Author Topic: What's wrong with renting forever?: Stigma of non-home ownership  (Read 41412 times)

Melody

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #100 on: October 19, 2015, 04:34:44 PM »
If you love the area and want to stay in it until your kid hits college there is a very real risk that you are out priced of the area before he leaves home. It's also likely your landlord sells (potentially to owner occupiers) forcing you to move... multiple times. If you just want an affordable place to live with metro access to the city (i.e. not fixated on suburb x) and don't mind moving often (12 monthly during a boom, as at least here there are caps on how much they can increase your rent by, so they'd rather churn you out and replace you with someone who pays more than renew your lease) then renting could very well be a good way to hit FI sooner. Having seen all of the above happen to friends repeatedly I'm choosing to buy. (Also HCOL with similar income/house price ratio to yours). [The heartbreak I have seen when people have had homes they have lives in for 5+ years ripped from under them as the landlord sells to an owner-occupier is really sad... in each instance the person had to move to an inferior house and neighborhood to keep the rent similar to what they paid previously]. I wouldn't judge someone for renting though as I understand it offers flexibility to move etc.

rubybeth

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #101 on: October 20, 2015, 06:20:42 AM »
If you love the area and want to stay in it until your kid hits college there is a very real risk that you are out priced of the area before he leaves home. It's also likely your landlord sells (potentially to owner occupiers) forcing you to move... multiple times. If you just want an affordable place to live with metro access to the city (i.e. not fixated on suburb x) and don't mind moving often (12 monthly during a boom, as at least here there are caps on how much they can increase your rent by, so they'd rather churn you out and replace you with someone who pays more than renew your lease) then renting could very well be a good way to hit FI sooner. Having seen all of the above happen to friends repeatedly I'm choosing to buy. (Also HCOL with similar income/house price ratio to yours). [The heartbreak I have seen when people have had homes they have lives in for 5+ years ripped from under them as the landlord sells to an owner-occupier is really sad... in each instance the person had to move to an inferior house and neighborhood to keep the rent similar to what they paid previously]. I wouldn't judge someone for renting though as I understand it offers flexibility to move etc.

Again, it sounds like you are assuming the OP is talking about living in a rental house, when she clearly stated in her original post that she is in an apartment. The likelihood of the landlord selling an apartment building to owner occupiers? Zilch.

Thinkum

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #102 on: October 20, 2015, 06:26:38 AM »
.... The likelihood of the landlord selling an apartment building to owner occupiers? Zilch.

Perhaps, but it is possible for apartment building owners to sell to developers. Which is exactly what happened to us. Having to leave and find a new residence is not a great experience when you liked where you lived to begin with.

clifp

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #103 on: October 20, 2015, 06:35:04 AM »
.... The likelihood of the landlord selling an apartment building to owner occupiers? Zilch.

Perhaps, but it is possible for apartment building owners to sell to developers. Which is exactly what happened to us. Having to leave and find a new residence is not a great experience when you liked where you lived to begin with.

Even for an apartment building there are many times owners evict tenants: changing the apartment to a condo, in order to put relatives in there (this is a common ploy for rent-controlled cities) and more recently in cities with a good tourism busy converting a long-term apartment rental into a short-term AirBnb.

Noodle

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #104 on: October 20, 2015, 07:39:23 AM »
Aside from the people who always see different choices as judgment on their choices, I think some of the concern comes from the fact that for many people, buying a house has been seen as the main source of long-term savings. So if someone you cared about was not buying (and you didn't know or understand their investment situation) you might worry that they were not accumulating the wealth they would need later in life.

I think every situation is so different, there's not a lot of point in giving general advice. It so depends on the local real estate market, family needs, etc. etc. In my city, there are a ton of evictions in my level of the rental market because developers are buying up older apartment buildings in desirable neighborhoods and turning them into very expensive townhouses or condos, and rents are going up fast (mine went up 30% in 5 years). The numbers were right for buying--I ended up spending about the same as renting but got a lot more for my money--plus I could see the writing on the wall after I saw three apartment buildings come down on my street. In my last city, I was expecting to be a permanent renter.

monkeytree

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #105 on: October 20, 2015, 08:13:53 AM »
We live in a relatively new building, and so I don't think they'll be tearing it down/kicking us out. I could potentially see them converting to condos at some point, but probably not anytime soon. I think our decision to rent indefinitely hinges on the assumption that we'll stay here in the same place. If we were "forced" to move, when that time comes, we'll probably look seriously at buying then.

If you love the area and want to stay in it until your kid hits college there is a very real risk that you are out priced of the area before he leaves home. 

So do you all think this is true? I would think if we rented in the same area until my son goes off to college, we would have so much saved up that even if prices went up, we'd have enough to pay down a good chunk... or am I just being too optimistic?

Jack

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #106 on: October 20, 2015, 08:27:54 AM »
Even with today's rock-bottom interest rates, if you factor in the opportunity cost of the 20% down payment over the lifetime of a 30-year mortgage loan, renting ALWAYS wins.

It is absolutely wrong to claim that "renting always wins." Let's take my house as an example, and evaluate it against some of the metrics people have mentioned so far:

The house in question is a 3 bedroom, 2 bath single-family detached home in a gentrifying neighborhood in Atlanta. I bought it in 2009 and paid about $100k. My principal and interest payment is about $500/month, PITI is about $750/month, and PITI + utilities is about $1000/month. The house is now worth almost $300K according to Zillow, or $150-200K according to my (much more realistic) best guess.

Metric 1, monthly cost: To rent a house like mine I'd have to pay at least $1500/month, plus utilities. That's twice what I actually pay (not including the opportunity cost of living in it myself vs. renting it to someone else!). Owning wins. (By the way: if I wanted to rent for the same monthly cost as my mortgage, the best I'd be able to do is a relatively low-quality 2-bedroom apartment.)

