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Definitely agree with this sentiment! Houses are affordable only in low cost of living areas where folks don’t want to live for a reason. Some of those reasons

Definitely agree with this sentiment! Houses are affordable only in low cost of living areas where folks don’t want to live for a reason. Some of those reasons are subjective (not a lot to do in Ohio), and some are very objective (certain rural areas are extremely hostile to other groups of people). In major cities where people want to live (slash where well paying jobs are), it is very difficult to justify ownership. For example, a $600k house at 7% interest will loose money over 5 years even if you sell for $650k. And not just loose money, but loose even more money than renting for like $4k/mo. (And this accounts for a $100k down payment!) There is basically no way to justify ownership in these areas financially without coming into a significant amount of capital. And while you could afford it with a high cashflow (two high income earners, which is doable in major cities), you can get a nice apartment for $4k/mo that might have even more amenities than your house would have (like a hot tub). I think this is a huge bummer, especially because owning an apartment or condo is becoming more rare as well, since renting is more financially attractive to property owners. This basically makes it much more difficult to build wealth, and allows large developers to make off with a huge amount of money. So it does feel kind of hopeless in these large cities, even if you make a ton of money. You basically either have to accept taking a huge loss on ownership (unless you stay there for decades or get a great deal), or settle for renting.

coding123 3y ago
And at 4k a month for rent I would say life is just hopeless which might account for the mass shootings, suicide, homelessness, drug use...
wara23arish 3y ago
If you’re comparing it to renting you still come out on top no matter
- noahtallen 3y ago
  The numbers I shared in my post are from some basic math! Over 5 years, you spend more money, even if it appreciates by 5% when you sell it. This is because $170k of your mortgage payments went to interest alone, not to mention HOA fees, property tax, mortgage insurance, and maintenance. Unless the house appreciates a lot very fast, or you have very low interest rates, it’s very unlikely that a house in these cities ($650k, for example) will make you money at all in the mid-term, let alone beat renting.
- carbine 3y ago
  that's just mathematically incorrect as a generalization. it depends on the market, the price-to-rent ratio, interest rates, transaction fees, maintenance fees, taxes, and how long you're actually living in one place. if your burn as a renter is substantially lower you could invest the difference in a non-real-estate asset and make a lot more return, in many cases.
  - Sohcahtoa82 3y ago
    There are a lot of factors, but if you don't move, then I can't see any realistic scenario where renting comes out ahead in the long term. In my area, the price-to-rent ratio is nearly 1:1. When I bought my house in 2015, my mortgage payment (30 year fixed) was about $1,500/month (Plus ~$400/month property tax). Zillow estimated the rental value at $1,700/month. From the listings I've seen in my area, Zillow's rental value is pretty close to what people are paying. In my case, I would have been insane to choose to rent instead of buy. The thing to remember is that rent always goes up. 30 years from now, the rent could easily be anywhere from $4,000-7,000/month. Meanwhile I'll be making my final $1,500 mortgage payment. Yeah, if my water heater explodes, I'm on the hook for it. But a single month of savings in the difference between renting and buying years from now would cover the cost.
    - SirMaster 3y ago
      In Wisconsin where I live the rent is like half of what it would cost in monthly costs to buy a house. Renting is so much cheaper in the long run as I can earn so much more on that money difference with various investments like multi-family realestate.
- fooker 3y ago
  If you live a stable life at the same place for 40 years, yes.
- pphysch 3y ago
  At current astronomical prices, "buying" means "renting from a bank" and volunteering as unpaid landlord.
linguae 3y ago
And even renting at times feels hopeless. I just received my rent increase notice yesterday; my rent has been going up every year since COVID started. I’d love to be able to have a fixed-rate mortgage so I don’t have to deal with rent inflation, except I can’t afford to buy anything near Silicon Valley (where I work), so I’d have to contemplate a move to the Central Valley or even further away (like working remotely from Las Vegas or Phoenix) if I want to purchase anything. Hey, it could be worse; I’m in a privileged position compared to many other people where they can’t afford the rent. But this inflationary environment feels demoralizing where everything goes up faster than what you can earn in raises.
- xyzzy4747 3y ago
  You could also rent further away and save more for a house, get roommates, or beg your parents for a downpayment.
  - than3 3y ago
    Not really an option near; or in Silicon Valley. You pay the savings in sanity points when you get roommates or family. No amount of savings is worth it. Downpayments for houses in that area with a 740+ credit score is at least 200k and only goes up from there, don't know many parents that could help that much given the high amount taxable event, that's also not taking into account most homes have significant maintenance the first year, you never know what you'll find. I've seen some places where they found out they had to fix the foundation after opening up to do some safety fixes, ended up costing around 120k. Involved a hillside sliding too so geotechnical engineer had to come in, no clue how much that cost after all was said and done. Wasn't found during the normal pre-sale inspection.
    - baremetal 3y ago
      If its on a hill, get soil tests before purchasing.
    - singleshot_ 3y ago
      What is a “high amount taxable event” in this context?
brailsafe 3y ago
A 1 bedroom condo in the neighborhood I've shared a basement with my partner in for going on 4 years now, is ~$750k CAD. I didn't even want to own something before, even when it was theoretically in the cards, but now it's so unbelievably unreachable and not-worth-it, I just think wtf Anything we could pay for even if we really stretched irresponsibly would be twice the price and likely not provide anything we don't have except a shit ton of debt, stress, and an extra closet
Sohcahtoa82 3y ago
> (not a lot to do in Ohio) Cedar Point and King's Island would like a word. ;-) Obviously, roller coaster's aren't everyone's cup of tea, but I've often heavily considered moving to Sandusky, Ohio after I retire just so I can spend all day every day at Cedar Point.
- noahtallen 3y ago
  True, one of the biggest highlights of the state!
- downrightmike 3y ago
  Are those up wind or down wind of all the burning toxic chemicals?
  - red-iron-pine 3y ago
    Or the river that catches on fire?
nradov 3y ago
There is no logical basis to agree with that sentiment. Have you actually spent much time in Ohio? Lots to do in Cleveland. But the home ownership rate isn't even particularly high in Ohio. Based on home ownership rates it appears to be easier to buy in other states like Minnesota, Maryland, and Utah. Lots of options depending on what you're looking for. https://ipropertymanagement.com/research/homeownership-rate-by-state https://ipropertymanagement.com/research/homeownership-rate-...
- noahtallen 3y ago
  Which sentiment? I grew up in Ohio; lived there for 18 years. It makes financial sense to buy a home near Toledo, for example. (E.g. not so expensive that you’d loose money vs renting.) Not a ton to do, though.
deleted 3y ago
[deleted]
JeremyNT 3y ago
> So it does feel kind of hopeless in these large cities, even if you make a ton of money. You basically either have to accept taking a huge loss on ownership (unless you stay there for decades or get a great deal), or settle for renting. Isn't this kind of how it should be, though? The idea that owning a house is some kind of guaranteed investment is strange to me. It's not "losing money" per se, it's "spending money" so you have a place to live. In a healthier market I feel like owning versus renting should be a choice people can make without any obvious financial winner. That said it seems like both owning and renting are too expensive relative to median wages in desirable areas.
- noahtallen 3y ago
  I almost agree, but I do think that ownership is better for society because that it distributes wealth more widely.

