5 ms·

Renting is always worth 0 as equity, so it's a total loss regardless.

by quantified 4y ago

notch656a 4y ago
But renting also guarantees you will never have negative equity.
- quantified 4y ago
  Negative equity with a roof over your head is better than on the street. Your equity going to zero is still cheaper than raising a family to adulthood in a rented place.
  - notch656a 4y ago
    I agree there are lots of upsides to having a house. I definitely get some used car salesman vibes whenever someone tries to sell up the upsides of negative equity, though. Having no chance to have negative equity is pretty much unequivocally one of the few absolute advantages of renting. The other being (typically) lower transactional costs for short term occupancy.
    - quantified 4y ago
      Negative equity means little. So what if it's worth less when you sell than when you buy? Compare the net on that with the loss you take from renting. Only a fool treats their dwelling as an appreciating asset anyway. It's subject to market forces.
brianwawok 4y ago
* It guarantees you do not lose money if the home values around you drop * It gives you a fixed monthly houseing cost. No "10k new roof" or "1k new stove" suprises hit you. * If you are say, saving 50% vs buying, you can put this difference in an index fund. This would over 10 or 20 years potentially give you a LOT of money over buying. Look, buying is mostly great. It's one of the biggest builders of wealth for most Americans. But from a purely numbers game, it's not so clear "rent is just losing money".
- antisthenes 4y ago
  1. True, but housing prices rarely drop in desirable areas (usually where good jobs and schools are). If, for some reason, you decide to stay in a town with a dying industry, then yes, this is true. 2. So does a fixed-rate mortgage. Even better, refinancing a mortgage during a low-rate period (e.g. 2012, 2020) actually lets you reduce your payment, while contributing more to equity. How often do you have an opportunity to reduce your rent? 3. Saving 50% of what exactly? You can put the down payment into an index fund, yes, but remember than the house is an asset that gives you 5x leverage initially, assuming 20% down. You can't get 5x leverage at your broker, and even if you could, playing with 5x leverage on the stock market is insanely risky compared to real estate. > But from a purely numbers game, it's not so clear "rent is just losing money" It's pretty clear actually. They've compared retirees who rented all their life vs home-buyers. The difference in wealth was striking, a factor of 6x-7x if not more. What's not clear is whether that trend will continue in perpetuity under the conditions of declining population.
  - brianwawok 4y ago
    So say global warming continues. Huge chunks of Cali aren't fit to live in. Salt Lake dries up. What happens to all of those home values? Home values rising historically is good, but I don't think a clear win through all time. There is no instrinsic reason a house value should rise faster than inflation. You can always build a new house for cost X. Buying existing means that new house supply is too low or too costly.
    - quantified 4y ago
      I don't look at a house as an appreciating asset, that would be stupid. Market forces control the price, and those are predominantly out of your control. But for what I've paid in rent over the years, I could have paid for entire dwellings. And had the freedom to fix and alter things per my desire.
- jjav 4y ago
  > It gives you a fixed monthly houseing cost. Renting is the opposite of a fixed monthly cost, since rents go up all the time. If you rent, you can't tell me what your rent will be in ten years. I can tell you what my mortgage will be, exactly the same as today. > No "10k new roof" or "1k new stove" suprises hit you. If these bother you, you can sign up for house maintenance insurance programs to give you a fixed monthly cost. I'd recommend against that since they make a profit off you, you're better off putting that money into an investment account and withdraw from there when you neeed it.
1991g 4y ago
This is true only if you place zero value on "having a roof over my head".
boringg 4y ago
Absolute statements rarely hold up when you shine a light on them.
- quantified 4y ago
  That's sometimes true, but there are a lot of nuances to it.

Renting is always worth 0 as equity, so it's a total loss regardless.

notch656a 4y ago

But renting also guarantees you will never have negative equity.

quantified 4y ago
Negative equity with a roof over your head is better than on the street. Your equity going to zero is still cheaper than raising a family to adulthood in a rented place.
- notch656a 4y ago
  I agree there are lots of upsides to having a house. I definitely get some used car salesman vibes whenever someone tries to sell up the upsides of negative equity, though. Having no chance to have negative equity is pretty much unequivocally one of the few absolute advantages of renting. The other being (typically) lower transactional costs for short term occupancy.
  - quantified 4y ago
    Negative equity means little. So what if it's worth less when you sell than when you buy? Compare the net on that with the loss you take from renting. Only a fool treats their dwelling as an appreciating asset anyway. It's subject to market forces.

brianwawok 4y ago

* It guarantees you do not lose money if the home values around you drop * It gives you a fixed monthly houseing cost. No "10k new roof" or "1k new stove" suprises hit you. * If you are say, saving 50% vs buying, you can put this difference in an index fund. This would over 10 or 20 years potentially give you a LOT of money over buying. Look, buying is mostly great. It's one of the biggest builders of wealth for most Americans. But from a purely numbers game, it's not so clear "rent is just losing money".

antisthenes 4y ago
1. True, but housing prices rarely drop in desirable areas (usually where good jobs and schools are). If, for some reason, you decide to stay in a town with a dying industry, then yes, this is true. 2. So does a fixed-rate mortgage. Even better, refinancing a mortgage during a low-rate period (e.g. 2012, 2020) actually lets you reduce your payment, while contributing more to equity. How often do you have an opportunity to reduce your rent? 3. Saving 50% of what exactly? You can put the down payment into an index fund, yes, but remember than the house is an asset that gives you 5x leverage initially, assuming 20% down. You can't get 5x leverage at your broker, and even if you could, playing with 5x leverage on the stock market is insanely risky compared to real estate. > But from a purely numbers game, it's not so clear "rent is just losing money" It's pretty clear actually. They've compared retirees who rented all their life vs home-buyers. The difference in wealth was striking, a factor of 6x-7x if not more. What's not clear is whether that trend will continue in perpetuity under the conditions of declining population.
- brianwawok 4y ago
  So say global warming continues. Huge chunks of Cali aren't fit to live in. Salt Lake dries up. What happens to all of those home values? Home values rising historically is good, but I don't think a clear win through all time. There is no instrinsic reason a house value should rise faster than inflation. You can always build a new house for cost X. Buying existing means that new house supply is too low or too costly.
  - quantified 4y ago
    I don't look at a house as an appreciating asset, that would be stupid. Market forces control the price, and those are predominantly out of your control. But for what I've paid in rent over the years, I could have paid for entire dwellings. And had the freedom to fix and alter things per my desire.
jjav 4y ago
> It gives you a fixed monthly houseing cost. Renting is the opposite of a fixed monthly cost, since rents go up all the time. If you rent, you can't tell me what your rent will be in ten years. I can tell you what my mortgage will be, exactly the same as today. > No "10k new roof" or "1k new stove" suprises hit you. If these bother you, you can sign up for house maintenance insurance programs to give you a fixed monthly cost. I'd recommend against that since they make a profit off you, you're better off putting that money into an investment account and withdraw from there when you neeed it.

1991g 4y ago

This is true only if you place zero value on "having a roof over my head".

boringg 4y ago

Absolute statements rarely hold up when you shine a light on them.

quantified 4y ago
That's sometimes true, but there are a lot of nuances to it.