Anonymous
03/21/2024 08:56
Subject: What if we just rent for the long haul...
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.
Anonymous
03/21/2024 08:34
Subject: What if we just rent for the long haul...
Anonymous wrote:Anonymous wrote:Because we made $50,000 in about 5 years after selling our last house.
Because rent continues to go up with inflation, while our mortgage says the same.
Yes, some houses are bad buys if you need to sell quickly. But if you’re going to be putting down roots, buying offers some big advantages.
Except the PITI goes up, esp in the high-tax jurisdictions around here (e.g. Ffx County).
I wish I were a renter, honestly. I’m a single parent and the house maintenance never ends. And I don’t have a fixer-upper either. It’s always some thing. A broken appliance, something needs updating/maintenance, landscaping, it never ends.
The only positive I have from renting is the stability it provides my young child. Especially now that she is in younger elementary. And yes, equity I guess. But it’s really hard to see that when I have more than 25 years left on my mortgage, and the taxes keep going up.
I’d love to sell and buy something smaller. But I’m stuck with the interest rates.
And please don’t ask me why I bought a bigger house and I need. I had a family tragedy and our family size decreased. We thought we would be a family of three going on four forever. The universe had other plans.
I am so sorry. I hope interest rates calm down so you can trade into something more comfortable for you. For us, a newer townhome with a DCUM-dreaded HOA was perfect. Little maintenance, but without the instability of rent. Best wishes for you and your child.
Anonymous
03/21/2024 07:22
Subject: What if we just rent for the long haul...
We have good friends that were renting a house because they believed it was a better deal. The owner of the house decided to sell it and didn't renew their lease and they had to move. They couldn't find another rental house in the school district and didn't want to "downgrade" to an apartment and ended up renting in a different school zone. Now their kids are at a different school and I feel so bad for them. They should have bought a house or rented an apartment.
Anonymous
03/20/2024 23:47
Subject: What if we just rent for the long haul...
Anonymous wrote:Because we made $50,000 in about 5 years after selling our last house.
Because rent continues to go up with inflation, while our mortgage says the same.
Yes, some houses are bad buys if you need to sell quickly. But if you’re going to be putting down roots, buying offers some big advantages.
Except the PITI goes up, esp in the high-tax jurisdictions around here (e.g. Ffx County).
I wish I were a renter, honestly. I’m a single parent and the house maintenance never ends. And I don’t have a fixer-upper either. It’s always some thing. A broken appliance, something needs updating/maintenance, landscaping, it never ends.
The only positive I have from renting is the stability it provides my young child. Especially now that she is in younger elementary. And yes, equity I guess. But it’s really hard to see that when I have more than 25 years left on my mortgage, and the taxes keep going up.
I’d love to sell and buy something smaller. But I’m stuck with the interest rates.
And please don’t ask me why I bought a bigger house and I need. I had a family tragedy and our family size decreased. We thought we would be a family of three going on four forever. The universe had other plans.
Anonymous
03/20/2024 23:41
Subject: What if we just rent for the long haul...
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.
"People who rent and save vs. bying are typically renting much less space or worse amenities. "
This is the key point here, and a BIG reason why financially renting might make you better off. As recent owners often complain, the rent vs. own gap is high now. You're not going to rent insanely outside your means if you don't need it today, but you'll certainly buy one because you're trying to solve today for your future life. That's probably a few thousand dollars of a gap monthly, possibly even more once you account for home maintenance, taxes, insurance, renos, etc. The assumption is that you're then reinvesting that money into the market. Your quality of life might be "suffering" (from less space, worse amenities), but that's the financial trade off.
The “key point” is something you and PP just assume to be true?
But so what? Many people take a hit to their quality of life by buying vs renting in terms of commute and access to amenities. (Eg can afford to rent where they actually want to live but can only afford to buy farther out)
There are always trade-offs.
