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> Some people prefer to rent rather than buy. Why would someone prefer to give away money instead of invest it into their net worth ? Are there really people

> Some people prefer to rent rather than buy. Why would someone prefer to give away money instead of invest it into their net worth ? Are there really people that prefer renting, and wouldn’t buy even if they could afford to? Are they common?

richwater 3y ago
Rent (in dollar terms) is the most you will ever pay per month. Mortgage (in dollar terms) is the least you will ever pay per month. Combine that with the ease of movement between renting and owning and it's absolutely something many people prefer.
- skyyler 3y ago
  I’d love to see some numbers on the percentage of current renters that would prefer to own.
  - 0_____0 3y ago
    I know a lot of people who would love to have the money to buy. Whether they would rather have a house - or - rent but have a down payment's worth of money, I think is a better question
  - freitzkriesler2 3y ago
    It's high , many renters have given up hope they'll ever own.
    - younshin21 3y ago
      [dead]
  - sgerenser 3y ago
    Probably the majority at what they think the house should cost. Probably very few at what the monthly payment for a market rate mortgage + downpayment actually costs, based on the recent run-up in home values and interest rates over the past 3-4 years. E.g. would you prefer to rent the same house at $2000 month, or own at $4000/mo? It might not be this bad in Atlanta but in many areas the rent/buy ratio is that bad now.
    - bombcar 3y ago
      You'd have to correct for so many things - and it's actually quite hard to get down to the reality. Obviously almost all renters would take a "free and clear" ownership of the same house they're currently renting; that's a six figure freebee. And many owners will not fully exhibit "buyer's remorse" just because the cost of ownership is so high. And no home-owner loves facing down the $10-50k repairs that a house can need now and then.
      - ghaff 3y ago
        Yeah. I live in an old house on a little bit of property. It's paid-off but it's still probably something close to $2K/month between property taxes, insurance, utilities/oil, and more or less steady state maintenance--some of which could probably be deferred but...
        bombcar 3y ago
        It's totally worth the exercise (it's not terribly hard) to "rent to yourself" on paper, just to get a feel for everything involved. And like you see, it is much more than you'd expect at first, because so many things only "pop up" every 10/20/30 years. A $20k roof replacement done every 30 years is $60 a month or so, and how many of those kind of things are hiding in a house? Hint: the depreciation tables from the IRS are not a gift ...
        ghaff 3y ago
        I used to (half-)joke that had I known how much work and money my house was going to be, I'd probably just have gone with a newer condo. I agree with the points upthread that a lot of people like the idea of home ownership but don't appreciate all the ongoing costs--including the amortized costs of unexpected things. (I just paid $1K to get a big tree that came down dealt with which fortunately didn't cause any actual damage.
        skyyler 3y ago
- ghaff 3y ago
  I'm glad I own a house but it can be a massive headache, expense, and time sink. It also places a big constraint on moving as you say. I absolutely wouldn't have wanted one the first 15 years or so out of school and I've been lucky enough that jobs have never forced me to move.
- freitzkriesler2 3y ago
  Ease of movement is such a meme. Every time I've sold houses in 2nd or 3rd tier markets they've sold and gone into escrow in less than 2 months. Maybe back when housing wasn't so tight this was the case. That isn't it anymore. Sure you have to queue up a bunch of things like a realtor and a mortgage broker but the benefits of getting equity outweigh the supposed convenience of renting .
  - ghaff 3y ago
    It's also often house vs. apartment. There's absolutely friction associated with moving from a house with its contents to another house than there is to moving from, say, a 1000 sq. ft. apartment to another. It's still a move but it's much less of an undertaking and, as a renter, you also tend to have a mindset that you will be moving.
rad_gruchalski 3y ago
> Why would someone prefer to give away money instead of invest it into their net worth ? You mean… how. Cash? Mortgage? Buying is easy, running the thing not necessarily. What are you going to do if you lose the job? Health? What’s your plan for when you get old? Do you see the work around the house? Do you remember Lehman Brothers and why it happened? Because so many thought they could afford it! Have they increased their net worth? Is that a new build? Second hand? How old? When is the roof to be replaced? Hows the isolation? What’s the quality of windows and doors? Is the electrical installation ready for solar panels? And so on… > Are there really people that prefer renting, and wouldn’t buy even if they could afford to? Obviously.
bombcar 3y ago
Yes, a moment's thought should reveal that this is the case. Buying and selling a house costs about 10% (or more) (realtors, expenses, etc). So if you buy a house today for $200k, and sell it tomorrow for $200k you will lose about $20k. (Yes, there are flipping tricks and stuff you can do to reduce that, but there are costs for normal transactions.) So the rule of thumb is "about seven years" - if you buy today, and sell in seven years, appreciation and such will "break even". Certainly if appreciation was insanely high, that will be a shorter period, if it is bad or a crash happens, it may be longer or even underwater. But whatever the time period is, if you will not live in the house for that number of years, you're better off renting, unless rental prices are so high as to invert it. Another example of this is where businesses often prefer to lease (even so far as to triple-net) for tax purposes and to free up capital.
- skyyler 3y ago
  >88% of Americans would rather own a home than rent. Specifically, 76% of renters would rather own a home, but only 2% of homeowners would rather rent. https://www.lendingtree.com/home/mortgage/homeownership-renting-survey/ https://www.lendingtree.com/home/mortgage/homeownership-rent...
  - bombcar 3y ago
    I suppose most homeowners that want to rent sell and become renters, so we can deduce that 20-24% of renters actually want to rent, and some percentage of the remainder might go back to renting if they had a bad ownership experience. Though some percentage of those renters are in highly favorable situations, like rent-controlled units that would be insanely more expensive on the open market.
    - skyyler 3y ago
      >I suppose most homeowners that want to rent sell and become renters I see, so maybe selling isn't that big of a hassle then? People keep bringing it up as evidence that people would rather rent, but that really doesn't seem to be the case.
gwbas1c 3y ago
For awhile, I was friendly with a person who had a lot of material success and was recently retired. He explained why he preferred renting to me: In the end, it was less hassle for him. All of the "upkeep" was someone else's responsibility. He just wrote a check every month. (Granted, I prefer owning my own home.)

