4 ms·

All I know is my mortgage is $1,800 a month and to rent my place now is at least $6K/month. I love knowing that my monthly payment can't go up.

by eweise 1y ago

bthrn 1y ago
Property taxes and insurance go up pretty much every year.
- toomuchtodo 1y ago
  Not faster than rent. You can always challenge your property taxes and shop your homeowners insurance. If your rent goes up, you can only move, which isn’t really an option when all landlords are raising rents in lockstep. Half of American renters are cost burdened, for example. https://news.ycombinator.com/item?id=43119657 https://news.ycombinator.com/item?id=43119657 (own my primary US residence free and clear, my housing savings goes into investments, which grow faster than inflation)
- slumpt_ 1y ago
  i guess it will depend a lot on where you bought some parts of california have been affected by insurers more than others, but in those more minimally affected? prop tax is suppressed via prop 13 (for better or worse), and the cost of insurance is a drop in the bucket relative to what id be paying for a roof over my head otherwise tbh
- campnic 1y ago
  Which has the exact same impact on rental properties. In many jurisdictions it is worse for rentals (no homestead or occupancy reductions)
- grues-dinner 1y ago
  Presumably those go up roughly the same for rental properties as well. So while your payments may still go up, you're paying it either way on top of interest/rent.
- al_borland 1y ago
  Where I’m at there is a limit on how much property tax can increase. It is reassessed when a home is purchased by a new owner. This is done to allow people to age in place, and not price someone out of a neighborhood they’ve live in all their life.
deleted 1y ago
[deleted]
slumpt_ 1y ago
yep my life cannot be uprooted based on the whims of a crummy landlord or because my obligation has crept out of my budget i bought conservatively and now have a tiny payment relative to what i’d otherwise have to pay to live in the bay area. peace of mind is hard to put a price on
A_D_E_P_T 1y ago
Something I've noticed is that some cities are better for renters, and others are better for buyers. My current city in central Europe is very renter-friendly. A nice apartment would cost $600k, but rents practically never exceed $1500/month. Under such circumstances an apartment doesn't seem like a great investment. I've also lived, briefly, in Canada -- where rents were often extremely high relative to home prices. (I have a friend who pays $300/month on a mortgage and rents the place out for $2000/month. At the same time, the house has nearly tripled in value over the past ~7 years.)
- al_borland 1y ago
  I saw this when I lived in the Chicagoland area. A co-worker was giving me the business for renting instead of buying something. The he let it slip that his property tax alone was $35k/year, almost 2x what I was paying in rent, and that didn’t even include the mortgage.
  - tomjakubowski 1y ago
    Surely this must not have been a like-for-like comparison, unless your landlord is very charitable or somehow secured a much lower property tax rate than your coworker did (as is possible in California through various Prop 13 mechanisms). Have you looked up what the property tax bill is on your apartment?
    - al_borland 1y ago
      He had a nice house in an expensive area. I think his wife was someone important at a bank. I was in a one bedroom apartment, so not like-for-like, but I didn’t need or want anymore space than I had. I was also in a nice area, and in the nicest apartments in that area, as far as I could tell. A couple people who moved out there when I did bought places, and I heard nothing but regrets from them a year later.
  - tptacek 1y ago
    That's an enormously high property tax bill for Chicagoland. I live in Oak Park, famously one of the highest-taxed areas in the county, in a relatively large house, and my taxes are not close to that (more than $10k less). I don't doubt you or your friend, but their situation was unique.
zeroq 1y ago
Good for you, but it's not true for everyone. Here a variable rate is norm and has been since I remember. I was eyeballing a particular house with specific financing in mind just before covid started, and if I'd pull a trigger on that transaction my monthly payement would more than double at some point.
ForHackernews 1y ago
Sounds like you're stuck there forever. Golden handcuffs, real estate edition.
- ghaff 1y ago
  The more positive spin is that you've bought into a huge bias to stay put in exchange for pros (and cons).
- eweise 1y ago
  Well, not really but I really like where I live so I don't consider moving.
al_borland 1y ago
Who are these people who can afford $6k/month for a rental? It has to be a very small percentage of the population, yet I see these kind of numbers thrown around a lot. Statistically, I’m in the top ~5% of income earners (from the data I can find), with no debt, and I couldn’t afford $6k/month. I bought a house because I don't understand the rental market anymore. I don’t really like being a home owner, but the rent prices these days are so out of hand. I think the most I ever paid for rent was $1,680 and I felt irresponsible doing that. I don’t know how all these rentals are full with the prices they’re charging. Does everyone have roommates?
- antonymoose 1y ago
  The $6k number is a touch high, but the answer is realistically 30-something DINKs and up. I make $150k a year, let’s say, and if I have a spouse with a corporate career let’s say it’s similar so maybe $250k-300k per year in income? Well that’s about $12,000 in income after taxes, medical, and a 10% retirement contribution. So, yes, $6k per month is house-poor numbers, but it’s workable for sure. If you’re even better off, good for you, it may fall into affordable range.
  - al_borland 1y ago
    Making that much, I wouldn’t want to put anymore than 25% of my take-home toward rent. That would mean making $312k take-home… after taxes, retirement, etc. Maybe I’m conservative, but being house poor while making $300k is insane. I’m thinking someone would need to be pushing $400-500k for household income. That would put them in the top 3%. I don’t get the supply and demand curve on it. Making that much, and renting. It’s an even smaller market than the full 3%.
    - ndriscoll 1y ago
      I wouldn't want to purely out of the waste, but from a risk perspective, why not? Your other costs don't scale with housing or income, so if you're spending $70k on housing, you might be at $100k overall expenses. Add another $50k for income taxes and $50k for retirement savings and you're still at 50-100k left over for whatever you like (using 250-300 household income). 6k for a mortgage would be scary in case of job loss, but for rent, whatever, just move.

