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Grace Dent writes for the Independent how "for the average person, marrying into property will be your best shot at 'owning it'" http://www.independent.co.uk/v

Grace Dent writes for the Independent how "for the average person, marrying into property will be your best shot at 'owning it'" http://www.independent.co.uk/voices/the-housing-crisis-is-creating-sharp-elbowed-husband-hunters-a6875576.html http://www.independent.co.uk/voices/the-housing-crisis-is-cr... Crazy. But to be honest, why is everyone focused on buying a house? Does everyone want to own a house, 1.7 kids and a car or where does the need to buy instead of renting come from? Maybe I'm missing something, but the flexibility of renting seems a lot bigger advantage than the small advantages of owning a house.

cmdrfred 11y ago
Depends I guess, for me I want to lower my cost of living in old age and not paying rent is a big factor in that.
- NikolaeVarius 11y ago
  You would probably come out far ahead taking the money you would have paid on the down payment and house maintainance and invested in the stock market. Tends to be much MUCH better return wise versus homes.
  - laurencerowe 11y ago
    In the US, mortgage interest is tax deductible whereas rent is not. The more you earn (and thus the higher your tax bracket) the more this subsidy is worth. The other big factor is inflation. Rent will increase every year while your mortgage payments will stay at the same nominal value. Admittedly inflation is much less of a thing now, but in the past it made owning a home hugely more worthwhile. Great calculator to explore the various paramaters here: http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html http://www.nytimes.com/interactive/2014/upshot/buy-rent-calc...
  - cmdrfred 11y ago
    Better returns directly on the money (given historical averages hold) yes. You also have to consider I'm locking in my monthly housing cost in 2016 prices (until I pay off the mortgage that is, then I merely have to pay property taxes) also I can make improvements to my standard of living that renters can't. If I want a hot tub, I simply install one rather than having to find an apartment with one and paying a massive monthly premium for it. Rent for a decent one bedroom in my area is $1200 a month, my mortgage is $1120 (taxes and insurance included) and that gives me 3 bedrooms and a yard. For me this was the better choice.
  - twic 11y ago
    However, it's much easier for an ordinary person to borrow hundreds of thousands of pounds to invest in the property market than it is to borrow that sort of money to invest in the stock market. The leverage makes up for the lower rate of return.
undersuit 11y ago
Some places it's worth to own. You may be paying the bank for a few years, but the bank isn't setting rules like no smoking, walkthroughs to enforce compliance, no additional tenets, or "non-refundable pet security deposits." If you are going to live in one place you might just be better off throwing the same amount of money at the bank instead of at the landlord.
- deleted 11y ago
  [deleted]
sehutson 11y ago
It's not always about buying into the norm or just having an investment - there are a lot of compelling reasons to want a house. -More choices in terms of size, acreage, architectural features -No worry about landlords disapproving of your lifestyle, no drop-ins and inspections, etc. (I knew someone whose landlord let her cat out and it was missing for weeks) -You can change your property to suit your tastes -The only pet limits are those imposed by your government -With a fixed rate mortgage, your monthly costs stay basically the same. Yes, there are repairs, but you can save up for that and postpone many things in a pinch. Except in extreme cases coupled with poor emergency savings, rising property values are unlikely to push you out of your home (and if they do, you get something for it). With rent, your landlord can raise the price and you have no choice but to pay it or move out. -You can get attached. Some people just like that feeling of having roots, and there's nothing wrong with that preference.
- mschuster91 11y ago
  > -No worry about landlords disapproving of your lifestyle, no drop-ins and inspections, etc. In Germany, "inspections" are flat out illegal except in very strictly regulated circumstances. > The only pet limits are those imposed by your government Not true either. Just look at the HOA crap in America. Worse than government, in fact. Laws at least have to act like they've been passed by a democracy and stand up to judicial review, HOA decisions more often than not are pretty much final. > With a fixed rate mortgage, your monthly costs stay basically the same Good luck getting a long term fixed rate mortgage. > With rent, your landlord can raise the price and you have no choice but to pay it or move out That is what regulation is for: in Germany, there are laws limiting rent raises.