What are you even talking about? People don’t buy large houses in the exurb just in case. They buy for schools and adequate space for the family they have. The choice for the typical buyer, like OP, is either rent a SFH in a top school district or buy a SFH in a top school district. Apartments are rare in areas with great schools and apartments with at least 3 bedrooms are even rarer. There is no arbitrage to be had when you have multiple kids and you want to provide them with the best schooling you can.
Renting a SFH, long-term, in a desirable school district is terrible financial decision in most cases.
I don’t know what you mean by “just in case” but people absolutely DO buy in suburbs AND exurbs for more space (and they are often convinced to buy more space than is “adequate”). There are plenty of rental homes and even *gasp* three bedroom apartments in good school districts. There are also plenty of “adequate” rentals near people’s jobs, and in these (typically) close-in areas the cost of ownership is out of reach for the typical buyer.
We get it, you hate the idea of renting, but it’s strange that you just make things up and also disregard the incredibly obvious math involved because you don’t like it.
Anonymous
03/20/2024 23:16
Subject: What if we just rent for the long haul...
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.
Anonymous
03/20/2024 18:50
Subject: What if we just rent for the long haul...
One thing I know... a lot of the people choosing to rent now because of the short-term financial comparison will come back in ten years and complain about how expensive housing is and how they'll never own. And then they'll wake up in their late 40s and will make one of those posts about how maybe renting for life is their destiny.
Anonymous
03/20/2024 18:19
Subject: What if we just rent for the long haul...
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.
"People who rent and save vs. bying are typically renting much less space or worse amenities. "
This is the key point here, and a BIG reason why financially renting might make you better off. As recent owners often complain, the rent vs. own gap is high now. You're not going to rent insanely outside your means if you don't need it today, but you'll certainly buy one because you're trying to solve today for your future life. That's probably a few thousand dollars of a gap monthly, possibly even more once you account for home maintenance, taxes, insurance, renos, etc. The assumption is that you're then reinvesting that money into the market. Your quality of life might be "suffering" (from less space, worse amenities), but that's the financial trade off.
The “key point” is something you and PP just assume to be true?
But so what? Many people take a hit to their quality of life by buying vs renting in terms of commute and access to amenities. (Eg can afford to rent where they actually want to live but can only afford to buy farther out)
There are always trade-offs.
What are you even talking about? People don’t buy large houses in the exurb just in case. They buy for schools and adequate space for the family they have. The choice for the typical buyer, like OP, is either rent a SFH in a top school district or buy a SFH in a top school district. Apartments are rare in areas with great schools and apartments with at least 3 bedrooms are even rarer. There is no arbitrage to be had when you have multiple kids and you want to provide them with the best schooling you can.
Renting a SFH, long-term, in a desirable school district is terrible financial decision in most cases.
Anonymous
03/20/2024 16:34
Subject: What if we just rent for the long haul...
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.
"People who rent and save vs. bying are typically renting much less space or worse amenities. "
This is the key point here, and a BIG reason why financially renting might make you better off. As recent owners often complain, the rent vs. own gap is high now. You're not going to rent insanely outside your means if you don't need it today, but you'll certainly buy one because you're trying to solve today for your future life. That's probably a few thousand dollars of a gap monthly, possibly even more once you account for home maintenance, taxes, insurance, renos, etc. The assumption is that you're then reinvesting that money into the market. Your quality of life might be "suffering" (from less space, worse amenities), but that's the financial trade off.
I'll point out recent owners aren't complaining. Otherwise they wouldn't have bought.
Are people more likely to rent what they can afford versus owning what they can't afford? Not sure if that is true. A common complaint these days is the increasing unaffordability of rent for most Americans who rent. Who are disproportionately poorer.
Anonymous
03/20/2024 16:15
Subject: What if we just rent for the long haul...
Anonymous wrote:Anonymous wrote:Anonymous wrote: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.
Comparing a certain type of home, in a historically strong metro area, to the stock market in general is an unfair comparison. A better comparison would be to compare the real estate market in general to the stock market in general.
