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

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm always suspicious of those saying renting is better because they are never entirely honest with their scenarios and it turns out they're comparing renting versus buying two quite different properties rather than the same type of property. You can certainly save money renting a small apartment in a less desirable area over a larger SFH in a highly regarded school district. But that's not the option most people face when making the decision to rent or buy.

If it was really that much financially better to rent, then vastly more affluent people would do it. But they don't. And that tells you everything.

I've only owned a house for four years but in that time I've had significant appreciation, my mortgage is almost half what it cost to rent the same property based on the few rentals in the neighborhood. Meanwhile I'm building up equity. It's a form of forced savings.

People have lost money owning houses and much of that comes down to timing, buying at market peaks and selling at market lows, facing foreclosures due to job losses, buying the wrong kind of money pit, or selling too soon after buying. Some of those factors you can control by being intelligent, others you cannot. But I will say that based on the last 10 years, people who waited for prices to come down have only lost out.

Interest rates are high by recent standards, but they could go up. Or if they go down, you can refinance. Given that there is nothing to indicate any kind of housing crash because we actually have a severe undersupply of housing, if you can swing the mortgage payments, it's better to go for it.

Renting is not always better but it is almost always better right now. If you don’t believe it go on Zillow and look at rentals that were recently sold and compare the rental price to what you would pay if you got a mortgage on them at the current rates. My impression with people tirelessly defending buying is that actually it is them who did not do the math. I own and did the math for myself. I would be significantly richer now if I kept renting and invested my money instead. But there are other advantages of owning, which is precisely why affluent people own too. They are very well aware it might not be financially the wisest but they do not care as they want to have a place they can renovate as they please and that no one can sell from under them.

There is an aspect of short term thinking when you see rents being lower than comparable mortgages if you buy *now*. But rents always go up in the long run. It's rare for rents to fall, especially for better areas, and those falls never last more than a year or two. Even if you pay more with a mortgage than rent right now, you are still building equity in the property that you don't with rent, plus you get to deduct taxes and mortgage interests, which you don't with renting.

The gap between renting and mortgage payments for a comparable property is never going to be so huge in favor of renting that you can genuinely make money off investing the differential in the market. All that is theoretical. Part of it comes down to that a mortgage is a forced savings, you have no choice but to make the payments and build up your equity. But telling yourself that if I rent I'll have an extra $1k to invest doesn't mean the extra $1k always goes into investments. Given that we still higher than typical inflation, the rent is also only going to keep going up.

Well, you are clearly another one who has not done the math for comparable properties RIGHT NOW. The mortgage for a house I considered renting for 7.2k would be almost double that (sold recently for 2.3mil). And an absolute majority of that is interest so the equity you are building is minuscule. And as a foreigner with a particular visa situation I cannot deduct any of it. Why would I buy that house right now knowing I won’t be staying there for more than 10 years anyway? You always need the full picture. Also it is very unlikely that the rent would double in the next 10 years. Many of the houses on the rental market I have been watching, have been renting at about the same rate for the last 5-7 years. And I would never have to replace the AC or roof in them.

I don't know where you live but I live in a robust market and even right now renting and taking out a mortgage seems roughly comparable enough. And rents have absolutely gone up noticeably in the last 4-5 years. Your experience claiming rents haven't gone up is not backed by by national statistics, which show the complete opposite. Significantly so.

Even in the worst case scenario it is not massively cheaper to rent. I've been around real estate long enough to know the instances of when renting is cheaper than buying is always temporary and never lasts long. I don't envy today's buyers and it sucks for them to have missed out on the 2021-2022 era. Your instance on "RIGHT NOW" is short term thinking. Real estate is a long term holding, even if it is only five years before you sell.

Your experience as a foreigner not able to deduct interest means your advice is useless to most Americans.

[Anonymous]

if you're in it for the long haul, your mortgage payment will become a smaller portion of your income as time goes on (minus increasing property taxes), but your rent will stay a significant portion of your income.

Sure the prices today might be equivalent, but in 15-20 years will your mortgage payment (plus accrued equity) still be equivalent to rent? Doubt it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm always suspicious of those saying renting is better because they are never entirely honest with their scenarios and it turns out they're comparing renting versus buying two quite different properties rather than the same type of property. You can certainly save money renting a small apartment in a less desirable area over a larger SFH in a highly regarded school district. But that's not the option most people face when making the decision to rent or buy.