  - paulddraper 11y ago
    HOAs are very, very far from universal. E.g. my suburban neighborhood near Salt Lake City doesn't have an HOA. I've not seen an HOA survive in any significant way past 30 years.
  - alistairSH 11y ago
    Why do you say that about fixed rate mortgages? Are they not available in the UK? They're readily available in the US. HOAs can be a pain, but aren't universal. The HOA that covers my home approves exterior changes, collects fees to cover shared property maintenance and insurance, and that's about it. No limits on pets (beyond county rules, mostly dealing with livestock). No limits on interior renovations. Etc. Even with regulated rent increases, you still end up paying more over time. With a fixed rate mortgage, you pay less per month over time (after inflation). By the time you retire, the house is yours, with only taxes and insurance to be paid.
jonesb6 11y ago
I think the biggest reason is that in most Western markets buying a home is a fantastic investment. In the Bay Area at least it lead a lot of families to a good pile of generational wealth.
monk_e_boy 11y ago
Most people my parents age purchased a house, waited a few years and it doubled in price. Then they kept doing that until most of them are in £500,000 houses having paid off their mortgage. So the pressure from them to their kids 'invest in houses' is very big. After all, house prices always go up. I worked it out for my Uncle and he was making more on his house price going up than in his job (for a couple of years.) You can't do up a renter. Most people want to 'nest' or have different requirements from a home than the renter has. Got a baby? Need a baby room. Go surfing? Need a surfboard storage room. Want to paint over the mould? Need permission from landlord. And where I live no one rents out houses. So renters just can't live here.
- majewsky 11y ago
  looks up "mould" in dictionary Do you mean the fungi that spread on wet walls? Because I would consider just painting over these a very bad idea.
  - brbsix 11y ago
    Its a sort of interior trim. http://www.homedepot.com/b/Building-Materials-Moulding-Millwork-Moulding/N-5yc1vZara1 http://www.homedepot.com/b/Building-Materials-Moulding-Millw...
  - monk_e_boy 11y ago
    Yeah, spelling - woops. Not sure how else to fix it. The UK is very wet, houses are stone and cold. Condensation is almost constant and mold pops up most winters. We used to run a dehumidifier and it would collect water, but as soon as you open the front door another houseful of wet air comes in.
    - valdiorn 11y ago
      don't paint over mold. It's dangerous stuff, get mold removal products or a specialist in; better yet, make the landlord pay for it (which he should, because if his property becomes uninhabitable by mold he's screwed).
st3v3r 11y ago
Most rentals, you can't do anything to. So if you want to modify or change the place a little bit, you can't.
- grecy 11y ago
  On the upside, if the place is modified outside your control (weather, damage, wears out, trees, etc) you don't have to pay for it
  - quicklyfrozen 11y ago
    Yeah, you just have to live with it because the landlord doesn't care :-).
    - grecy 11y ago
      If you have a landlord like that, move, which is another upside to not owning - it's very easy to move whenever you want.
      - st3v3r 11y ago
        You just gotta pay for breaking the lease, and go find another place, and get enough together for a deposit, etc.
        grecy 11y ago
        Just wait till the lease is over - and paying a deposit is like tax returns - it all comes out in the wash, so it's not really an "expenditure".
analog31 11y ago
The flexibility of renting is also the landlord's flexibility, and I could get kicked out of a rental. Where I live is almost magically optimized -- My spouse and I can both commute to work without driving or parking a car. We're within walking distance of shops. Our kids are guaranteed of attending good schools. It would suck to be displaced from that situation. Turning things around, why would you want to be a landlord? I'm my own landlord, I collect "imputed rent" from myself, and I have perfect tenants. ;-) Of course being a landlord has some risks, but if I had to move, I'd probably keep my existing house and rent it out.
duaneb 11y ago
> the flexibility of renting seems a lot bigger advantage than the small advantages of owning a house. Sure, until you consider the flexibility other have to do stuff with your apartment (or house, I guess?). There is no guarantee of stability.
s_q_b 11y ago
