8 ms·

Three Million U.S. Households Making over $150k Are Still Renting

29 points by GalenErso 4y ago

nunez 4y ago
...and proud of it. We've moved four times in the past five years. We don't have kids; we only have cats. Each move was for a very good reason. Had we owned, we never would have discovered just how much we love our new city or how much I dislike the suburbs without losing substantial amounts of money or being "forced" into becoming a landlord. We'd also still be paying student loans. I love renting. It offers so much flexibility and offloads so much potential headache. We will probably buy soon, but renting has made it possible to buy when I was ready in a city we were both very very sure is "it" instead of scrimping and saving for a crappy starter home somewhere we would both develop an acquired taste for. Also, when I buy, I want our place to be _our place_, not a financial vehicle to buy low and sell high. Renting for a while is giving me enough time to develop enough financial security to make that possible.
pinewurst 4y ago
https://archive.ph/fHc8f https://archive.ph/fHc8f
Idiot_in_Vain 4y ago
Part of these probably have poor credit score and can't get mortgage.
- toomuchtodo 4y ago
  > Part of these probably have poor credit score and can't get mortgage. FHA loans require you to fog a mirror to qualify [1] [2]. More importantly, Fed interest rate hikes have not yet hammered real estate prices sufficiently for mortgage payments to reach what wages can support [3] [4] [5]. [1] https://www.nerdwallet.com/article/mortgages/fha-loan-requirements https://www.nerdwallet.com/article/mortgages/fha-loan-requir... [2] https://www.hud.gov/program_offices/housing/sfh/lender/origination/mortgage_limits https://www.hud.gov/program_offices/housing/sfh/lender/origi... [3] https://www.youtube.com/watch?v=DsuwbJaVGqI https://www.youtube.com/watch?v=DsuwbJaVGqI [4] https://www.youtube.com/watch?v=FPJ0KYI1SKE https://www.youtube.com/watch?v=FPJ0KYI1SKE [5] https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA (ignore the clickbait youtube titles, the charts shown are sufficient)
  - alexpotato 4y ago
    Are people with ~2.5% mortgages in any hurry to sell though? If people are deciding not to sell b/c of the above, yes, higher interest rates might bring down the prices of house that people "have" to sell but that's not going to improve the supply situation.
    - toomuchtodo 4y ago
      They aren't, which means liquidity will be a challenge, but there are always sellers who have no choice and must sell (death, divorce, job move, etc). New home builders also contribute to new comps, depending on the market and land availability. Supply is going to be a mess due to the cost of money, land, labor, and materials. Don't expect a crash. It's going to be a slow stagnation burn.
- ctvo 4y ago
  The average credit score in the US was 711[1] in 2020. It is highly unlikely the distribution is different for these 3 million house holds vs. the population that it's even worth discussing as a contributing factor unless you have some other information we're missing (I'd wager people making 150K as a holdhouse probably have better credit rating than the general population if anything). 1 - https://www.valuepenguin.com/average-credit-score https://www.valuepenguin.com/average-credit-score
  - Idiot_in_Vain 4y ago
    [flagged]
- willis936 4y ago
  Part but not all. Having a 700+ credit score is pretty easy to accomplish with this level of income, but mortgages require a down payment. The target level of capital has been rising. At the same time rent rates have been rising. So if you make a combined $150k, $120k post tax, $90k take home after benefit bills, $60k after rent. That's plenty to live off of, but it is a lengthening horizon before you can afford a down payment, even with belt tightening exercises.
- kube-system 4y ago
  Or they live in trendy urban neighborhoods where a 20% down payment is $200k, and that locks you into a monthly payment that is no less than renting, and is in a school district that they don't want to be in long term.
  - Idiot_in_Vain 4y ago
    [flagged]
HardwareLust 4y ago
I am, but for good reasons. The company I work for could be bought or collapse at any moment, and I do not want to be tied to this particular region if that happens. I want to be able to ghost this place with a minimum of fuss when that severance check hits so I can head back west where I belong.
etchalon 4y ago
We rented for years after we crossed that threshold because we weren't ready to buy. We didn't want the hassle of a home, weren't convinced the city we were in would be where we lived for the rest of our life, and didn't love the options we could afford in the area we rented.
- gear54rus 4y ago
  Can't you just sell it if you decide to move?
  - etchalon 4y ago
    Why would I risk losing money until I had to or was comfortable with?
  - soperj 4y ago
    Costs a fair bit to buy and sell. If the price of homes isn't going up very fast often times it's cheaper to rent than even the interest costs on your mortgage would be.
  - jedberg 4y ago
    Houses aren't quite that fungible. It takes a lot of work to prep a house to sell, you have to hope there are buyers, and it costs a lot of money to sell a house.
    - xur17 4y ago
      Yeah, at a bare minimum you're looking at 6% in agent fees.
  - yamtaddle 4y ago
    It's a hassle—and some folks find it more a hassle than others, due to personality or circumstance—and you lose some money to transaction costs every time you sell. Which doesn't mean you lose money overall, if the property has appreciated, but it still stings.