If it was really that much financially better to rent, then vastly more affluent people would do it. But they don't. And that tells you everything.

I've only owned a house for four years but in that time I've had significant appreciation, my mortgage is almost half what it cost to rent the same property based on the few rentals in the neighborhood. Meanwhile I'm building up equity. It's a form of forced savings.

People have lost money owning houses and much of that comes down to timing, buying at market peaks and selling at market lows, facing foreclosures due to job losses, buying the wrong kind of money pit, or selling too soon after buying. Some of those factors you can control by being intelligent, others you cannot. But I will say that based on the last 10 years, people who waited for prices to come down have only lost out.

Interest rates are high by recent standards, but they could go up. Or if they go down, you can refinance. Given that there is nothing to indicate any kind of housing crash because we actually have a severe undersupply of housing, if you can swing the mortgage payments, it's better to go for it.

Renting is not always better but it is almost always better right now. If you don’t believe it go on Zillow and look at rentals that were recently sold and compare the rental price to what you would pay if you got a mortgage on them at the current rates. My impression with people tirelessly defending buying is that actually it is them who did not do the math. I own and did the math for myself. I would be significantly richer now if I kept renting and invested my money instead. But there are other advantages of owning, which is precisely why affluent people own too. They are very well aware it might not be financially the wisest but they do not care as they want to have a place they can renovate as they please and that no one can sell from under them.

There is an aspect of short term thinking when you see rents being lower than comparable mortgages if you buy *now*. But rents always go up in the long run. It's rare for rents to fall, especially for better areas, and those falls never last more than a year or two. Even if you pay more with a mortgage than rent right now, you are still building equity in the property that you don't with rent, plus you get to deduct taxes and mortgage interests, which you don't with renting.

The gap between renting and mortgage payments for a comparable property is never going to be so huge in favor of renting that you can genuinely make money off investing the differential in the market. All that is theoretical. Part of it comes down to that a mortgage is a forced savings, you have no choice but to make the payments and build up your equity. But telling yourself that if I rent I'll have an extra $1k to invest doesn't mean the extra $1k always goes into investments. Given that we still higher than typical inflation, the rent is also only going to keep going up.

Well, you are clearly another one who has not done the math for comparable properties RIGHT NOW. The mortgage for a house I considered renting for 7.2k would be almost double that (sold recently for 2.3mil). And an absolute majority of that is interest so the equity you are building is minuscule. And as a foreigner with a particular visa situation I cannot deduct any of it. Why would I buy that house right now knowing I won’t be staying there for more than 10 years anyway? You always need the full picture. Also it is very unlikely that the rent would double in the next 10 years. Many of the houses on the rental market I have been watching, have been renting at about the same rate for the last 5-7 years. And I would never have to replace the AC or roof in them.

Where do you think the money comes from to pay the interest, replace the AC or roof? Tenants are still paying and the longer you rent, the more of your rent is going toward that than quality/location.

If you don’t like interest bc it’s “throwing money away”, you should really hate rent.

[Anonymous]

Follow Ramit Sethi.

[Anonymous]

Rent and invest your money in stocks. Higher return.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm always suspicious of those saying renting is better because they are never entirely honest with their scenarios and it turns out they're comparing renting versus buying two quite different properties rather than the same type of property. You can certainly save money renting a small apartment in a less desirable area over a larger SFH in a highly regarded school district. But that's not the option most people face when making the decision to rent or buy.

If it was really that much financially better to rent, then vastly more affluent people would do it. But they don't. And that tells you everything.

I've only owned a house for four years but in that time I've had significant appreciation, my mortgage is almost half what it cost to rent the same property based on the few rentals in the neighborhood. Meanwhile I'm building up equity. It's a form of forced savings.

People have lost money owning houses and much of that comes down to timing, buying at market peaks and selling at market lows, facing foreclosures due to job losses, buying the wrong kind of money pit, or selling too soon after buying. Some of those factors you can control by being intelligent, others you cannot. But I will say that based on the last 10 years, people who waited for prices to come down have only lost out.

Interest rates are high by recent standards, but they could go up. Or if they go down, you can refinance. Given that there is nothing to indicate any kind of housing crash because we actually have a severe undersupply of housing, if you can swing the mortgage payments, it's better to go for it.

