5 ms·

I think the idea is that if you rented that whole time and invested your money in the stock market you'd be just as well off

chii 3y ago
It's probably true that you'd be financially equivalent, but some people don't prefer to move with little notice due to rental changes forced upon them. I suppose if you account for this extra cost (which may be non-monetary, but one can always assign the inconvenience using a dollar figure...) then renting could be worse off.
- leoedin 3y ago
  Yeah, I don't even care if owning a house is financially worse than renting. It's mine! There's no landlord who decides to inspect it, or evict me. The cost of the mortgage is subject to a pre-determined process, and I can fix it to provide predictability. I can extend it, improve it, fix it or redecorate it. It represents power over my circumstances, and long term stability. How do you put monetary value on that?
  - chii 3y ago
    > How do you put monetary value on that? it is possible to make a guess at the monetary value of these advantages, by comparing the difference between the cost of renting vs cost of owning (including cost of capital). Of course, the value of owning is different between different people (some might prefer renting due to the flexibility of moving at a moments' notice for example). And in fact, if it turns out that owning is lower cost in total (even taking into account the cost of capital), then it would make a lot of sense to buy! And in some areas, this is definitely true.
wiseowise 3y ago
Not true, you don’t have the same stability as person owning a house does. You always have to be prepared to move, can’t change stuff without landlords approval, can’t buy nice stuff (good luck moving your 80 inch TV with your nice leather couch).
- rentalord 3y ago
  None of this is relevant though. “Not true, you don’t have the same flexibility as a person renting does. You always have to be prepared for significant maintenance, etc. etc.” The point is that financially we expect that two approaches to be comparable, perhaps with renters paying a bit for that flexibility and shorter term commitment. (That they aren’t over a particular period is fortunate for those that managed to time the market).
- amrocha 3y ago
  Yes, if you value these things that's a reason to buy a house, but it doesn't make it a good financial decision
  - wiseowise 3y ago
    “Just as well off” implies having equal parts, or I missed something?
    - bagacrap 3y ago
      Just as well off financially, obviously.
    - amrocha 3y ago
      Right, whether it's better than renting financially depends on a lot of factors. There's benefits to renting too, you have to make the right choice for yourself.
s1artibartfast 3y ago
Thats not very relevant to a current choice between moving or taking a pay cut.
jjav 3y ago
> I think the idea is that if you rented that whole time and invested your money in the stock market you'd be just as well off The OP said their mortgage is already lower than rent, which is typical, so it is the homeowner who has extra money left over (compared to if they were renting) to invest every month. The renter has ever-increasing rent swallowing up any raises, so not much left over to invest.

chii 3y ago

It's probably true that you'd be financially equivalent, but some people don't prefer to move with little notice due to rental changes forced upon them. I suppose if you account for this extra cost (which may be non-monetary, but one can always assign the inconvenience using a dollar figure...) then renting could be worse off.

leoedin 3y ago
Yeah, I don't even care if owning a house is financially worse than renting. It's mine! There's no landlord who decides to inspect it, or evict me. The cost of the mortgage is subject to a pre-determined process, and I can fix it to provide predictability. I can extend it, improve it, fix it or redecorate it. It represents power over my circumstances, and long term stability. How do you put monetary value on that?
- chii 3y ago
  > How do you put monetary value on that? it is possible to make a guess at the monetary value of these advantages, by comparing the difference between the cost of renting vs cost of owning (including cost of capital). Of course, the value of owning is different between different people (some might prefer renting due to the flexibility of moving at a moments' notice for example). And in fact, if it turns out that owning is lower cost in total (even taking into account the cost of capital), then it would make a lot of sense to buy! And in some areas, this is definitely true.

wiseowise 3y ago

Not true, you don’t have the same stability as person owning a house does. You always have to be prepared to move, can’t change stuff without landlords approval, can’t buy nice stuff (good luck moving your 80 inch TV with your nice leather couch).

rentalord 3y ago
None of this is relevant though. “Not true, you don’t have the same flexibility as a person renting does. You always have to be prepared for significant maintenance, etc. etc.” The point is that financially we expect that two approaches to be comparable, perhaps with renters paying a bit for that flexibility and shorter term commitment. (That they aren’t over a particular period is fortunate for those that managed to time the market).
amrocha 3y ago
Yes, if you value these things that's a reason to buy a house, but it doesn't make it a good financial decision
- wiseowise 3y ago
  “Just as well off” implies having equal parts, or I missed something?
  - bagacrap 3y ago
    Just as well off financially, obviously.
  - amrocha 3y ago
    Right, whether it's better than renting financially depends on a lot of factors. There's benefits to renting too, you have to make the right choice for yourself.

s1artibartfast 3y ago

Thats not very relevant to a current choice between moving or taking a pay cut.

jjav 3y ago

> I think the idea is that if you rented that whole time and invested your money in the stock market you'd be just as well off The OP said their mortgage is already lower than rent, which is typical, so it is the homeowner who has extra money left over (compared to if they were renting) to invest every month. The renter has ever-increasing rent swallowing up any raises, so not much left over to invest.