9 ms·

This is why the whole concept of renting seems bad to me. If you don't have rent control, you are condemned to a future of uncertainty, as you can never retire

This is why the whole concept of renting seems bad to me. If you don't have rent control, you are condemned to a future of uncertainty, as you can never retire in case prices go up. You also pay money but never see any permanent return, as it doesn't matter how long you've been paying, you can never stop.

alandarev 13y ago
True, renting does not give you rights, and I see no reason why it should. But do not risk believing that buying a house for youself is a true investment. I have been renting for last five years, and I see nothing bad in renting. Though my opinion might be irrelevent to the subject, as I do not live in SF and there is no "frozen property taxes" law in UK.
- cscheid 13y ago
  In the US, the http://en.wikipedia.org/wiki/Home_mortgage_interest_deduction http://en.wikipedia.org/wiki/Home_mortgage_interest_deductio... on your first home makes a huge difference when making rent-vs-own plans. It wasn't obvious to me when I first started making rent-vs-own plans (I'm not a US citizen). In 30-year mortgages you are realistically paying more than half your monthly payment as interest, and doing that with pre-tax money means you're conservatively looking at 15% total reduction in monthly payments compared to renting.
  - refurb 13y ago
    As stated above, it really depends on a number of factors whether renting is cheaper or more expensive than buying. You are right that the US has two things to advantage owning: (1) mortgage interest tax deduction and (2) 30-year mortgage terms. If you're lucky enough to lock in a mortgage rate of ~3%, when you add in the mortgage interest tax deduction, you're practically paying nothing for the money you are borrowing. However, all it takes is a 10%+ drop in the market when you are selling to wipe out any advantage to owning and often you'll come out behind of someone who rents.
  - dionidium 13y ago
    We're pretty far off topic now, but this benefit has been overstated. In most of the U.S. -- the areas not discussed in this article -- cheap housing is the norm. If you have, say, a $150k mortgage at 5% for 30 years, then your yearly interest is going to be less than $5k. That's less than the standard deduction.
    - selectodude 13y ago
      Essentially it's a tax write-off for the wealthy.
      - Domenic_S 13y ago
        Not at all. The deduction (all itemized deductions in fact) phases out starting at $300k household income, which is pretty trivial for a 2-techie couple in an urban tech hub.
        gojomo 13y ago
        A "2 techie couple in an urban tech hub" is "the wealthy".
        Domenic_S 13y ago
        I disagree - but even if I concede, you're proving my point.
        dionidium 13y ago
        $300k household income, which is pretty trivial Anything over $250k puts you in the top 2% of U.S. households. Your definition of words like "trivial" and "wealthy" might be different from mine.
      - prostoalex 13y ago
        No, because wealthy families are typically hit by AMT, not income tax, and mortgage interest is only deducted under income tax. It's a write-off for someone who's making enough money to find it worthwhile to itemize but not enough to pay AMT. Wealthy families also have access to higher-quality asset-backed loans which typically come with lower interest rates.
- sosborn 13y ago
  >I see nothing bad in renting. The rub usually comes when you are older and your earning ability deteriorates. Those who own their house get a significant drop in monthly housing costs while those who are still renting to not. Some people plan well for this, others don't.
scottkduncan 13y ago
Not that this is the best place to hash out a buy vs. rent argument (the answer of course is, it depends), but there are loads of uncertainties associated with buying. How high will my property taxes go? Will the market where I am go up or down? What will my future maintenance costs be? Will I have to pick up and move to another city unexpectedly? Variability in all of those affects what kind of return you get on buying, if at all. Then there are the transaction and opportunity costs associated with buying...locking up a down payment, closing costs, broker costs. I'm sure I'll buy in the future when I'm at a different point lifewise, but for now renting works just fine.
- Domenic_S 13y ago
  Those costs are all baked in to the price of rent. It's not like you get out of paying property tax by renting. Housing prices go up = your rent goes up.
- iopq 13y ago
  This is why I hate property taxes. It means that I can't just buy a house and live in it. I have to make sure my house doesn't get too expensive for ME to live in. I can't just look forward to retiring in my house. It's taxes until I die.
  - dragonwriter 13y ago
    Even in the absence of property taxes, utility and maintenance costs (and changing market rates for required labor and materials that drive those) would pose the same risk. Property taxes are hardly the only required expenses that might go up when owning a house (and, in CA, have strict constitutional limits on increases, unlike most other necessary expenses.)
    - 001sky 13y ago
      Isn't the issue with property taxes that weath taxes are not legal under the constitution. The government is not allowed to just tax (ie, take) your assets. Income and Real estate are just imperfect proxies "wealth".
raverbashing 13y ago
What? If you rent and retire you can go wherever rent is cheaper. Problem solved
chaostheory 13y ago
Renting gives you flexibility. If the rent increases beyond your means, just move. When you find better job prospects (or need them), just move. When you buy a house, you can't just move even if you need to do it. It is a lot more difficult. That's where I see the 2-3 hour daily commutes, which I feel is insane. > You also pay money but never see any permanent return, as it doesn't matter how long you've been paying, you can never stop Yes but at the same time, your capital isn't trapped in the place that you're living in. You also have to pay for yearly maintenance in both time and money (I personally hate this part the most). When you don't own a home, you can more easily do things like investing or using it to start something up.
- lacksconfidence 13y ago
  > Yes but at the same time, your capital isn't trapped in the place that you're living in. It probably varies by person, but I don't see that the same. If i was paying $2400/mo in rent, then i bought a house for $2400/mo mortgage, the capital in the house is not part of the capital i would have if i had been renting. That would just be gone.
  - chaostheory 13y ago
    > If i was paying $2400/mo in rent, then i bought a house for $2400/mo mortgage, If rent was $2400/m, I can assure you that a house in the same area would be a lot more than $2400/m unless you put %50 or more as a down payment which is at least a few hundred thousand if not a million dollars. That's a lot of capital. If you choose a house in a cheaper area with a mortgage of $2400/m, then I can guarantee that there will be cheaper apartments in the area as well. > the capital in the house is not part of the capital i would have if i had been renting. That would just be gone. I'm not sure I understand what you're saying? Are we in agreement or are you disagreeing?
    - lacksconfidence 13y ago
      Currently i rent a 1br place for $2400, looking to buy something. I am strictly guessing that most people in my situation arn't going to be getting a mortgage that is thousands more than their current rent, but rather end up in something a little less nice that has a similar mortgage to the previous rent. i will have to find a cheaper area to be able to buy a house(or condo more likely). > I'm not sure I understand what you're saying? Are we in agreement or are you disagreeing? Rent: pay $2400/mo for 30 years. Spent: $864k. Capital: $0 Buy: pay $2400/mo for 30 years. Spent: $864k. Capital: Whatever the house is worth. Hopefully around the 3-400k the loan was for, but half would still be better than the rent scenario Together that doesn't sum it up, sure in that cheaper neighborhood maybe a rental would be $600 a month cheaper, $216k over those 30 years and more with compound interest. But rent doesn't stay the same like a mortgage does (baring intervention). An apartment that went for $1800 a decade ago (locally) goes for well over $2400 now.
smsm42 13y ago
You are condemned to a future of uncertainty anyways. That's the nature of living - you don't know what your income would be in the future, your health, your expenses. You can make some preparations - but you'd never be certain. If you want the services the city provides, you have to pay for them. They are paid from property taxes. As those raise, so does the rent - after all, you live in the city, so you consume those services, so why don't you have to pay for them? That's your return - getting city services. If you don't like taxes being linked to property value - enact fixed taxes, but then you'd have to rein in city budget costs, including salaries, pensions, benefits, entitlements, etc. Somebody has to pay for all that. If not people living in the city, then who? If you want to stop paying for it, then you need to either stop consuming them, or find some other way to pay - what that would be?

