But the trick I missed was we just don’t build housing in this country. Especially not affordable housing.
As long as this continues, and I don’t see any credible signs of abatement, owning a home is a good idea.
It's affordable because it has accumulated a lot of infrastructure debt, for example things like: insulation, roof, plumbing, electric. etc. etc.
There isn't a boomer conspiracy that they are all in on. There isn't a secret Whatsapp chat for boomers to conspire to cheat the next generations out of housing.
It's just bad local policies, because small towns hate density and don't understand second order effects.
99.9% of boomers don't make conscious policy decisions either.
Also, property tax is pretty much the most unavoidable tax there is, and the most beneficial. It funds schools, parks, roads, police, garbage collection and much of the local infrastructure and essential services where I live.
I like having all those services, so I will gladly pay the tax, including any increases.
That's not how markets work.
You can only charge in rent what the market will bear and if it's between renting a place out for a net loss of say -1500 or not renting it out and paying 3000 in expenses anyways some landlord is going to pick -1500 over -3000.
In general, being a landlord is a losing proposition. The whole reason renting is better than owning is because real estate appreciates less than the stock market. That's still the case if you buy the place and rent it out! You might make money but you're losing out on the opportunity cost of NVDA growth.
Now landlords could all gather together and decide that renting 150 units for 3000 generates more profit than renting 200 units for 2000 and yeah you'll end up with empty units. But its because the opportunity cost of the empty unit is in the landlord favor.
Yes, some areas will freeze the tax level if you are over a certain age, but I'm sure not all areas do that.
You commonly end up paying someone a lot of money who then turns around and gets underpaid subcontractors, of dubious employment eligibility status, to do the actual work.
If you’re going through the trouble of owning a home, it makes sense to do as much work yourself as you can.
That pays for a lot of contractor time.
Even if you have to take a line of credit against your house above your current loan amount, your equity is based on it's current value, and that's still a static price in the end.
That rent increases every single year, percentage based so it compounds, is asinine and literally only serves to make some holding company's line go up infinitely.
As long as the US has 30 year fixed rate loans, it will never be better to rent.
Plus, as a renter, I took the option of renting in a cheaper (unattractive) building with no amenities in an otherwise expensive neighborhood in a very expensive city, to be close to work.
If I wanted to buy a condo in the same neighborhood as I live in now, roughly the same layout, I’m looking at a monthly mortgage payment plus condo fees at least 75% more than my _total_ cost to rent where I am now, including utilities.
Is owning a home the financially responsible thing to do, generally? Yes. But owning a home is more money and more work than most people wondering about the decision realize, even if in the end you come out on top when you look at your bottom line.
And yet properties around you will have gone up by some average amount. When your landlord does raise your rent (or when you move out, as the pro-landlords keep telling us people love to do), the rent you will pay at the new place will have kept pace with the average raise.
- prevailing interest rates
- predicted future interest rates
- mortgage cost
- predicted house price appreciation
- predicted rent increase
- risk tolerance
- opportunity cost on passing on other investment options (e.g. stock market)
- liquidity
- how much you value your time
- how much you value the option of being able to up-and-go whenever you want
- property taxes
- property sales taxes
- and others
Seeing someone declare, with confidence, that one option is better than the other is a clear indication they've done close to no thinking about this decision.
If there's a scenario where long-term renting is cheaper than buying, then you're lucky because you've got a landlord that did not adequately calculate what rent should be.
The cost of ‘what if the roof caved in tomorrow’ or ‘what if the furnace blew up’ should be built into the rent.
Also, you're ignoring all the other factors I mentioned.
It's not unrelated - if the costs go up, they won't operate at a loss. They might sell to somebody who can buy it outright - but then many won't and just raise the rent. And then others can claim "muh market rates" to match them.
There's a shortage of housing in most places with jobs, so they have a large queue of people willing to pay through the nose. What are they going to do - live under a bridge? They will cut out most other expenses before they give up on housing.
Only two of those points weren't bullshit: the ability to up and move in the next year or the concern that you may be about to lose your job in the next few months. Anything else makes buying cheaper in the long run.
The market will bear a lot more than it should because the market doesn't have any other choice. As far as I'm concerned, people who buy real estate for the sole purpose of renting it out are financial vampires, sucking every last cent from their tenants, finding every justification for raising rents. You gotta be a cartoonish villain to raise rents just because your tenant got a new higher-paying job.
The absolute worst part of it all is how so many landlords have this savior complex, thinking they're providing a service that's good for the community. No no no. Landlords provide housing the same way scalpers provide concert tickets.
the only things that make sense is if you're planning to move in the next ten years and "risk tolerance", which is an issue if you expect to lose your job in the next few months.
or you can budget such that you could still pay off your mortgage on minimum wage - it won't be a big expensive house, but it'll be yours.
This means, as a homeowner, I have a huge advantage over my friends who are renting and paying twice as much for a single bedroom apartment, even including maintenance costs. This will only get worse over time.