Metric 2, "price actually paid" (including interest): Assuming I take my mortgage to term, I would pay $500 * 360 = $180K total for my house, over thirty years. It's worth close to that much now, six years in. I've already broken even! (And that's without taking into account the fact that I haven't actually paid most of that $180K yet.)

Metric 3, opportunity cost of not investing down payment: I bought with (effectively) a negative down payment. First of all, I got a $20K down-payment assistance grant from the city. Even so, the FHA required me to have $1500 in cash at closing... which I borrowed from my parents. Then the Federal government gave me an $8K tax credit (out of which I repaid my parents). If I hadn't bought, I would have had not only fewer assets overall, but less actual cash to invest!

Rubic

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #107 on: October 20, 2015, 08:35:51 AM »
Again, it sounds like you are assuming the OP is talking about living in a rental house, when she clearly stated in her original post that she is in an apartment. The likelihood of the landlord selling an apartment building to owner occupiers? Zilch.

Actually > Zilch.  It happened to a friend of mine recently.  She and her cat were comfortably settled in for a couple of years, living close to work, then received 30 days notice to vacate because the owner sold to a developer.

That said, the financial benefits of renting usually overcome the financial benefits of ownership.  I've spent most of my life as a renter.
 

Rubic

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #108 on: October 20, 2015, 08:58:59 AM »
@monkeytree:

Everyone's situation is different and circumstances may change.  I think starting with the plan to rent indefinitely is a great plan.  If you proceed on that basis, you should quickly build up your assets.

That had been my plan.

Where I detoured, and am now a homeowner: 

During 2010, in the aftermath of the housing collapse, developers were desperate to sell and were even auctioning units at a loss to quickly raise cash.  Due to years of saving, I was able to obtain a unit (though not through an auction) at a bargain price.

If your plan is to rent indefinitely, you'll have the opportunity to wait until an overwhelming deal comes your way.  Maybe never, but maybe the stars will be in alignment and you can take advantage of a fat pitch -- ideally a property you could easily rent out if you decide to move.  If you think in terms of decades (I waited 12 years), you'll probably see an opportunity when it becomes available. 

There's no penalty for not swinging at the fat pitch.  You can wait years and years and never strike out.

mm1970

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #109 on: October 20, 2015, 10:44:12 AM »
We live in a relatively new building, and so I don't think they'll be tearing it down/kicking us out. I could potentially see them converting to condos at some point, but probably not anytime soon. I think our decision to rent indefinitely hinges on the assumption that we'll stay here in the same place. If we were "forced" to move, when that time comes, we'll probably look seriously at buying then.

If you love the area and want to stay in it until your kid hits college there is a very real risk that you are out priced of the area before he leaves home. 

So do you all think this is true? I would think if we rented in the same area until my son goes off to college, we would have so much saved up that even if prices went up, we'd have enough to pay down a good chunk... or am I just being too optimistic?
If you are mustachian, I do not think you are being too optimistic.

Our net worth is pretty high now.  But if we had opted to continue renting 11 years ago instead of buying our house, it would probably be half a million higher. 

Scandium

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #110 on: October 20, 2015, 11:11:47 AM »
Where in the world can you get annual rental increases of only 1-2%?! I assume this is real rate at least? I may have lived in the Comcast versions of apartments, but in each case after the first year the rent jumped >10%. Just 2% seems very low to me.

Comparing the cost of an apartment and a house isn't really fair either, as you "get more" with a house. Apples to apples the rent for our house is likely way more than our mortgage (part of which can be counted as savings). But if you're ok in an apartment this is of course irrelevant.

rubybeth

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #111 on: October 20, 2015, 11:37:40 AM »
Where in the world can you get annual rental increases of only 1-2%?! I assume this is real rate at least? I may have lived in the Comcast versions of apartments, but in each case after the first year the rent jumped >10%. Just 2% seems very low to me.

Since you asked, the midwest of the US, not a large metropolitan area (under 100,000 population). Our rent actually went down from 2014 to now because the price of our garage dropped by $10/mo for no real reason. We started off renting out apartment for $550/mo with no garage in 2008 and now it's up to $660/mo with garage in 2015. There are even cheaper places in our city, but they're in less desirable neighborhoods for our needs.

dodojojo

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #112 on: October 20, 2015, 12:31:03 PM »
I've lived in the same apartment for 9 years and my rent goes up about 2 -2.5% annually. I've rented all my life (I grew up in rented places as well) and I've never been asked to vacate.  As Walter White would say, "I am the one who knocks."

I do live in a very HCOL neighborhood...watch as management sells out to a high rise condo developer...

catccc

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #113 on: October 20, 2015, 12:43:04 PM »
Where in the world can you get annual rental increases of only 1-2%?! I assume this is real rate at least? I may have lived in the Comcast versions of apartments, but in each case after the first year the rent jumped >10%. Just 2% seems very low to me.

We rent a house, the rent has been the same since we moved in 2011.  Our landlord likes a good tenant and wants to keep us around, I guess.  This about an hour outside of philly.  I think we just got lucky.



Dicey

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #114 on: October 20, 2015, 01:20:59 PM »
Depending on the kids ages and personalities, they might just be curious. Giving your kid answers to the questions might put them all at ease.

"My parents work long hours and are kinda clumsy, so we live in an apartment so they don't have to waste time figuring out how to fix stuff"

If your kid is dealing with mean girls, I don't know how to handle it :)

My thinking is along the same lines, but the answer I'd teach my kid is "We rent because we have different goals." Should even work on mean girls.

There are a load of great answers if anyone asks what the goals are (which I doubt). The easiest and best is probably "Freedom".

psyclotr0n

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #115 on: October 20, 2015, 02:15:07 PM »
Tiny homes is the only way out of this madness that I can see. Not for everyone, but some "tiny" homes can still be pretty big...

Melody

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #116 on: October 20, 2015, 03:46:01 PM »
We live in a relatively new building, and so I don't think they'll be tearing it down/kicking us out. I could potentially see them converting to condos at some point, but probably not anytime soon. I think our decision to rent indefinitely hinges on the assumption that we'll stay here in the same place. If we were "forced" to move, when that time comes, we'll probably look seriously at buying then.