alandarev 13y ago

True, renting does not give you rights, and I see no reason why it should. But do not risk believing that buying a house for youself is a true investment. I have been renting for last five years, and I see nothing bad in renting. Though my opinion might be irrelevent to the subject, as I do not live in SF and there is no "frozen property taxes" law in UK.

cscheid 13y ago
In the US, the http://en.wikipedia.org/wiki/Home_mortgage_interest_deduction http://en.wikipedia.org/wiki/Home_mortgage_interest_deductio... on your first home makes a huge difference when making rent-vs-own plans. It wasn't obvious to me when I first started making rent-vs-own plans (I'm not a US citizen). In 30-year mortgages you are realistically paying more than half your monthly payment as interest, and doing that with pre-tax money means you're conservatively looking at 15% total reduction in monthly payments compared to renting.
- refurb 13y ago
  As stated above, it really depends on a number of factors whether renting is cheaper or more expensive than buying. You are right that the US has two things to advantage owning: (1) mortgage interest tax deduction and (2) 30-year mortgage terms. If you're lucky enough to lock in a mortgage rate of ~3%, when you add in the mortgage interest tax deduction, you're practically paying nothing for the money you are borrowing. However, all it takes is a 10%+ drop in the market when you are selling to wipe out any advantage to owning and often you'll come out behind of someone who rents.
- dionidium 13y ago
  We're pretty far off topic now, but this benefit has been overstated. In most of the U.S. -- the areas not discussed in this article -- cheap housing is the norm. If you have, say, a $150k mortgage at 5% for 30 years, then your yearly interest is going to be less than $5k. That's less than the standard deduction.
  - selectodude 13y ago
    Essentially it's a tax write-off for the wealthy.
    - Domenic_S 13y ago
      Not at all. The deduction (all itemized deductions in fact) phases out starting at $300k household income, which is pretty trivial for a 2-techie couple in an urban tech hub.
      - gojomo 13y ago
        A "2 techie couple in an urban tech hub" is "the wealthy".
        Domenic_S 13y ago
        I disagree - but even if I concede, you're proving my point.
      - dionidium 13y ago
        $300k household income, which is pretty trivial Anything over $250k puts you in the top 2% of U.S. households. Your definition of words like "trivial" and "wealthy" might be different from mine.
    - prostoalex 13y ago
      No, because wealthy families are typically hit by AMT, not income tax, and mortgage interest is only deducted under income tax. It's a write-off for someone who's making enough money to find it worthwhile to itemize but not enough to pay AMT. Wealthy families also have access to higher-quality asset-backed loans which typically come with lower interest rates.
sosborn 13y ago
>I see nothing bad in renting. The rub usually comes when you are older and your earning ability deteriorates. Those who own their house get a significant drop in monthly housing costs while those who are still renting to not. Some people plan well for this, others don't.

