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Renting isn’t cheaper than buying at nearly any point from 2008 to 2020 in any US city. Renting being cheaper than buying is a “new” phenomenon and still debat

Renting isn’t cheaper than buying at nearly any point from 2008 to 2020 in any US city. Renting being cheaper than buying is a “new” phenomenon and still debatable since renting doesn’t result in equity and can never result in ownership. A house isn’t just an asset, it’s a place to live.

falcolas 3y ago
But as long as you need a place to live, you can't use it as an asset. You might be able to get a few loans on it, but that just means you keep paying monthly, like you're renting. It's not an investment asset if you require it to live. That said, renting is just as expensive as owning right now too. You're paying a mortgage and taxes and repairs and insurance either way, and with renting, you're also paying for a bit of landlord profit.
- bluGill 3y ago
  A you own house is both an asset and a place to live. If your accounting models cannot handle that concept then you need to update them. Accounting 101 probably can't as it is complex and tricky, but more advanced models can. Now because you have to live someplace a house is not an asset you can just go and trade for whatever, but it is still an asset.
wing-_-nuts 3y ago
> Renting isn’t cheaper than buying at nearly any point from 2008 to 2020 in any US city There's a lot of nuance in disagreement with this. Renting often makes sense for young workers who have not yet settled down. Also in many parts of the US one can rent a simple 1bd apartment where one could not buy such a house. I rented and invested in stocks up to about 5y ago and I've come out much further ahead than if I purchased a house.
- tristor 3y ago
  Sure, there's a lot of nuance in any sort of multi-variable economic question. That's not the point, the person I was replying to said renting is cheaper than buying, that hasn't been true for over a decade pre-pandemic. The primary reasons why this weren't true were low interest rates and a gradual recovery in housing prices after the correction 2008. 2020 changed both of these things, and so they are correct /now/, but /most/ people who own a home didn't buy in it the last 2 years, so their advice against buying a house on the basis of it being more expensive than rent is mute. As a simple example, my fully-laden (mortgage + insurance + tax) cost on a 2600 sqft 4br/3.5ba house on a 1/2 acre lot in a nice suburb in San Antonio purchased in 2012 was around $1400/mo compared to this being the typical rent for a 1br apartment pre-2020 in San Antonio anywhere that wasn't in the ghetto. That was largely thanks to having a 2.4% interest mortgage and being able to buy in 2012 in the dip for property values. The same property that was purchased for $162k in 2012 sold for $340k in 2022, and the mortgage rate for the new buyer was around 6.5%, doubling both price and interest rate greatly changes the equation, but let's not act as if that hasn't been a relatively recent (pandemic-tied) shift.
  - wing-_-nuts 3y ago
    Hasn't been the case for you, and arguably for a lot of people, but not for everyone. Everyone has to run the numbers and do their own calculus. Buying being better than renting is a good rule of thumb but it has some glaring exceptions.
    - bluGill 3y ago
      The best rule of thumb is buying or renting will turn out about the same in the long run if you invest the difference saved by renting. Buy buying your up front payments are higher than renting, but you pay the house off and long term pay less and thus need less to live on. Renting you have more free cash up front, but you need more cash in the long run. The above is the rule of thumb though. You have to run numbers for your life situation as they constantly change. Note that some of the numbers are for your life situation which itself can change. Renting is often better just if you buy and have to move there is a bunch of negatives.
      - jjav 3y ago
        > The best rule of thumb is buying or renting will turn out about the same in the long run if you invest the difference saved by renting. Owning a home, I'm investing the difference I save by not having to rent. Difficult to see how a renter can come ahead unless the time horizon is just a couple years. Rents only ever (mostly) go up. Mortgages only go down (refinances). Those lines can cross in just a few years into ownership. By now, renting the same house I own is about 4x more expensive. One thing you really don't want when going into retirement is a constantly and unpredictably increasing housing cost when you'll be on a fixed income.
        bluGill 3y ago
        There is more than just house payments. There is also taxes and insurance, both of which go up over time (they are often rolled into the mortgage payment, but they are not the same thing). There are also maintenance costs which can be quite high (if you do it yourself they can be lower, but not everyone has the time or ability). Also most people are buying a much larger place than they would rent. These need to be factored in and they make the point where the line crosses farther out.

