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Is it really, though? How much more efficient is owning than renting in most markets? My sense was that, given the rate at which people typically move, it's nor

Is it really, though? How much more efficient is owning than renting in most markets? My sense was that, given the rate at which people typically move, it's normally a wash.

rahimnathwani 10y ago
"My sense was that, given the rate at which people typically move, it's normally a wash." The difference between renting and buying isn't just the monthly payment. It's also the range of outcomes. If you buy a place with 20% down, and the property price goes up by 20% whilst you're living there, you've doubled your net worth. In some US states (e.g. California) mortgages are nonrecourse[0], so it's a bit with unlimited upside, but capped downside. If the property price crashes to 50% of the purchase price, you can walk away, losing only your initial deposit. [0] http://www.financialsamurai.com/non-recourse-states-walk-away-from-mortgage/ http://www.financialsamurai.com/non-recourse-states-walk-awa...
- Swizec 10y ago
  The caveat is that for that $200k+ deposit on a 1-bedroom in SF, you could go travel the world for 4 or 5 years. Or have 4.7 years of rent for the same place. After which you're likely to get tired of SF anyway and move somewhere else. Oh and in the 4.7 years you've been paying rent out of savings, you've saved up enough for the next 4.7 years of rent in NYC ... or many many years of rent anywhere else. So yeah, I for one am def not ever buying unless I can cash it out in one go. Then again, there are many things you could do for a million dollars in cash. Like retire for 10 years and do cool shit.
  - adrianN 10y ago
    For a million bucks your can retire for good.
  - jcon321 10y ago
    wonder how your family will enjoy the shakeup every time you feel like moving
  - vonmoltke 10y ago
    If the real estate market is so out of whack that you can rent a $1MM property for $3500/month of course I would rent. You aren't going to find that in a healthy market, though.
    - rahimnathwani 10y ago
      3500/month is 42000/year. So that a gross rental yield of 4.2%, which is in line with home loan interest rates. So it doesn't seem out of whack at all.
- fennecfoxen 10y ago
  > It's also the range of outcomes. If you buy a place with 20% down, and the property price goes up by 20% whilst you're living there, you've doubled your net worth. That "range of outcomes" isn't a free upgrade, though: you pay for it directly with a higher mortgage interest rate.
riprowan 10y ago
> given the rate at which people typically move, it's normally a wash Right, the trick is to not move, but buy and hold.
sqldba 10y ago
It's about more than just money though. What about rent inspections and being able to improve anything?
vonmoltke 10y ago
How often do you think people typically move? I have been out of my parents' house for 14.5 years, but only justoved in to my fourth residence in that period a few months ago. This is also the fourth in that same period for my wife (only the second we have shared). My mom has been in her house for 40 years. My sister has only had three (bout counting military barracks) in the past eight years, and is not planning on going anywhere for a while at this point. Moving is a major disruption, and I don't think moving frequently is the norm, nor so I thinkost people like to do it.
- obstinate 10y ago
  According to my real estate agent, the average homeowner in the Bay Area moves every five years.
- marssaxman 10y ago
  Over my whole life, I've moved on average once every two years. Moving is a disruption but it's also an opportunity to keep things fresh, to keep yourself flexible and awake and open to new experience. It helps keep you from settling into a rut, sleepwalking through life doing the same things over and over. Moving is also a great opportunity to simplify your life and get rid of all the crap that otherwise accumulates. You can pare it all down to the essentials before you move, so you get to enjoy a clean new minimal space. Of course the possessions will pile back up again eventually, but you can try things out differently this time.
bluGill 10y ago
The general "rule of thumb" is you need to live someplace for at least 7 years for buying to make sense. In the US where owning is fairly common people do move less than other parts of the world where owning is not common. Either owning or renting can be good. They both lead to very different life style decisions. As always location location location. The are some areas where rent would be twice your house payment for similar sized places. There are some areas where rent is much cheaper than a house payment. Most people buy something much bigger/nicer place than they would rent - this is a smart thing as they will be spending more time there.

