What if we just rent for the long haul...

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

When an overwhelming majority, staggeringly overwhelming majority, of higher income, higher net worth people own, not rent, that tells you something. Not a coincidence.

It tells me they’re not too concerned about what the optimal financial move might be, because they can easily afford to own and they want to own so who cares?

What does it tell you?

Not PP. There is no free lunch. Landlords pass on the cost of PITI plus a profit margin to the renter. People who rent and save vs. bying are typically renting much less space or worse amenities. I don’t think housing is a great investment, but you do have to live somewhere and pay for shelter. Also, a house is bought on leverage so for a 400k down payment the house has to appreciate by 30k a year to beat the market long term. And yes $2M houses have appreciated a lot more than 30k annually. I consider PITI the sunk cost of providing for shelter, no different than rent.

If the landlord of the SFH bought during 3% mortgage rates, he/she can charge rent that's a lot lower than what you will pay to buy using today's rates. In the neighborhoods I'm looking at, you can rent a home that is worth around 2M for 10K a month. The PITI for a 2M house is a little more than 13K, which means I save 36K in a year from just renting than owning. Sure your 2M house might appreciate more than 30K this year, but my 400K down payment pretty much earned 30K just in 2024 YTD in the stock market. When you include the 36K in savings, it's a no brainer. That's why, right now, it's better to rent than to buy.

I find it odd that posters here think that people won't be able to help themselves but to spend the 36K rent versus mortgage difference on trivial things, rather than to invest it. Maybe you're right, but that person probably never had a shot at saving 400K for the downpayment anyways. And if you are the type of person who could save up 400K, you probably can figure out how to use 36K/year in annual savings effectively.

Terrible argument. Landlords are business people, they don't charge what they can afford to charge, they charge what the market will bear based on supply and demand. They also rely on the stream of income. If their personal costs go up due to inflation, they are raising rents by at least that %. That's why Rents in the US have increased by 6-7% post Covid.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

When an overwhelming majority, staggeringly overwhelming majority, of higher income, higher net worth people own, not rent, that tells you something. Not a coincidence.

It tells me they’re not too concerned about what the optimal financial move might be, because they can easily afford to own and they want to own so who cares?

What does it tell you?

Not PP. There is no free lunch. Landlords pass on the cost of PITI plus a profit margin to the renter. People who rent and save vs. bying are typically renting much less space or worse amenities. I don’t think housing is a great investment, but you do have to live somewhere and pay for shelter. Also, a house is bought on leverage so for a 400k down payment the house has to appreciate by 30k a year to beat the market long term. And yes $2M houses have appreciated a lot more than 30k annually. I consider PITI the sunk cost of providing for shelter, no different than rent.

If the landlord of the SFH bought during 3% mortgage rates, he/she can charge rent that's a lot lower than what you will pay to buy using today's rates. In the neighborhoods I'm looking at, you can rent a home that is worth around 2M for 10K a month. The PITI for a 2M house is a little more than 13K, which means I save 36K in a year from just renting than owning. Sure your 2M house might appreciate more than 30K this year, but my 400K down payment pretty much earned 30K just in 2024 YTD in the stock market. When you include the 36K in savings, it's a no brainer. That's why, right now, it's better to rent than to buy.

I find it odd that posters here think that people won't be able to help themselves but to spend the 36K rent versus mortgage difference on trivial things, rather than to invest it. Maybe you're right, but that person probably never had a shot at saving 400K for the downpayment anyways. And if you are the type of person who could save up 400K, you probably can figure out how to use 36K/year in annual savings effectively.

Some people love to reduce everything to pure numbers, doesn't he? One again, you are demonstrating short term thinking. A year from now interest rates could double. Or they could be half today. The numbers then change enormously. But it's too late for you.

By the way, 10k rent versus 13 PITI isn't quite the same. Some of the 13PITI is going to the principal. Remove the portion going to the principal then the gap isn't so large. Then next year that 10k rent could be 12k! Then in a few years it'd be 15k while the PITI is only 13.5k. And the 2M house could now be worth 2.5. Then you have to move and have to pay the moving costs.

Renting does gives you great flexibility. But it also gives you instability. If it works for you, psychologically, stay a renter and be happy. In fact, it sounds like you have the luxury of affording to be a renter.