falcolas 3y ago

But as long as you need a place to live, you can't use it as an asset. You might be able to get a few loans on it, but that just means you keep paying monthly, like you're renting. It's not an investment asset if you require it to live. That said, renting is just as expensive as owning right now too. You're paying a mortgage and taxes and repairs and insurance either way, and with renting, you're also paying for a bit of landlord profit.

bluGill 3y ago
A you own house is both an asset and a place to live. If your accounting models cannot handle that concept then you need to update them. Accounting 101 probably can't as it is complex and tricky, but more advanced models can. Now because you have to live someplace a house is not an asset you can just go and trade for whatever, but it is still an asset.

wing-_-nuts 3y ago

> Renting isn’t cheaper than buying at nearly any point from 2008 to 2020 in any US city There's a lot of nuance in disagreement with this. Renting often makes sense for young workers who have not yet settled down. Also in many parts of the US one can rent a simple 1bd apartment where one could not buy such a house. I rented and invested in stocks up to about 5y ago and I've come out much further ahead than if I purchased a house.

tristor 3y ago
Sure, there's a lot of nuance in any sort of multi-variable economic question. That's not the point, the person I was replying to said renting is cheaper than buying, that hasn't been true for over a decade pre-pandemic. The primary reasons why this weren't true were low interest rates and a gradual recovery in housing prices after the correction 2008. 2020 changed both of these things, and so they are correct /now/, but /most/ people who own a home didn't buy in it the last 2 years, so their advice against buying a house on the basis of it being more expensive than rent is mute. As a simple example, my fully-laden (mortgage + insurance + tax) cost on a 2600 sqft 4br/3.5ba house on a 1/2 acre lot in a nice suburb in San Antonio purchased in 2012 was around $1400/mo compared to this being the typical rent for a 1br apartment pre-2020 in San Antonio anywhere that wasn't in the ghetto. That was largely thanks to having a 2.4% interest mortgage and being able to buy in 2012 in the dip for property values. The same property that was purchased for $162k in 2012 sold for $340k in 2022, and the mortgage rate for the new buyer was around 6.5%, doubling both price and interest rate greatly changes the equation, but let's not act as if that hasn't been a relatively recent (pandemic-tied) shift.
- wing-_-nuts 3y ago
  Hasn't been the case for you, and arguably for a lot of people, but not for everyone. Everyone has to run the numbers and do their own calculus. Buying being better than renting is a good rule of thumb but it has some glaring exceptions.
  - bluGill 3y ago
    The best rule of thumb is buying or renting will turn out about the same in the long run if you invest the difference saved by renting. Buy buying your up front payments are higher than renting, but you pay the house off and long term pay less and thus need less to live on. Renting you have more free cash up front, but you need more cash in the long run. The above is the rule of thumb though. You have to run numbers for your life situation as they constantly change. Note that some of the numbers are for your life situation which itself can change. Renting is often better just if you buy and have to move there is a bunch of negatives.
    - jjav 3y ago
      > The best rule of thumb is buying or renting will turn out about the same in the long run if you invest the difference saved by renting. Owning a home, I'm investing the difference I save by not having to rent. Difficult to see how a renter can come ahead unless the time horizon is just a couple years. Rents only ever (mostly) go up. Mortgages only go down (refinances). Those lines can cross in just a few years into ownership. By now, renting the same house I own is about 4x more expensive. One thing you really don't want when going into retirement is a constantly and unpredictably increasing housing cost when you'll be on a fixed income.
      - bluGill 3y ago
        There is more than just house payments. There is also taxes and insurance, both of which go up over time (they are often rolled into the mortgage payment, but they are not the same thing). There are also maintenance costs which can be quite high (if you do it yourself they can be lower, but not everyone has the time or ability). Also most people are buying a much larger place than they would rent. These need to be factored in and they make the point where the line crosses farther out.