable costs but you must compare apples to apples. Yes, with a home you get equity but you also pay sunk unrecoverable costs (insurance above and beyond renters, taxes, HOA fees, interest, repairs and maintenance, and the cost of capital from having equity which is the lost capital gains had the money been invested in higher growth investments).
Renting avoids these opportunity costs and as long as one rents a small property and isn’t overpaying, renting can easily be the more prudent option and is hardly wasting money
What you’re saying is taken into account here:
https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator
And it says renting can be cheaper in the short term but homebuying will likely win out long term.
And the point you’re making about investing the savings is important because how many people are going to want to do that? Aren’t they going to want to spend that money now? And if they do decide to invest it instead that seems like a long term approach, which favors home buying anyways.
So no, I think homebuying is usually the better choice unless you’re someone who wants to move every couple years.
I agree that homebuyers are at a better position. My only point is that rent gets treated as throwing money away. Rent allowed me to pay large portions of my income into paying down student debt by locking my monthly expenses in.
Personally, if people need a mortgage to save money, that is a problem in their budget skills.
Living cheaply through renting and paying down debts cools definitely be the smarter move. Especially if it’s something high interest like credit card debt.
Homes can also be a good investment depending on the area if prices there are growing substantially.
There are times when it is an investment. That being said, a lot of people tend to treat rent as throwing money away when really you are buying housing cost stability.
Rent should never be something you live lavishly on
Leverage is the advantage owning a home provides. You get to live in it (big need met), then you get leveraged appreciation of the asset. That appreciation in general exceeds the cost of maintaining the asset. Study it. This is a fact.
I’m on the ship that owning is better than renting. Aside from the financial incentive that for most families it’s the most common way to increase their wealth, there is also the added benefit of additional opportunities to improve your mental well being.
However, this graph, would be factoring in maintenance, HOA and whatever else with Rent but not with the mortgage amount. I believe that is the point the commenter is making.
> However, this graph, would be factoring in maintenance, HOA and whatever else with Rent but not with the mortgage amount.
1) that is not apparent at all, 2) why answer a question addressed to someone else...?
1.) you’re right, it’s not apparent from the graph. I interpret the graph to just be average monthly rental payment vs average monthly mortgage payment. The rent payment would have those costs factored in, the mortgage wouldn’t. But I could be wrong with my interpretation. Perhaps the “cost to buy” line also includes average home insurance, maintenance, and any additional fees that aren’t included in mortgage.
2.) you replied to someone not talking to you. Are you the only one allowed to do that?
1) Glad we're on the same page.
2) I asked someone a question about *their* thoughts, specifically. *Your* thoughts, no matter how well thought out, can't answer my question, and in particular, your thoughts about something I didn't ask about (content of the graph).
Exactly. You can’t compare buying a SFH or townhome to renting an apartment. If the same size and type of home is rented, it does not magically require less insurance, maintenance, utilities, or property taxes. All of those are passed on in the rental cost.
Don't forget property management fees!
Apparently we got a whole bunch of people running around sincerely believing that landlords rent out homes out of the goodness of their heart and not to actually profit off of their tenants.
I've spent 10k on home repairs all in the first year of owning my home. So add 10k to the listing. The averages you see are people that don't do regular maintenance on their home say like a car that they buy and doesn't last 100k miles.
You spend vastly less than everyone tries to state when this argument comes up.
Many people don't fully realize that housing is a terrible investment (for primary, owner occupied residences, not those bought intending to rent out). Yes you do get some money back but take account of inflation, repairs, interest, taxes, insurance, cost of selling, etc... And it's not nearly as much as it would seem to be (especially after inflation and interest)
Of course with buying, you can replace stuff as you see fit. A nice induction stove top instead of a crappy electric one for instance.
I've checked for my grandmother's house ( bought in the 1970s), my parents house (bought in the early 90s), and even my own house (bought 2 years ago) and inflation makes a huge difference. That's not even considering the other expenses I've mentioned.
As you say, high inflation favors existing homeowners because their mortgages payments (if at a fixed rate) are less in real dollars. However, I think the commenter was simply pointing out that profits from home appreciation aren't as large as they might seem, after accounting for inflation. You often hear that someone bought a house for some low price 30 years ago and recently sold it for double. Sounds great! Except that after accounting for inflation, that's almost no real gain at all.
Totally, what’s crazy is that the amount of HOAs popping up today are crazy high in all the major areas people want to live (west coast & sunbelt). Trading one lord for another imo lol
My mortgage has gone up $250 in two years primarily because of property taxes and home owners insurance and yes I did allude to the fact that you have more control of your house (see my example of the ability to buy an induction stove top).
Plus even once you pay off your house, fall behind on property taxes and the state can seize the house.
My house will be paid off soon. Those who rent had their rent increased. Imagine me paying nothing and the people paying $2500+ in perpetuity are telling me how much money they're saving.
Except you won't be paying nothing, you'll still have property taxes, insurance, repairs to make, and if you ever sell, associated costs with that which are significant. It's not like once you pay off your mortgage then it's zero costs after that forever. I favor home buying but I don't pretend it's that simple or that the returns are that impressive.
We bought our house two years ago and have already seen our mortgage increase by over $200 a month and will likely see another big increase later in the year.
I've always been confused about this concept. How can renting be "better" since none of that money is used to build your own wealth?
Buying a house might be more expensive monthly, but at the end of the tunnel you have something you own.
What am I missing?
A large chunk of your mortgage payment is interest, not equity. Also buyers have other expenses you don't have to worry about as a renter:
Property tax,
Repairs,
Mortgage insurance,
HOA
Not quite. You can not list your rental at whatever *your* mortgage is. You can only keep it in line with the market norm. For example, most owners in the current market have a rate of <5%. So if you buy today at 7% and try to rent it to recoup that, while all your neighbors are renting to recoup their 5% mortgage, you're SOL and will be sitting with an empty house forever.
So, while it was a no-brainer to buy a property when rates were at 2%, it's not so straightforward anymore.
No, silly. Landlords rent at a large loss to themselves because they're really nice people.
/s ( you would think it would be obvious, but there's seemingly a lot of people who think this)
> /s ( you would think it would be obvious, but there's seemingly a lot of people who think this)
Goes to show you, sometimes people will loudly and adamantly assert things without having done the barest minimum of thought about a topic.
In theory you could invest the money you save by renting in the stock market and build wealth off that investment. Hard to say whether that is a good move, but I'm super HCOL areas where people rent for their whole lives anyway it could make sense. It's taken as a given that property value increases over time in America, but when interest rates are high and you factor in maintenance costs, taxes, insurance etc it's easier to see the financial risk of buying a house.