Renting is not always better but it is almost always better right now. If you don’t believe it go on Zillow and look at rentals that were recently sold and compare the rental price to what you would pay if you got a mortgage on them at the current rates. My impression with people tirelessly defending buying is that actually it is them who did not do the math. I own and did the math for myself. I would be significantly richer now if I kept renting and invested my money instead. But there are other advantages of owning, which is precisely why affluent people own too. They are very well aware it might not be financially the wisest but they do not care as they want to have a place they can renovate as they please and that no one can sell from under them.

There is an aspect of short term thinking when you see rents being lower than comparable mortgages if you buy *now*. But rents always go up in the long run. It's rare for rents to fall, especially for better areas, and those falls never last more than a year or two. Even if you pay more with a mortgage than rent right now, you are still building equity in the property that you don't with rent, plus you get to deduct taxes and mortgage interests, which you don't with renting.

The gap between renting and mortgage payments for a comparable property is never going to be so huge in favor of renting that you can genuinely make money off investing the differential in the market. All that is theoretical. Part of it comes down to that a mortgage is a forced savings, you have no choice but to make the payments and build up your equity. But telling yourself that if I rent I'll have an extra $1k to invest doesn't mean the extra $1k always goes into investments. Given that we still higher than typical inflation, the rent is also only going to keep going up.

Well, you are clearly another one who has not done the math for comparable properties RIGHT NOW. The mortgage for a house I considered renting for 7.2k would be almost double that (sold recently for 2.3mil). And an absolute majority of that is interest so the equity you are building is minuscule. And as a foreigner with a particular visa situation I cannot deduct any of it. Why would I buy that house right now knowing I won’t be staying there for more than 10 years anyway? You always need the full picture. Also it is very unlikely that the rent would double in the next 10 years. Many of the houses on the rental market I have been watching, have been renting at about the same rate for the last 5-7 years. And I would never have to replace the AC or roof in them.

Where do you think the money comes from to pay the interest, replace the AC or roof? Tenants are still paying and the longer you rent, the more of your rent is going toward that than quality/location.

If you don’t like interest bc it’s “throwing money away”, you should really hate rent.

For the kind of properties I am interested to rent vs but you pay more in interest than you pay in rent. I am looking at houses in NW DC roughly in the 1.5 to 2mil range. Rent for all of them is lower than what only your interest payments would be in the time horizon for which I would own or rent. I definitely disagree with whoever said above that even owning for 5 years is better than renting for the same period. I highly doubt this is true in the current market, considering the massive transaction costs and any improvement/maintenance costs. People also seem to largely ignore the opportunity cost. My 500k down payment would have gone significantly farther in the stock market in the 5 years since we bought. There is nothing wrong with wanting to own a place but it is definitely much more often than people want to admit not the best financial decision. Sure, no one has a crystal ball and I am curious how this post will age, but if I was not owning already, I would definitely not buy right now with the standard 20% down or less.

[Anonymous]

Anonymous wrote:Rent and invest your money in stocks. Higher return.

Exactly.

[Anonymous]

Anonymous wrote:People put a lot of meaning into growing equity through owning. My family has owed three homes in last 15 years. I did the math and had we just rented same place and put the difference in money - down payment and extra if took to own- into market, we would have a lot more money than we do now. All homes ended up being headache if you asked me.
We didn't overpay any of them, but just simply owning a home costs a lot.
We sold all three, got the equity out and it doubled in this market in two years. It is still going up. The homes would have never appreciated like that. They were not assets.
Most people know real estate, but they don't know anything about market. Being in the market taught me a lot more than owning real estate.
I make $13k to $20k a day easily on the money I have in the market. People still keep asking me when am I ready to buy. No time soon or even never. Seeing the markets move up so fast is more exciting that owning a home. I also love my rental. My landlord is awesome. But also, like PP, mentioned, I can move right next door to the middle school and three years after that, right next door to child's high school.
I got to be crazy to take out cash right now from the market and buy a home with those interest rates.
You have to do the math to see it.
I did get a finance degree, but most of what I know about markets, came from being in the market hands on the last four years.

Didn't I see your Facebook ad promising me a '10 figure income working only 2 hours a month with my 'no-fault' marketing plan?.

[Anonymous]

Anonymous wrote:Rent and invest your money in stocks. Higher return.