There is a massive fiscal advantage in owning vs. renting, because payments toward ownership build capital. Let's take two scenarios: (A) In scenario A, you pay rent on an apartment for $5000 per month. (B) In scenario B, you pay a fixed-rate mortgage on a residence in the amount of $5000 per month. Therefore: In scenario A, you are essentially taking $5k and setting it on fire once a month. In scenario B, you are paying that money toward a share of the property's ownership. So instead of setting it on fire, you're gaining $5k of equity in the property.
- YZF 11y ago
  It doesn't work quite like that. Here are the economics in my area: - Buy $1.2M - Rent $1800 a month. By law rent can only be increased a limited amount every year (and it's never been increased for me). The landlord is getting 1.8% return on his money before his maintenance expenses, taxes, etc. The only scenario this makes any sense is interest rates remain at 0% for the next 30 years. Even in this case it's not clear that house prices can keep appreciating at the same rate. Unless we go negative rates. If I have 1.2M in cash why would I buy this house instead of renting? I'm taking a big risk with a lot of money. It's true that over the last 10-20 years people who have taken this bet came usually ahead (except in some parts of the US) but it's still a huge risk.
  - clock_tower 11y ago
    Indeed! If you have $1.2 million in cash, investing it to produce a 5% dividend gets you an income of $60,000 a year before taxes -- while $1800 a month is $21,600 a year. (Hint: Chevron's stock has fallen so far that their dividend, which they haven't lowered, is 5% of their stock price. The chance won't last forever; when the price of oil goes back up, Chevron will go back up with it.) An income from investments of $60,000 a year isn't enough to live like a king, but it's certainly enough to live like a yeoman, even after taxes. If you buy an expensive house with that money, instead of buying an income stream with it, the best you can hope for is to live like a wage-slave.
  - learnstats2 11y ago
    This is not the only post with dodgy numbers, but this one may be specific to London: - London yields 2-5% https://www.portico.com/yields https://www.portico.com/yields - No such rent capping law in London, it's generally expected that rents will increase every year and there's plenty of demand to cover it. Clearly, people are making the decision to buy the house.
hackerboos 11y ago
>But to be honest, why is everyone focused on buying a house? Because rental laws in the UK offer no long term stability. See a previous comment I made. https://news.ycombinator.com/item?id=10916002 https://news.ycombinator.com/item?id=10916002
paulddraper 11y ago
> flexibility of renting seems a lot bigger advantage than the small advantages of owning a house Want to paint a wall? Own a pet? Add a garage? Replace your grass with desert cactus? Build an extension? Knock a hole in the ceiling so you can hang upside down like a bat from the rafters? Build a dirt bike track in your backyard? Owning is nothing if not flexible. At the very least, you should agree that describing "flexibility" as a characteristic of renting alone is a incomplete summary of the situation.
kazinator 11y ago
What flexibility of renting? Let's talk moves. Every month, renters play a stressful game of "musical homes": they have to move in a single day. Those that are lucky happen to be moving to a place that has been vacant for some time, and can negotiate a head start to start moving there before their official move-in date. Owners negotiate possession dates, giving themselves comfortable time zones for moving gradually, and can write clauses into contracts like "we will buy this place, pending the sale of our current place". Payments. Many people who own have a mortage. But you can shop around for a mortgage independently of the property you're moving into. Mortgages have flexibility. They can be moved to a new property ("portability"). How many landlords offer "skip a payment" feature in the rent?
- viraptor 11y ago
  > Every month, renters play a stressful game of "musical homes": they have to move in a single day. Why do they do that? I always took at least 3-4 days overlap between the rent on the old and new place. Assumed that's what normally happens.
  - kazinator 11y ago
    Depends on factors like vacancy rates in your area. How do you overlap if the place you have now is month by month, and the place you want to move into isn't available until the 1st of next month? If you give notice, you have to move out the morning of the 1st, unless you pay another month's rent, and only on the 1st can you get keys to the new place. The only way you will get overlap is if the people move out of the new place sooner and the new landlord lets you start moving in, or else your current landlord doesn't find any new tenants for the next month and nicely agrees to give you a few more days to move out. When vacancy rates are low, the good places you want are never the ones that are conveniently vacant: what you want, everyone