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There are a perilous lack of actual facts backing this up (and some red flags disclaimers like "in expensive areas". What does that even mean from a statistical
by corresation 13y ago
There are a perilous lack of actual facts backing this up (and some red flags disclaimers like "in expensive areas". What does that even mean from a statistical perspective). For instance I would instant call bullshit on the rent versus owning notion based on basic economics (when rents are less than the price of the mortgage, people don't rent out houses. The notion makes absolutely no sense).
Even more indicting is the description of the nationwide market as a singular, when there are enormously different realities across the nation.
- AnIrishDuck 13y ago> when rents are less than the price of the mortgage, people don't rent out houses. The notion makes absolutely no sense So they're just going to let the house sit empty? Buying/selling a house is a long term proposition because of transaction costs. Partially covering a mortgage payment temporarily is better than not recovering it at all. If the rent payments can't cover the mortgage, they're probably going to take a hefty loss on sale, if they can sell the house at all.
- corresation 13y agoAwesome, so show me (I don't literally demand that you do, but rather mean anyone) actual data of rents that are lower than corresponding mortgages. Anecdotal evidence is very, very much to the contrary.
- huherto 13y agoIt would be useful to be able to compare the rental market with sales market to get a good idea if the houses are good to buy or not. But I have no idea how to monetize such a thing.
- AnIrishDuck 13y agoExamples are rare, because they require a perfect storm of market conditions. I'm not challenging that, just the notion that it "makes no sense". If you don't have enough equity to cover your loss on a sale, it absolutely can make sense to take a small hit on recurring mortgage payments.
- fluidcruft 13y agoI think "expensive areas" relates to comps--your house is valued in part based on recent sales of similar houses in your neighborhood. So... well, I don't know. I sort of see that there could be a linkage but as I ponder it, it becomes less clear how the mechanism could play out.
- YokoZar 13y agoPeople rent out otherwise empty houses regardless of what the mortgage rates are. Selling at a loss is a thing because it's less bad than not recovering anything -- renting below the mortgage price has a similar logic.