  - 4y ago
no_wizard 4y ago
This used to be considered a bracket that was nearly "guaranteed" to be in the home ownership class. Definitely endemic of housing in the USA, where people want to live, there are restrictions on building adequate housing that even upper middle class folks are priced out of ownership (let alone reasonable rents) I view this as a failure of housing policy and jurisdiction
- nunez 4y ago
  $150k/yr in 1980 is roughly $580k/yr today, though.
  - seanmcdirmid 4y ago
    $544k according to https://www.in2013dollars.com/us/inflation/1980?amount=150 https://www.in2013dollars.com/us/inflation/1980?amount=150. Which makes me realize how a my FAANG salary is not even keeping up with where my dad was in 1980 when he was contracting in nuclear plant construction :p (but that industry imploded in the mid 80s, so it didn't last).
    - nunez 4y ago
      yeah it's crazy how much net compensation has flatlined for everyone but people heavily compensated by the markets.
- cragfar 4y ago
  That is part of it, but fewer people are getting married and having kids which was one of the main drivers for buying a home. And job hopping is more common.
  - thaw13579 4y ago
    It could go the other way as well, fewer people are starting a family because of the cost of housing.
    - 4y ago
bottlepalm 4y ago
I mean if you compare with buying a house, you'll build more wealth renting an apartment as they're typically much much smaller. Equities have better historical ROI than Real Estate, and that's when you diversify and buy an ETF, not one particular lucky stock/house. Now if we're talking about 'buying an apartment' that'd be a better comparison, as in that case it would be better than renting if you plan to live in a single place for a long time. The amount of money people blow every month on mortgage interest, maintenance, insurance, and taxes on a big house is easily more than many peoples' rents, but yet people are convinced that buying (before they actually need a house) will lead them to a better financial future.
- 62951413 4y ago
  Houses that were selling for 600-700K in 2009 are much closer to 1.5M now (e.g. in 94563 or 94549). While their property tax is capped nicely. Just saying.
- CydeWeys 4y ago
  It all 100% depends. I live in lower Manhattan and it's hard to justify buying in almost all situations. It only pays off much further down the line, but it might not ever pay off at all if you consider the opportunity cost for your money.
- it_citizen 4y ago
  I am in the same situation but every 6 months I come back to question it, I can’t help it. Mortgage is such a huge leverage (with the risks that come with it) I have to re-run the numbers all the time because my guts keep telling me to buy. Probably due of my cultural background where the first thing everybody did was buying a house.
- c54 4y ago
  This is true in theory but mortgages are the largest levered bet a regular individual can make, and there are other systemic incentives around home ownership making that bet play out disproportionately well
- tylerjaywood 4y ago
mathwords 4y ago
[dead]
rco8786 4y ago
"Still" renting, heavily implies that purchasing a home is some sort of inevitable conclusion that if you haven't done yet then something is wrong with you. A) Not true but also B) 150k is not enough money to purchase homes in several major metro areas.
- dnadler 4y ago
  That's because home ownership in the US is (was?) really the primary path for the middle class to accumulate wealth. The US home mortgage as a financial instrument is phenomenal for this. So, it was generally expected that most people would rent until they can afford to buy on their path to accumulating wealth. There are certainly reasons for people not to buy, but not being able to afford a home is more of a problem now than it has been historically (obviously). This has significant knock-on effects for individuals and the broader economy.
- karmakurtisaani 4y ago
  Owning a home is preferable though. "You're either paying your own or someone else's mortgage." Edit: clearly one quote cannot capture the complexity of life. However, should I ever own a home, I'd be happy to let you guys pay for my mortgage.
  - cudgy 4y ago
    I might pay your mortgage if comparable rents will cover it. There’s no guarantee that will be the case, and you could be stuck with a house you can’t sell or rent for more than the mortgage, taxes, insurance, hoa fees, hoa assessments, lawncare, gutter cleanings, pesticide, termite service and bond, replacement hvacs and appliances, roof replacements, exterior paint, interior paint, carpet, wall repairs, toilet issues, plumbing leaks, frozen pipes, squirrel and rodent damage, damage from tenants, vacant months, legal fees for evictions, and the risk of eviction moratoriums, earthquake damage, fires, etc.
  - swatcoder 4y ago
    "You're either rooted with high inertia and volatile maintenance costs or you're buying personal flexibility and medium-term expense stability." Owning is a smart place to park money when you're sure you're settling down for a long while and can be a good investment at other times, but renting is "preferable" quite often too. People get very caught up in black and white thinking about this and it leads to a lot of counterproductive decisions and frustration.
ParksNet 4y ago
Houses in my city are declining in value by $10k/month right now. Why buy?
- hammock 4y ago
  I also want to know this
  - flappyeagle 4y ago
