4 ms·

The issue is less about the dollar cost of housing in most places, than the opportunity cost and closing of flexibility in getting into a long term mortgage. I

The issue is less about the dollar cost of housing in most places, than the opportunity cost and closing of flexibility in getting into a long term mortgage. In all but the most obnoxiously over-priced areas, if you make $100k, you should be able to buy something on a low down-payment FHA loan, and your total mortgage payment should be less than you'd pay in rent. PMI sucks, but it's not terribly difficult to refinance out of it after a handful of years. The problem is you're tied down to a location. The market is hot now, but even so, it is not trivial to list a house, get an offer, close, and decamp from it, and it's rare that that goes quickly. If you envision moving around from job to job, rather than settling in for the long haul, a 30-year mortgage is a ball and chain.

ed312 7y ago
Struggling with rent vs buy right now for this very reason. I know financially it would be better to buy, but then you lose the flexibility to go after a great opportunity in even another part of a major city.
- aetherson 7y ago
  You know that you can sell houses before you pay off your mortgage, right? If you aren't in an area with very high housing costs (which, obviously, very many readers of this site are), it's not even that big a deal to sell your house when you need to. If your house constitutes 40% of your net worth, and you take a 5% hit on your sale price, then your net worth has declined... 2%. A good job is worth that. Admittedly, it's different when your house is 90% of your net worth and you're barely able to afford your mortgage.
  - ska 7y ago
    Closing costs will kill you if you are doing this too often. If you are pretty certain you will stay at least 5 years, you should be ok.
  - fredophile 7y ago
    Selling isn't free. Where I live you can expect to pay 6% just to the realtors. You also have other costs like lawyers, etc. You're also ignoring leverage. If the house is 40% of my net worth, I take a 5% hit on the sale price, and I've only paid 20% of the house then I've lost 10% of my net worth not 2%.
- milkytron 7y ago
  I was in a similar position a couple years ago, and ended up buying. If you read the article, they mention "built to rent" houses. I bought one of these, and although I do not rent it out now, I could quite easily rent it out if a better opportunity comes along that would require me to move. I think this is a good option for people who have the cash for a down payment, are looking for a place to live, and don't want to deal with rising rents in case they do stay, while still increasing net worth every month with the mortgage payment. You might be tied down for a year or two, but it's not like being stuck somewhere for 30 years if you have the option to rent a place out.

ed312 7y ago

Struggling with rent vs buy right now for this very reason. I know financially it would be better to buy, but then you lose the flexibility to go after a great opportunity in even another part of a major city.

aetherson 7y ago
You know that you can sell houses before you pay off your mortgage, right? If you aren't in an area with very high housing costs (which, obviously, very many readers of this site are), it's not even that big a deal to sell your house when you need to. If your house constitutes 40% of your net worth, and you take a 5% hit on your sale price, then your net worth has declined... 2%. A good job is worth that. Admittedly, it's different when your house is 90% of your net worth and you're barely able to afford your mortgage.
- ska 7y ago
  Closing costs will kill you if you are doing this too often. If you are pretty certain you will stay at least 5 years, you should be ok.
- fredophile 7y ago
  Selling isn't free. Where I live you can expect to pay 6% just to the realtors. You also have other costs like lawyers, etc. You're also ignoring leverage. If the house is 40% of my net worth, I take a 5% hit on the sale price, and I've only paid 20% of the house then I've lost 10% of my net worth not 2%.
milkytron 7y ago
I was in a similar position a couple years ago, and ended up buying. If you read the article, they mention "built to rent" houses. I bought one of these, and although I do not rent it out now, I could quite easily rent it out if a better opportunity comes along that would require me to move. I think this is a good option for people who have the cash for a down payment, are looking for a place to live, and don't want to deal with rising rents in case they do stay, while still increasing net worth every month with the mortgage payment. You might be tied down for a year or two, but it's not like being stuck somewhere for 30 years if you have the option to rent a place out.