else wants. It's not unheard of for one group of renters to be moving in simultaneously as another is still moving out. In Vancouver, Canada things must be quite dim in this regard these days. Check this out: http://www.metronews.ca/news/vancouver/2015/12/16/vancouver-rental-rates-spike-as-vacancy-hovers-near-zero.html http://www.metronews.ca/news/vancouver/2015/12/16/vancouver-... Ouch! You're not likely going to find a nice, empty, move-in-before-official-date apartment here in this market. By the way, from the above: "citywide, two-bedroom rents jumped to $1,643 from $1,571 in 2014." I haven't been looking, but the 2014 figure substantially surpasses my current mortgage payment plus property taxes and maintenance fee. Bye bye!
dclowd9901 11y ago
It's a way to build wealth. If you're renting, you're building someone else's wealth.
- deleted 11y ago
  [deleted]
- vinceguidry 11y ago
  I hate this argument, even though I prefer to buy as well. Buy food rather than grow your own? You're building someone else's wealth. Also, mortgage interest is no joke and is never accounted for in these rationalizations.
  - dclowd9901 11y ago
    If you plan to sell, the calculation is much more complicated. I wouldn't buy a house unless it was one I was keeping (which is what I'm doing now). It's equivalent to a very expensive savings account. What do you get at the end of 30 years of renting? A big fat goose egg. Rent cost has to be insanely low to compete with owning a house in the long term.
  - repsilat 11y ago
    mortgage interest And once you've paid off your mortgage, there's still investment opportunity cost. I agree that owning may be the smart thing to do on balance (though things like stamp duty add too much friction for me), but it isn't a slam dunk.
  - someguydave 11y ago
    > mortgage interest Which is subsidized by the US Government in the US in the form of tax deductions.
    - vinceguidry 11y ago
      Which really only benefits the rich. You have to itemize to take advantage of the deduction, and then you're only saving money over and above the standard deduction. Unless you buy a really expensive house, or have lots of other deductions, then you save a couple thousand dollars a year at most. Which isn't peanuts, but shouldn't figure prominently into the decision to buy a home or not. Always run the numbers. Numbers are the difference between emotion and logic.
InclinedPlane 11y ago
Owning a house is a significant life change (not just having a mortgage, that's just a stage along the way to ownership). For one, it significantly cuts down your expenses and opens up your options, giving you a ton of freedom. Want to take a long time off from work (either a sabbatical or by being between jobs)? Good luck doing that if you have huge monthly expenses. If your expenses are instead hundreds of dollars a month instead of thousands, then it's a lot easier to save up for a 4 month hike of the Appalachian Trail, or a month long trip to explore Europe or Japan or Southeast Asia or to travel around the US or whatever. Or to spend a year concentrating on shifting careers or focusing on a hobby (or turning a hobby into a career) or volunteering or raising your kids. Or, for that matter, just taking full advantage of your vacation time. Also, owning a home is great for investing. For the first several years not much will change, but then you'll start building equity, after that you'll be well into the "market proof equity" range. But after you've paid off your mortgage you'll likely not be retired, so now you have massive amounts of cash ballooning out your savings and investments. All of this is predicated on actually paying off that mortgage and building positive equity, which is not always going to be easy and may not be the most reasonable economic choice depending on the housing market and one's income. But if you can manage it then it can have tremendous benefits.
nommm-nommm 11y ago
>Maybe I'm missing something, but the flexibility of renting seems a lot bigger advantage than the small advantages of owning a house. This varies a lot. I don't actually care to own a house too much but we are going to buy one soon because the rental market in my area has gone in-fucking-sane in the last few years so its ao much cheaper to own in my neighborhood, I'm basically lighting dollar bills on fire every month with how inflated rents are. Oh, and landlords are so stupid. We are model tenants, both very high income... but we have a cat so we are ineligible to rent 90% of properties, no exceptions. That is because it is a landlord's market right now. I don't think governments have any business promoting home ownership though and society shouldn't make you feel like you didn't "make it" until you are strapped with a mortgage you can't afford.
ionised 11y ago
I could do with a car, but the house and kids I don't need.