If you’re going to compare the DC housing market to stocks, compare it to a certain company or a certain sector. If you bought a basket of individual tech stocks (Apple, Microsoft, Amazon) 20 years ago instead of a house in DC you’d be doing far better.
No I am not. The average house appreciation in the US for the last 2 decades has been ~5%, for strong metro areas it has been double that. If you only invest $400K (down payment) and purchase an asset of $2M (house), your asset would have appreciated $100k a year annually with a 5% appreciation rate. If you invested the 400k in the market you'd need a 25% annual return to make 100k (stock market average has been 9.9% annually). Plus 1. rents have increased 8.5% annually for the last 4 decades while your mortgage payment stays fixed and often decreases through refinancing 2. your mortgage is tax deductible while rent isn't. Renting only makes sense if you can't settle down for 5 plus years in an area.
The bolded is ridiculously untrue.
https://tradingeconomics.com/united-states/rent-inflation
https://www.in2013dollars.com/Rent-of-primary-residence/price-inflation
I don't have time to do the calcs, but based on the 2nd link chart, looks like the average rent inflation since 1984 is around 4% or so.
Yes it's mostly true. Here is a reputable source not a random website you just Googled:
https://fred.stlouisfed.org/series/CUUR0000SEHA
Ha ha incredible. If you take the Feb 1984 base from that data, it's 102.9. The Feb 2024 base is 413.65. Put that into Excel and you get an annualized inflation rate of 3.54%
So your inflation rate was only by 2.4x. Great work.
Well great typo work by me- "only OFF by 2.4x"
Anonymous
03/20/2024 16:11
Subject: What if we just rent for the long haul...
Anonymous wrote:Anonymous wrote: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.
Comparing a certain type of home, in a historically strong metro area, to the stock market in general is an unfair comparison. A better comparison would be to compare the real estate market in general to the stock market in general.
If you’re going to compare the DC housing market to stocks, compare it to a certain company or a certain sector. If you bought a basket of individual tech stocks (Apple, Microsoft, Amazon) 20 years ago instead of a house in DC you’d be doing far better.
No I am not. The average house appreciation in the US for the last 2 decades has been ~5%, for strong metro areas it has been double that. If you only invest $400K (down payment) and purchase an asset of $2M (house), your asset would have appreciated $100k a year annually with a 5% appreciation rate. If you invested the 400k in the market you'd need a 25% annual return to make 100k (stock market average has been 9.9% annually). Plus 1. rents have increased 8.5% annually for the last 4 decades while your mortgage payment stays fixed and often decreases through refinancing 2. your mortgage is tax deductible while rent isn't. Renting only makes sense if you can't settle down for 5 plus years in an area.
The bolded is ridiculously untrue.
https://tradingeconomics.com/united-states/rent-inflation
https://www.in2013dollars.com/Rent-of-primary-residence/price-inflation
I don't have time to do the calcs, but based on the 2nd link chart, looks like the average rent inflation since 1984 is around 4% or so.
Yes it's mostly true. Here is a reputable source not a random website you just Googled:
https://fred.stlouisfed.org/series/CUUR0000SEHA
Ha ha incredible. If you take the Feb 1984 base from that data, it's 102.9. The Feb 2024 base is 413.65. Put that into Excel and you get an annualized inflation rate of 3.54%
So your inflation rate was only by 2.4x. Great work.
Anonymous
03/20/2024 16:09
Subject: What if we just rent for the long haul...
Anonymous wrote: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.
Comparing a certain type of home, in a historically strong metro area, to the stock market in general is an unfair comparison. A better comparison would be to compare the real estate market in general to the stock market in general.
If you’re going to compare the DC housing market to stocks, compare it to a certain company or a certain sector. If you bought a basket of individual tech stocks (Apple, Microsoft, Amazon) 20 years ago instead of a house in DC you’d be doing far better.