There is no 10K Rent vs. 13K PITI in desirable school districts. There is so little inventory for buying that people like OP are clamoring to rent. Plus the biggest advantage of the PITI is not even the principal pay down, it's the TAX DEDUCTION which a renter can't get. There is at least a $2k a month tax break that the buyer is getting on that PITI.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

When an overwhelming majority, staggeringly overwhelming majority, of higher income, higher net worth people own, not rent, that tells you something. Not a coincidence.

It tells me they’re not too concerned about what the optimal financial move might be, because they can easily afford to own and they want to own so who cares?

What does it tell you?

Not PP. There is no free lunch. Landlords pass on the cost of PITI plus a profit margin to the renter. People who rent and save vs. bying are typically renting much less space or worse amenities. I don’t think housing is a great investment, but you do have to live somewhere and pay for shelter. Also, a house is bought on leverage so for a 400k down payment the house has to appreciate by 30k a year to beat the market long term. And yes $2M houses have appreciated a lot more than 30k annually. I consider PITI the sunk cost of providing for shelter, no different than rent.

If the landlord of the SFH bought during 3% mortgage rates, he/she can charge rent that's a lot lower than what you will pay to buy using today's rates. In the neighborhoods I'm looking at, you can rent a home that is worth around 2M for 10K a month. The PITI for a 2M house is a little more than 13K, which means I save 36K in a year from just renting than owning. Sure your 2M house might appreciate more than 30K this year, but my 400K down payment pretty much earned 30K just in 2024 YTD in the stock market. When you include the 36K in savings, it's a no brainer. That's why, right now, it's better to rent than to buy.

I find it odd that posters here think that people won't be able to help themselves but to spend the 36K rent versus mortgage difference on trivial things, rather than to invest it. Maybe you're right, but that person probably never had a shot at saving 400K for the downpayment anyways. And if you are the type of person who could save up 400K, you probably can figure out how to use 36K/year in annual savings effectively.

Some people love to reduce everything to pure numbers, doesn't he? One again, you are demonstrating short term thinking. A year from now interest rates could double. Or they could be half today. The numbers then change enormously. But it's too late for you.

By the way, 10k rent versus 13 PITI isn't quite the same. Some of the 13PITI is going to the principal. Remove the portion going to the principal then the gap isn't so large. Then next year that 10k rent could be 12k! Then in a few years it'd be 15k while the PITI is only 13.5k. And the 2M house could now be worth 2.5. Then you have to move and have to pay the moving costs.

Renting does gives you great flexibility. But it also gives you instability. If it works for you, psychologically, stay a renter and be happy. In fact, it sounds like you have the luxury of affording to be a renter.

If interests double a year from now then it means it was a bad time to buy now and a bad time to buy a year from now. If interest rates halve next year, this year was still a bad time to buy and next year is probably a good time to buy.

There's a reason why the rent is around 10K a month for the same homes in the area I wish to buy in and it's not because the landlord is an idiot and wanted to leave money on the table. The lack of demand is also the same reason why rents probably won't increase by 50% in the next year or so.

[Anonymous]

Are there even that many rental houses out there? I don't live in an area with 2 million dollar homes so maybe it's different here but there are zero rental houses in my neighborhood currently available (though there are a couple of townhouses). It seems to me that the people "clamoring " to rent would drive up the rents.

[Anonymous]

Anonymous wrote:Are there even that many rental houses out there? I don't live in an area with 2 million dollar homes so maybe it's different here but there are zero rental houses in my neighborhood currently available (though there are a couple of townhouses). It seems to me that the people "clamoring " to rent would drive up the rents.

This. You can rent an apartment in a city. But try looking for a property in a desirable neighborhood with good schools.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

When an overwhelming majority, staggeringly overwhelming majority, of higher income, higher net worth people own, not rent, that tells you something. Not a coincidence.

It tells me they’re not too concerned about what the optimal financial move might be, because they can easily afford to own and they want to own so who cares?

What does it tell you?

Not PP. There is no free lunch. Landlords pass on the cost of PITI plus a profit margin to the renter. People who rent and save vs. bying are typically renting much less space or worse amenities. I don’t think housing is a great investment, but you do have to live somewhere and pay for shelter. Also, a house is bought on leverage so for a 400k down payment the house has to appreciate by 30k a year to beat the market long term. And yes $2M houses have appreciated a lot more than 30k annually. I consider PITI the sunk cost of providing for shelter, no different than rent.

