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Chalk up another dumb one here. Owning a home is the best thing I've ever done. I don't own it as an investment and it's value doesn't mean squat to me on a dai
by bcl 15y ago
Chalk up another dumb one here. Owning a home is the best thing I've ever done. I don't own it as an investment and it's value doesn't mean squat to me on a daily basis. It only matters when I want to refinance it to move to a lower interest rate and shorter term. Or when (if?) I eventually sell it in the LONG TERM.
Housing isn't a short term investment. If you need to be mobile, rent or surf couches. But when you are ready to settle down nothing beats having your own roof over your head and 20 years of fixed payments ahead of you.
The article must be comparing house vs. apartment rental prices to get their 30:1 ratio, even in Seattle. If you rent a house you're paying the mortgage for the owner + a bit more so there is no way you can rent a comparable home for that much less than buying.
- mechanical_fish 15y agoIf you rent a house you're paying the mortgage for the owner + a bit more so there is no way you can rent a comparable home for that much less than buying. This is one instance of a classic fallacy. Let's call it the steady-state fallacy: If X is impossible over the long run, then X cannot really be happening. In the housing market the second-order factor is speculation: During bubbles, like the one that is deflating now, people overpay for housing, way more than the equivalent rent, on the assumption that the house would appreciate. When housing prices fell instead, these people ended up owing more on their mortgage than the housing was worth. But it's better to collect 60% of your mortgage in rent than collect 0% of your mortgage on an empty house, or to live in your house in a town where you have no job. So there are lots of houses and condos that rent for significantly less than they cost to buy. Pretty much all the ones in Boston, for example, at least until very recently.
- Goladus 15y agoRight, renting is a related but partially separate market from buying. There are various pressures that affect the market value of the home you're interested in renting, and you may not be able to charge rent+expenses and actually get any decent tenants.
- nhangen 15y agoI look at it like this - If you could buy a business that was guaranteed to make you 1k-1500/month every year for the rest of your life, while also having someone pay most or all of the loan required to buy said business, would you do it? I sure as hell would (and did).
- davidandgoliath 15y agoThere's that word again -- "guaranteed". Not that making assumptions is a bad thing as the worst case scenario is bankruptcy along with everyone else, but never assume the market is going to remain where it is. $1k-1,500 a month when your neighbor is renting out at a discount is not going to fair well.