Hell, just live in your '71 Buick for which you paid $400, shower at Planet Fitness, and dumpster dive for food?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm always suspicious of those saying renting is better because they are never entirely honest with their scenarios and it turns out they're comparing renting versus buying two quite different properties rather than the same type of property. You can certainly save money renting a small apartment in a less desirable area over a larger SFH in a highly regarded school district. But that's not the option most people face when making the decision to rent or buy.

If it was really that much financially better to rent, then vastly more affluent people would do it. But they don't. And that tells you everything.

I've only owned a house for four years but in that time I've had significant appreciation, my mortgage is almost half what it cost to rent the same property based on the few rentals in the neighborhood. Meanwhile I'm building up equity. It's a form of forced savings.

People have lost money owning houses and much of that comes down to timing, buying at market peaks and selling at market lows, facing foreclosures due to job losses, buying the wrong kind of money pit, or selling too soon after buying. Some of those factors you can control by being intelligent, others you cannot. But I will say that based on the last 10 years, people who waited for prices to come down have only lost out.

Interest rates are high by recent standards, but they could go up. Or if they go down, you can refinance. Given that there is nothing to indicate any kind of housing crash because we actually have a severe undersupply of housing, if you can swing the mortgage payments, it's better to go for it.

Renting is not always better but it is almost always better right now. If you don’t believe it go on Zillow and look at rentals that were recently sold and compare the rental price to what you would pay if you got a mortgage on them at the current rates. My impression with people tirelessly defending buying is that actually it is them who did not do the math. I own and did the math for myself. I would be significantly richer now if I kept renting and invested my money instead. But there are other advantages of owning, which is precisely why affluent people own too. They are very well aware it might not be financially the wisest but they do not care as they want to have a place they can renovate as they please and that no one can sell from under them.

There is an aspect of short term thinking when you see rents being lower than comparable mortgages if you buy *now*. But rents always go up in the long run. It's rare for rents to fall, especially for better areas, and those falls never last more than a year or two. Even if you pay more with a mortgage than rent right now, you are still building equity in the property that you don't with rent, plus you get to deduct taxes and mortgage interests, which you don't with renting.

The gap between renting and mortgage payments for a comparable property is never going to be so huge in favor of renting that you can genuinely make money off investing the differential in the market. All that is theoretical. Part of it comes down to that a mortgage is a forced savings, you have no choice but to make the payments and build up your equity. But telling yourself that if I rent I'll have an extra $1k to invest doesn't mean the extra $1k always goes into investments. Given that we still higher than typical inflation, the rent is also only going to keep going up.

Well, you are clearly another one who has not done the math for comparable properties RIGHT NOW. The mortgage for a house I considered renting for 7.2k would be almost double that (sold recently for 2.3mil). And an absolute majority of that is interest so the equity you are building is minuscule. And as a foreigner with a particular visa situation I cannot deduct any of it. Why would I buy that house right now knowing I won’t be staying there for more than 10 years anyway? You always need the full picture. Also it is very unlikely that the rent would double in the next 10 years. Many of the houses on the rental market I have been watching, have been renting at about the same rate for the last 5-7 years. And I would never have to replace the AC or roof in them.

Where do you think the money comes from to pay the interest, replace the AC or roof? Tenants are still paying and the longer you rent, the more of your rent is going toward that than quality/location.

If you don’t like interest bc it’s “throwing money away”, you should really hate rent.

For the kind of properties I am interested to rent vs but you pay more in interest than you pay in rent. I am looking at houses in NW DC roughly in the 1.5 to 2mil range. Rent for all of them is lower than what only your interest payments would be in the time horizon for which I would own or rent. I definitely disagree with whoever said above that even owning for 5 years is better than renting for the same period. I highly doubt this is true in the current market, considering the massive transaction costs and any improvement/maintenance costs. People also seem to largely ignore the opportunity cost. My 500k down payment would have gone significantly farther in the stock market in the 5 years since we bought. There is nothing wrong with wanting to own a place but it is definitely much more often than people want to admit not the best financial decision. Sure, no one has a crystal ball and I am curious how this post will age, but if I was not owning already, I would definitely not buy right now with the standard 20% down or less.

Cool story. 10 years from now when rates are touching 4 and 5 percent again, your 2M house is 4 or 4.5M and you can’t find a rental for less than 20,000 per month, and the S&P has get back to us. I hope you’re ready to tap into your invested down payment.