If you love the area and want to stay in it until your kid hits college there is a very real risk that you are out priced of the area before he leaves home. 

So do you all think this is true? I would think if we rented in the same area until my son goes off to college, we would have so much saved up that even if prices went up, we'd have enough to pay down a good chunk... or am I just being too optimistic?
If you are mustachian, I do not think you are being too optimistic.

Our net worth is pretty high now.  But if we had opted to continue renting 11 years ago instead of buying our house, it would probably be half a million higher.
Its a risk. Maybe not a big one (I don't know the dynamics of your local market and what underpins demand) but it's a risk that doesn't exist if you buy, only you know if you are willing to take that risk (which you weight up with the risks of buying). Certainly has happened here as the inner city suburbs have gentrified... Some of these areas have gone from $150/ week rent to $500/ week rent in 10 years. (I am pretty sure that's more than 2% growth!) If you are willing to move to other suburbs that are yet to gentrify you have more options... But gentrification (at least here) happens from the inner city out so your commute will gradually get less walkable/bikeable.As others have said it does not need to be an all or nothing, you can keep your eye out for a bargain, or you can reassess at any time if you suspect there will be a shift in market dynamic. 

NoraLenderbee

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #117 on: October 20, 2015, 05:49:43 PM »
Even with today's rock-bottom interest rates, if you factor in the opportunity cost of the 20% down payment over the lifetime of a 30-year mortgage loan, renting ALWAYS wins.

It is absolutely wrong to claim that "renting always wins." Let's take my house as an example, and evaluate it against some of the metrics people have mentioned so far:

The house in question is a 3 bedroom, 2 bath single-family detached home in a gentrifying neighborhood in Atlanta. I bought it in 2009 and paid about $100k. My principal and interest payment is about $500/month, PITI is about $750/month, and PITI + utilities is about $1000/month. The house is now worth almost $300K according to Zillow, or $150-200K according to my (much more realistic) best guess.

[snip]

Metric 2, "price actually paid" (including interest): Assuming I take my mortgage to term, I would pay $500 * 360 = $180K total for my house, over thirty years. It's worth close to that much now, six years in. I've already broken even! (And that's without taking into account the fact that I haven't actually paid most of that $180K yet.)


You'd pay $750 * 360 = 270000. Taxes and insurance are part of the carrying costs.

clifp

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #118 on: October 20, 2015, 07:13:33 PM »
I ran a poll on early-retirement.org.  Among retirees (generally early) 88% own homes, among those looking to retire early its about 80% that own.  The rates are substantially higher than the country as a whole and close to the percentage found in the millionaires next door.  As rule most people bought as soon as possible.

Brilliantine

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #119 on: October 20, 2015, 07:22:32 PM »
I knew that that"ALWAYS" would come back to haunt me. I should have said "almost always".

That aside,

1. I still don't know why homeowners take the "value" of their primary residence into account when they do net worth calculations or ROI calculations or rent vs buy comparisons. Your primary residence's value (however you may have arrived at that value) means not-a-whole-lot as long as you continue to live in it. Is everyone assuming that they will always buy low and sell high?

2. It seems to me like many homeowners are happy to rattle off their PITI numbers but they hardly ever talk about the cost of repairs/maintenance/improvements on their house. Friend of mine just got done paying for lead abatement for the exterior paint of his house. Another friend put in a $75,000 kitchen*. Another, added a dormer for I don't know how many thousands of dollars even though he did most of the work himself. Is this a side-effect of the problem above? Do people think the new kitchen adds to the "value" of their house? If so, I have news: it does not.

* I know... Nobody on this forum would do such a stupid thing.

Hank Sinatra

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #120 on: October 20, 2015, 07:37:09 PM »
Quote
Do people think the new kitchen adds to the "value" of their house? If so, I have news: it does not.   

Yes. This is the biggest joke of all. I remember watching a home improvement type show some years back. The question of the day was: Which home improvement has the biggest payoff when you go to sell?  They discussed the usual i.e. Add a new bathroom. Add a swimming pool. Finish the basement and such. The #1 thing was -remodel the kitchen-. The Expert said a remodeled kitchen could bring in   --up to--  90% of the cost of the remodeling job!

Gee! Under perfect conditions, if you remodel your kitchen you can lose  a minimum of 10% of the improvement cost!

Jack

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #121 on: October 20, 2015, 08:01:11 PM »
Even with today's rock-bottom interest rates, if you factor in the opportunity cost of the 20% down payment over the lifetime of a 30-year mortgage loan, renting ALWAYS wins.

It is absolutely wrong to claim that "renting always wins." Let's take my house as an example, and evaluate it against some of the metrics people have mentioned so far:

The house in question is a 3 bedroom, 2 bath single-family detached home in a gentrifying neighborhood in Atlanta. I bought it in 2009 and paid about $100k. My principal and interest payment is about $500/month, PITI is about $750/month, and PITI + utilities is about $1000/month. The house is now worth almost $300K according to Zillow, or $150-200K according to my (much more realistic) best guess.

[snip]

Metric 2, "price actually paid" (including interest): Assuming I take my mortgage to term, I would pay $500 * 360 = $180K total for my house, over thirty years. It's worth close to that much now, six years in. I've already broken even! (And that's without taking into account the fact that I haven't actually paid most of that $180K yet.)


You'd pay $750 * 360 = 270000. Taxes and insurance are part of the carrying costs.

I was basing that metric off of Shane's statement below. He didn't include taxes or insurance, so I didn't either.

When people sell their homes they often report that they've made a "profit" based on the fact that they sold the property for more than the original purchase price. "Wow, I'm a real estate tycoon. I just made a big capital gain on the sale of my residence." It's interesting, though, I've never heard anyone report the actual price they paid for their house/condo, which, including mortgage interest, is often 2X+ what the original sale price was.

