4 ms·
Yes, owning a home is different from renting, but really cost of home ownership is a pretty good measure of overall cost of living. In almost any city, rent pri
by nathanwdavis 17y ago
Yes, owning a home is different from renting, but really cost of home ownership is a pretty good measure of overall cost of living. In almost any city, rent prices will sit just a tad bit lower than a mortgage on an equally comfortable home - the two markets are in competition because they essentially meet the same need (a place to live).
Secondly, most other costs of living (transportation, food, utilities) don't have the huge variance that the cost of a place to live does, so it becomes the most statistically meaningful measure.
- pg 17y agoreally cost of home ownership is a pretty good measure of overall cost of living Not true. In some places there's a big gap between the cost of owning and the cost of renting. In Silicon Valley, renting is much cheaper than buying, because there is still so much expectation of future growth built into house prices. So you can't use house prices as an index of how affordable the Bay Area is for e.g. someone who's 25, because they probably don't want to buy a house yet anyway.
- nathanwdavis 17y agoYou may be referring to the average rent compared to the average mortgage on a home. But they are not equal. The average rented place in the valley does not have the amenities and comforts of the average owned home. If location, comforts, size and all other factors are equal, you will probably find that the cost to rent is almost equal to the cost to own.
- pg 17y agoIf you buy a house in SV and rent it out, you get about half the after-tax return that you'd get in the rest of the US.