All I know is my mortgage is $1,800 a month and to rent my place now is at least $6K/month. I love knowing that my monthly payment can't go up.

by eweise 1y ago

All I know is my mortgage is $1,800 a month and to rent my place now is at least $6K/month. I love knowing that my monthly payment can't go up.

bthrn 1y ago

Property taxes and insurance go up pretty much every year.

toomuchtodo 1y ago
Not faster than rent. You can always challenge your property taxes and shop your homeowners insurance. If your rent goes up, you can only move, which isn’t really an option when all landlords are raising rents in lockstep. Half of American renters are cost burdened, for example. https://news.ycombinator.com/item?id=43119657 https://news.ycombinator.com/item?id=43119657 (own my primary US residence free and clear, my housing savings goes into investments, which grow faster than inflation)
slumpt_ 1y ago
i guess it will depend a lot on where you bought some parts of california have been affected by insurers more than others, but in those more minimally affected? prop tax is suppressed via prop 13 (for better or worse), and the cost of insurance is a drop in the bucket relative to what id be paying for a roof over my head otherwise tbh
campnic 1y ago
Which has the exact same impact on rental properties. In many jurisdictions it is worse for rentals (no homestead or occupancy reductions)
grues-dinner 1y ago
Presumably those go up roughly the same for rental properties as well. So while your payments may still go up, you're paying it either way on top of interest/rent.
al_borland 1y ago
Where I’m at there is a limit on how much property tax can increase. It is reassessed when a home is purchased by a new owner. This is done to allow people to age in place, and not price someone out of a neighborhood they’ve live in all their life.

deleted 1y ago

[deleted]

slumpt_ 1y ago

yep my life cannot be uprooted based on the whims of a crummy landlord or because my obligation has crept out of my budget i bought conservatively and now have a tiny payment relative to what i’d otherwise have to pay to live in the bay area. peace of mind is hard to put a price on