    This is a complicated question to answer. You’ll want to consider what you think the long run prospects for home prices and interest rates are. You’re not buying a house in most circumstances, you’re buying a mortgage.
    - hammock 4y ago
      aren't i buying both?
AnotherGoodName 4y ago
I would have thought it was higher to be honest. Basically anyone with any job mobility should be in this bucket.
mistrial9 4y ago
curious that "rent seeking" is an end-game in small (individual) capital endeavors. There was an individual real-estate agent in the SF Bay Area recently who leveraged, bought, sold repeat.. in a brutally competitive environment, including surviving 2008 events. The end game of almost fifteen years of this relentless effort? purchasing an 18 unit apartment building in a flyover state and moving out of California. Why is this remarkable? because the fodder for the business was private homes. It is like porn for some people. Flipping houses is tangible and real. If you enjoy watching your competition get crushed by pressure and cash flow problems, more's the better. Yet, these houses were not stable places for families or DINKs .. they were chips on a table. And where did that ultimate money go? into RENTALS.. because MONEY. Zero new houses were built. Stability of life was undermined as table stakes. There are a dozen winners and hundreds of losers, seen and unseen. Drink to that! the side effects? brutal alcoholism, soul loss.. things that could have been but were left in the rush to the seven figure check. real 2000s in California housing market
- lotsofpulp 4y ago
  The houses would not be chips on a table if housing supply met or surpassed demand, in any given location. Barring water shortages, drastic climate change, or natural catastrophe, I doubt the desirable areas of California could ever meet demand with individual houses with yards and garages.
barsonme 4y ago
We’re in this category. We could’ve purchased a home a while ago, but we chose to rent and save money instead. We didn’t want to raise kids in Seattle, so buying an overpriced home there made little sense. Now that we’re both working remote, we’ve moved away and are in the process of building a home (ie still renting) in an area we really like. It’s taken much longer, but the results will be much nicer.
swatcoder 4y ago
This is a weird angle on the story. The story is that housing prices are so inflated that even well-paid professionals can struggle to responsibly buy in if they don't already have a stake in real estate. This isn't new to Manhattan, but it's now common across a lot of American cities and that's news-worthy. But the way of quantifying it is where it goes off. There are countless reasons to prefer renting than buying, even with a good income, and what are often personal reasons often grow to include financial one when the prices seems unsustainable. So the number of x-income household that are renting is not really illustrative of what's worth reading in the story. Presumably, the journalist or editor are themselves fixated on home ownership (we all know those people) and have sort of projected that out onto everyone else. But sometimes, you just don't want to own.
- lotsofpulp 4y ago
  > The story is that housing prices are so inflated that even well-paid professionals can struggle to responsibly buy in if they don't already have a stake in real estate. This isn't new to Manhattan, but it's now common across a lot of American cities and that's news-worthy. Is this accurate? Or is it more “well-paid professionals struggle to responsibly buy in select areas of a handful of metros”? Are well paid NYC professionals struggling to buy in the Bronx? Or east Brooklyn? Or Staten Island? I doubt well paid professionals are struggling in all of Chicago, Kansas City, Tampa, Dallas, Atlanta either. It might be that they are struggling to buy in the richer parts, but that is simply consequences of widening income/wealth gap.
  - swatcoder 4y ago
    The story opens with a story about Central Florida. This is more widespread than “a handful of metros” right now. And sure, when people say “struggle to buy” we’re talking about securing rough parity in their lifestyle as renters. Yes, they can likely go and start gentrifying a grossly unfamiliar neighborhood that needs housing for its own community, or maybe find a rough home that has a low list price and unknown high maintenance costs, but they can currently provide much better for themselves and their families by renting. The market doesn’t always look like this. It has sometimes, it does now, and when it does it effects people. That’s the story. And that’s why its news. You’re not obliged to care about it, but if you’re just going to dismiss it without bothering to understand it, you can just skip along and read other things.
andrewfromx 4y ago
I'm not sure exactly what features to add next to this site https://remoterenters.com/ https://remoterenters.com/ but the idea is to help people find a building where their rent is actually a good deal. Because yes, many people will never get a mortgage and buy a condo or house. And a16z has a plan to give renters equity in their building + make the experience of living (and working) there 10x better. And just like jobs are now "anywhere in the world" so it changes everything in terms of the available candidate pool, the available renters are now also anywhere in the world. Landlords need to compete!
- it_citizen 4y ago
  Nice little collection. I will definitely through it! Regarding a16z, that’s rich they want to help renters but at the same time, the founder is privately NYMBYing in their neighborhood because it might hurt their property value.