cmdrfred 11y ago

Depends I guess, for me I want to lower my cost of living in old age and not paying rent is a big factor in that.

NikolaeVarius 11y ago
You would probably come out far ahead taking the money you would have paid on the down payment and house maintainance and invested in the stock market. Tends to be much MUCH better return wise versus homes.
- laurencerowe 11y ago
  In the US, mortgage interest is tax deductible whereas rent is not. The more you earn (and thus the higher your tax bracket) the more this subsidy is worth. The other big factor is inflation. Rent will increase every year while your mortgage payments will stay at the same nominal value. Admittedly inflation is much less of a thing now, but in the past it made owning a home hugely more worthwhile. Great calculator to explore the various paramaters here: http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html http://www.nytimes.com/interactive/2014/upshot/buy-rent-calc...
- cmdrfred 11y ago
  Better returns directly on the money (given historical averages hold) yes. You also have to consider I'm locking in my monthly housing cost in 2016 prices (until I pay off the mortgage that is, then I merely have to pay property taxes) also I can make improvements to my standard of living that renters can't. If I want a hot tub, I simply install one rather than having to find an apartment with one and paying a massive monthly premium for it. Rent for a decent one bedroom in my area is $1200 a month, my mortgage is $1120 (taxes and insurance included) and that gives me 3 bedrooms and a yard. For me this was the better choice.
- twic 11y ago
  However, it's much easier for an ordinary person to borrow hundreds of thousands of pounds to invest in the property market than it is to borrow that sort of money to invest in the stock market. The leverage makes up for the lower rate of return.

undersuit 11y ago

Some places it's worth to own. You may be paying the bank for a few years, but the bank isn't setting rules like no smoking, walkthroughs to enforce compliance, no additional tenets, or "non-refundable pet security deposits." If you are going to live in one place you might just be better off throwing the same amount of money at the bank instead of at the landlord.

deleted 11y ago
[deleted]

sehutson 11y ago

It's not always about buying into the norm or just having an investment - there are a lot of compelling reasons to want a house. -More choices in terms of size, acreage, architectural features -No worry about landlords disapproving of your lifestyle, no drop-ins and inspections, etc. (I knew someone whose landlord let her cat out and it was missing for weeks) -You can change your property to suit your tastes -The only pet limits are those imposed by your government -With a fixed rate mortgage, your monthly costs stay basically the same. Yes, there are repairs, but you can save up for that and postpone many things in a pinch. Except in extreme cases coupled with poor emergency savings, rising property values are unlikely to push you out of your home (and if they do, you get something for it). With rent, your landlord can raise the price and you have no choice but to pay it or move out. -You can get attached. Some people just like that feeling of having roots, and there's nothing wrong with that preference.

mschuster91 11y ago
> -No worry about landlords disapproving of your lifestyle, no drop-ins and inspections, etc. In Germany, "inspections" are flat out illegal except in very strictly regulated circumstances. > The only pet limits are those imposed by your government Not true either. Just look at the HOA crap in America. Worse than government, in fact. Laws at least have to act like they've been passed by a democracy and stand up to judicial review, HOA decisions more often than not are pretty much final. > With a fixed rate mortgage, your monthly costs stay basically the same Good luck getting a long term fixed rate mortgage. > With rent, your landlord can raise the price and you have no choice but to pay it or move out That is what regulation is for: in Germany, there are laws limiting rent raises.
- paulddraper 11y ago
  HOAs are very, very far from universal. E.g. my suburban neighborhood near Salt Lake City doesn't have an HOA. I've not seen an HOA survive in any significant way past 30 years.
- alistairSH 11y ago
  Why do you say that about fixed rate mortgages? Are they not available in the UK? They're readily available in the US. HOAs can be a pain, but aren't universal. The HOA that covers my home approves exterior changes, collects fees to cover shared property maintenance and insurance, and that's about it. No limits on pets (beyond county rules, mostly dealing with livestock). No limits on interior renovations. Etc. Even with regulated rent increases, you still end up paying more over time. With a fixed rate mortgage, you pay less per month over time (after inflation). By the time you retire, the house is yours, with only taxes and insurance to be paid.

