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It depends. I would have to pay my current rent for 83 years to match the purchase price of a similar house. Plus if I rent it, then repairs need to be paid for

It depends. I would have to pay my current rent for 83 years to match the purchase price of a similar house. Plus if I rent it, then repairs need to be paid for by the housing company. If I buy, then I'm paying for them. So with the current high housing asset prices and low rental prices, purchasing a house doesn't make financial sense.

fragmede 5y ago
There's a line where if makes sense to own vs rent, and sometimes local market conditions will land you in one camp vs the other. But at the end of the decade, if you're paying, eg $2,000/month in rent vs mortgage, after 30 years, one person owns their house, the other can look forwards to paying rent for another 30 years.
- hnaccount_rng 5y ago
  Right now you'd neither a) after 30 years own the house at 2k/month and b) would have to pay for all the renovations within the 30 years (and I'd expect at least one pipe burst in that time). There are advantages of just renting. Even beyond the "I can just move if I have to" part.
- chii 5y ago
  > $2,000/month in rent vs mortgage the mortgage is not 100% comparable to the rent, since not 100% of the mortgage is unrecoverable cost, unlike rent. Some percentage of the mortgage payment is the principle payment. If you subtract this principle payment, and add in the cost of capital for the mortgage (which is the opportunity cost of the initial deposit), you can then compare the cost of mortgage with rent. In most cases, rent should be cheaper (but of course, not always). A nice rule of thumb is to have a 5% rule - if you can rent annually for less than 5% of the cost of the property, you'd be ahead financially.
- rosndo 5y ago
  Money you didn’t waste on buying a house could’ve been invested in less risky faster-appreciating assets like index funds. In many cities where buy prices are high the renter will end up with a higher net worth in the end.

fragmede 5y ago

There's a line where if makes sense to own vs rent, and sometimes local market conditions will land you in one camp vs the other. But at the end of the decade, if you're paying, eg $2,000/month in rent vs mortgage, after 30 years, one person owns their house, the other can look forwards to paying rent for another 30 years.

hnaccount_rng 5y ago
Right now you'd neither a) after 30 years own the house at 2k/month and b) would have to pay for all the renovations within the 30 years (and I'd expect at least one pipe burst in that time). There are advantages of just renting. Even beyond the "I can just move if I have to" part.
chii 5y ago
> $2,000/month in rent vs mortgage the mortgage is not 100% comparable to the rent, since not 100% of the mortgage is unrecoverable cost, unlike rent. Some percentage of the mortgage payment is the principle payment. If you subtract this principle payment, and add in the cost of capital for the mortgage (which is the opportunity cost of the initial deposit), you can then compare the cost of mortgage with rent. In most cases, rent should be cheaper (but of course, not always). A nice rule of thumb is to have a 5% rule - if you can rent annually for less than 5% of the cost of the property, you'd be ahead financially.
rosndo 5y ago
Money you didn’t waste on buying a house could’ve been invested in less risky faster-appreciating assets like index funds. In many cities where buy prices are high the renter will end up with a higher net worth in the end.