Is it really, though? How much more efficient is owning than renting in most markets? My sense was that, given the rate at which people typically move, it's normally a wash.

rahimnathwani 10y ago

"My sense was that, given the rate at which people typically move, it's normally a wash." The difference between renting and buying isn't just the monthly payment. It's also the range of outcomes. If you buy a place with 20% down, and the property price goes up by 20% whilst you're living there, you've doubled your net worth. In some US states (e.g. California) mortgages are nonrecourse[0], so it's a bit with unlimited upside, but capped downside. If the property price crashes to 50% of the purchase price, you can walk away, losing only your initial deposit. [0] http://www.financialsamurai.com/non-recourse-states-walk-away-from-mortgage/ http://www.financialsamurai.com/non-recourse-states-walk-awa...

Swizec 10y ago
The caveat is that for that $200k+ deposit on a 1-bedroom in SF, you could go travel the world for 4 or 5 years. Or have 4.7 years of rent for the same place. After which you're likely to get tired of SF anyway and move somewhere else. Oh and in the 4.7 years you've been paying rent out of savings, you've saved up enough for the next 4.7 years of rent in NYC ... or many many years of rent anywhere else. So yeah, I for one am def not ever buying unless I can cash it out in one go. Then again, there are many things you could do for a million dollars in cash. Like retire for 10 years and do cool shit.
- adrianN 10y ago
  For a million bucks your can retire for good.
- jcon321 10y ago
  wonder how your family will enjoy the shakeup every time you feel like moving
- vonmoltke 10y ago
  If the real estate market is so out of whack that you can rent a $1MM property for $3500/month of course I would rent. You aren't going to find that in a healthy market, though.
  - rahimnathwani 10y ago
    3500/month is 42000/year. So that a gross rental yield of 4.2%, which is in line with home loan interest rates. So it doesn't seem out of whack at all.
fennecfoxen 10y ago
> It's also the range of outcomes. If you buy a place with 20% down, and the property price goes up by 20% whilst you're living there, you've doubled your net worth. That "range of outcomes" isn't a free upgrade, though: you pay for it directly with a higher mortgage interest rate.

riprowan 10y ago

> given the rate at which people typically move, it's normally a wash Right, the trick is to not move, but buy and hold.

sqldba 10y ago

It's about more than just money though. What about rent inspections and being able to improve anything?

vonmoltke 10y ago

How often do you think people typically move? I have been out of my parents' house for 14.5 years, but only justoved in to my fourth residence in that period a few months ago. This is also the fourth in that same period for my wife (only the second we have shared). My mom has been in her house for 40 years. My sister has only had three (bout counting military barracks) in the past eight years, and is not planning on going anywhere for a while at this point. Moving is a major disruption, and I don't think moving frequently is the norm, nor so I thinkost people like to do it.

obstinate 10y ago
According to my real estate agent, the average homeowner in the Bay Area moves every five years.
marssaxman 10y ago
Over my whole life, I've moved on average once every two years. Moving is a disruption but it's also an opportunity to keep things fresh, to keep yourself flexible and awake and open to new experience. It helps keep you from settling into a rut, sleepwalking through life doing the same things over and over. Moving is also a great opportunity to simplify your life and get rid of all the crap that otherwise accumulates. You can pare it all down to the essentials before you move, so you get to enjoy a clean new minimal space. Of course the possessions will pile back up again eventually, but you can try things out differently this time.

bluGill 10y ago

The general "rule of thumb" is you need to live someplace for at least 7 years for buying to make sense. In the US where owning is fairly common people do move less than other parts of the world where owning is not common. Either owning or renting can be good. They both lead to very different life style decisions. As always location location location. The are some areas where rent would be twice your house payment for similar sized places. There are some areas where rent is much cheaper than a house payment. Most people buy something much bigger/nicer place than they would rent - this is a smart thing as they will be spending more time there.