4 ms·

It’s money you have to spend (shelter is non-optional), and mortgage is definitely a better investment than renting (you’ll get at least some of it back on sell

by setr 5y ago

It’s money you have to spend (shelter is non-optional), and mortgage is definitely a better investment than renting (you’ll get at least some of it back on selling, unless it dips very far) whereas rent is guaranteed to be burnt. And the difference between rent and mortgage as a monthly payment isn’t that far for same-lifestyle, assuming you can put up the standard up-front capital requirements. As far as I can tell, it’s quite reasonable.

chii 5y ago
interest payments from the mortgage can be directly compared with rent, but not the principle repayment portion of the mortgage. > assuming you can put up the standard up-front capital requirements. which is also a cost - just more difficult to imagine as a cost. This cost is called the cost of capital, and is non-zero. If you take the minimum return, which is the risk-free rate from buying treasuries, this can be considered your cost of capital for this upfront deposit. More, if you consider this capital could be invested in the markets for some risk. It isn't always clear cut which wins out, mortgage or renting. For the past few decades, mortgages have been winning out due to declining interest rates, but that might not last.
- drdec 5y ago
  > interest payments from the mortgage can be directly compared with rent, but not the principle repayment portion of the mortgage. You keep saying this but my mortgage payment for the past six years has been 0. And when I had a mortgage the payment always was comparable with the rent I was paying on a 2 bedroom apartment before buying the house. That apartment would never accommodate my family of four. If renting works for you that's great, keep renting. But don't pretend it's because it is somehow cheaper than owning - it's not.
klipt 5y ago
> And the difference between rent and mortgage as a monthly payment isn’t that far for same-lifestyle That doesn't seem to be true in the Bay Area which has a very high buy/rent ratio because everyone expects housing here to be a great investment. The property tax alone on a townhouse can be higher than the rent on a similar apartment. And property tax, mortgage interest, HOA fees/utilities like garbage and water, are pure expenses like rent, not investments.
- sgtnoodle 5y ago
  Anecdotally, I live in the bay area and bought a house 4 years ago in a very desirable location, and my mortgage + property tax is cheaper than the equivalent rent would be.
- jjav 5y ago
  > And property tax, mortgage interest, HOA fees/utilities like garbage and water, are pure expenses like rent, not investments. You're paying for all of that when renting as well, so not a differentiator.
  - klipt 5y ago
    It is a differentiator if those things would add up to more than rent. In that case renting is literally saving money that you can e.g. put into the stock market instead of real estate.

by setr 5y ago

chii 5y ago

interest payments from the mortgage can be directly compared with rent, but not the principle repayment portion of the mortgage. > assuming you can put up the standard up-front capital requirements. which is also a cost - just more difficult to imagine as a cost. This cost is called the cost of capital, and is non-zero. If you take the minimum return, which is the risk-free rate from buying treasuries, this can be considered your cost of capital for this upfront deposit. More, if you consider this capital could be invested in the markets for some risk. It isn't always clear cut which wins out, mortgage or renting. For the past few decades, mortgages have been winning out due to declining interest rates, but that might not last.

drdec 5y ago
> interest payments from the mortgage can be directly compared with rent, but not the principle repayment portion of the mortgage. You keep saying this but my mortgage payment for the past six years has been 0. And when I had a mortgage the payment always was comparable with the rent I was paying on a 2 bedroom apartment before buying the house. That apartment would never accommodate my family of four. If renting works for you that's great, keep renting. But don't pretend it's because it is somehow cheaper than owning - it's not.

klipt 5y ago

> And the difference between rent and mortgage as a monthly payment isn’t that far for same-lifestyle That doesn't seem to be true in the Bay Area which has a very high buy/rent ratio because everyone expects housing here to be a great investment. The property tax alone on a townhouse can be higher than the rent on a similar apartment. And property tax, mortgage interest, HOA fees/utilities like garbage and water, are pure expenses like rent, not investments.

sgtnoodle 5y ago
Anecdotally, I live in the bay area and bought a house 4 years ago in a very desirable location, and my mortgage + property tax is cheaper than the equivalent rent would be.
jjav 5y ago
> And property tax, mortgage interest, HOA fees/utilities like garbage and water, are pure expenses like rent, not investments. You're paying for all of that when renting as well, so not a differentiator.
- klipt 5y ago
  It is a differentiator if those things would add up to more than rent. In that case renting is literally saving money that you can e.g. put into the stock market instead of real estate.