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A mortgage doesn't need to be a 30 year commitment. When I run rent vs buy calculators, it usually becomes a good decision around 10 years -- of course this var

A mortgage doesn't need to be a 30 year commitment. When I run rent vs buy calculators, it usually becomes a good decision around 10 years -- of course this varies dramatically from city to city. Note: This is for comparing rent vs buy of properties of equal value. But I'm just trying to make a point about the commitment of a mortgage.

logfromblammo 8y ago
The important thing is that the rent-vs-buy inflection point is N years in the future. If N is 10, you have to believe that your current situation will be stable for the next 10 years, which is at least partially independent of the number of years it has already been stable. I have lived in the same place for about 10 years, so had I bought when I first moved, it would have been a good decision (only in retrospect). But 10 years ago, I had no idea how long I was going to be here. The job that got me to move only lasted 2 years. At no point during that 10 years did I ever believe I would still be here--and, more importantly, earning equal or greater income--10 years later. I still don't. The risk I face in loss of all mortgage-paying income is greater when I can't consider quick relocation to a hotter city for jobs, which is what happens when you buy an immobile, illiquid asset. It has never been a good decision for me to buy a home. Both times I actually did buy, I had to move earlier than the inflection point, for job-seeking reasons, and take a big loss compared to renting for that same period. The job market and housing market are inextricably intertwined. People need to live near the place that they work. If they don't have firm, stable career prospects for the next five years, at minimum, and they buy on a mortgage anyway, they will on average lose more of their money to bankers and real estate agents than they would have to rental landlords. Home-ownership is a trailing indicator for the health of local careers, not the other way around. If you don't have good job security, reasonable expectation of finding new mortgage-paying jobs quickly, or enough saved to buy your home in cash and still have some left over for expenses, you should never buy. The middlemen all earn the most when the churn rate falls into the realm of bad financial planning. If you have to sell your house and plow the proceeds into a new one frequently, the transfer middlemen earn more. If you refinance a new 30-year mortgage every 0 to 5 years, the bankers earn more. But fewer people can really expect to have same-job-same-house for the next 10 years, and they are still buying, on bad advice issued by those who will benefit most, not realizing that they are choosing poorly.
- elicash 8y ago
  Sure, but I also didn't know I would live in my city as long as I did. So I should have bought earlier. Bad predictions can work both ways, you do the best you can.

logfromblammo 8y ago

The important thing is that the rent-vs-buy inflection point is N years in the future. If N is 10, you have to believe that your current situation will be stable for the next 10 years, which is at least partially independent of the number of years it has already been stable. I have lived in the same place for about 10 years, so had I bought when I first moved, it would have been a good decision (only in retrospect). But 10 years ago, I had no idea how long I was going to be here. The job that got me to move only lasted 2 years. At no point during that 10 years did I ever believe I would still be here--and, more importantly, earning equal or greater income--10 years later. I still don't. The risk I face in loss of all mortgage-paying income is greater when I can't consider quick relocation to a hotter city for jobs, which is what happens when you buy an immobile, illiquid asset. It has never been a good decision for me to buy a home. Both times I actually did buy, I had to move earlier than the inflection point, for job-seeking reasons, and take a big loss compared to renting for that same period. The job market and housing market are inextricably intertwined. People need to live near the place that they work. If they don't have firm, stable career prospects for the next five years, at minimum, and they buy on a mortgage anyway, they will on average lose more of their money to bankers and real estate agents than they would have to rental landlords. Home-ownership is a trailing indicator for the health of local careers, not the other way around. If you don't have good job security, reasonable expectation of finding new mortgage-paying jobs quickly, or enough saved to buy your home in cash and still have some left over for expenses, you should never buy. The middlemen all earn the most when the churn rate falls into the realm of bad financial planning. If you have to sell your house and plow the proceeds into a new one frequently, the transfer middlemen earn more. If you refinance a new 30-year mortgage every 0 to 5 years, the bankers earn more. But fewer people can really expect to have same-job-same-house for the next 10 years, and they are still buying, on bad advice issued by those who will benefit most, not realizing that they are choosing poorly.

elicash 8y ago
Sure, but I also didn't know I would live in my city as long as I did. So I should have bought earlier. Bad predictions can work both ways, you do the best you can.