jonesb6 11y ago

I think the biggest reason is that in most Western markets buying a home is a fantastic investment. In the Bay Area at least it lead a lot of families to a good pile of generational wealth.

monk_e_boy 11y ago

Most people my parents age purchased a house, waited a few years and it doubled in price. Then they kept doing that until most of them are in £500,000 houses having paid off their mortgage. So the pressure from them to their kids 'invest in houses' is very big. After all, house prices always go up. I worked it out for my Uncle and he was making more on his house price going up than in his job (for a couple of years.) You can't do up a renter. Most people want to 'nest' or have different requirements from a home than the renter has. Got a baby? Need a baby room. Go surfing? Need a surfboard storage room. Want to paint over the mould? Need permission from landlord. And where I live no one rents out houses. So renters just can't live here.

majewsky 11y ago
looks up "mould" in dictionary Do you mean the fungi that spread on wet walls? Because I would consider just painting over these a very bad idea.
- brbsix 11y ago
  Its a sort of interior trim. http://www.homedepot.com/b/Building-Materials-Moulding-Millwork-Moulding/N-5yc1vZara1 http://www.homedepot.com/b/Building-Materials-Moulding-Millw...
- monk_e_boy 11y ago
  Yeah, spelling - woops. Not sure how else to fix it. The UK is very wet, houses are stone and cold. Condensation is almost constant and mold pops up most winters. We used to run a dehumidifier and it would collect water, but as soon as you open the front door another houseful of wet air comes in.
  - valdiorn 11y ago
    don't paint over mold. It's dangerous stuff, get mold removal products or a specialist in; better yet, make the landlord pay for it (which he should, because if his property becomes uninhabitable by mold he's screwed).

st3v3r 11y ago

Most rentals, you can't do anything to. So if you want to modify or change the place a little bit, you can't.

grecy 11y ago
On the upside, if the place is modified outside your control (weather, damage, wears out, trees, etc) you don't have to pay for it
- quicklyfrozen 11y ago
  Yeah, you just have to live with it because the landlord doesn't care :-).
  - grecy 11y ago
    If you have a landlord like that, move, which is another upside to not owning - it's very easy to move whenever you want.
    - st3v3r 11y ago
      You just gotta pay for breaking the lease, and go find another place, and get enough together for a deposit, etc.
      - grecy 11y ago
        Just wait till the lease is over - and paying a deposit is like tax returns - it all comes out in the wash, so it's not really an "expenditure".

analog31 11y ago

The flexibility of renting is also the landlord's flexibility, and I could get kicked out of a rental. Where I live is almost magically optimized -- My spouse and I can both commute to work without driving or parking a car. We're within walking distance of shops. Our kids are guaranteed of attending good schools. It would suck to be displaced from that situation. Turning things around, why would you want to be a landlord? I'm my own landlord, I collect "imputed rent" from myself, and I have perfect tenants. ;-) Of course being a landlord has some risks, but if I had to move, I'd probably keep my existing house and rent it out.

duaneb 11y ago

> the flexibility of renting seems a lot bigger advantage than the small advantages of owning a house. Sure, until you consider the flexibility other have to do stuff with your apartment (or house, I guess?). There is no guarantee of stability.

s_q_b 11y ago

There is a massive fiscal advantage in owning vs. renting, because payments toward ownership build capital. Let's take two scenarios: (A) In scenario A, you pay rent on an apartment for $5000 per month. (B) In scenario B, you pay a fixed-rate mortgage on a residence in the amount of $5000 per month. Therefore: In scenario A, you are essentially taking $5k and setting it on fire once a month. In scenario B, you are paying that money toward a share of the property's ownership. So instead of setting it on fire, you're gaining $5k of equity in the property.