If the landlord of the SFH bought during 3% mortgage rates, he/she can charge rent that's a lot lower than what you will pay to buy using today's rates. In the neighborhoods I'm looking at, you can rent a home that is worth around 2M for 10K a month. The PITI for a 2M house is a little more than 13K, which means I save 36K in a year from just renting than owning. Sure your 2M house might appreciate more than 30K this year, but my 400K down payment pretty much earned 30K just in 2024 YTD in the stock market. When you include the 36K in savings, it's a no brainer. That's why, right now, it's better to rent than to buy.

I find it odd that posters here think that people won't be able to help themselves but to spend the 36K rent versus mortgage difference on trivial things, rather than to invest it. Maybe you're right, but that person probably never had a shot at saving 400K for the downpayment anyways. And if you are the type of person who could save up 400K, you probably can figure out how to use 36K/year in annual savings effectively.

Some people love to reduce everything to pure numbers, doesn't he? One again, you are demonstrating short term thinking. A year from now interest rates could double. Or they could be half today. The numbers then change enormously. But it's too late for you.

By the way, 10k rent versus 13 PITI isn't quite the same. Some of the 13PITI is going to the principal. Remove the portion going to the principal then the gap isn't so large. Then next year that 10k rent could be 12k! Then in a few years it'd be 15k while the PITI is only 13.5k. And the 2M house could now be worth 2.5. Then you have to move and have to pay the moving costs.

Renting does gives you great flexibility. But it also gives you instability. If it works for you, psychologically, stay a renter and be happy. In fact, it sounds like you have the luxury of affording to be a renter.

If interests double a year from now then it means it was a bad time to buy now and a bad time to buy a year from now. If interest rates halve next year, this year was still a bad time to buy and next year is probably a good time to buy.

There's a reason why the rent is around 10K a month for the same homes in the area I wish to buy in and it's not because the landlord is an idiot and wanted to leave money on the table. The lack of demand is also the same reason why rents probably won't increase by 50% in the next year or so.

You keep showing over and over again how short term thinking your mindset is. Interest rates could go up or they could go down. Owning is a hedge against the future. By the way, if you'd paid attention over the past year, interest rates doubled but prices still went up. If rates drop, prices will shoot up. And meanwhile rents have done nothing but keep going up too.

I don't know where you live, but in my market there's a pent up demand meaning properties sell immediately with multiple offers and the handful of rentals are very expensive and rent immediately. That's demand. Lack of signs means lack of inventory, not lack of demand.

[Anonymous]

This is all extremely market dependent. I have friends in the bay area whose homes are under by 10-15% who are on the 3-5 year ownership range. They’re staying put but it sure stings every month as they pay their $3k / month ownership premium. This is tied to the bay area market, and every market has its own dynamics.

[Anonymous]

^ and for anyone who is going to jump in and say but what about if you bought in 2000? 2010? 2015? The point is - its highly market dependent and timing is also important. The stock market isnt market dependent, yes timing matters, but youre also 100% liquid

Again, there are many valid reasons why you might buy like lack of rental inventory, access to schools, etc. You may just want a nice forever home. You may want stability for your children. Heck, you might just really want to garden, renovate, have the furniture you want, etc. But lets not fool ourselves that buying is always better, without fail.

[Anonymous]

We've been renting for 8 years and I don't see it changing any time soon. We can't afford to buy in our neighborhood and our landlord, who lives in FL, makes it clear every few years when we renew the lease that he's happy with the situation as-is. I don't pretend to understand his plan but he charges us less in rent than I would every pay for a mortgage and I don't see any reason to move unless he raises the rent significantly or decides to sell. At this point we are waiting out our youngest, who is still in elementary, to get into middle school and then we might explore a downsizing move because our oldest kids will all be in college or beyond.

For those saying it keeps you from being a part of the community, my kids and I have never felt on the outside as renters. Maybe if we were only here a few years and things were constantly changing it would be different. We join the local pool every year, our kids attend the schools within walking distance, and we are fully included in the neighborhood in the ways that matter to my family.

[Anonymous]

Anonymous wrote:We recently moved from NYC (renters) to a pricey suburb in a large city (not DC) where there is NO inventory. The homes that are even on the market are overpriced and/or need so much work/something wrong with them (no garage, busy street, etc).

We are currently renting a SFH while we save more money for a down payment. DH just said to me, what if we just rent for the long haul and ride out the market as long as we can? It just seems like renting in our area is looked down upon... do I just need to get over that? We are trying to make some friends out here, but the people we meet seem very into where we are looking to buy, who our realtor is, etc.