Even with today's unusually low interest rates, if you buy a $400K home with a 20% down payment and finance $320K at 3.92%, over 30 years you end up paying $544,683 + $80K deposit = $624,683. Wouldn't this be the actual price of the home? Cash buyers are the only ones who get to pay $400K. So when you sell the place for $XXXK, your cost basis isn't the original purchase price. It's the total of all the mortgage payments you've made + the downpayment, right? Wouldn't that make more sense?

okits

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #122 on: October 20, 2015, 08:30:58 PM »
Where in the world can you get annual rental increases of only 1-2%?! I assume this is real rate at least? I may have lived in the Comcast versions of apartments, but in each case after the first year the rent jumped >10%. Just 2% seems very low to me.

Province of Ontario has rent control for buildings completed and occupied prior to Nov 1, 1991.  The guideline is based on inflation (going back to 2000 it looks like only 2002 and 2012 had guidelines above 3%.*)  Your landlord can apply for an exemption to increase your rent more than the guideline, but there needs to be justification, like capital improvements.  For a new tenant the landlord can charge the market rate (but is then subject to the guideline for future increases for the duration of that person's tenancy.)

The legislation isn't perfect, but the 1/11/91 cutoff means the plush, luxury amenity condos built in the past 15 years can gouge as the market will bear, but older, unfancy places can't brutally squeeze existing tenants.  That must have some effect of protecting lower income people (who may only be able to afford the older, cheaper buildings), though admittedly DH and I are benefitting from it, too.

* Source:  http://www.landlordselfhelp.com/RentIncreaseGuideline.htm

Shane

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #123 on: October 20, 2015, 08:32:45 PM »
I ran a poll on early-retirement.org.  Among retirees (generally early) 88% own homes, among those looking to retire early its about 80% that own.  The rates are substantially higher than the country as a whole and close to the percentage found in the millionaires next door.  As rule most people bought as soon as possible.

Given the emphasis placed on home ownership in our society, it's not surprising there's a correlation between FI people and people who own their own homes. But, I think you're asking the wrong question. Rather than asking what % of FI people own their own homes, the question should be: did purchasing a home instead of renting speed up or slow down your journey to FI? Depending on the market(s) where the respondents to your poll live, their answers to that question may go either way if they're honest.

Dicey

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #124 on: October 21, 2015, 12:35:32 PM »
1. I still don't know why homeowners take the "value" of their primary residence into account when they do net worth calculations or ROI calculations or rent vs buy comparisons. Your primary residence's value (however you may have arrived at that value) means not-a-whole-lot as long as you continue to live in it. Is everyone assuming that they will always buy low and sell high?
This is kind of a sideways response to this question. In the early days of my journey to FI, I included my home equity, primarily because I had a lot and it gave me a mental boost. I knew it was artificial, but seeing that net worth number grow was inspirational. Once I achieved FI, and had accrued more money than I ever really thought possible (OMG, it works, it really works!), I omitted the value of my home from my numbers. I also do not count the value of rental property in my portfolio, just because, I'm conservative that way. I don't include my cars (yes, plural and paid for) either. I know that my FIRE/Net Worth number is, in its way, is as imaginary as home equity. I mean, in the sense that I'm never going to spend it all, right? My point is that whatever tricks you employ to get yourself to your magic number are okay, as long as you get to real number$.

2...Do people think the new kitchen adds to the "value" of their house? If so, I have news: it does not.
I agree that 75K for a kitchen sounds over-the-top, but an outdated kitchen surely subtracts value when it's time to sell. It's sad to see what happens when an older house that hasn't been kept reasonably up-to-date goes on the market, in comparison to one that has. The trick is to be smart about how you do it. For a stunning example, check out Cheddar Stacker's awesome kitchen remodel.

http://forum.mrmoneymustache.com/journals/the-cheddar-block/msg840651/#msg840651

charis

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #125 on: October 21, 2015, 02:38:42 PM »
1. I still don't know why homeowners take the "value" of their primary residence into account when they do net worth calculations or ROI calculations or rent vs buy comparisons. Your primary residence's value (however you may have arrived at that value) means not-a-whole-lot as long as you continue to live in it. Is everyone assuming that they will always buy low and sell high?
This is kind of a sideways response to this question. In the early days of my journey to FI, I included my home equity, primarily because I had a lot and it gave me a mental boost. I knew it was artificial, but seeing that net worth number grow was inspirational. Once I achieved FI, and had accrued more money than I ever really thought possible (OMG, it works, it really works!), I omitted the value of my home from my numbers. I also do not count the value of rental property in my portfolio, just because, I'm conservative that way. I don't include my cars (yes, plural and paid for) either. I know that my FIRE/Net Worth number is, in its way, is as imaginary as home equity. I mean, in the sense that I'm never going to spend it all, right? My point is that whatever tricks you employ to get yourself to your magic number are okay, as long as you get to real number$.

2...Do people think the new kitchen adds to the "value" of their house? If so, I have news: it does not.
I agree that 75K for a kitchen sounds over-the-top, but an outdated kitchen surely subtracts value when it's time to sell. It's sad to see what happens when an older house that hasn't been kept reasonably up-to-date goes on the market, in comparison to one that has. The trick is to be smart about how you do it. For a stunning example, check out Cheddar Stacker's awesome kitchen remodel.

http://forum.mrmoneymustache.com/journals/the-cheddar-block/msg840651/#msg840651

Our kitchen is crazy outdated.  It's just terrible.  And it is one of the main reasons why our house is assessed at $15K to $20K lower than otherwise comparable houses on our block.  If we do a decent upgrade in that range, we will certainly make our money back, probably more, if/when we sell.

mrs sideways

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #126 on: October 21, 2015, 07:25:54 PM »
It just makes me wonder then, with all the baggage/headache that comes with homeownership, why do so many (most?) people buy?