coding123 3y ago

And at 4k a month for rent I would say life is just hopeless which might account for the mass shootings, suicide, homelessness, drug use...

wara23arish 3y ago

If you’re comparing it to renting you still come out on top no matter

noahtallen 3y ago
The numbers I shared in my post are from some basic math! Over 5 years, you spend more money, even if it appreciates by 5% when you sell it. This is because $170k of your mortgage payments went to interest alone, not to mention HOA fees, property tax, mortgage insurance, and maintenance. Unless the house appreciates a lot very fast, or you have very low interest rates, it’s very unlikely that a house in these cities ($650k, for example) will make you money at all in the mid-term, let alone beat renting.
carbine 3y ago
that's just mathematically incorrect as a generalization. it depends on the market, the price-to-rent ratio, interest rates, transaction fees, maintenance fees, taxes, and how long you're actually living in one place. if your burn as a renter is substantially lower you could invest the difference in a non-real-estate asset and make a lot more return, in many cases.
- Sohcahtoa82 3y ago
  There are a lot of factors, but if you don't move, then I can't see any realistic scenario where renting comes out ahead in the long term. In my area, the price-to-rent ratio is nearly 1:1. When I bought my house in 2015, my mortgage payment (30 year fixed) was about $1,500/month (Plus ~$400/month property tax). Zillow estimated the rental value at $1,700/month. From the listings I've seen in my area, Zillow's rental value is pretty close to what people are paying. In my case, I would have been insane to choose to rent instead of buy. The thing to remember is that rent always goes up. 30 years from now, the rent could easily be anywhere from $4,000-7,000/month. Meanwhile I'll be making my final $1,500 mortgage payment. Yeah, if my water heater explodes, I'm on the hook for it. But a single month of savings in the difference between renting and buying years from now would cover the cost.
  - SirMaster 3y ago
    In Wisconsin where I live the rent is like half of what it would cost in monthly costs to buy a house. Renting is so much cheaper in the long run as I can earn so much more on that money difference with various investments like multi-family realestate.
fooker 3y ago
If you live a stable life at the same place for 40 years, yes.
pphysch 3y ago
At current astronomical prices, "buying" means "renting from a bank" and volunteering as unpaid landlord.