Why is renting so frowned upon?? Maybe we just need to make new friends?

Just remember…renting is forever….mortgages are not. Yes a homeowner has maintenance costs and property taxes even after paying off the mortgage but a renter is paying the homeowners mortgage, maintenance, and property taxes for them (it’s all priced into the rent). You just lose the hassle of maintaining the home, have easy flexibility to move, but can’t make changes and additions to the home as you may want.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We recently moved from NYC (renters) to a pricey suburb in a large city (not DC) where there is NO inventory. The homes that are even on the market are overpriced and/or need so much work/something wrong with them (no garage, busy street, etc).

We are currently renting a SFH while we save more money for a down payment. DH just said to me, what if we just rent for the long haul and ride out the market as long as we can? It just seems like renting in our area is looked down upon... do I just need to get over that? We are trying to make some friends out here, but the people we meet seem very into where we are looking to buy, who our realtor is, etc.

Why is renting so frowned upon?? Maybe we just need to make new friends?

Just remember…renting is forever….mortgages are not. Yes a homeowner has maintenance costs and property taxes even after paying off the mortgage but a renter is paying the homeowners mortgage, maintenance, and property taxes for them (it’s all priced into the rent). You just lose the hassle of maintaining the home, have easy flexibility to move, but can’t make changes and additions to the home as you may want.

Did you buy a house the moment you exited the womb? I'm willing to bet 99.9% of the people who own a house today has rented before.

[Anonymous]

Don't be scared to rent. Buying only works if you are staying put and you are sure you will get your equity and make money off the house. If not, why bother? Owning a house is so much maintenance. I would rent and make my money in the markets. The name of the game is making money. Does it matter how you get it? why cares what other people think? I would gladly be friends with someone who rented - I would want a friend v no friend. You also have to get over wanting friends. Most people you don't need as friends if they look down on you for renting!

I never understood why owning a home was such a big deal. Again, you have to be able to achieve the "dream" not just for owning for owning sake.

Personally I don't know how someone even buys a house in this market without serious financial support or if they were loaded. Not a home in a top neighborhood that's beautiful or a gut job I guess. I'm all about location. That's your equity right there. Whether up and coming or established, there's no other way.

[Anonymous]

We sold our house during the pandemic and have been renting an apartment ever since, in DC.

The nice thing about renting in DC (and other areas, perhaps?) is that leases go month-to-month after the first year. When the right next place comes along to buy, we can just go for it.

I do think that people look down a bit on renters, given how acquaintances behave when they hear that we’ve moved. (I also suspect that some people think we had financial troubles and sold for those reasons.) Overall, I really like the freedom that renting allows and we all love our neighborhood.

[Anonymous]

Anonymous wrote:Don't be scared to rent. Buying only works if you are staying put and you are sure you will get your equity and make money off the house. If not, why bother? Owning a house is so much maintenance.

Because the value of giving your children the experience of a stable childhood home is priceless. If you can get one in a desirable location, that also means the home is potentially a generational gift. If you think they are hard to attain now, imagine 30, 40, 50 years from now.

Owning a home is some maintenance. If you are irresponsible or patch everything up with duct tape, perhaps it is more. Consider not doing that.

[Anonymous]

Anonymous wrote:We've been renting for 8 years and I don't see it changing any time soon. We can't afford to buy in our neighborhood and our landlord, who lives in FL, makes it clear every few years when we renew the lease that he's happy with the situation as-is. I don't pretend to understand his plan but he charges us less in rent than I would every pay for a mortgage and I don't see any reason to move unless he raises the rent significantly or decides to sell. At this point we are waiting out our youngest, who is still in elementary, to get into middle school and then we might explore a downsizing move because our oldest kids will all be in college or beyond.

For those saying it keeps you from being a part of the community, my kids and I have never felt on the outside as renters. Maybe if we were only here a few years and things were constantly changing it would be different. We join the local pool every year, our kids attend the schools within walking distance, and we are fully included in the neighborhood in the ways that matter to my family.

You should be renting in a less expensive neighborhood to save more money and then purchase in that neighborhood eventually.

You admitted yourself you can’t afford the neighborhood so your solution is to RENT where you don’t accumulate any equity.

You’re essentially leasing a car you can’t afford to buy.