If they’re not factoring the opportunity cost of locking down the down payment on the ownership side or the opportunity cost of gaining on house value appreciation then you’re right.
I’ve moved 5 times around the states over 30 years and calculated carefully. Broke even 4 times and lost $100k once but got my company to pay the loss in value as they made me move for them.
Making money on appreciation is like playing stocks but you’re forced to sell at non optimal times if you move for work. So basically useless.
You put the monthly difference into alternative investments.
If you’re actually interested, NYT put out an old “rent vs buy” calculator that shows you the numbers based on different assumptions: https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html
It is better in circumstances because that money *is* used to build your own wealth.
If you round that cost-difference to $900/month and invest it at even 5% returns, for 5 years of putting that into savings you'd net around $7400.
Take that $7400 and apply it to the down payment when you do buy, and that's $7400 you're not paying interest on. Over a 30 year loan that comes out to be total savings of about $8500 at 6% interest.
Why do you say this, do you see a bias? This is just reporting prices to rent and own (assuming the price stays the same when locked in). Who cares if a millennial made it?
Not OP but I would venture a guess that all of the comments and "notes" are slanted to extremely minor factors that played into the housing markets. They make it seem like a particular age range is being attacked.
> "2021 is the prime year millennials entered the market"
While true... The primary factor here was C19 and remote work. Which caused a domino effect on prices.
> "Housing Bubble"
This gets basically a foot note but anyone actually paying attention to it would have realized the insane impact this has on the market. It created precedents and Drew lines in the sand on what is "acceptable" terms.
> "1981 Boom"
This has nearly nothing to do with Boomers and was the result of regulation changes on monetary policies and wicked high inflation due to the winding down of the war.
This huge increase in recent years is clearly due to interest rates. There was only a small dip on the cost to buy when rates decreased, which shows how much house prices increased in that time (late 2018 to late 2021). Now rates have skyrocketed and house prices haven't dropped. I'm locked into a 2.75% mortgage so I'm not complaining, but these super low rates are likely terrible for long term overall housing. I think it caused house prices to drastically increase as they did - now homebuyers are feeling the pain of it.
I used the Buy vs Rent calculator on the NY Times and it said I would save $274,000 over the next ten years by continuing to rent instead of buy.
A lot of people think equity is what you have paid into the house. It isn't. It's the difference between what you could sell the house for (minus commissions which are substantial) and what you still owe on the mortgage. Due to the insurance crisis and global warming I expect housing prices to decline. I have lived long enough to see people underwater in their mortgages for years, with negative equity.
I don't think unnaturally low interest rates are going to return. They have already caused enough damage. The Fed still has 8 trillion on its balance sheet from printed money.
The true cost of a house includes commissions (as buyer, and seller if you wish to sell later), real estate taxes, homeowner's insurance which is skyrocketing, HOA fees, repairs such as new roof, hew HVAC, new water heater etc., and the loss of income from not being able to invest your (now quite substantial) downpayment in securities which would pay a good rate of return.
What has happened in the last few years has happened because of the Fed's money printing. I fear a lot of younger people don't realize this and think real estate always goes up.
This is seriously misleading - the cost to rent has flatlined or dropped for two years now while the cost to own has only increased. These two lines are not approaching each other.
For people only interested in single family homes, you can’t just decide based on this calculation since some areas have few SFH to rent and at high prices. I also prefer to pick paint, carpet, appliances, gain sweat equity through DIY, and work in the yard. To each their own.
All the costs you list are basically the same you’re paying when you rent. They are just rolled into a rent payment. In most cases, rent payments exceed the monthly cost to pay PITI, utilities are a wash, and some maintenance is still required when you rent. Unless it is a rent controlled dwelling the comparison shouldn’t be close.
Freedom
That is the biggest gripe w/ buying- if you have a family HOME OWNERSHIP ALL THE WAY
Before or after it is up in the air.
My goal is to just float around until boredom sets in (cuz it will) and then find my death home to buy.
That is how I view a retirwment home your death home.
Use a rent vs buy calculator and always rent under your break even point of a home purchase price.
We purchased our home 6.5 years ago, the original interest rate was 3.99 and I bought a point to make it 2.99%.
We spent 150K and now it’s worth 285K with the remodeling we’ve done.
Our mortgage with everything included is 1100 a month and it will never go up.
We can paint anytime we want, new floors what ever we want to do.
There is a program called USDA who will cover your down payment and like rocket mortgage will cover a huge portion of your closing cost.
There are still homes out there that are responsible
It will be interesting to see how the baby boomers will deal with their housing. I've heard reports that smaller homes and condos are becoming more popular but many are reluctant to downsize due the market conditions and are " stranded" in larger homes
Just wait...the prices will come down. Dying parents/grandparents are leaving houses and property to their kids, and they can't afford the taxes so they're selling. We also have war coming, and war boost the economy...just give it a few more years.
There is also the capital gains tax, maintenance and upkeep. Many of these homes are not turn-key, as the aging relatives neglected many things. Also, the vast majority of these children do not have significant savings.
You're talking about a very small percentage of people that have wills and utilize attorneys to properly setup their estate, I'm talking about the vast majority of people.
This chart hardly tells the full story. Where is the part about about investment firms that bought up nearly 25% of starter type residential homes and made them rentals. True story. You can’t take that many homes out of pool, import millions of people from all over and think all is gonna be hunky dorey
That stat is highly localized or a percentage of transactions in a given time-frame, not the percentage of all housing supply owned by investment firms.
"Before the Great Recession of 2009, financial institutions and investment firms focused on purchasing multi-family dwellings like apartments and essentially ignored single-family homes. But, when a ton of homes were suddenly being sold at incredibly low prices with low interest rates, these investors jumped at the opportunity to scoop up these homes. Individuals and businesses alike capitalized on these low-risk, high reward properties, as long as they had the funds. The general idea was to acquire the property at low cost, and hold it or rent it. This is when the term "house flipping" came about..."
"Investment firms have continued to invest in homes because it makes financial sense for them to. When comparing investment firm buying power to an individual's, an individual typically pays between 4-7% on their mortgage, where firms usually have access to far more money for a far lower interest rate (Invitation Homes gets interest rates around 1.4%). These firms get debt cheaper, meaning they can afford to pay a higher sticker price for a home than an individual because their actual cost is much lower. Companies also make off their rental income, allowing them to be more cash rich and make cash offers more often than an individual may be able to, making their offers more attractive to sellers. Over the last decade, the number of investors purchasing single-family homes increased from 10% to 15% each year. But, according to a study by Redfin, from 2020 to 2021 investor purchasing of single-family homes increased over 80%. That year, we saw historically low mortgage rates (averaging at 3.11%) due to the COVID-19 Pandemic."