The person who bought your house now for 2M is sitting on 2M in equity, able to refinance, and is going to make 120k gross cash flow per year when you leave bc you can’t pay 20k in rent, or a greater and greater share of your income goes to rent and you find out you’re working just to pay your landlord. But hey, at least you weren’t a sucker who bought into “home ownership” and had to pay all that interest.

If you want to talk about under appreciated opportunity cost, 500k cap gains net of capex is tax free on the sale of a house.

Maximizing the % gains on every last penny of your money is foolish. When you have the liquidity for a down payment you should also be thinking about stability, predictability, and hedging against inflation.

Sure rates are high but if you buy now and rates go up, you’re shielded from a lot of inflationary pressure you simply aren’t when you rent. If rates go down, you refinance and lower your payment, an option also not available to renters. Refinancing costs roughly the price of moving and there’s no chance you’d have to do it annually.

[Anonymous]

You might have to get over not having a garage or being on a busy street (as long as we’re talking two lanes and not, like, four). If your area is competitive like DC you’ll have to compromise.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm always suspicious of those saying renting is better because they are never entirely honest with their scenarios and it turns out they're comparing renting versus buying two quite different properties rather than the same type of property. You can certainly save money renting a small apartment in a less desirable area over a larger SFH in a highly regarded school district. But that's not the option most people face when making the decision to rent or buy.

If it was really that much financially better to rent, then vastly more affluent people would do it. But they don't. And that tells you everything.

I've only owned a house for four years but in that time I've had significant appreciation, my mortgage is almost half what it cost to rent the same property based on the few rentals in the neighborhood. Meanwhile I'm building up equity. It's a form of forced savings.

People have lost money owning houses and much of that comes down to timing, buying at market peaks and selling at market lows, facing foreclosures due to job losses, buying the wrong kind of money pit, or selling too soon after buying. Some of those factors you can control by being intelligent, others you cannot. But I will say that based on the last 10 years, people who waited for prices to come down have only lost out.

Interest rates are high by recent standards, but they could go up. Or if they go down, you can refinance. Given that there is nothing to indicate any kind of housing crash because we actually have a severe undersupply of housing, if you can swing the mortgage payments, it's better to go for it.

Renting is not always better but it is almost always better right now. If you don’t believe it go on Zillow and look at rentals that were recently sold and compare the rental price to what you would pay if you got a mortgage on them at the current rates. My impression with people tirelessly defending buying is that actually it is them who did not do the math. I own and did the math for myself. I would be significantly richer now if I kept renting and invested my money instead. But there are other advantages of owning, which is precisely why affluent people own too. They are very well aware it might not be financially the wisest but they do not care as they want to have a place they can renovate as they please and that no one can sell from under them.

There is an aspect of short term thinking when you see rents being lower than comparable mortgages if you buy *now*. But rents always go up in the long run. It's rare for rents to fall, especially for better areas, and those falls never last more than a year or two. Even if you pay more with a mortgage than rent right now, you are still building equity in the property that you don't with rent, plus you get to deduct taxes and mortgage interests, which you don't with renting.

The gap between renting and mortgage payments for a comparable property is never going to be so huge in favor of renting that you can genuinely make money off investing the differential in the market. All that is theoretical. Part of it comes down to that a mortgage is a forced savings, you have no choice but to make the payments and build up your equity. But telling yourself that if I rent I'll have an extra $1k to invest doesn't mean the extra $1k always goes into investments. Given that we still higher than typical inflation, the rent is also only going to keep going up.

Well, you are clearly another one who has not done the math for comparable properties RIGHT NOW. The mortgage for a house I considered renting for 7.2k would be almost double that (sold recently for 2.3mil). And an absolute majority of that is interest so the equity you are building is minuscule. And as a foreigner with a particular visa situation I cannot deduct any of it. Why would I buy that house right now knowing I won’t be staying there for more than 10 years anyway? You always need the full picture. Also it is very unlikely that the rent would double in the next 10 years. Many of the houses on the rental market I have been watching, have been renting at about the same rate for the last 5-7 years. And I would never have to replace the AC or roof in them.

Where do you think the money comes from to pay the interest, replace the AC or roof? Tenants are still paying and the longer you rent, the more of your rent is going toward that than quality/location.

If you don’t like interest bc it’s “throwing money away”, you should really hate rent.