What is this plan? (Genuinely asking because it doesn't make sense to me.) If my (paid-off) house decreases in market value, I'm pretty sure I'm just happy because my property taxes are lower. It's not like I'm expecting to profit from its price going up, literally ever; I still need a place to live and if housing prices are going up everywhere, then selling my house means I now have the purchasing power to buy ~one house. At best, I have a larger credit amount in a HELOC but I still have to pay that off so it's not really a "financial plan".
Edit: In addition I get to live in it!
Overindexing on one risk or cost is not sensible.
We had an earthquake (unknown faultline so completely unpredicted) in my city Christchurch. Owning your own home had costs and insurance response here wasn't ideal. Not owning your own home would have been more costly over a decade or two.
Just after a one-off disaster is a great time to buy. Christchurch realty has really bounced back.
[1] This might change to 4 months: https://en.wikipedia.org/wiki/Renters'_Rights_Bill
Plus, it is in no way tied to what the "average renter makes". In my state there are very few laws about rent increases. It can basically happen within 1 month of lease renewal IIRC. Which does not allow (most people) time to move and typically the surrounding rents have increased higher than the proposed increase so it often does not save money.
It really depends on the landlord or property management company involved though. Some do 5-10% increases every time they can because "that's the way it is"....some don't.
If I would have bought a house 6 years ago I would be spending ~$500/mo less than I am for the house I currently rent.
One noise complaint? One false noise complaint? You're out.
Its a shelter from storms, both physically and metaphorically.
Of course they'll be pushing a narrative in which you shouldn't own your own home, the main source of financial security and peace of mind for when you are no longer able or willing to work a grueling 9-5 schedule.
Believe it or not, ownership costs aren't scary and, in most cases (unless you get fleeced by contractors) are very predictable and still cheaper than rent (especially in light of recent rent increases).
Personally, I wouldn't just treat this article with a grain of salt, I would disregard it entirely.
It's fine to wait if you actually are saving money and putting it in the stock market. But USA in general has a savings problem, so of course it blows up on people.
The example of a 30 year roof replacement is great because it nicely aligns with a 30 year mortgage. So in reality, the cost of homeownership should be the monthly cost of servicing the mortgage payments PLUS the amortized cost of roof replacement. Your real estate agent has no reason to tell you that a 200k house is actually 240k. Because by the time you "own" the house, it is due for a 40k roof replacement. With the amortized cost maybe you can't actually afford the house.
- Mortgage monthly payment - Amortized: -- cost of roof replacement -- cost of at least 2 refrigerators, more likely 4 refrigerators -- cost of at least 1 new air conditioning system + at least 100% of the cost of a new system over the lifespan of repairs of the current system -- Cost of at least 1 new garage door system -- Cost of at least 4-5 toilet replacements by a plumber over 30 years -- Cost of at least 1 whole home repainting, more likely 2 occurrences -- Cost of wear and tear; hard to quantify but Likely very significant.
This is not even considering the amortized costs of personal time. The time spent servicing chores like grasscutting, pruning, weed pulling, touchup painting, repairs caused by wear and tear.
Personally I think people should consider having a house repair savings account (or Money Market Fund or CD Account or whatever).
Now consider a set of tires for a car, replaced every 6 years, at $1200. That amortizes to $16 per month.
The replacement tires is only 4% of the cost of a roof replacement (1200/30000) but the amortized monthly cost of the tires is nearly 20% of the monthly cost of the roof replacement (16/83).
Long story short, I got increasing anxiety doing this math and watching my expected savings income evaporate over the long term as these amounts added up.
95% of WSJ is shilling for corporations. They're the most out-of-touch rag to currently exist.
How many times have they blamed "Millennials" (While somehow still believing that 20-30 year olds are Millennials) for businesses failing, rather than examining how businesses have enshittified their product or simply failed to adapt to changing market demands?
The other option that boomer generation doesn't seem to be using as much is multi-generational homes. Give the house to your kid, you play grandma/grandpa and give them child care. The kid gets a cheap house and cheap childcare. You build multi-generational equity.
Older Americans are not leaving their paid off 3/2bed in the burbs in exchange for a condo that has rent costs go up 10% every year. Every single older person I know with a paid off house won’t move because it will be dramatically more expensive than what they pay now for way less housing.
There are a million calculators out there and I've linked 4 in a previous post (https://news.ycombinator.com/item?id=44794529). The math just works out in favor of renting because real estate doesn't appreciate as fast as other stuff.
There are of course no-monetary reasons to own a house.
As well as if you plug in an interest rate of say 2% it starts to look like owning is better than renting. But we're not in that environment for the next year or so.
jqpabc123•5mo ago
commandlinefan•5mo ago
jqpabc123•5mo ago
Renting builds equity for someone else. And they have every incentive to take all they can get.
supertrope•5mo ago