Because for me, renting was worse! I grew up in an apartment and was always acutely aware that our home wasn't ours: it could be taken away from us with just 30 days notice. My mother dreaded the rent increases every year, never knowing how much it was going to cost THIS time. Renting on my own was shit too. There was one place we loved... until it got sold and the new owners decided to renovate the entire complex. The water got turned off twice a week for two months, the workout room was closed for three, the workmen ripping the units apart started at 9am with the power tools, and there was that fun week when they renovated our unit while we were still there. And lets not forget rent increases, everywhere, every year. The only thing you can do is move, which is a giant pain in the ass, even when I only had one room of stuff!

Now? With kids? I will happily and gladly exchange my weekends on home maintenance if I know no one can kick us out next month, our costs will be the same every year for as long as we stay, and if anyone turns off our water for a day, it's going to be us!
« Last Edit: October 21, 2015, 07:41:30 PM by mrs sideways »

clifp

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #127 on: October 21, 2015, 07:57:37 PM »
I ran a poll on early-retirement.org.  Among retirees (generally early) 88% own homes, among those looking to retire early its about 80% that own.  The rates are substantially higher than the country as a whole and close to the percentage found in the millionaires next door.  As rule most people bought as soon as possible.

Given the emphasis placed on home ownership in our society, it's not surprising there's a correlation between FI people and people who own their own homes. But, I think you're asking the wrong question. Rather than asking what % of FI people own their own homes, the question should be: did purchasing a home instead of renting speed up or slow down your journey to FI? Depending on the market(s) where the respondents to your poll live, their answers to that question may go either way if they're honest.

Most of the comments were that home ownership speed up the path to FI. You are certainly right the answers would depend on when and where. 

I haven't seen anybody on this thread show data that over the last 30 years renters came out ahead of owners in my state or my city. Several of us have shown examples where ownership was clearly better than renting. While correlation isn't causation at some point it pretty safe to make some assumption.  Why is there a big emphasis on home ownership in our society?  Answer because it leads to wealth accumulation.  Now if you think that assumption is faulty fine but I'd love to see some data to back it up.

markbrynn

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #128 on: October 22, 2015, 02:42:54 AM »
Quote
Earlier you buy, the earlier you own it outright and begin years of mortgage free living.

This discussion seems to go nowhere because there are many people involved in even this small discussion and they don't all agree (or acknowledge) some basic facts.

For example, shouldn't it be well accepted by everybody here that if you have a mortgage free home that you also have all of the value of the home tied up in a non-producing asset. If your home is worth $500k, then you are forgoing (based on the commonly used 4% safe withdrawal rate*) $20k/year in income. That is over $1500/month that could be paying for rent.

Add on top of that the basic costs usually mentioned (tax and insurance) and often forgotten (maintenance) and you have a pretty substantial "cost" of living mortgage free.

*Adjust this rate to whatever you want, but investing this money (in the US stock market) has historically been able to produce reliable returns around 4% (inflation adjusted).

clifp

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #129 on: October 22, 2015, 05:43:43 AM »
Quote
Earlier you buy, the earlier you own it outright and begin years of mortgage free living.

This discussion seems to go nowhere because there are many people involved in even this small discussion and they don't all agree (or acknowledge) some basic facts.

For example, shouldn't it be well accepted by everybody here that if you have a mortgage free home that you also have all of the value of the home tied up in a non-producing asset. If your home is worth $500k, then you are forgoing (based on the commonly used 4% safe withdrawal rate*) $20k/year in income. That is over $1500/month that could be paying for rent.

Add on top of that the basic costs usually mentioned (tax and insurance) and often forgotten (maintenance) and you have a pretty substantial "cost" of living mortgage free.

*Adjust this rate to whatever you want, but investing this money (in the US stock market) has historically been able to produce reliable returns around 4% (inflation adjusted).

How do you figure its non-producing asset?  In a place like California home prices have appreciated 6.92%/year over the last 40 years.  In fact, there are only about a 1/2 dozen state where housing prices appreciated less than inflation over this period. It is pretty hard to argue today that a bond portfolio (e.g. Vanguard Total Bonds) is a better inflation hedge than a house.

That is in addition to providing a place to live and a substantial saving on rent. There  aren't many places you can rent a $500K house for $1,500/month. Moreover, the income from home appreciation is deferred and up 500K exclude whereas you have to pay taxes on that 4%. 

charis

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #130 on: October 22, 2015, 07:23:15 AM »
Whether it is more financially sound to rent or buy is entirely dependent on the housing market where you are.  There is no point in discussing this because one person's set of "facts" is entirely different than another person's set of "facts."
« Last Edit: October 22, 2015, 09:58:26 AM by jezebel »

Axecleaver

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #131 on: October 22, 2015, 08:56:16 AM »
Quote
How do you figure its non-producing asset?  In a place like California home prices have appreciated 6.92%/year over the last 40 years.  In fact, there are only about a 1/2 dozen state where housing prices appreciated less than inflation over this period. It is pretty hard to argue today that a bond portfolio (e.g. Vanguard Total Bonds) is a better inflation hedge than a house.

Housing prices depend very heavily on your particular neighborhood, so I question the 6.92% per year appreciation. Some places will be more and others less. The census data on housing doesn't support your hypothesis. It only goes through 2000, so I had to hunt for 2010 numbers, and those dont seem to square with the census data. Zillow data shows median prices dropping in California from a high in 2008 of 538k to a low in 2012 of 310k. (-40%). Values are now at 470k which is still under 2008 peak. So, I don't see any way to get to a 7% appreciation, and it's still way more volatile than financial markets (and much less liquid).

Notice California and NY both go down between 1990 and 2000, and we can see drops between 2000 and 2010.

https://www.census.gov/hhes/www/housing/census/historic/values.html

                   2000           1990
California - $211,500  $249,800 -15.3%
New York - $168,100  $148,700 -11.5%

These values are adjusted for inflation - wow, you could get a house in Hawaii for $75k in today's dollars in 1950!

rubybeth

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #132 on: October 22, 2015, 09:24:22 AM »
How do you figure its non-producing asset?  In a place like California home prices have appreciated 6.92%/year over the last 40 years.  In fact, there are only about a 1/2 dozen state where housing prices appreciated less than inflation over this period. It is pretty hard to argue today that a bond portfolio (e.g. Vanguard Total Bonds) is a better inflation hedge than a house.