richwater 3y ago

Rent (in dollar terms) is the most you will ever pay per month. Mortgage (in dollar terms) is the least you will ever pay per month. Combine that with the ease of movement between renting and owning and it's absolutely something many people prefer.

skyyler 3y ago
I’d love to see some numbers on the percentage of current renters that would prefer to own.
- 0_____0 3y ago
  I know a lot of people who would love to have the money to buy. Whether they would rather have a house - or - rent but have a down payment's worth of money, I think is a better question
- freitzkriesler2 3y ago
  It's high , many renters have given up hope they'll ever own.
  - younshin21 3y ago
    [dead]
- sgerenser 3y ago
  Probably the majority at what they think the house should cost. Probably very few at what the monthly payment for a market rate mortgage + downpayment actually costs, based on the recent run-up in home values and interest rates over the past 3-4 years. E.g. would you prefer to rent the same house at $2000 month, or own at $4000/mo? It might not be this bad in Atlanta but in many areas the rent/buy ratio is that bad now.
  - bombcar 3y ago
    You'd have to correct for so many things - and it's actually quite hard to get down to the reality. Obviously almost all renters would take a "free and clear" ownership of the same house they're currently renting; that's a six figure freebee. And many owners will not fully exhibit "buyer's remorse" just because the cost of ownership is so high. And no home-owner loves facing down the $10-50k repairs that a house can need now and then.
    - ghaff 3y ago
      Yeah. I live in an old house on a little bit of property. It's paid-off but it's still probably something close to $2K/month between property taxes, insurance, utilities/oil, and more or less steady state maintenance--some of which could probably be deferred but...
      - bombcar 3y ago
        It's totally worth the exercise (it's not terribly hard) to "rent to yourself" on paper, just to get a feel for everything involved. And like you see, it is much more than you'd expect at first, because so many things only "pop up" every 10/20/30 years. A $20k roof replacement done every 30 years is $60 a month or so, and how many of those kind of things are hiding in a house? Hint: the depreciation tables from the IRS are not a gift ...
        ghaff 3y ago
        I used to (half-)joke that had I known how much work and money my house was going to be, I'd probably just have gone with a newer condo. I agree with the points upthread that a lot of people like the idea of home ownership but don't appreciate all the ongoing costs--including the amortized costs of unexpected things. (I just paid $1K to get a big tree that came down dealt with which fortunately didn't cause any actual damage.
        skyyler 3y ago
ghaff 3y ago
I'm glad I own a house but it can be a massive headache, expense, and time sink. It also places a big constraint on moving as you say. I absolutely wouldn't have wanted one the first 15 years or so out of school and I've been lucky enough that jobs have never forced me to move.
freitzkriesler2 3y ago
Ease of movement is such a meme. Every time I've sold houses in 2nd or 3rd tier markets they've sold and gone into escrow in less than 2 months. Maybe back when housing wasn't so tight this was the case. That isn't it anymore. Sure you have to queue up a bunch of things like a realtor and a mortgage broker but the benefits of getting equity outweigh the supposed convenience of renting .
- ghaff 3y ago
  It's also often house vs. apartment. There's absolutely friction associated with moving from a house with its contents to another house than there is to moving from, say, a 1000 sq. ft. apartment to another. It's still a move but it's much less of an undertaking and, as a renter, you also tend to have a mindset that you will be moving.