pwinnski 4y ago
We own a house, but have been considering selling it and getting an apartment, despite earning well north of that number in Texas, not exactly a high cost-of-living state. Financially, we might (or might not) miss out on some equity growth, but our expenses would be more steady. Instead of sporadic multi-thousand dollar repairs and a giant property tax check every year, we'd make a single monthly payment to replace both. Some months we would pay more than if we stayed put, some months we'd pay much less. In the meantime, an apartment would be much smaller, and so utility bills would decrease, too. Rent would go to maintain the shared pool rather me having to pay separately for that, too. In a state where property taxes weren't running more than $6k/year, the math might be different. We'd likely have moved already if we didn't have two electric cars.
- yieldcrv 4y ago
  Take a second look at California, people that can afford to live here don't really have to deal with "the high taxes". because you can also afford a CPA. and California property taxes are typically less than half of Texas. try having most of your annual earnings to be long term capital gains with some of your other unrealized long term gains donated to your non-profit. if you're just doing "income" and saving, taking no risk or spending, then don't take a second look at California. but if you can drive some Net Operating Losses in conjunction with capital gains and capital donations to non-profits, you really don't have to worry about income taxes anywhere, just the local property taxes, and those are much lower in California than Texas.
  - lotsofpulp 4y ago
    Property tax rates might be lower in California, but nominal property taxes are dependent on when you purchased the property. If you purchase an $800,000 house in California in 2019, your property tax might be $8,000, similar to Texas's 2% property tax on a $400,000 house. The difference in California is that if you purchased property long ago, or inherited it, you pay far less than 2% of the market value in property tax. But that is not relevant for anyone looking to purchase a home, and generally, land in CA is much more expensive than TX, so I doubt there are any property tax savings by buying in CA.
henry2023 4y ago
My wife and I make more than $250k a year. Our avg tax rate is just about 35% and we live with half our take-home pay. I consider ourselves lucky and cannot possibly feel "bad" about my situation. Yet, taking a substantial 15y mortgage that requires us never to make less than we're making today to get a trashy house in a bad neighborhood or a 600 sqft condo is a nogo for me
dougmwne 4y ago
I guess this is about me! I am renting for a reasonable rate. There is a similar house on my street for 1 mil. While I could buy it, I could also live off that 1 mil if it was in liquid investments for the rest of my life. The dividends would pay my rent, expenses and then some. Why should I put such a massive investment on a single asset? It can be difficult to even insure a house in my state, the so called “insurance crisis.” My financial plan is to work while I can bare it, then head off to a cheaper place once I can’t. I’ve never been too interested in accumulating great stores of things and don’t have champagne taste. I save a lot of what I make. I’m assuming that the economic good time will end during my lifetime, so live a simple and enjoyable life that I think I will be able to sustain even if my ability to work is destroyed. I think that makes me a big picture pessimist but a small picture optimist.
- atom058 4y ago
  I just had a discussion about this with my family, and I'm in your camp of living small and avoiding the painful adjustments that might come in future. If I wanted to, I could get a house or buy an apartment, but it would require me to put in most of my wealth to cover the mortgage. Currently in a rent-controlled apartment, so my housing costs after buying would go up about x5 with the interest rates we're seeing now. And then my utilities, insurance and other maintenance costs on top. I feel I'd need to earn 2-3 times what I'm earning now to be comfortable with that level of spend. I would feel trapped if I'd have to sustain property ownership on my current salary level, as it would force me to keep working certain jobs and long hours. But many of my peers seem to have made a different choice
- swatcoder 4y ago
  Same here. I had good luck buying after the 2008 bust and selling some time later, and am open to taking advantage of an opportunity like that if we see another big dip. But otherwise, there's no rush to be house poor again in an overheated market like this. It was stressful then and intensified the golden handcuffs experience that often comes with working in tech. Accumulating flexible savings and then maybe buying a modest "retirement" home later in cash or with a small/short-term mortgage seems to be the way.
- 4y ago
Apreche 4y ago
I'm in NYC. Even if I bought something with a monthly down payment comparable to my current rent, it would be a lot less nice than the place I'm renting now. It would also be in a worse location. Even if I decided to do that, the down payment is a major issue. My savings grows, but the prices grow faster. I would need a sudden financial windfall of at least a few hundred K in order to buy. If I did receive such a windfall, and I found the right place, then I think I would end up buying. But I don't see that happening any time soon.