A_D_E_P_T 1y ago

Something I've noticed is that some cities are better for renters, and others are better for buyers. My current city in central Europe is very renter-friendly. A nice apartment would cost $600k, but rents practically never exceed $1500/month. Under such circumstances an apartment doesn't seem like a great investment. I've also lived, briefly, in Canada -- where rents were often extremely high relative to home prices. (I have a friend who pays $300/month on a mortgage and rents the place out for $2000/month. At the same time, the house has nearly tripled in value over the past ~7 years.)

al_borland 1y ago
I saw this when I lived in the Chicagoland area. A co-worker was giving me the business for renting instead of buying something. The he let it slip that his property tax alone was $35k/year, almost 2x what I was paying in rent, and that didn’t even include the mortgage.
- tomjakubowski 1y ago
  Surely this must not have been a like-for-like comparison, unless your landlord is very charitable or somehow secured a much lower property tax rate than your coworker did (as is possible in California through various Prop 13 mechanisms). Have you looked up what the property tax bill is on your apartment?
  - al_borland 1y ago
    He had a nice house in an expensive area. I think his wife was someone important at a bank. I was in a one bedroom apartment, so not like-for-like, but I didn’t need or want anymore space than I had. I was also in a nice area, and in the nicest apartments in that area, as far as I could tell. A couple people who moved out there when I did bought places, and I heard nothing but regrets from them a year later.
- tptacek 1y ago
  That's an enormously high property tax bill for Chicagoland. I live in Oak Park, famously one of the highest-taxed areas in the county, in a relatively large house, and my taxes are not close to that (more than $10k less). I don't doubt you or your friend, but their situation was unique.

zeroq 1y ago

Good for you, but it's not true for everyone. Here a variable rate is norm and has been since I remember. I was eyeballing a particular house with specific financing in mind just before covid started, and if I'd pull a trigger on that transaction my monthly payement would more than double at some point.

ForHackernews 1y ago

Sounds like you're stuck there forever. Golden handcuffs, real estate edition.

ghaff 1y ago
The more positive spin is that you've bought into a huge bias to stay put in exchange for pros (and cons).
eweise 1y ago
Well, not really but I really like where I live so I don't consider moving.

al_borland 1y ago

Who are these people who can afford $6k/month for a rental? It has to be a very small percentage of the population, yet I see these kind of numbers thrown around a lot. Statistically, I’m in the top ~5% of income earners (from the data I can find), with no debt, and I couldn’t afford $6k/month. I bought a house because I don't understand the rental market anymore. I don’t really like being a home owner, but the rent prices these days are so out of hand. I think the most I ever paid for rent was $1,680 and I felt irresponsible doing that. I don’t know how all these rentals are full with the prices they’re charging. Does everyone have roommates?

antonymoose 1y ago
The $6k number is a touch high, but the answer is realistically 30-something DINKs and up. I make $150k a year, let’s say, and if I have a spouse with a corporate career let’s say it’s similar so maybe $250k-300k per year in income? Well that’s about $12,000 in income after taxes, medical, and a 10% retirement contribution. So, yes, $6k per month is house-poor numbers, but it’s workable for sure. If you’re even better off, good for you, it may fall into affordable range.
- al_borland 1y ago
  Making that much, I wouldn’t want to put anymore than 25% of my take-home toward rent. That would mean making $312k take-home… after taxes, retirement, etc. Maybe I’m conservative, but being house poor while making $300k is insane. I’m thinking someone would need to be pushing $400-500k for household income. That would put them in the top 3%. I don’t get the supply and demand curve on it. Making that much, and renting. It’s an even smaller market than the full 3%.
  - ndriscoll 1y ago
    I wouldn't want to purely out of the waste, but from a risk perspective, why not? Your other costs don't scale with housing or income, so if you're spending $70k on housing, you might be at $100k overall expenses. Add another $50k for income taxes and $50k for retirement savings and you're still at 50-100k left over for whatever you like (using 250-300 household income). 6k for a mortgage would be scary in case of job loss, but for rent, whatever, just move.