Because it doesn't "produce" anything until you sell it, meaning you have to move/leave/give it up. It's non-producing while you live in it, unlike investments, which you own and can product wealth which can be sold easily at any time, unlike a house. Prices may appreciate, but to realize them, you have to sell and move.

Shane

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #133 on: October 22, 2015, 09:37:41 AM »
Quote
Earlier you buy, the earlier you own it outright and begin years of mortgage free living.

This discussion seems to go nowhere because there are many people involved in even this small discussion and they don't all agree (or acknowledge) some basic facts.

For example, shouldn't it be well accepted by everybody here that if you have a mortgage free home that you also have all of the value of the home tied up in a non-producing asset. If your home is worth $500k, then you are forgoing (based on the commonly used 4% safe withdrawal rate*) $20k/year in income. That is over $1500/month that could be paying for rent.

Add on top of that the basic costs usually mentioned (tax and insurance) and often forgotten (maintenance) and you have a pretty substantial "cost" of living mortgage free.

*Adjust this rate to whatever you want, but investing this money (in the US stock market) has historically been able to produce reliable returns around 4% (inflation adjusted).

This +1!

charis

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #134 on: October 22, 2015, 10:06:38 AM »
Quote
Earlier you buy, the earlier you own it outright and begin years of mortgage free living.

This discussion seems to go nowhere because there are many people involved in even this small discussion and they don't all agree (or acknowledge) some basic facts.

For example, shouldn't it be well accepted by everybody here that if you have a mortgage free home that you also have all of the value of the home tied up in a non-producing asset. If your home is worth $500k, then you are forgoing (based on the commonly used 4% safe withdrawal rate*) $20k/year in income. That is over $1500/month that could be paying for rent.

Add on top of that the basic costs usually mentioned (tax and insurance) and often forgotten (maintenance) and you have a pretty substantial "cost" of living mortgage free.

*Adjust this rate to whatever you want, but investing this money (in the US stock market) has historically been able to produce reliable returns around 4% (inflation adjusted).

This +1!

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. 

Shane

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #135 on: October 22, 2015, 10:18:01 AM »
I ran a poll on early-retirement.org.  Among retirees (generally early) 88% own homes, among those looking to retire early its about 80% that own.  The rates are substantially higher than the country as a whole and close to the percentage found in the millionaires next door.  As rule most people bought as soon as possible.

Given the emphasis placed on home ownership in our society, it's not surprising there's a correlation between FI people and people who own their own homes. But, I think you're asking the wrong question. Rather than asking what % of FI people own their own homes, the question should be: did purchasing a home instead of renting speed up or slow down your journey to FI? Depending on the market(s) where the respondents to your poll live, their answers to that question may go either way if they're honest.

Most of the comments were that home ownership speed up the path to FI. You are certainly right the answers would depend on when and where. 

I haven't seen anybody on this thread show data that over the last 30 years renters came out ahead of owners in my state or my city. Several of us have shown examples where ownership was clearly better than renting. While correlation isn't causation at some point it pretty safe to make some assumption.  Why is there a big emphasis on home ownership in our society?  Answer because it leads to wealth accumulation.  Now if you think that assumption is faulty fine but I'd love to see some data to back it up.

Again, @Clifp, asking those of us who disagree with you to somehow magically produce data specific to your state and your city seems like an unreasonable request, don't you think? How could we possibly know where you live?

I don't disagree with your premise that owning a home has traditionally been a means of wealth accumulation in our society, but just because that's what people have traditionally done doesn't mean it's the only way or the most efficient way to save money. If we're talking about "normal" people who spend everything they make, plus a little more, then you're absolutely right, locking in a mortgage for as much as they can possibly afford, as young as they can will force them to save and, over time, cause them to accumulate wealth.

On the other hand, we're not talking about "normal" people here. Many people who are reading/posting on this board are not "normal!" :) Many of them seem to be downright Unamerican! They spend less than they make, sometimes MUCH LESS. Some of them are saving and investing 70-80% of their gross salaries. This is not "normal" behavior! Because we're not dealing with "normal" people here, I think we need to adjust our thinking a little bit.

If the choice is buy a house and make mortgage payments for 30 years or blow all the money on fast cars and fancy drinks at the bar, then buying a house will win every time. But those aren't the choices for Mustachians. It's buy a house or rent and invest the difference between rent and the costs of home ownership (often higher) in the stock market. This is the comparison we have to make. As pointed out by another poster above, every dollar of equity a homeowner has in her home is money that could be invested in the stock market, and any capital appreciation in a home has to be compared to returns in the stock market in order to see which investment wins.

If you're looking for an inflation hedge or a diversification away from equities and you want to own real estate, buying shares in an REIT is a much safer way than owning a home.

Retire-Canada

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #136 on: October 22, 2015, 10:35:09 AM »
For example, shouldn't it be well accepted by everybody here that if you have a mortgage free home that you also have all of the value of the home tied up in a non-producing asset. If your home is worth $500k, then you are forgoing (based on the commonly used 4% safe withdrawal rate*) $20k/year in income. That is over $1500/month that could be paying for rent.

Sure, but there are two problems with this:

1. if you get a paid off house by paying down a mortgage instead of renting for similar costs you are essentially building up that equity as a bonus. In my case buying and renting the same house would cost the same per month with all expenses factored in. That means I get ~$9K/yr equity [not including value appreciation] on my house whereas if I rented I would need to save an additional $9K over the same living costs to build up an investment portfolio equivalent to my house's equity.

2. Plus the houses around here are steadily appreciating in value above inflation so you'd be losing that tax free capital gains opportunity by selling now.