For the kind of properties I am interested to rent vs but you pay more in interest than you pay in rent. I am looking at houses in NW DC roughly in the 1.5 to 2mil range. Rent for all of them is lower than what only your interest payments would be in the time horizon for which I would own or rent. I definitely disagree with whoever said above that even owning for 5 years is better than renting for the same period. I highly doubt this is true in the current market, considering the massive transaction costs and any improvement/maintenance costs. People also seem to largely ignore the opportunity cost. My 500k down payment would have gone significantly farther in the stock market in the 5 years since we bought. There is nothing wrong with wanting to own a place but it is definitely much more often than people want to admit not the best financial decision. Sure, no one has a crystal ball and I am curious how this post will age, but if I was not owning already, I would definitely not buy right now with the standard 20% down or less.

Cool story. 10 years from now when rates are touching 4 and 5 percent again, your 2M house is 4 or 4.5M and you can’t find a rental for less than 20,000 per month, and the S&P has get back to us. I hope you’re ready to tap into your invested down payment.

The person who bought your house now for 2M is sitting on 2M in equity, able to refinance, and is going to make 120k gross cash flow per year when you leave bc you can’t pay 20k in rent, or a greater and greater share of your income goes to rent and you find out you’re working just to pay your landlord. But hey, at least you weren’t a sucker who bought into “home ownership” and had to pay all that interest.

If you want to talk about under appreciated opportunity cost, 500k cap gains net of capex is tax free on the sale of a house.

Maximizing the % gains on every last penny of your money is foolish. When you have the liquidity for a down payment you should also be thinking about stability, predictability, and hedging against inflation.

Sure rates are high but if you buy now and rates go up, you’re shielded from a lot of inflationary pressure you simply aren’t when you rent. If rates go down, you refinance and lower your payment, an option also not available to renters. Refinancing costs roughly the price of moving and there’s no chance you’d have to do it annually.

.

Also curious how this one will age. You did not see prices double in the last 10 years when the rates were at their lowest and I highly doubt they will do it in the next 10 years. Those prices need to be supported by people being able to pay them. No one’s salary is going to double in 10 years either. I think we are all free to make our own predictions. I agree there are other advantages of owning, but it is not always the wisest financial decision.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm always suspicious of those saying renting is better because they are never entirely honest with their scenarios and it turns out they're comparing renting versus buying two quite different properties rather than the same type of property. You can certainly save money renting a small apartment in a less desirable area over a larger SFH in a highly regarded school district. But that's not the option most people face when making the decision to rent or buy.

If it was really that much financially better to rent, then vastly more affluent people would do it. But they don't. And that tells you everything.

I've only owned a house for four years but in that time I've had significant appreciation, my mortgage is almost half what it cost to rent the same property based on the few rentals in the neighborhood. Meanwhile I'm building up equity. It's a form of forced savings.

People have lost money owning houses and much of that comes down to timing, buying at market peaks and selling at market lows, facing foreclosures due to job losses, buying the wrong kind of money pit, or selling too soon after buying. Some of those factors you can control by being intelligent, others you cannot. But I will say that based on the last 10 years, people who waited for prices to come down have only lost out.

Interest rates are high by recent standards, but they could go up. Or if they go down, you can refinance. Given that there is nothing to indicate any kind of housing crash because we actually have a severe undersupply of housing, if you can swing the mortgage payments, it's better to go for it.

Renting is not always better but it is almost always better right now. If you don’t believe it go on Zillow and look at rentals that were recently sold and compare the rental price to what you would pay if you got a mortgage on them at the current rates. My impression with people tirelessly defending buying is that actually it is them who did not do the math. I own and did the math for myself. I would be significantly richer now if I kept renting and invested my money instead. But there are other advantages of owning, which is precisely why affluent people own too. They are very well aware it might not be financially the wisest but they do not care as they want to have a place they can renovate as they please and that no one can sell from under them.

There is an aspect of short term thinking when you see rents being lower than comparable mortgages if you buy *now*. But rents always go up in the long run. It's rare for rents to fall, especially for better areas, and those falls never last more than a year or two. Even if you pay more with a mortgage than rent right now, you are still building equity in the property that you don't with rent, plus you get to deduct taxes and mortgage interests, which you don't with renting.