No I am not. The average house appreciation in the US for the last 2 decades has been ~5%, for strong metro areas it has been double that. If you only invest $400K (down payment) and purchase an asset of $2M (house), your asset would have appreciated $100k a year annually with a 5% appreciation rate. If you invested the 400k in the market you'd need a 25% annual return to make 100k (stock market average has been 9.9% annually). Plus 1. rents have increased 8.5% annually for the last 4 decades while your mortgage payment stays fixed and often decreases through refinancing 2. your mortgage is tax deductible while rent isn't. Renting only makes sense if you can't settle down for 5 plus years in an area.
The bolded is ridiculously untrue.
https://tradingeconomics.com/united-states/rent-inflation
https://www.in2013dollars.com/Rent-of-primary-residence/price-inflation
I don't have time to do the calcs, but based on the 2nd link chart, looks like the average rent inflation since 1984 is around 4% or so.
Yes it's mostly true. Here is a reputable source not a random website you just Googled:
https://fred.stlouisfed.org/series/CUUR0000SEHA
Ha ha incredible. If you take the Feb 1984 base from that data, it's 102.9. The Feb 2024 base is 413.65. Put that into Excel and you get an annualized inflation rate of 3.54%
Anonymous
03/20/2024 15:39
Subject: What if we just rent for the long haul...
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.
"People who rent and save vs. bying are typically renting much less space or worse amenities. "
This is the key point here, and a BIG reason why financially renting might make you better off. As recent owners often complain, the rent vs. own gap is high now. You're not going to rent insanely outside your means if you don't need it today, but you'll certainly buy one because you're trying to solve today for your future life. That's probably a few thousand dollars of a gap monthly, possibly even more once you account for home maintenance, taxes, insurance, renos, etc. The assumption is that you're then reinvesting that money into the market. Your quality of life might be "suffering" (from less space, worse amenities), but that's the financial trade off.
The “key point” is something you and PP just assume to be true?
But so what? Many people take a hit to their quality of life by buying vs renting in terms of commute and access to amenities. (Eg can afford to rent where they actually want to live but can only afford to buy farther out)
There are always trade-offs.
Anonymous
03/20/2024 15:37
Subject: What if we just rent for the long haul...
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.
"People who rent and save vs. bying are typically renting much less space or worse amenities. "
This is the key point here, and a BIG reason why financially renting might make you better off. As recent owners often complain, the rent vs. own gap is high now. You're not going to rent insanely outside your means if you don't need it today, but you'll certainly buy one because you're trying to solve today for your future life. That's probably a few thousand dollars of a gap monthly, possibly even more once you account for home maintenance, taxes, insurance, renos, etc. The assumption is that you're then reinvesting that money into the market. Your quality of life might be "suffering" (from less space, worse amenities), but that's the financial trade off.
Which is a short term thinking. The periods where owning is more expensive than renting is always short lived and never lasts long.
Most people are not in the situation where the choice is between 10k in mortgage + home expenses versus 5k in rent + 5k investments. It’s more like rent + 0 investments.
There are times when market fundamentals are uncomfortable and it's worthwhile pausing and renting for a year or two longer, as buyers in 2006-2008 must wish they had done. But pretty much everyone who bought between 2009 and 2022 into 2023 has made out like a bandit.
Anonymous
03/20/2024 15:21
Subject: What if we just rent for the long haul...
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.
"People who rent and save vs. bying are typically renting much less space or worse amenities. "
This is the key point here, and a BIG reason why financially renting might make you better off. As recent owners often complain, the rent vs. own gap is high now. You're not going to rent insanely outside your means if you don't need it today, but you'll certainly buy one because you're trying to solve today for your future life. That's probably a few thousand dollars of a gap monthly, possibly even more once you account for home maintenance, taxes, insurance, renos, etc. The assumption is that you're then reinvesting that money into the market. Your quality of life might be "suffering" (from less space, worse amenities), but that's the financial trade off.