Frankly the only sensible advice in this thread is to look closely at your situation and work out a business case that takes into account your own data.

Any sweeping statements about renting or owning being better/worse globally are stupid.

morning owl

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #137 on: October 22, 2015, 10:59:17 AM »
Quote
Earlier you buy, the earlier you own it outright and begin years of mortgage free living.

This discussion seems to go nowhere because there are many people involved in even this small discussion and they don't all agree (or acknowledge) some basic facts.

For example, shouldn't it be well accepted by everybody here that if you have a mortgage free home that you also have all of the value of the home tied up in a non-producing asset. If your home is worth $500k, then you are forgoing (based on the commonly used 4% safe withdrawal rate*) $20k/year in income. That is over $1500/month that could be paying for rent.

Add on top of that the basic costs usually mentioned (tax and insurance) and often forgotten (maintenance) and you have a pretty substantial "cost" of living mortgage free.

*Adjust this rate to whatever you want, but investing this money (in the US stock market) has historically been able to produce reliable returns around 4% (inflation adjusted).

This +1!

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 believe the point is that a house is riskier and costlier than having an equivalent-valued portfolio of diverse income-producing financial assets. A home might increase in value when sold, unlike most  consumer products, but it is not an income-producing asset while you own it, as investments are. (Unless of course the house is a rental house.) Also a house is an asset that *costs* you money to own, unlike income-producing financial assets. And you can't easily diversify in real estate, unless you live somewhere where houses are cheap, or you have multi millions to invest in multiple properties, and property managers to manage them in their various locations.

Agree with above posters that this is largely a location-dependent argument. Sometimes it makes financial sense to rent, sometimes it does not.

Brilliantine

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #138 on: October 22, 2015, 11:55:02 AM »
Question for those firmly in "renting is better" camp?
Do you lease your car, too?

I don't. Why do you ask? :)


Shane

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #139 on: October 22, 2015, 12:21:19 PM »
Question for those firmly in "renting is better" camp?
Do you lease your car, too?

Again, this shouldn't be a debate between the "renting is better" camp and the "buying is better" camp. The reality is that IT DEPENDS on where you are and your personal situation. Each person needs to evaluate her own situation, run the numbers and see if renting or buying works best for her family. Buying isn't always better and renting isn't always better. It depends where you live! And a lot depends on your personal preferences. There's no one right answer to this question.

monkeytree

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #140 on: October 22, 2015, 01:08:09 PM »
Question for those firmly in "renting is better" camp?
Do you lease your car, too?

Again, this shouldn't be a debate between the "renting is better" camp and the "buying is better" camp. The reality is that IT DEPENDS on where you are and your personal situation. Each person needs to evaluate her own situation, run the numbers and see if renting or buying works best for her family. Buying isn't always better and renting isn't always better. It depends where you live! And a lot depends on your personal preferences. There's no one right answer to this question.

I agree, which is why I tried to describe our situation to provide context, and how even if we bought, it would have to be at least a few years down the road...which would mean different circumstances, price fluctuations, different opportunity costs, etc. I think if I had found this site 10-15 years ago and started at least trying to live more MMM-style earlier, I may have leaned toward buying too (with more time to save, etc). But I'm already in my late 30s, just finishing up paying off all our debts and want to maximize our finances the best we can in the "limited" time we have left til college/retirement/etc in the HCOL we ended up at. That's why in MY situation, the thought crossed my mind that renting indefinitely may be better or even just easier.

Also, yes, we own, not lease, our car too. I don't see how that matters - you can't compare owning a $10-20k car with a $400-500k house.
« Last Edit: October 22, 2015, 01:21:27 PM by monkeytree »

Brilliantine

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #141 on: October 22, 2015, 01:55:57 PM »
This link must already have been provided once or twice in this thread but here we go again:

http://www.gocurrycracker.com/renters-for-life/

Take a look at Jeremy's example of buying a $100K house with 20% down in 1985 (30 years ago) vs renting the exact same house (price-to-rent ratio of 19 is assumed for this hypothetical market) and investing the down payment and the savings due to renting into index funds (with dividends reinvested)


Zikoris

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #142 on: October 22, 2015, 02:19:25 PM »
Question for those firmly in "renting is better" camp?
Do you lease your car, too?

Like the other ERE-leaning Mustachians, I don't have a car to begin with, leased or otherwise. The $250 I paid for my bicycle put me well ahead of renting a bike very quickly.

clifp

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #143 on: October 22, 2015, 02:35:55 PM »
Quote
How do you figure its non-producing asset?  In a place like California home prices have appreciated 6.92%/year over the last 40 years.  In fact, there are only about a 1/2 dozen state where housing prices appreciated less than inflation over this period. It is pretty hard to argue today that a bond portfolio (e.g. Vanguard Total Bonds) is a better inflation hedge than a house.

Housing prices depend very heavily on your particular neighborhood, so I question the 6.92% per year appreciation. Some places will be more and others less. The census data on housing doesn't support your hypothesis. It only goes through 2000, so I had to hunt for 2010 numbers, and those dont seem to square with the census data. Zillow data shows median prices dropping in California from a high in 2008 of 538k to a low in 2012 of 310k. (-40%). Values are now at 470k which is still under 2008 peak. So, I don't see any way to get to a 7% appreciation, and it's still way more volatile than financial markets (and much less liquid).


Notice California and NY both go down between 1990 and 2000, and we can see drops between 2000 and 2010.

https://www.census.gov/hhes/www/housing/census/historic/values.html

                   2000           1990
California - $211,500  $249,800 -15.3%
New York - $168,100  $148,700 -11.5%

These values are adjusted for inflation - wow, you could get a house in Hawaii for $75k in today's dollars in 1950!

Here is the source http://www.estateofmindsites.com/subscriber_new/map.php?user_id=1&share=y of the data. If you hover over a state it shows the year by year price appreciation so I'm inclined to believe that they did the math correctly. As you can see it shows California leading the nation with a 6.92% annualize appreciation since 1975. Inflation over the same period was just under 3.8% so other than a few state in the midwest and south in most state housing prices appreciated faster than inflation.