The gap between renting and mortgage payments for a comparable property is never going to be so huge in favor of renting that you can genuinely make money off investing the differential in the market. All that is theoretical. Part of it comes down to that a mortgage is a forced savings, you have no choice but to make the payments and build up your equity. But telling yourself that if I rent I'll have an extra $1k to invest doesn't mean the extra $1k always goes into investments. Given that we still higher than typical inflation, the rent is also only going to keep going up.

Well, you are clearly another one who has not done the math for comparable properties RIGHT NOW. The mortgage for a house I considered renting for 7.2k would be almost double that (sold recently for 2.3mil). And an absolute majority of that is interest so the equity you are building is minuscule. And as a foreigner with a particular visa situation I cannot deduct any of it. Why would I buy that house right now knowing I won’t be staying there for more than 10 years anyway? You always need the full picture. Also it is very unlikely that the rent would double in the next 10 years. Many of the houses on the rental market I have been watching, have been renting at about the same rate for the last 5-7 years. And I would never have to replace the AC or roof in them.

Where do you think the money comes from to pay the interest, replace the AC or roof? Tenants are still paying and the longer you rent, the more of your rent is going toward that than quality/location.

If you don’t like interest bc it’s “throwing money away”, you should really hate rent.

For the kind of properties I am interested to rent vs but you pay more in interest than you pay in rent. I am looking at houses in NW DC roughly in the 1.5 to 2mil range. Rent for all of them is lower than what only your interest payments would be in the time horizon for which I would own or rent. I definitely disagree with whoever said above that even owning for 5 years is better than renting for the same period. I highly doubt this is true in the current market, considering the massive transaction costs and any improvement/maintenance costs. People also seem to largely ignore the opportunity cost. My 500k down payment would have gone significantly farther in the stock market in the 5 years since we bought. There is nothing wrong with wanting to own a place but it is definitely much more often than people want to admit not the best financial decision. Sure, no one has a crystal ball and I am curious how this post will age, but if I was not owning already, I would definitely not buy right now with the standard 20% down or less.

Cool story. 10 years from now when rates are touching 4 and 5 percent again, your 2M house is 4 or 4.5M and you can’t find a rental for less than 20,000 per month, and the S&P has get back to us. I hope you’re ready to tap into your invested down payment.

The person who bought your house now for 2M is sitting on 2M in equity, able to refinance, and is going to make 120k gross cash flow per year when you leave bc you can’t pay 20k in rent, or a greater and greater share of your income goes to rent and you find out you’re working just to pay your landlord. But hey, at least you weren’t a sucker who bought into “home ownership” and had to pay all that interest.

If you want to talk about under appreciated opportunity cost, 500k cap gains net of capex is tax free on the sale of a house.

Maximizing the % gains on every last penny of your money is foolish. When you have the liquidity for a down payment you should also be thinking about stability, predictability, and hedging against inflation.

Sure rates are high but if you buy now and rates go up, you’re shielded from a lot of inflationary pressure you simply aren’t when you rent. If rates go down, you refinance and lower your payment, an option also not available to renters. Refinancing costs roughly the price of moving and there’s no chance you’d have to do it annually.

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Also curious how this one will age. You did not see prices double in the last 10 years when the rates were at their lowest and I highly doubt they will do it in the next 10 years. Those prices need to be supported by people being able to pay them. No one’s salary is going to double in 10 years either. I think we are all free to make our own predictions. I agree there are other advantages of owning, but it is not always the wisest financial decision.

Oh wow. Money historically doubles every 7 years.

[Anonymous]

Anonymous wrote:You might have to get over not having a garage or being on a busy street (as long as we’re talking two lanes and not, like, four). If your area is competitive like DC you’ll have to compromise.

Everyone I know who earns a decent income and still rents :

1. Won’t compromise on anything and thinks they should be able to afford a more expensive home

2. Doesn’t have a down payment.

The % of renters who invest heavily in the market instead of buying a home is incredibly small.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm always suspicious of those saying renting is better because they are never entirely honest with their scenarios and it turns out they're comparing renting versus buying two quite different properties rather than the same type of property. You can certainly save money renting a small apartment in a less desirable area over a larger SFH in a highly regarded school district. But that's not the option most people face when making the decision to rent or buy.

If it was really that much financially better to rent, then vastly more affluent people would do it. But they don't. And that tells you everything.

I've only owned a house for four years but in that time I've had significant appreciation, my mortgage is almost half what it cost to rent the same property based on the few rentals in the neighborhood. Meanwhile I'm building up equity. It's a form of forced savings.