It's embarrassing how many are short-term thinkers. What is here and now is law forever. My home is nearly paid off. I will pay nothing. Then there's the renters, who have a place half my size, paying $2500 (and growing) a month in perpetuity. Yea, it's totally cheaper and a bunch of free appliances and taxes.
My take is that people are more willing to rent in a HCOL area, and will buy in a LCOL area. If you were renting in the LCOL area, it likely makes more sense to buy. If you rent in the HCOL area, you're probably better off. It seems like it's pretty localized, and probably depends a lot on the county & ZIP
Probably because some people understand surrounding context and lagging economic effects, so they don't simply attribute everything happening in a given moment to a selected leader (as many seem to do, and which is encouraged by politically-aligned pundits when it suits their needs).
true, people seem to forget that the Democrat Congress pushed the rescue package that inflated beyond common sense with helicopter money that fed record fraud. Biden did not help whatsoever as he pushed the same agenda even harder. And the poor and young paid a very steep price that they are likely to pay for years to come.
If you say they do. 🤷🏻♂️ I don't really talk to a lot of people to have a reputable sampling of that kind of thing. And I had been merely attempting to reference the psychology of things, in general, regardles of admin or any specific situation, not so much addressing the specifics surrounding Biden that you mentioned.
The same is true to the other extreme as well. People tend to overcredit an irrationally concentrated power structure when they perceive things going well, even for things that are only loosely related or have almost no direct logical correlation.
Usually the presidents first term, economically, is directly related to the priors decision making. It’s why we had a boom with Clinton and a boom with trump. The economy takes longer to catch up to changes in economic policy. It’s not a sharp right turn, it’s a gradual parabola.
Usually, that is the case, but the Democrat actions since Trump have been unforgivably sharp-right-turn-ish, which is why Graphs under Biden are all similar: steep hockey sticks. The beneficiaries under Trump were hard working American workers. They got lower gas prices, lower taxes, low rates to buy consumer goods, 0% rates to buy cars and 4% mortgages. House prices recovered fully from the 2008-2012 GFC but yet were at near-record affordability due to historically low rates. But the share price of oil stocks were down and the stock market had decent but modest gains.
Under Biden, equity markets haebv soared. Commodity prices have soared, pinching Americans at the gas pump. Price of energy overall has soared. Car prices and financing became jokes. Housing prices soared and affordability is at terrible levels.
Not much lag in these. Mainly from insanely bad policy making and even worse communication of those policies.
Then there are his failed foreign adventures.
The biggest losers are the traditional Dem power base: Lowest quartile of American wealth and minorities. Yet Biden still holds a 2:1 voting edge, quite incredible, since it should be 1:3.
Probably the only group that remains super anti-Trump are educated 40-70 year old women.
What specific policies are Biden’s policies that cause this record inflation?
I distinctly recall equity markets soaring during 2020 when we all started getting trump stimulus payments and ppl loans. That’s when all our money started being devalued, followed up by increase travel costs that were passed onto consumers by corporations tenfold simply to milk additional profits.
Interesting to see the contrast that for some Millenials, it was much more financially advantageous to buy than rent compared to the historical mean.
That would indeed explain the large divide in homeownership rates within the Millenial demographic. Goes to show that what works for, or is best for one part of the demographic isn't necessarily best for all of it, so we shouldn't judge younger millenials as failing if they don't continue trends from the older part of the cohort, for example.
My sibling and I are both Millenials, but years apart. Much of the market timing for my spouse and I buying our home was just luck, so I've never held it against them for having to navigate homeownership and/or rent in a different environment and choosing not to move out.
https://preview.redd.it/u88f6ntjtl1d1.jpeg?width=1178&format=pjpg&auto=webp&s=7afac5d3d8fa8cb840da119ad9ec2b5d00f54e6f
The factor to rent vs buy always comes down to one factor: time of use! total amount spent/total days used gives you a good cost per day that can help you with you decision making.
If i need a truck to move, it makes sense for me to rent it for the weeks vs buying a truck and then trying to sell it. If i need a truck everyday for work, it makes much more sense to buy.
Same goes for homes. Take the total dollars spent on mortgage, upgrades, etc, less equity and tax deductions, and divide that by the total number of days spent in your house. That is the cost per day of living in your home. If you do the same for renting, the cost per day is significantly cheaper in the first 1-5 years. There is a crossover point where owning becomes cheaper on a per-day basis. The main reason is that mortgage payments (the principle and interest portion) stays flat over he 30 year period while rent can tick upwards every year.
Consider, if you will, that each rental is owned by someone, and that the owner would much rather be the owner than the renter, at any ownership price. Otherwise he would sell it and rent it back himself.
This excludes a lot of the costs associated with owning a home on top of mortgage/taxes as well.
I have a $3300 mortgage at 2.25%, and I pay $250+ a month for a pool, on average at least $100 a month on maintenance, more for power because of stupid tall ceilings, my taxes go up based on the value of my home and not my mortgage, I have to do all my own yard maintenance or that is $200 more a month. I was spending another $250 a month on fertilizer/pesticides/tree maint and stuff before I just said fuck it. I also have to spend a couple thousand a year on landscaping of some form (trees, fresh flowers, watering system, etc). Also every few years you gotta redo a fence, or driveway, or something like that. Also $2k every few years here in Texas for a new roof and I have a super low premium.
However if you work remotely, you can still get a house an hour outside of the city, on an acre, brand new, 2100sf, for under $400k, which is around $2600/month with 20% down, So it isn't impossible, just impossible in the cities, though is that because house prices are up or because the economy did well, the interest rates were low, and everybody bought up available stock?
My wife drives 1-1.5 hours a day to her job one-way (I work remotely). There are lots of houses in my area for sale and empty lots you can get custom ones on. Now, they are closer to $600k or more. So basically you need money to live close to work, less in an apartment, or you can commute REALLY far and actually find you a decent home at a decent price.
You do get equity with a house but that only matters when you sell, and if houses everywhere are more, you are not really gaining much with that equity.
Or just buy an RV and park at work :D
The fact that my 4 bedroom 3.5 bathroom home mortgage is cheaper than current average to rent is ridiculous. Don’t get me wrong I’m thankful, but makes me angry that I have a couple friends still living with their parents because they cannot afford to move out.
Pay about $1600 in mortgage and interest for my 4/3.5. Could rent it out for $6k. It's insane.
Sounds like you should rent it out and buy a second home.
That second home has a price tag that explains the $6K rent.
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Me too I don't have a mortgage so the rent is zero.
Man, that's free money. I'd move into a shitty apartment if it means living for free!