29 points by GalenErso 4y ago

...and proud of it. We've moved four times in the past five years. We don't have kids; we only have cats. Each move was for a very good reason. Had we owned, we never would have discovered just how much we love our new city or how much I dislike the suburbs without losing substantial amounts of money or being "forced" into becoming a landlord. We'd also still be paying student loans. I love renting. It offers so much flexibility and offloads so much potential headache. We will probably buy soon, but renting has made it possible to buy when I was ready in a city we were both very very sure is "it" instead of scrimping and saving for a crappy starter home somewhere we would both develop an acquired taste for. Also, when I buy, I want our place to be _our place_, not a financial vehicle to buy low and sell high. Renting for a while is giving me enough time to develop enough financial security to make that possible.

pinewurst 4y ago

https://archive.ph/fHc8f https://archive.ph/fHc8f

Idiot_in_Vain 4y ago

Part of these probably have poor credit score and can't get mortgage.

toomuchtodo 4y ago
> Part of these probably have poor credit score and can't get mortgage. FHA loans require you to fog a mirror to qualify [1] [2]. More importantly, Fed interest rate hikes have not yet hammered real estate prices sufficiently for mortgage payments to reach what wages can support [3] [4] [5]. [1] https://www.nerdwallet.com/article/mortgages/fha-loan-requirements https://www.nerdwallet.com/article/mortgages/fha-loan-requir... [2] https://www.hud.gov/program_offices/housing/sfh/lender/origination/mortgage_limits https://www.hud.gov/program_offices/housing/sfh/lender/origi... [3] https://www.youtube.com/watch?v=DsuwbJaVGqI https://www.youtube.com/watch?v=DsuwbJaVGqI [4] https://www.youtube.com/watch?v=FPJ0KYI1SKE https://www.youtube.com/watch?v=FPJ0KYI1SKE [5] https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA (ignore the clickbait youtube titles, the charts shown are sufficient)
- alexpotato 4y ago
  Are people with ~2.5% mortgages in any hurry to sell though? If people are deciding not to sell b/c of the above, yes, higher interest rates might bring down the prices of house that people "have" to sell but that's not going to improve the supply situation.
  - toomuchtodo 4y ago
    They aren't, which means liquidity will be a challenge, but there are always sellers who have no choice and must sell (death, divorce, job move, etc). New home builders also contribute to new comps, depending on the market and land availability. Supply is going to be a mess due to the cost of money, land, labor, and materials. Don't expect a crash. It's going to be a slow stagnation burn.
ctvo 4y ago
The average credit score in the US was 711[1] in 2020. It is highly unlikely the distribution is different for these 3 million house holds vs. the population that it's even worth discussing as a contributing factor unless you have some other information we're missing (I'd wager people making 150K as a holdhouse probably have better credit rating than the general population if anything). 1 - https://www.valuepenguin.com/average-credit-score https://www.valuepenguin.com/average-credit-score
- Idiot_in_Vain 4y ago
  [flagged]
willis936 4y ago
Part but not all. Having a 700+ credit score is pretty easy to accomplish with this level of income, but mortgages require a down payment. The target level of capital has been rising. At the same time rent rates have been rising. So if you make a combined $150k, $120k post tax, $90k take home after benefit bills, $60k after rent. That's plenty to live off of, but it is a lengthening horizon before you can afford a down payment, even with belt tightening exercises.
kube-system 4y ago
Or they live in trendy urban neighborhoods where a 20% down payment is $200k, and that locks you into a monthly payment that is no less than renting, and is in a school district that they don't want to be in long term.
- Idiot_in_Vain 4y ago
  [flagged]

HardwareLust 4y ago

I am, but for good reasons. The company I work for could be bought or collapse at any moment, and I do not want to be tied to this particular region if that happens. I want to be able to ghost this place with a minimum of fuss when that severance check hits so I can head back west where I belong.

etchalon 4y ago

We rented for years after we crossed that threshold because we weren't ready to buy. We didn't want the hassle of a home, weren't convinced the city we were in would be where we lived for the rest of our life, and didn't love the options we could afford in the area we rented.