People have lost money owning houses and much of that comes down to timing, buying at market peaks and selling at market lows, facing foreclosures due to job losses, buying the wrong kind of money pit, or selling too soon after buying. Some of those factors you can control by being intelligent, others you cannot. But I will say that based on the last 10 years, people who waited for prices to come down have only lost out.

Interest rates are high by recent standards, but they could go up. Or if they go down, you can refinance. Given that there is nothing to indicate any kind of housing crash because we actually have a severe undersupply of housing, if you can swing the mortgage payments, it's better to go for it.

Renting is not always better but it is almost always better right now. If you don’t believe it go on Zillow and look at rentals that were recently sold and compare the rental price to what you would pay if you got a mortgage on them at the current rates. My impression with people tirelessly defending buying is that actually it is them who did not do the math. I own and did the math for myself. I would be significantly richer now if I kept renting and invested my money instead. But there are other advantages of owning, which is precisely why affluent people own too. They are very well aware it might not be financially the wisest but they do not care as they want to have a place they can renovate as they please and that no one can sell from under them.

There is an aspect of short term thinking when you see rents being lower than comparable mortgages if you buy *now*. But rents always go up in the long run. It's rare for rents to fall, especially for better areas, and those falls never last more than a year or two. Even if you pay more with a mortgage than rent right now, you are still building equity in the property that you don't with rent, plus you get to deduct taxes and mortgage interests, which you don't with renting.

The gap between renting and mortgage payments for a comparable property is never going to be so huge in favor of renting that you can genuinely make money off investing the differential in the market. All that is theoretical. Part of it comes down to that a mortgage is a forced savings, you have no choice but to make the payments and build up your equity. But telling yourself that if I rent I'll have an extra $1k to invest doesn't mean the extra $1k always goes into investments. Given that we still higher than typical inflation, the rent is also only going to keep going up.

Well, you are clearly another one who has not done the math for comparable properties RIGHT NOW. The mortgage for a house I considered renting for 7.2k would be almost double that (sold recently for 2.3mil). And an absolute majority of that is interest so the equity you are building is minuscule. And as a foreigner with a particular visa situation I cannot deduct any of it. Why would I buy that house right now knowing I won’t be staying there for more than 10 years anyway? You always need the full picture. Also it is very unlikely that the rent would double in the next 10 years. Many of the houses on the rental market I have been watching, have been renting at about the same rate for the last 5-7 years. And I would never have to replace the AC or roof in them.

Where do you think the money comes from to pay the interest, replace the AC or roof? Tenants are still paying and the longer you rent, the more of your rent is going toward that than quality/location.

If you don’t like interest bc it’s “throwing money away”, you should really hate rent.

For the kind of properties I am interested to rent vs but you pay more in interest than you pay in rent. I am looking at houses in NW DC roughly in the 1.5 to 2mil range. Rent for all of them is lower than what only your interest payments would be in the time horizon for which I would own or rent. I definitely disagree with whoever said above that even owning for 5 years is better than renting for the same period. I highly doubt this is true in the current market, considering the massive transaction costs and any improvement/maintenance costs. People also seem to largely ignore the opportunity cost. My 500k down payment would have gone significantly farther in the stock market in the 5 years since we bought. There is nothing wrong with wanting to own a place but it is definitely much more often than people want to admit not the best financial decision. Sure, no one has a crystal ball and I am curious how this post will age, but if I was not owning already, I would definitely not buy right now with the standard 20% down or less.

I looked at what was available in NW DC/ Chevy Chase. Seems like the rents for a $1.5 to $2M property is $8k a month on average. Mortgage would vary depending on how much equity you bring to the property. But 500k down on a $1.8M is about $10k a month in mortgage. It is more expensive than what you can rent. But it's still $8k in rent gone forever each month whereas for $10k monthly mortgage you are still paying something towards principle and building equity, so at worst it's a wash, at best it's still cheaper than renting. And with a mortgage you have a property and can benefit from appreciation.

Yes, housing prices can go south just as much as they can go north. So can the stock market.

If you just wanted to live somewhere for a few years before moving on, you do have a good argument for renting *now* because you're planning on moving in 2-3 years. But if you, like most people, are looking to stay put for a long time, it's better to bite the bullet and buy what you can. Even if you end up selling in a few years, any money "lost" will just be the equivalent of the rent you otherwise would have paid.