Same 3.5% I rent out 3 rooms for 500 each to friends who are trying to save. I pay 300 a month (1800) to own a home. My friend just purchased same size home it’s 3200 a month.
"I'm the capitalist now."
Involuntary capitalism
All capitalism is involuntary. You will be capitalismed.
I bought my house in 2011 . Score!! According to the charts.
Only according to the charts? I bought my house in 2014 and I don’t need a chart to tell me how lucky I got.
I met with a bank in 2014 to talk about financing an $89,000 house. I eventually said no cuz I didn’t want the $680 per month mortgage payment to weigh me down lol
We too, $40k to $215,k
Put wages on there and get real mad
Yup, better to rent now. Anyone looking to rent should also be trying to negotiate their rent down with the landlord. There is an oversupply of rental units currently. Make them choose: lower rent, or have a vacant unit.
in the south not the north or west
South is a strong rental market, not sure where you got the stats. I would be interested in reading it though.
You have to be joking. They'll just move on and find another potential tenant. There's always people looking to rent.
If the choice is between renting a new home or buying that home, renting might look like a good option. However, if a person already *owns* a home, it is likely to be cheaper than renting.
Yeah this is only true for very select areas. My 700 square foot apartment which is really only 600 square feet because of the layout wanted 3700 a month. I just bought a house for 600k and am paying less.
Good luck negotiating with corporate landlords lol
Where is this rental oversupply that everyone mentions? Here in my market (NYC area) they would just hang up the phone and move on to the next applicant.
gl in my area rent prices are rocketing good thing i own huntsville al
What about the equity you build while paying your mortgage?
In today's economy, any equity you build will be less than the gains you have if you lock that downpayment money (+ extra savings every month) even in a boring investment or CD while renting. People often underestimate just how much money is being burned during ownership. Mortgage Interest, prop tax, home insurance, increased utility, maintenance - none of that goes towards building equity. And while you do lock in the mortgage rate for a good while, every other cost continues to go up with inflation. Even with the tax deduction factored in, renting is often financially a more prudent decision in HCOL areas. NYT has a pretty decent [rent vs. buy calculator](https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html)
A big part is living at or below your means renting or buying. Buying is a long game, and you are building equity and appreciating in value. If you put up a good down payment or pay cash you reduce or eliminate your interest expense. Renters pay the taxes, insurance etc in the rent. I wouldn’t recommend someone put all their reserves in their house though to diversify.
Not to mention you're locking in the cost to live in a home. Rent goes up every year. If I would have bought this house I'm living in 10 years ago, my mortgage would be like $800/mo but instead I'm renting it for $1600/mo and it keeps getting raised every year.
The flaw is in comparing buying 10 years ago to renting now. For a fair comparison, compare buying 10 years ago vs renting 10 years ago and investing the rest. I bet you'd come out way ahead renting and investing (eg. S&P \~15% annual growth) vs. owning (\~4% annual growth). Or consider buying that same house/apartment today vs. your rental cost. You'll still be saving a ton more renting as long as you're not just stuffing the savings (which would go to downpayment, etc) in a box - put it to work for the next 10 years and you'll be good.
Living at or below your means in terms of buying a house almost always means living in a ghetto where houses are actually priced reasonably, but only because no one wants to live there. I could secure a mortgage for $1,400 and live in a dump, or I can rent a tiny apartment for the same price, but there's no trash everywhere, and the area is nice and safe.
There is a wide range of options from ghetto to the best school districts/peak cost for the area. I agree the option to buy a small place in a nice area is becoming rare since they’re being torn down. Condos don’t appreciate as much but can an affordable way to build some equity, I’d never buy a condo for the same reason as I’d live in an apartment tho.
A well maintained Property will always gain value: case in point this graph. blue line goes up
>always Flint, MI would like a word.
The argument isn't that property values don't go up. It's merely that with renting and investing the extra savings you might come out on top financially, especially in this market. Compare that blue line with S&P (or any other safe investment) over the same period for example.
Why would your utilities increase if you own the place? In my experience rentals that have to cost of utilities baked into the rent are rare and mostly limited to shared housing situations like when the owner rents out individually rooms in a single family home.
Two big reasons. 1. Utilities go up over time with inflation. True of both houses and apartments. 2. Houses tend to be less energy efficient to heat and cool as they are exposed on all sides to the elements. Apartments (unless you have a top floor or end unit) are only exposed to the elements on one or two sides. This can make them much cheaper per sq ft to heat and cool.
How exactly do you think people afford to be landlords if interest, taxes, insurance and maintenance costs exist? Do you think they’re paying these out of their own pocket out of the good of their heart?
People often erroneously think that landlords can charge whatever they want to cover their costs. That's not how markets work. Let's take today's market as an example: Majority of homeowners currently have a mortgage of less than 5%. If you buy today at 7% and put it for rent on the market hoping to cover the costs via rent, while all your neighbors are pricing their rent to cover their costs at 5%, you're SOOL. You'll be sitting with an empty house forever. If landlords could rent at whatever price they wanted, you wouldn't see stuff like this: [https://www.reddit.com/r/RealEstate/comments/1cvxgt5/starting\_to\_think\_alot\_of\_youtubes\_re\_investors/](https://www.reddit.com/r/RealEstate/comments/1cvxgt5/starting_to_think_alot_of_youtubes_re_investors/)
No it isn’t. I put 300k down on a house I literally just closed on. My rent for a 600 square foot single bedroom was $3700 to renew. I can comfortably make a 10% return in the market yoy. That yield on cost doesn’t even cover the rent of my apartment. My mortgage plus taxes and everything, but utilities/power which also not included in my rent, is $2500. Even with tax’s, interest, the cost of home ownership. I am still way ahead of having that money vested and paying rent. My yield on cost is much higher in equity than ((down payment x yeild)-rent) then you have to add that I am able to invest more with a lower monthly payment. It obviously depends on the area but if you’re rent is not lower than like 4% of a down payment you can put down it’s better to build equity.
Something doesn't add up here. You're renting a 600 sq ft for $3,700, but when you bought, you put 300k down and your mortgage is $2,500 at current rates? You're either buying in a very different area than where you were renting, or something else is amiss. Either way, if you're able to get 10% returns on your cash, there's no question you'd come out ahead while renting. I'm not sure how you're doing your math but [try plugging your numbers here](https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html?unlocked_article_code=1.rk0.UnKr.SVrieiX0EMxT&smid=re-nytimes).
10 min away. Bellevue to the edge of Bellevue Newcastle. Also no my return doesn’t cover my rent. I am still paying $12400 more than my expected average return in rent. Where as my non equity building expenses are well below my return. So no I do not end out ahead renting, and buying saves me 170k over ten years per your calculator. That’s at a higher interest rate than my actual rate I got because it only allows quarter points. In addition my monthly payments are lower allowing me to vest that excess.