As for your claim that house markets are more volatile than financial markets, I hope you don't really believe that.  The standard deviation of the S&P 500 is ~16% over a long periods of time (Morningstar has SPY at 15% over the last 15 years) and other asset classes even more volatile. If you look at the year by year price appreciation of the housing market you'll see that the 15% declines occurred in a few states during a couple of years.

clifp

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #144 on: October 22, 2015, 03:11:13 PM »
This link must already have been provided once or twice in this thread but here we go again:

http://www.gocurrycracker.com/renters-for-life/

Take a look at Jeremy's example of buying a $100K house with 20% down in 1985 (30 years ago) vs renting the exact same house (price-to-rent ratio of 19 is assumed for this hypothetical market) and investing the down payment and the savings due to renting into index funds (with dividends reinvested)

First of all is hypothetical market assumptions are pretty unfavorable for buying because his rents are way to low, and based on an obscure academic study, rather something like Case Shiller.
Realtytrac publishes reports of rental trends.  The most recent report I found showed this
Quote
Among all 461 counties analyzed the average potential annual gross rental yield for homes purchased in February 2015 was 9.34 percent.


This equates to P/R of 11.  Using this figure the rent on his 100K house starts at $780/month considerable more than the $569 monthly payment for buying.  The renter starts out behind and falls further each month. In the same report. http://www.realtytrac.com/news/home-prices-and-sales/april-2015-residential-rental-property-analysis/ Realtytrac shows the 76% of the counties mortgage payments are lower than rents.

But honestly I'm less interested in project future returns (cause as Twain says forecast is difficult especially of the future) than historical examples where over longish 10+ year renting came out better than buying.  The two example of houses he used were ok, but he needed to show how much a renter would have spent during that same time period.

Shane

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #145 on: October 22, 2015, 05:08:37 PM »
Here is the source http://www.estateofmindsites.com/subscriber_new/map.php?user_id=1&share=y of the data. If you hover over a state it shows the year by year price appreciation so I'm inclined to believe that they did the math correctly. As you can see it shows California leading the nation with a 6.92% annualize appreciation since 1975. Inflation over the same period was just under 3.8% so other than a few state in the midwest and south in most state housing prices appreciated faster than inflation.

The site you linked to is run by a mortgage broker, someone who has a vested interest in getting everyone to believe it's a good thing to take out a big loan to buy a house. I'm sure that doesn't affect the data, though. :)

clifp

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #146 on: October 22, 2015, 06:10:35 PM »
Here is the source http://www.estateofmindsites.com/subscriber_new/map.php?user_id=1&share=y of the data. If you hover over a state it shows the year by year price appreciation so I'm inclined to believe that they did the math correctly. As you can see it shows California leading the nation with a 6.92% annualize appreciation since 1975. Inflation over the same period was just under 3.8% so other than a few state in the midwest and south in most state housing prices appreciated faster than inflation.

The site you linked to is run by a mortgage broker, someone who has a vested interest in getting everyone to believe it's a good thing to take out a big loan to buy a house. I'm sure that doesn't affect the data, though. :)

I've crossed check the year by year data for two states I'm familar with NV and HI.  The year by year numbers corresponded to the numbers compiled by the Real Estate boards for those two states over the last 5 years.  Do you have specific examples of incorrect data, or are you make wild ass accusations?

bryan

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #147 on: October 22, 2015, 06:28:33 PM »
Didn't read the whole thread but did search for "security" and read those comments.

I think there is an argument for security that no one has mentioned yet: getting priced out of a place you want to stay.

Say you moved to a city in ~2006 for a good, new job and found a nice neighbourhood that is perfect for your MMM tendencies. You decide to rent since you are not sure how long you will stay at the job/city and the rents here are cheap (you checked the NYT buy/rent calculator and looks like 7 years is the timeframe buying is better). After a year you are in love with the surrounding area, the city at large is pretty agreeable, and the economy seems to be doing pretty well. You've made a nice circle of friends and do various little things/events in the neighbourhood. You would feel comfortable sticking around here for a while but you are still early in your career, no family, etc. You keep renting for another year. During this time, the housing bubble pops and homes start going on sale/foreclosing all across the country. You could buy a place and come out ahead if you stay in the city for ~5 years.

Now, you have to make a decision. Keep renting or Buy.

In one possible future, your gut feelings were right and the city's economy weathers the recession just fine and has a large influx of jobs. You could easily maintain your career here. Your hunch about the neighbourhood was even more on the mark and it's super awesome. Over the next year, rents go up by close to 25% and house costs in your neighbourhood are starting to really go through the roof; buying is better after 14 years. Hope you bought, else after a few more years you will be forced to move out of the neighbourhood because of soaring rent, at least a couple miles away.

I largely made up the numbers, but the situation is perfectly believable. There's another scenario where it's not such a boom/bust as well. But the end result is the same that if you want to secure your location, you have to buy else be forced out.

markbrynn

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #148 on: October 23, 2015, 12:51:55 AM »
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I've crossed check the year by year data for two states I'm familar with NV and HI.  The year by year numbers corresponded to the numbers compiled by the Real Estate boards for those two states over the last 5 years.  Do you have specific examples of incorrect data, or are you make wild ass accusations?

I haven't inspected the data, but I wonder if they control for various things besides sales price, for example, increase in the average size of houses and money spent on renovations. In addition, if they're using average sales price instead of median it could be skewed by high appreciation on the most expensive houses (people who are less affected by real world economics) and lower appreciation on the rest.

It seems a challenge to get trustworthy, accurate numbers on this. If someone can find some that specify what factors are taken into account, that would be helpful (no luck on my end).

markbrynn

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Re: What's wrong with renting forever?: Stigma of non-home ownership
« Reply #149 on: October 23, 2015, 12:56:35 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"