gear54rus 4y ago
Can't you just sell it if you decide to move?
- etchalon 4y ago
  Why would I risk losing money until I had to or was comfortable with?
- soperj 4y ago
  Costs a fair bit to buy and sell. If the price of homes isn't going up very fast often times it's cheaper to rent than even the interest costs on your mortgage would be.
- jedberg 4y ago
  Houses aren't quite that fungible. It takes a lot of work to prep a house to sell, you have to hope there are buyers, and it costs a lot of money to sell a house.
  - xur17 4y ago
    Yeah, at a bare minimum you're looking at 6% in agent fees.
- yamtaddle 4y ago
  It's a hassle—and some folks find it more a hassle than others, due to personality or circumstance—and you lose some money to transaction costs every time you sell. Which doesn't mean you lose money overall, if the property has appreciated, but it still stings.
- 4y ago

no_wizard 4y ago

This used to be considered a bracket that was nearly "guaranteed" to be in the home ownership class. Definitely endemic of housing in the USA, where people want to live, there are restrictions on building adequate housing that even upper middle class folks are priced out of ownership (let alone reasonable rents) I view this as a failure of housing policy and jurisdiction

nunez 4y ago
$150k/yr in 1980 is roughly $580k/yr today, though.
- seanmcdirmid 4y ago
  $544k according to https://www.in2013dollars.com/us/inflation/1980?amount=150 https://www.in2013dollars.com/us/inflation/1980?amount=150. Which makes me realize how a my FAANG salary is not even keeping up with where my dad was in 1980 when he was contracting in nuclear plant construction :p (but that industry imploded in the mid 80s, so it didn't last).
  - nunez 4y ago
    yeah it's crazy how much net compensation has flatlined for everyone but people heavily compensated by the markets.
cragfar 4y ago
That is part of it, but fewer people are getting married and having kids which was one of the main drivers for buying a home. And job hopping is more common.
- thaw13579 4y ago
  It could go the other way as well, fewer people are starting a family because of the cost of housing.
  - 4y ago

bottlepalm 4y ago

I mean if you compare with buying a house, you'll build more wealth renting an apartment as they're typically much much smaller. Equities have better historical ROI than Real Estate, and that's when you diversify and buy an ETF, not one particular lucky stock/house. Now if we're talking about 'buying an apartment' that'd be a better comparison, as in that case it would be better than renting if you plan to live in a single place for a long time. The amount of money people blow every month on mortgage interest, maintenance, insurance, and taxes on a big house is easily more than many peoples' rents, but yet people are convinced that buying (before they actually need a house) will lead them to a better financial future.

62951413 4y ago
Houses that were selling for 600-700K in 2009 are much closer to 1.5M now (e.g. in 94563 or 94549). While their property tax is capped nicely. Just saying.
CydeWeys 4y ago
It all 100% depends. I live in lower Manhattan and it's hard to justify buying in almost all situations. It only pays off much further down the line, but it might not ever pay off at all if you consider the opportunity cost for your money.
it_citizen 4y ago
I am in the same situation but every 6 months I come back to question it, I can’t help it. Mortgage is such a huge leverage (with the risks that come with it) I have to re-run the numbers all the time because my guts keep telling me to buy. Probably due of my cultural background where the first thing everybody did was buying a house.
c54 4y ago
This is true in theory but mortgages are the largest levered bet a regular individual can make, and there are other systemic incentives around home ownership making that bet play out disproportionately well
tylerjaywood 4y ago

mathwords 4y ago

[dead]

rco8786 4y ago

"Still" renting, heavily implies that purchasing a home is some sort of inevitable conclusion that if you haven't done yet then something is wrong with you. A) Not true but also B) 150k is not enough money to purchase homes in several major metro areas.

dnadler 4y ago
That's because home ownership in the US is (was?) really the primary path for the middle class to accumulate wealth. The US home mortgage as a financial instrument is phenomenal for this. So, it was generally expected that most people would rent until they can afford to buy on their path to accumulating wealth. There are certainly reasons for people not to buy, but not being able to afford a home is more of a problem now than it has been historically (obviously). This has significant knock-on effects for individuals and the broader economy.
karmakurtisaani 4y ago
Owning a home is preferable though. "You're either paying your own or someone else's mortgage." Edit: clearly one quote cannot capture the complexity of life. However, should I ever own a home, I'd be happy to let you guys pay for my mortgage.
- cudgy 4y ago
  I might pay your mortgage if comparable rents will cover it. There’s no guarantee that will be the case, and you could be stuck with a house you can’t sell or rent for more than the mortgage, taxes, insurance, hoa fees, hoa assessments, lawncare, gutter cleanings, pesticide, termite service and bond, replacement hvacs and appliances, roof replacements, exterior paint, interior paint, carpet, wall repairs, toilet issues, plumbing leaks, frozen pipes, squirrel and rodent damage, damage from tenants, vacant months, legal fees for evictions, and the risk of eviction moratoriums, earthquake damage, fires, etc.
- swatcoder 4y ago
  "You're either rooted with high inertia and volatile maintenance costs or you're buying personal flexibility and medium-term expense stability." Owning is a smart place to park money when you're sure you're settling down for a long while and can be a good investment at other times, but renting is "preferable" quite often too. People get very caught up in black and white thinking about this and it leads to a lot of counterproductive decisions and frustration.