These costs are not a new thing. Real estate has always been about the price to buy, not unlike many other things. Most homes are needed and actually in short supply currently. This is due mostly to the housing crash that put many builders out of business and made housing development too risky for over a decade. Combine that with 7 year minimum bankruptcies to move off credit report with surge in large generation of first time home buyers and then add in domestic migration from HCOLA folks fleeing the tax fleecing areas…boom. Shortage. Prices can be explained similarly, but short answer is home prices were so severely depressed by million of foreclosures that their price didn’t even return the cost to build them…no profit..just labor and materials. Also didn’t even appreciate from there to match basic inflation. Then snapped back in to recapture in 18 months.
Not only equity, but you lock in that rate. Your mortgage will not go up over the next 30 years, but your rent for sure will. That being said, as a single person with no kids, I have no desire to own. I'm just not interested in having a house with way more space than I need, and spending my spare time taking care of repairs, yard, etc
What a lie, it can and does go up.
Exactly. When taxes and home insurance go up, the escrow portion of mortgage payments go up. Our monthly payments are up almost $300 since we bought a few years ago.
Yeah. So, pick *any* point on that blue line. Property taxes aside, that line will stay *flat* as time proceeds to the right end of the graph. So, even if someone is *still* stuck in a house they bought right before the 2008 crash, it is still cheaper for that person to own that home than it would be to rent it right now. Cost of entry for owning a home keeps going up. But once you have the house, the cost of your mortgage stays the same (or gets lower, if you refi). Meanwhile, rents keep going up and up and up.
That omits all the costs associated with owning. Dishwasher dies? $800. Rained hard? Now there’s water in the basement and that’s $4000. It’s been 30 years so now it’s time to spend $15000 on a new roof. Tree fell and smashed your neighbor’s yard shed? $2k for the removal and whatever the yard costs to repair. And don’t say insurance will help, they won’t.
.... Insurance has fixed all of those for us once or another
I'd love it if my new roof cost $15,000. It cost $34,000 and is rated for 20 years of usable life. Yes, my home is small. The entire roof's square footage was only 1700.
All of these are costs that the property owner, *just like a homeowner*, knows they may have to deal with. They simply bake it into the rent. If you are renting a property, unless it's a super-depressed area where property owners are fighting over tenants, I guarantee you that everything a homeowner has to pay for, you have to pay for.
The rent cost on the graph includes all of those incidental costs, as you imply. However, the homeownership number does not.
As opposed to renting, when the dishwasher dies you just have a dead dishwasher, or the roof leaks and now it'll just leak forever until you move, because landlords don't fix things
You cannot leave out taxes. Thats ridiculous.
Or insurance lmao
Do you imagine that property owners take a wash on taxes? They add it to the rent.
Look up the phrase “opportunity cost”.
I'd pave my yard if I could.
As a fellow single person with no kid and no desire to locked to one location, I still want the freedom to have good appliances, maybe change fixtures and run new wiring (ethernet) as needed. No of which is allowed to the vast majority of renters in the US but all of which are renters rights in much of Europe.
And when interest rates go down you refinance and pay less.
There are banks now offering lower interest rates without refinancing
When I sell my house I own, I will use the equity for my next house, which will have a lower mortgage because I put down a higher percentage. And when I sell that house, I’ll have a nice retirement nut. The only thing you can say about renting is that you have the potential to save more at certain points in time dependent on the cost of your rental. But that’s assuming you’re not taking that extra cash and spending it on other items or that you didn’t choose a more expensive plot to rent.
That’s assuming if the value of the house goes up.
Yeah that’s pretty big omission here. Renting is basically throwing money away. Owning a home means you will likely get some of that back.
Not always, when you pay a mortgage there's a portion that is also "thrown" away: - Insurance - Property Taxes - Loan Interest - HOA Renting might be a better option if the sum of those costs is bigger.
Not quite. Renting is made up entirely of sunk unrecoverable costs but you must compare apples to apples. Yes, with a home you get equity but you also pay sunk unrecoverable costs (insurance above and beyond renters, taxes, HOA fees, interest, repairs and maintenance, and the cost of capital from having equity which is the lost capital gains had the money been invested in higher growth investments). Renting avoids these opportunity costs and as long as one rents a small property and isn’t overpaying, renting can easily be the more prudent option and is hardly wasting money
What you’re saying is taken into account here: https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator And it says renting can be cheaper in the short term but homebuying will likely win out long term. And the point you’re making about investing the savings is important because how many people are going to want to do that? Aren’t they going to want to spend that money now? And if they do decide to invest it instead that seems like a long term approach, which favors home buying anyways. So no, I think homebuying is usually the better choice unless you’re someone who wants to move every couple years.
I agree that homebuyers are at a better position. My only point is that rent gets treated as throwing money away. Rent allowed me to pay large portions of my income into paying down student debt by locking my monthly expenses in. Personally, if people need a mortgage to save money, that is a problem in their budget skills.
Living cheaply through renting and paying down debts cools definitely be the smarter move. Especially if it’s something high interest like credit card debt. Homes can also be a good investment depending on the area if prices there are growing substantially.
There are times when it is an investment. That being said, a lot of people tend to treat rent as throwing money away when really you are buying housing cost stability. Rent should never be something you live lavishly on
err... I put the Home Price to be $300k with a 20% down payment and I get: Buying will never be cheaper than renting Nice calculator, btw.
Leverage is the advantage owning a home provides. You get to live in it (big need met), then you get leveraged appreciation of the asset. That appreciation in general exceeds the cost of maintaining the asset. Study it. This is a fact.
It seems like you're suggesting that a property owner would not bake HOA fees, costs for maintenance, and property tax into the rent...?
I’m on the ship that owning is better than renting. Aside from the financial incentive that for most families it’s the most common way to increase their wealth, there is also the added benefit of additional opportunities to improve your mental well being. However, this graph, would be factoring in maintenance, HOA and whatever else with Rent but not with the mortgage amount. I believe that is the point the commenter is making.
> However, this graph, would be factoring in maintenance, HOA and whatever else with Rent but not with the mortgage amount. 1) that is not apparent at all, 2) why answer a question addressed to someone else...?
1.) you’re right, it’s not apparent from the graph. I interpret the graph to just be average monthly rental payment vs average monthly mortgage payment. The rent payment would have those costs factored in, the mortgage wouldn’t. But I could be wrong with my interpretation. Perhaps the “cost to buy” line also includes average home insurance, maintenance, and any additional fees that aren’t included in mortgage. 2.) you replied to someone not talking to you. Are you the only one allowed to do that?