YZF 11y ago
It doesn't work quite like that. Here are the economics in my area: - Buy $1.2M - Rent $1800 a month. By law rent can only be increased a limited amount every year (and it's never been increased for me). The landlord is getting 1.8% return on his money before his maintenance expenses, taxes, etc. The only scenario this makes any sense is interest rates remain at 0% for the next 30 years. Even in this case it's not clear that house prices can keep appreciating at the same rate. Unless we go negative rates. If I have 1.2M in cash why would I buy this house instead of renting? I'm taking a big risk with a lot of money. It's true that over the last 10-20 years people who have taken this bet came usually ahead (except in some parts of the US) but it's still a huge risk.
- clock_tower 11y ago
  Indeed! If you have $1.2 million in cash, investing it to produce a 5% dividend gets you an income of $60,000 a year before taxes -- while $1800 a month is $21,600 a year. (Hint: Chevron's stock has fallen so far that their dividend, which they haven't lowered, is 5% of their stock price. The chance won't last forever; when the price of oil goes back up, Chevron will go back up with it.) An income from investments of $60,000 a year isn't enough to live like a king, but it's certainly enough to live like a yeoman, even after taxes. If you buy an expensive house with that money, instead of buying an income stream with it, the best you can hope for is to live like a wage-slave.
- learnstats2 11y ago
  This is not the only post with dodgy numbers, but this one may be specific to London: - London yields 2-5% https://www.portico.com/yields https://www.portico.com/yields - No such rent capping law in London, it's generally expected that rents will increase every year and there's plenty of demand to cover it. Clearly, people are making the decision to buy the house.

hackerboos 11y ago

>But to be honest, why is everyone focused on buying a house? Because rental laws in the UK offer no long term stability. See a previous comment I made. https://news.ycombinator.com/item?id=10916002 https://news.ycombinator.com/item?id=10916002

paulddraper 11y ago

> flexibility of renting seems a lot bigger advantage than the small advantages of owning a house Want to paint a wall? Own a pet? Add a garage? Replace your grass with desert cactus? Build an extension? Knock a hole in the ceiling so you can hang upside down like a bat from the rafters? Build a dirt bike track in your backyard? Owning is nothing if not flexible. At the very least, you should agree that describing "flexibility" as a characteristic of renting alone is a incomplete summary of the situation.

kazinator 11y ago

What flexibility of renting? Let's talk moves. Every month, renters play a stressful game of "musical homes": they have to move in a single day. Those that are lucky happen to be moving to a place that has been vacant for some time, and can negotiate a head start to start moving there before their official move-in date. Owners negotiate possession dates, giving themselves comfortable time zones for moving gradually, and can write clauses into contracts like "we will buy this place, pending the sale of our current place". Payments. Many people who own have a mortage. But you can shop around for a mortgage independently of the property you're moving into. Mortgages have flexibility. They can be moved to a new property ("portability"). How many landlords offer "skip a payment" feature in the rent?

viraptor 11y ago
> Every month, renters play a stressful game of "musical homes": they have to move in a single day. Why do they do that? I always took at least 3-4 days overlap between the rent on the old and new place. Assumed that's what normally happens.
- kazinator 11y ago
  Depends on factors like vacancy rates in your area. How do you overlap if the place you have now is month by month, and the place you want to move into isn't available until the 1st of next month? If you give notice, you have to move out the morning of the 1st, unless you pay another month's rent, and only on the 1st can you get keys to the new place. The only way you will get overlap is if the people move out of the new place sooner and the new landlord lets you start moving in, or else your current landlord doesn't find any new tenants for the next month and nicely agrees to give you a few more days to move out. When vacancy rates are low, the good places you want are never the ones that are conveniently vacant: what you want, everyone else wants. It's not unheard of for one group of renters to be moving in simultaneously as another is still moving out. In Vancouver, Canada things must be quite dim in this regard these days. Check this out: http://www.metronews.ca/news/vancouver/2015/12/16/vancouver-rental-rates-spike-as-vacancy-hovers-near-zero.html http://www.metronews.ca/news/vancouver/2015/12/16/vancouver-... Ouch! You're not likely going to find a nice, empty, move-in-before-official-date apartment here in this market. By the way, from the above: "citywide, two-bedroom rents jumped to $1,643 from $1,571 in 2014." I haven't been looking, but the 2014 figure substantially surpasses my current mortgage payment plus property taxes and maintenance fee. Bye bye!

