Author Topic: What's wrong with renting forever?: Stigma of non-home ownership  (Read 39828 times)

charis

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #150 on: October 23, 2015, 07:22:24 AM »
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Well, no.  That's only really comparable if you could rent $500k home for $1500.   You could never do that where I live, where $500K homes are not all that common.  Again, what's the point in debating something that is so circumstance dependent?  It sounds like a lot of posters are just trying to justify their personal decision to buy or rent.

I think you missed my point. I don't care if $1500 can rent an apartment in your neighbourhood. I was only trying to point out that the opportunity cost of living mortgage free is quite substantial. It may still make more sense to own in that case, but the cost is not "only taxes and insurance," as a previous poster said.

If you ignore the tied up capital in your home, then you are missing a large part of the equation. How the decision falls in your neck of the woods is not something any of us can tell you about (or particularly care about), we* just want everybody to make a truly informed decision.

*sorry for the royal "we"

I didn't miss your point.  I don't think the majority (if any) of the posters here are ignoring the fact that capital is tied up in a house until it is sold.  It goes both ways, the cost of renting is not merely the monthly rent that one pays.  What people are largely ignoring is that most people in the US don't live in an inflated housing market.

markbrynn

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #151 on: October 23, 2015, 08:07:43 AM »
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I didn't miss your point.  I don't think the majority (if any) of the posters here are ignoring the fact that capital is tied up in a house until it is sold.  It goes both ways, the cost of renting is not merely the monthly rent that one pays.  What people are largely ignoring is that most people in the US don't live in an inflated housing market.

I don't want to get into a back and forth on particular points (and become annoyingly nitpicky in the processes), so hopefully my answering here is not getting to that point yet.

1) A specific post on this thread said very clearly that a family member was living on the cheap because they were mortgage free. Maybe most people understand the tied up capital issue, but there are some who don't.

2) I'm not sure what you mean by "the cost of renting is not merely the monthly rent one pays." Unless you are trying to move the possible equity gains on the house to the rental side of the equation. The way it's discussed in this thread, the costs, equity gain and opportunity cost related to owning has been considered on the owning side (tallying up a all-in ownership number). On the renting side is pretty much just the rent. You can also shift "missing out on equity gain" to the renting side, but it doesn't change the factors involved.

3) I don't know about "inflated housing market" but more places I look on the internet (that aren't trying to sell houses) seem to say that house prices have stayed more or less even with inflation over time. I'm not an expert, so figuring out what is fact and fiction on the internet is a challenge. I ran into Robert Shiller. His work seems to suggest that long-term houses stay even or fall in value (inflation adjusted) and that the gains seen by people in the past 20-30 years was an anomaly (a very lucrative anomaly for a lot of people, no doubt) caused by a number of factors like easy mortgages.

In case it's not clear from what I wrote, I'm sure that buying and renting can both be the better choice under differing circumstances. I only hope that people don't make incorrect assumptions, a big one being that houses nearly always increase greatly in value (much more than inflation).