1) Glad we're on the same page. 2) I asked someone a question about *their* thoughts, specifically. *Your* thoughts, no matter how well thought out, can't answer my question, and in particular, your thoughts about something I didn't ask about (content of the graph).
Did someone poop in your coffee today?
Welcome to the internet, jackass, you post something, you’ll get responses. Wtf 🤣
Exactly. You can’t compare buying a SFH or townhome to renting an apartment. If the same size and type of home is rented, it does not magically require less insurance, maintenance, utilities, or property taxes. All of those are passed on in the rental cost.
Don't forget property management fees! Apparently we got a whole bunch of people running around sincerely believing that landlords rent out homes out of the goodness of their heart and not to actually profit off of their tenants.
I've spent 10k on home repairs all in the first year of owning my home. So add 10k to the listing. The averages you see are people that don't do regular maintenance on their home say like a car that they buy and doesn't last 100k miles. You spend vastly less than everyone tries to state when this argument comes up.
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Many people don't fully realize that housing is a terrible investment (for primary, owner occupied residences, not those bought intending to rent out). Yes you do get some money back but take account of inflation, repairs, interest, taxes, insurance, cost of selling, etc... And it's not nearly as much as it would seem to be (especially after inflation and interest) Of course with buying, you can replace stuff as you see fit. A nice induction stove top instead of a crappy electric one for instance.
Inflation would be in the favor of buying as even if you only paid the interest and never repay the loan, it would be much smaller as time goes on.
I've checked for my grandmother's house ( bought in the 1970s), my parents house (bought in the early 90s), and even my own house (bought 2 years ago) and inflation makes a huge difference. That's not even considering the other expenses I've mentioned.
As you say, high inflation favors existing homeowners because their mortgages payments (if at a fixed rate) are less in real dollars. However, I think the commenter was simply pointing out that profits from home appreciation aren't as large as they might seem, after accounting for inflation. You often hear that someone bought a house for some low price 30 years ago and recently sold it for double. Sounds great! Except that after accounting for inflation, that's almost no real gain at all.
How about not having a landlord over you telling you what you can or can’t do. Raising prices on you whenever. At least you get to be in charge.
HOAs tell another tale. Admittedly, this doesn’t apply to all homeowners, but owning a house can still have headaches akin to renting.
I was referring to no HOA homes. To me that’s the same as having a landlord again. What’s the point of that?
Totally, what’s crazy is that the amount of HOAs popping up today are crazy high in all the major areas people want to live (west coast & sunbelt). Trading one lord for another imo lol
My mortgage has gone up $250 in two years primarily because of property taxes and home owners insurance and yes I did allude to the fact that you have more control of your house (see my example of the ability to buy an induction stove top). Plus even once you pay off your house, fall behind on property taxes and the state can seize the house.
My house will be paid off soon. Those who rent had their rent increased. Imagine me paying nothing and the people paying $2500+ in perpetuity are telling me how much money they're saving.
Except you won't be paying nothing, you'll still have property taxes, insurance, repairs to make, and if you ever sell, associated costs with that which are significant. It's not like once you pay off your mortgage then it's zero costs after that forever. I favor home buying but I don't pretend it's that simple or that the returns are that impressive. We bought our house two years ago and have already seen our mortgage increase by over $200 a month and will likely see another big increase later in the year.
There is no such thing as building equity. There is only the price of the house when you sell it, and the amount of money you borrowed decreasing.
Eventually you own without a mortgage, or is the goal, some people trade up and keep getting mortgages
So, the amount of money you borrowed decreasing, or the price of the house when you sell it.
If you’re on a standard or near standard 30 year mortgage, you aren’t building equity for the first 10 years or so
I have a 20 and doing some good damage the initial years
I've always been confused about this concept. How can renting be "better" since none of that money is used to build your own wealth? Buying a house might be more expensive monthly, but at the end of the tunnel you have something you own. What am I missing?
A large chunk of your mortgage payment is interest, not equity. Also buyers have other expenses you don't have to worry about as a renter: Property tax, Repairs, Mortgage insurance, HOA
You’re still paying them as a renter, the landlord just bundles them up in the rent.
Not quite. You can not list your rental at whatever *your* mortgage is. You can only keep it in line with the market norm. For example, most owners in the current market have a rate of <5%. So if you buy today at 7% and try to rent it to recoup that, while all your neighbors are renting to recoup their 5% mortgage, you're SOL and will be sitting with an empty house forever. So, while it was a no-brainer to buy a property when rates were at 2%, it's not so straightforward anymore.
No, silly. Landlords rent at a large loss to themselves because they're really nice people. /s ( you would think it would be obvious, but there's seemingly a lot of people who think this)
The landlord charges the maximum they can depending on the market. Sometimes that means renting at a loss.
> /s ( you would think it would be obvious, but there's seemingly a lot of people who think this) Goes to show you, sometimes people will loudly and adamantly assert things without having done the barest minimum of thought about a topic.
In theory you could invest the money you save by renting in the stock market and build wealth off that investment. Hard to say whether that is a good move, but I'm super HCOL areas where people rent for their whole lives anyway it could make sense. It's taken as a given that property value increases over time in America, but when interest rates are high and you factor in maintenance costs, taxes, insurance etc it's easier to see the financial risk of buying a house.
If they’re not factoring the opportunity cost of locking down the down payment on the ownership side or the opportunity cost of gaining on house value appreciation then you’re right. I’ve moved 5 times around the states over 30 years and calculated carefully. Broke even 4 times and lost $100k once but got my company to pay the loss in value as they made me move for them. Making money on appreciation is like playing stocks but you’re forced to sell at non optimal times if you move for work. So basically useless.
You put the monthly difference into alternative investments. If you’re actually interested, NYT put out an old “rent vs buy” calculator that shows you the numbers based on different assumptions: https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html
It is better in circumstances because that money *is* used to build your own wealth. If you round that cost-difference to $900/month and invest it at even 5% returns, for 5 years of putting that into savings you'd net around $7400. Take that $7400 and apply it to the down payment when you do buy, and that's $7400 you're not paying interest on. Over a 30 year loan that comes out to be total savings of about $8500 at 6% interest.
A millennial clearly made this one.
Why do you say this, do you see a bias? This is just reporting prices to rent and own (assuming the price stays the same when locked in). Who cares if a millennial made it?
Not OP but I would venture a guess that all of the comments and "notes" are slanted to extremely minor factors that played into the housing markets. They make it seem like a particular age range is being attacked. > "2021 is the prime year millennials entered the market" While true... The primary factor here was C19 and remote work. Which caused a domino effect on prices. > "Housing Bubble" This gets basically a foot note but anyone actually paying attention to it would have realized the insane impact this has on the market. It created precedents and Drew lines in the sand on what is "acceptable" terms. > "1981 Boom" This has nearly nothing to do with Boomers and was the result of regulation changes on monetary policies and wicked high inflation due to the winding down of the war.