rad_gruchalski 3y ago

> Why would someone prefer to give away money instead of invest it into their net worth ? You mean… how. Cash? Mortgage? Buying is easy, running the thing not necessarily. What are you going to do if you lose the job? Health? What’s your plan for when you get old? Do you see the work around the house? Do you remember Lehman Brothers and why it happened? Because so many thought they could afford it! Have they increased their net worth? Is that a new build? Second hand? How old? When is the roof to be replaced? Hows the isolation? What’s the quality of windows and doors? Is the electrical installation ready for solar panels? And so on… > Are there really people that prefer renting, and wouldn’t buy even if they could afford to? Obviously.

bombcar 3y ago

Yes, a moment's thought should reveal that this is the case. Buying and selling a house costs about 10% (or more) (realtors, expenses, etc). So if you buy a house today for $200k, and sell it tomorrow for $200k you will lose about $20k. (Yes, there are flipping tricks and stuff you can do to reduce that, but there are costs for normal transactions.) So the rule of thumb is "about seven years" - if you buy today, and sell in seven years, appreciation and such will "break even". Certainly if appreciation was insanely high, that will be a shorter period, if it is bad or a crash happens, it may be longer or even underwater. But whatever the time period is, if you will not live in the house for that number of years, you're better off renting, unless rental prices are so high as to invert it. Another example of this is where businesses often prefer to lease (even so far as to triple-net) for tax purposes and to free up capital.

skyyler 3y ago
>88% of Americans would rather own a home than rent. Specifically, 76% of renters would rather own a home, but only 2% of homeowners would rather rent. https://www.lendingtree.com/home/mortgage/homeownership-renting-survey/ https://www.lendingtree.com/home/mortgage/homeownership-rent...
- bombcar 3y ago
  I suppose most homeowners that want to rent sell and become renters, so we can deduce that 20-24% of renters actually want to rent, and some percentage of the remainder might go back to renting if they had a bad ownership experience. Though some percentage of those renters are in highly favorable situations, like rent-controlled units that would be insanely more expensive on the open market.
  - skyyler 3y ago
    >I suppose most homeowners that want to rent sell and become renters I see, so maybe selling isn't that big of a hassle then? People keep bringing it up as evidence that people would rather rent, but that really doesn't seem to be the case.

gwbas1c 3y ago

For awhile, I was friendly with a person who had a lot of material success and was recently retired. He explained why he preferred renting to me: In the end, it was less hassle for him. All of the "upkeep" was someone else's responsibility. He just wrote a check every month. (Granted, I prefer owning my own home.)