dclowd9901 11y ago

It's a way to build wealth. If you're renting, you're building someone else's wealth.

deleted 11y ago
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vinceguidry 11y ago
I hate this argument, even though I prefer to buy as well. Buy food rather than grow your own? You're building someone else's wealth. Also, mortgage interest is no joke and is never accounted for in these rationalizations.
- dclowd9901 11y ago
  If you plan to sell, the calculation is much more complicated. I wouldn't buy a house unless it was one I was keeping (which is what I'm doing now). It's equivalent to a very expensive savings account. What do you get at the end of 30 years of renting? A big fat goose egg. Rent cost has to be insanely low to compete with owning a house in the long term.
- repsilat 11y ago
  mortgage interest And once you've paid off your mortgage, there's still investment opportunity cost. I agree that owning may be the smart thing to do on balance (though things like stamp duty add too much friction for me), but it isn't a slam dunk.
- someguydave 11y ago
  > mortgage interest Which is subsidized by the US Government in the US in the form of tax deductions.
  - vinceguidry 11y ago
    Which really only benefits the rich. You have to itemize to take advantage of the deduction, and then you're only saving money over and above the standard deduction. Unless you buy a really expensive house, or have lots of other deductions, then you save a couple thousand dollars a year at most. Which isn't peanuts, but shouldn't figure prominently into the decision to buy a home or not. Always run the numbers. Numbers are the difference between emotion and logic.

InclinedPlane 11y ago

Owning a house is a significant life change (not just having a mortgage, that's just a stage along the way to ownership). For one, it significantly cuts down your expenses and opens up your options, giving you a ton of freedom. Want to take a long time off from work (either a sabbatical or by being between jobs)? Good luck doing that if you have huge monthly expenses. If your expenses are instead hundreds of dollars a month instead of thousands, then it's a lot easier to save up for a 4 month hike of the Appalachian Trail, or a month long trip to explore Europe or Japan or Southeast Asia or to travel around the US or whatever. Or to spend a year concentrating on shifting careers or focusing on a hobby (or turning a hobby into a career) or volunteering or raising your kids. Or, for that matter, just taking full advantage of your vacation time. Also, owning a home is great for investing. For the first several years not much will change, but then you'll start building equity, after that you'll be well into the "market proof equity" range. But after you've paid off your mortgage you'll likely not be retired, so now you have massive amounts of cash ballooning out your savings and investments. All of this is predicated on actually paying off that mortgage and building positive equity, which is not always going to be easy and may not be the most reasonable economic choice depending on the housing market and one's income. But if you can manage it then it can have tremendous benefits.

nommm-nommm 11y ago

>Maybe I'm missing something, but the flexibility of renting seems a lot bigger advantage than the small advantages of owning a house. This varies a lot. I don't actually care to own a house too much but we are going to buy one soon because the rental market in my area has gone in-fucking-sane in the last few years so its ao much cheaper to own in my neighborhood, I'm basically lighting dollar bills on fire every month with how inflated rents are. Oh, and landlords are so stupid. We are model tenants, both very high income... but we have a cat so we are ineligible to rent 90% of properties, no exceptions. That is because it is a landlord's market right now. I don't think governments have any business promoting home ownership though and society shouldn't make you feel like you didn't "make it" until you are strapped with a mortgage you can't afford.

ionised 11y ago

I could do with a car, but the house and kids I don't need.