linguae 3y ago

And even renting at times feels hopeless. I just received my rent increase notice yesterday; my rent has been going up every year since COVID started. I’d love to be able to have a fixed-rate mortgage so I don’t have to deal with rent inflation, except I can’t afford to buy anything near Silicon Valley (where I work), so I’d have to contemplate a move to the Central Valley or even further away (like working remotely from Las Vegas or Phoenix) if I want to purchase anything. Hey, it could be worse; I’m in a privileged position compared to many other people where they can’t afford the rent. But this inflationary environment feels demoralizing where everything goes up faster than what you can earn in raises.

xyzzy4747 3y ago
You could also rent further away and save more for a house, get roommates, or beg your parents for a downpayment.
- than3 3y ago
  Not really an option near; or in Silicon Valley. You pay the savings in sanity points when you get roommates or family. No amount of savings is worth it. Downpayments for houses in that area with a 740+ credit score is at least 200k and only goes up from there, don't know many parents that could help that much given the high amount taxable event, that's also not taking into account most homes have significant maintenance the first year, you never know what you'll find. I've seen some places where they found out they had to fix the foundation after opening up to do some safety fixes, ended up costing around 120k. Involved a hillside sliding too so geotechnical engineer had to come in, no clue how much that cost after all was said and done. Wasn't found during the normal pre-sale inspection.
  - baremetal 3y ago
    If its on a hill, get soil tests before purchasing.
  - singleshot_ 3y ago
    What is a “high amount taxable event” in this context?

brailsafe 3y ago

A 1 bedroom condo in the neighborhood I've shared a basement with my partner in for going on 4 years now, is ~$750k CAD. I didn't even want to own something before, even when it was theoretically in the cards, but now it's so unbelievably unreachable and not-worth-it, I just think wtf Anything we could pay for even if we really stretched irresponsibly would be twice the price and likely not provide anything we don't have except a shit ton of debt, stress, and an extra closet

Sohcahtoa82 3y ago

> (not a lot to do in Ohio) Cedar Point and King's Island would like a word. ;-) Obviously, roller coaster's aren't everyone's cup of tea, but I've often heavily considered moving to Sandusky, Ohio after I retire just so I can spend all day every day at Cedar Point.

noahtallen 3y ago
True, one of the biggest highlights of the state!
downrightmike 3y ago
Are those up wind or down wind of all the burning toxic chemicals?
- red-iron-pine 3y ago
  Or the river that catches on fire?

nradov 3y ago

There is no logical basis to agree with that sentiment. Have you actually spent much time in Ohio? Lots to do in Cleveland. But the home ownership rate isn't even particularly high in Ohio. Based on home ownership rates it appears to be easier to buy in other states like Minnesota, Maryland, and Utah. Lots of options depending on what you're looking for. https://ipropertymanagement.com/research/homeownership-rate-by-state https://ipropertymanagement.com/research/homeownership-rate-...

noahtallen 3y ago
Which sentiment? I grew up in Ohio; lived there for 18 years. It makes financial sense to buy a home near Toledo, for example. (E.g. not so expensive that you’d loose money vs renting.) Not a ton to do, though.

deleted 3y ago

[deleted]

JeremyNT 3y ago

> So it does feel kind of hopeless in these large cities, even if you make a ton of money. You basically either have to accept taking a huge loss on ownership (unless you stay there for decades or get a great deal), or settle for renting. Isn't this kind of how it should be, though? The idea that owning a house is some kind of guaranteed investment is strange to me. It's not "losing money" per se, it's "spending money" so you have a place to live. In a healthier market I feel like owning versus renting should be a choice people can make without any obvious financial winner. That said it seems like both owning and renting are too expensive relative to median wages in desirable areas.

noahtallen 3y ago
I almost agree, but I do think that ownership is better for society because that it distributes wealth more widely.