ParksNet 4y ago

Houses in my city are declining in value by $10k/month right now. Why buy?

hammock 4y ago
I also want to know this
- flappyeagle 4y ago
  This is a complicated question to answer. You’ll want to consider what you think the long run prospects for home prices and interest rates are. You’re not buying a house in most circumstances, you’re buying a mortgage.
  - hammock 4y ago
    aren't i buying both?

AnotherGoodName 4y ago

I would have thought it was higher to be honest. Basically anyone with any job mobility should be in this bucket.

mistrial9 4y ago

curious that "rent seeking" is an end-game in small (individual) capital endeavors. There was an individual real-estate agent in the SF Bay Area recently who leveraged, bought, sold repeat.. in a brutally competitive environment, including surviving 2008 events. The end game of almost fifteen years of this relentless effort? purchasing an 18 unit apartment building in a flyover state and moving out of California. Why is this remarkable? because the fodder for the business was private homes. It is like porn for some people. Flipping houses is tangible and real. If you enjoy watching your competition get crushed by pressure and cash flow problems, more's the better. Yet, these houses were not stable places for families or DINKs .. they were chips on a table. And where did that ultimate money go? into RENTALS.. because MONEY. Zero new houses were built. Stability of life was undermined as table stakes. There are a dozen winners and hundreds of losers, seen and unseen. Drink to that! the side effects? brutal alcoholism, soul loss.. things that could have been but were left in the rush to the seven figure check. real 2000s in California housing market

lotsofpulp 4y ago
The houses would not be chips on a table if housing supply met or surpassed demand, in any given location. Barring water shortages, drastic climate change, or natural catastrophe, I doubt the desirable areas of California could ever meet demand with individual houses with yards and garages.

barsonme 4y ago

We’re in this category. We could’ve purchased a home a while ago, but we chose to rent and save money instead. We didn’t want to raise kids in Seattle, so buying an overpriced home there made little sense. Now that we’re both working remote, we’ve moved away and are in the process of building a home (ie still renting) in an area we really like. It’s taken much longer, but the results will be much nicer.

swatcoder 4y ago

This is a weird angle on the story. The story is that housing prices are so inflated that even well-paid professionals can struggle to responsibly buy in if they don't already have a stake in real estate. This isn't new to Manhattan, but it's now common across a lot of American cities and that's news-worthy. But the way of quantifying it is where it goes off. There are countless reasons to prefer renting than buying, even with a good income, and what are often personal reasons often grow to include financial one when the prices seems unsustainable. So the number of x-income household that are renting is not really illustrative of what's worth reading in the story. Presumably, the journalist or editor are themselves fixated on home ownership (we all know those people) and have sort of projected that out onto everyone else. But sometimes, you just don't want to own.

lotsofpulp 4y ago
> The story is that housing prices are so inflated that even well-paid professionals can struggle to responsibly buy in if they don't already have a stake in real estate. This isn't new to Manhattan, but it's now common across a lot of American cities and that's news-worthy. Is this accurate? Or is it more “well-paid professionals struggle to responsibly buy in select areas of a handful of metros”? Are well paid NYC professionals struggling to buy in the Bronx? Or east Brooklyn? Or Staten Island? I doubt well paid professionals are struggling in all of Chicago, Kansas City, Tampa, Dallas, Atlanta either. It might be that they are struggling to buy in the richer parts, but that is simply consequences of widening income/wealth gap.
- swatcoder 4y ago
  The story opens with a story about Central Florida. This is more widespread than “a handful of metros” right now. And sure, when people say “struggle to buy” we’re talking about securing rough parity in their lifestyle as renters. Yes, they can likely go and start gentrifying a grossly unfamiliar neighborhood that needs housing for its own community, or maybe find a rough home that has a low list price and unknown high maintenance costs, but they can currently provide much better for themselves and their families by renting. The market doesn’t always look like this. It has sometimes, it does now, and when it does it effects people. That’s the story. And that’s why its news. You’re not obliged to care about it, but if you’re just going to dismiss it without bothering to understand it, you can just skip along and read other things.

andrewfromx 4y ago

I'm not sure exactly what features to add next to this site https://remoterenters.com/ https://remoterenters.com/ but the idea is to help people find a building where their rent is actually a good deal. Because yes, many people will never get a mortgage and buy a condo or house. And a16z has a plan to give renters equity in their building + make the experience of living (and working) there 10x better. And just like jobs are now "anywhere in the world" so it changes everything in terms of the available candidate pool, the available renters are now also anywhere in the world. Landlords need to compete!