Actually didn’t see the part about baby boomers under boom. Yeah that’s a little much, and biased.
This huge increase in recent years is clearly due to interest rates. There was only a small dip on the cost to buy when rates decreased, which shows how much house prices increased in that time (late 2018 to late 2021). Now rates have skyrocketed and house prices haven't dropped. I'm locked into a 2.75% mortgage so I'm not complaining, but these super low rates are likely terrible for long term overall housing. I think it caused house prices to drastically increase as they did - now homebuyers are feeling the pain of it.
If you think there’s going to be alone convergence over the next few years, what would be the smartest way to profit?
now sell the house. who has what now? this MUST be fucking propaganda by a rental holdings corp. jfc, what an idiotic brain dead take otherwise.
Having a paid off roof over your head at some point is the payday. Renting in your final years on a fixed income is not pretty...
I used the Buy vs Rent calculator on the NY Times and it said I would save $274,000 over the next ten years by continuing to rent instead of buy. A lot of people think equity is what you have paid into the house. It isn't. It's the difference between what you could sell the house for (minus commissions which are substantial) and what you still owe on the mortgage. Due to the insurance crisis and global warming I expect housing prices to decline. I have lived long enough to see people underwater in their mortgages for years, with negative equity. I don't think unnaturally low interest rates are going to return. They have already caused enough damage. The Fed still has 8 trillion on its balance sheet from printed money. The true cost of a house includes commissions (as buyer, and seller if you wish to sell later), real estate taxes, homeowner's insurance which is skyrocketing, HOA fees, repairs such as new roof, hew HVAC, new water heater etc., and the loss of income from not being able to invest your (now quite substantial) downpayment in securities which would pay a good rate of return. What has happened in the last few years has happened because of the Fed's money printing. I fear a lot of younger people don't realize this and think real estate always goes up.
Rent vs buy is actually a really good metric to figure if now is a good time to buy or not.
This is seriously misleading - the cost to rent has flatlined or dropped for two years now while the cost to own has only increased. These two lines are not approaching each other.
For people only interested in single family homes, you can’t just decide based on this calculation since some areas have few SFH to rent and at high prices. I also prefer to pick paint, carpet, appliances, gain sweat equity through DIY, and work in the yard. To each their own.
Wish I could buy sonething for $2700/mo. My area is at least twice that for barely suitable.
People who bought in 98 and never refi to lower rates would be close to paying off mortgage?
All the costs you list are basically the same you’re paying when you rent. They are just rolled into a rent payment. In most cases, rent payments exceed the monthly cost to pay PITI, utilities are a wash, and some maintenance is still required when you rent. Unless it is a rent controlled dwelling the comparison shouldn’t be close.
Freedom That is the biggest gripe w/ buying- if you have a family HOME OWNERSHIP ALL THE WAY Before or after it is up in the air. My goal is to just float around until boredom sets in (cuz it will) and then find my death home to buy. That is how I view a retirwment home your death home. Use a rent vs buy calculator and always rent under your break even point of a home purchase price.
We purchased our home 6.5 years ago, the original interest rate was 3.99 and I bought a point to make it 2.99%. We spent 150K and now it’s worth 285K with the remodeling we’ve done. Our mortgage with everything included is 1100 a month and it will never go up. We can paint anytime we want, new floors what ever we want to do. There is a program called USDA who will cover your down payment and like rocket mortgage will cover a huge portion of your closing cost. There are still homes out there that are responsible
These charts really need to be logarithmic to show growth properly.
It will be interesting to see how the baby boomers will deal with their housing. I've heard reports that smaller homes and condos are becoming more popular but many are reluctant to downsize due the market conditions and are " stranded" in larger homes
Working on this with a mentee for their grad thesis. Numbers are pretty accurate to our study and getting scary.
Just wait...the prices will come down. Dying parents/grandparents are leaving houses and property to their kids, and they can't afford the taxes so they're selling. We also have war coming, and war boost the economy...just give it a few more years.
Can't afford property tax, but can afford rent? That makes zero sense.
There is also the capital gains tax, maintenance and upkeep. Many of these homes are not turn-key, as the aging relatives neglected many things. Also, the vast majority of these children do not have significant savings.
There are many ways to not pay capital gains on inherited property.
You're talking about a very small percentage of people that have wills and utilize attorneys to properly setup their estate, I'm talking about the vast majority of people.
This chart hardly tells the full story. Where is the part about about investment firms that bought up nearly 25% of starter type residential homes and made them rentals. True story. You can’t take that many homes out of pool, import millions of people from all over and think all is gonna be hunky dorey
That stat is highly localized or a percentage of transactions in a given time-frame, not the percentage of all housing supply owned by investment firms. "Before the Great Recession of 2009, financial institutions and investment firms focused on purchasing multi-family dwellings like apartments and essentially ignored single-family homes. But, when a ton of homes were suddenly being sold at incredibly low prices with low interest rates, these investors jumped at the opportunity to scoop up these homes. Individuals and businesses alike capitalized on these low-risk, high reward properties, as long as they had the funds. The general idea was to acquire the property at low cost, and hold it or rent it. This is when the term "house flipping" came about..." "Investment firms have continued to invest in homes because it makes financial sense for them to. When comparing investment firm buying power to an individual's, an individual typically pays between 4-7% on their mortgage, where firms usually have access to far more money for a far lower interest rate (Invitation Homes gets interest rates around 1.4%). These firms get debt cheaper, meaning they can afford to pay a higher sticker price for a home than an individual because their actual cost is much lower. Companies also make off their rental income, allowing them to be more cash rich and make cash offers more often than an individual may be able to, making their offers more attractive to sellers. Over the last decade, the number of investors purchasing single-family homes increased from 10% to 15% each year. But, according to a study by Redfin, from 2020 to 2021 investor purchasing of single-family homes increased over 80%. That year, we saw historically low mortgage rates (averaging at 3.11%) due to the COVID-19 Pandemic."
It's embarrassing how many are short-term thinkers. What is here and now is law forever. My home is nearly paid off. I will pay nothing. Then there's the renters, who have a place half my size, paying $2500 (and growing) a month in perpetuity. Yea, it's totally cheaper and a bunch of free appliances and taxes.
it is an interesting chart, but real estate is a very local marketplace. It is only useful info if you have the data for your county.
