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IMO most childless people would be better off renting (kids change the whole set of incentives). Exceptions would be people with hobbies that require a lot of
by laughing_man 5mo ago
IMO most childless people would be better off renting (kids change the whole set of incentives). Exceptions would be people with hobbies that require a lot of space or a yard, and light sleepers.
A house means a better standard of living, but you definitely pay for it. I spent $25k replacing a fence at my house this year, and I'll need to spend another $20k to replace the air within the next few. The roof, another $30k, is coming up too. Where I live you can rent for quite awhile with $75k.
While it's true rent goes up over time, if you take the money you're not putting into a house and invest it, your investments will go up over time as well.
- deleted 5mo ago[deleted]
- kccqzy 5mo agoTheoretically these capital expenses like fence replacement or roof replacement should have been deducted from the market value of a house when you buy it: a theoretically rational buyer would take into account the present value of future capital projects. And this just goes to show how much the market value of a house is now much higher than the present value of all future rent. In simpler words, the market is frothy. Buyers just hope the market remains frothy when they sell.
- skew-aberration 5mo agoI don't follow this logic. Homebuyers do deduct these costs - I certainly did. House price is still tightly coupled to NPV of rent - expenses. People are a) predicting higher growth in rent over time (there are sound economic reasons to do so, though AI is a curveball) and b) use different discounting rates due to access to credit, etc.
- laughing_man 5mo agoOh, all this stuff was fine when I bought the place fifteen years ago. But eventually everything in a house will wear out right down to the foundation. And that was my point -- these are normal expenses you need to account for as a homeowner. Forget the price; I'm just trying to keep the house livable because I live here.
- skew-aberration 5mo agoIf you were renting, you would still be paying for the fence, utilities, roof, etc (quoted prices for fence/hvac are very high btw). If every renter on the street had significant free money to invest, why wouldn't the landlords increase rent? The only thing stopping them is the availability of other land / houses to buy, which acts as leverage for the renters. As land gets bought up over time, zoning becomes more restrictive, etc and this source of leverage dries up. The result is that while some high-income earners benefit from renting, it is mathematically impossible for the average person to do so. 'Anyone can win the race but not everyone' principle.
- laughing_man 5mo agoUsually when you're renting you're not in a detached dwelling, which is more expensive. On a per-unit basis, it's a lot cheaper for the landlord to maintain your unit than it is for you to maintain a separate house. Renting a house just makes no sense, IMO, unless you have a family and you know you're going to be moving soon. Also, rents don't increase just because you have extra money. People take the cost of living into account when they decide where to live, so there's a natural cap on what people will pay for rent if they can commute.
- skew-aberration 5mo agoWhere I live, people do indeed rent houses in large numbers. This is typically not because they wouldn't prefer to buy - it is because they can't afford to. This would describe such a large number of people globally that I'm shocked you aren't aware of this. 'Rents don't increase just because you have extra money'. Could you elaborate? Also, I said if everyone has more money, rent increases
- laughing_man 5mo agoAbsent government interference, rent is based on supply and demand. Why would you spend extra on a place even if you had the money?