it_citizen 4y ago
Nice little collection. I will definitely through it! Regarding a16z, that’s rich they want to help renters but at the same time, the founder is privately NYMBYing in their neighborhood because it might hurt their property value.

pwinnski 4y ago

We own a house, but have been considering selling it and getting an apartment, despite earning well north of that number in Texas, not exactly a high cost-of-living state. Financially, we might (or might not) miss out on some equity growth, but our expenses would be more steady. Instead of sporadic multi-thousand dollar repairs and a giant property tax check every year, we'd make a single monthly payment to replace both. Some months we would pay more than if we stayed put, some months we'd pay much less. In the meantime, an apartment would be much smaller, and so utility bills would decrease, too. Rent would go to maintain the shared pool rather me having to pay separately for that, too. In a state where property taxes weren't running more than $6k/year, the math might be different. We'd likely have moved already if we didn't have two electric cars.

yieldcrv 4y ago
Take a second look at California, people that can afford to live here don't really have to deal with "the high taxes". because you can also afford a CPA. and California property taxes are typically less than half of Texas. try having most of your annual earnings to be long term capital gains with some of your other unrealized long term gains donated to your non-profit. if you're just doing "income" and saving, taking no risk or spending, then don't take a second look at California. but if you can drive some Net Operating Losses in conjunction with capital gains and capital donations to non-profits, you really don't have to worry about income taxes anywhere, just the local property taxes, and those are much lower in California than Texas.
- lotsofpulp 4y ago
  Property tax rates might be lower in California, but nominal property taxes are dependent on when you purchased the property. If you purchase an $800,000 house in California in 2019, your property tax might be $8,000, similar to Texas's 2% property tax on a $400,000 house. The difference in California is that if you purchased property long ago, or inherited it, you pay far less than 2% of the market value in property tax. But that is not relevant for anyone looking to purchase a home, and generally, land in CA is much more expensive than TX, so I doubt there are any property tax savings by buying in CA.

henry2023 4y ago

My wife and I make more than $250k a year. Our avg tax rate is just about 35% and we live with half our take-home pay. I consider ourselves lucky and cannot possibly feel "bad" about my situation. Yet, taking a substantial 15y mortgage that requires us never to make less than we're making today to get a trashy house in a bad neighborhood or a 600 sqft condo is a nogo for me

dougmwne 4y ago

I guess this is about me! I am renting for a reasonable rate. There is a similar house on my street for 1 mil. While I could buy it, I could also live off that 1 mil if it was in liquid investments for the rest of my life. The dividends would pay my rent, expenses and then some. Why should I put such a massive investment on a single asset? It can be difficult to even insure a house in my state, the so called “insurance crisis.” My financial plan is to work while I can bare it, then head off to a cheaper place once I can’t. I’ve never been too interested in accumulating great stores of things and don’t have champagne taste. I save a lot of what I make. I’m assuming that the economic good time will end during my lifetime, so live a simple and enjoyable life that I think I will be able to sustain even if my ability to work is destroyed. I think that makes me a big picture pessimist but a small picture optimist.

atom058 4y ago
I just had a discussion about this with my family, and I'm in your camp of living small and avoiding the painful adjustments that might come in future. If I wanted to, I could get a house or buy an apartment, but it would require me to put in most of my wealth to cover the mortgage. Currently in a rent-controlled apartment, so my housing costs after buying would go up about x5 with the interest rates we're seeing now. And then my utilities, insurance and other maintenance costs on top. I feel I'd need to earn 2-3 times what I'm earning now to be comfortable with that level of spend. I would feel trapped if I'd have to sustain property ownership on my current salary level, as it would force me to keep working certain jobs and long hours. But many of my peers seem to have made a different choice
swatcoder 4y ago
Same here. I had good luck buying after the 2008 bust and selling some time later, and am open to taking advantage of an opportunity like that if we see another big dip. But otherwise, there's no rush to be house poor again in an overheated market like this. It was stressful then and intensified the golden handcuffs experience that often comes with working in tech. Accumulating flexible savings and then maybe buying a modest "retirement" home later in cash or with a small/short-term mortgage seems to be the way.
4y ago

Apreche 4y ago

I'm in NYC. Even if I bought something with a monthly down payment comparable to my current rent, it would be a lot less nice than the place I'm renting now. It would also be in a worse location. Even if I decided to do that, the down payment is a major issue. My savings grows, but the prices grow faster. I would need a sudden financial windfall of at least a few hundred K in order to buy. If I did receive such a windfall, and I found the right place, then I think I would end up buying. But I don't see that happening any time soon.