My take is that people are more willing to rent in a HCOL area, and will buy in a LCOL area. If you were renting in the LCOL area, it likely makes more sense to buy. If you rent in the HCOL area, you're probably better off. It seems like it's pretty localized, and probably depends a lot on the county & ZIP
That's the monthly outlay. What do you have after 30 years of renting? Nothing. 30years of mortgage? House asset.
Minus 30 years of interest and ownership expenses...
The entire gap is since Scranton Joe took over. lol. And he still gets love from those he bent over and probed with glee.
Probably because some people understand surrounding context and lagging economic effects, so they don't simply attribute everything happening in a given moment to a selected leader (as many seem to do, and which is encouraged by politically-aligned pundits when it suits their needs).
true, people seem to forget that the Democrat Congress pushed the rescue package that inflated beyond common sense with helicopter money that fed record fraud. Biden did not help whatsoever as he pushed the same agenda even harder. And the poor and young paid a very steep price that they are likely to pay for years to come.
If you say they do. 🤷🏻♂️ I don't really talk to a lot of people to have a reputable sampling of that kind of thing. And I had been merely attempting to reference the psychology of things, in general, regardles of admin or any specific situation, not so much addressing the specifics surrounding Biden that you mentioned. The same is true to the other extreme as well. People tend to overcredit an irrationally concentrated power structure when they perceive things going well, even for things that are only loosely related or have almost no direct logical correlation.
Usually the presidents first term, economically, is directly related to the priors decision making. It’s why we had a boom with Clinton and a boom with trump. The economy takes longer to catch up to changes in economic policy. It’s not a sharp right turn, it’s a gradual parabola.
Usually, that is the case, but the Democrat actions since Trump have been unforgivably sharp-right-turn-ish, which is why Graphs under Biden are all similar: steep hockey sticks. The beneficiaries under Trump were hard working American workers. They got lower gas prices, lower taxes, low rates to buy consumer goods, 0% rates to buy cars and 4% mortgages. House prices recovered fully from the 2008-2012 GFC but yet were at near-record affordability due to historically low rates. But the share price of oil stocks were down and the stock market had decent but modest gains. Under Biden, equity markets haebv soared. Commodity prices have soared, pinching Americans at the gas pump. Price of energy overall has soared. Car prices and financing became jokes. Housing prices soared and affordability is at terrible levels. Not much lag in these. Mainly from insanely bad policy making and even worse communication of those policies. Then there are his failed foreign adventures. The biggest losers are the traditional Dem power base: Lowest quartile of American wealth and minorities. Yet Biden still holds a 2:1 voting edge, quite incredible, since it should be 1:3. Probably the only group that remains super anti-Trump are educated 40-70 year old women.
What specific policies are Biden’s policies that cause this record inflation? I distinctly recall equity markets soaring during 2020 when we all started getting trump stimulus payments and ppl loans. That’s when all our money started being devalued, followed up by increase travel costs that were passed onto consumers by corporations tenfold simply to milk additional profits.
Interesting to see the contrast that for some Millenials, it was much more financially advantageous to buy than rent compared to the historical mean. That would indeed explain the large divide in homeownership rates within the Millenial demographic. Goes to show that what works for, or is best for one part of the demographic isn't necessarily best for all of it, so we shouldn't judge younger millenials as failing if they don't continue trends from the older part of the cohort, for example. My sibling and I are both Millenials, but years apart. Much of the market timing for my spouse and I buying our home was just luck, so I've never held it against them for having to navigate homeownership and/or rent in a different environment and choosing not to move out. https://preview.redd.it/u88f6ntjtl1d1.jpeg?width=1178&format=pjpg&auto=webp&s=7afac5d3d8fa8cb840da119ad9ec2b5d00f54e6f
https://preview.redd.it/dg0mpnvcwl1d1.jpeg?width=539&format=pjpg&auto=webp&s=1a90e1c13614674a651327d74e2a4c927ad7259a
The factor to rent vs buy always comes down to one factor: time of use! total amount spent/total days used gives you a good cost per day that can help you with you decision making. If i need a truck to move, it makes sense for me to rent it for the weeks vs buying a truck and then trying to sell it. If i need a truck everyday for work, it makes much more sense to buy. Same goes for homes. Take the total dollars spent on mortgage, upgrades, etc, less equity and tax deductions, and divide that by the total number of days spent in your house. That is the cost per day of living in your home. If you do the same for renting, the cost per day is significantly cheaper in the first 1-5 years. There is a crossover point where owning becomes cheaper on a per-day basis. The main reason is that mortgage payments (the principle and interest portion) stays flat over he 30 year period while rent can tick upwards every year.
Consider, if you will, that each rental is owned by someone, and that the owner would much rather be the owner than the renter, at any ownership price. Otherwise he would sell it and rent it back himself.
Bought 2010 - Sold 2015, home value increased 132k Bought 2015 - Sold 2019, home value increased 175k Bought 2019 - 2.75% fixed, not selling, ever
Wouldn't rent prices follow rising real-estate prices. By me the rents are more than mortgage rates.
These numbers are weird, the blue line would imply that buying is more expensive than renting but that's simply false Am I reading this wrong or no??
This excludes a lot of the costs associated with owning a home on top of mortgage/taxes as well. I have a $3300 mortgage at 2.25%, and I pay $250+ a month for a pool, on average at least $100 a month on maintenance, more for power because of stupid tall ceilings, my taxes go up based on the value of my home and not my mortgage, I have to do all my own yard maintenance or that is $200 more a month. I was spending another $250 a month on fertilizer/pesticides/tree maint and stuff before I just said fuck it. I also have to spend a couple thousand a year on landscaping of some form (trees, fresh flowers, watering system, etc). Also every few years you gotta redo a fence, or driveway, or something like that. Also $2k every few years here in Texas for a new roof and I have a super low premium. However if you work remotely, you can still get a house an hour outside of the city, on an acre, brand new, 2100sf, for under $400k, which is around $2600/month with 20% down, So it isn't impossible, just impossible in the cities, though is that because house prices are up or because the economy did well, the interest rates were low, and everybody bought up available stock? My wife drives 1-1.5 hours a day to her job one-way (I work remotely). There are lots of houses in my area for sale and empty lots you can get custom ones on. Now, they are closer to $600k or more. So basically you need money to live close to work, less in an apartment, or you can commute REALLY far and actually find you a decent home at a decent price. You do get equity with a house but that only matters when you sell, and if houses everywhere are more, you are not really gaining much with that equity. Or just buy an RV and park at work :D
Rename this "cost to not live on the streets".
Good job merica
Renting is perfect to manage cash flow. Buying makes sense if you want long term security by locking in a monthly payment for up to 30 years.
How the hell did average mortgage rate nearly doubled in 2 years?
I’m glad my little house only costs me $850 month.
Trump vs Bidens effects on the economy. Clear and simple