scottkduncan 13y ago

Not that this is the best place to hash out a buy vs. rent argument (the answer of course is, it depends), but there are loads of uncertainties associated with buying. How high will my property taxes go? Will the market where I am go up or down? What will my future maintenance costs be? Will I have to pick up and move to another city unexpectedly? Variability in all of those affects what kind of return you get on buying, if at all. Then there are the transaction and opportunity costs associated with buying...locking up a down payment, closing costs, broker costs. I'm sure I'll buy in the future when I'm at a different point lifewise, but for now renting works just fine.

Domenic_S 13y ago
Those costs are all baked in to the price of rent. It's not like you get out of paying property tax by renting. Housing prices go up = your rent goes up.
iopq 13y ago
This is why I hate property taxes. It means that I can't just buy a house and live in it. I have to make sure my house doesn't get too expensive for ME to live in. I can't just look forward to retiring in my house. It's taxes until I die.
- dragonwriter 13y ago
  Even in the absence of property taxes, utility and maintenance costs (and changing market rates for required labor and materials that drive those) would pose the same risk. Property taxes are hardly the only required expenses that might go up when owning a house (and, in CA, have strict constitutional limits on increases, unlike most other necessary expenses.)
  - 001sky 13y ago
    Isn't the issue with property taxes that weath taxes are not legal under the constitution. The government is not allowed to just tax (ie, take) your assets. Income and Real estate are just imperfect proxies "wealth".

raverbashing 13y ago

What? If you rent and retire you can go wherever rent is cheaper. Problem solved

chaostheory 13y ago

Renting gives you flexibility. If the rent increases beyond your means, just move. When you find better job prospects (or need them), just move. When you buy a house, you can't just move even if you need to do it. It is a lot more difficult. That's where I see the 2-3 hour daily commutes, which I feel is insane. > You also pay money but never see any permanent return, as it doesn't matter how long you've been paying, you can never stop Yes but at the same time, your capital isn't trapped in the place that you're living in. You also have to pay for yearly maintenance in both time and money (I personally hate this part the most). When you don't own a home, you can more easily do things like investing or using it to start something up.

lacksconfidence 13y ago
> Yes but at the same time, your capital isn't trapped in the place that you're living in. It probably varies by person, but I don't see that the same. If i was paying $2400/mo in rent, then i bought a house for $2400/mo mortgage, the capital in the house is not part of the capital i would have if i had been renting. That would just be gone.
- chaostheory 13y ago
  > If i was paying $2400/mo in rent, then i bought a house for $2400/mo mortgage, If rent was $2400/m, I can assure you that a house in the same area would be a lot more than $2400/m unless you put %50 or more as a down payment which is at least a few hundred thousand if not a million dollars. That's a lot of capital. If you choose a house in a cheaper area with a mortgage of $2400/m, then I can guarantee that there will be cheaper apartments in the area as well. > the capital in the house is not part of the capital i would have if i had been renting. That would just be gone. I'm not sure I understand what you're saying? Are we in agreement or are you disagreeing?
  - lacksconfidence 13y ago
    Currently i rent a 1br place for $2400, looking to buy something. I am strictly guessing that most people in my situation arn't going to be getting a mortgage that is thousands more than their current rent, but rather end up in something a little less nice that has a similar mortgage to the previous rent. i will have to find a cheaper area to be able to buy a house(or condo more likely). > I'm not sure I understand what you're saying? Are we in agreement or are you disagreeing? Rent: pay $2400/mo for 30 years. Spent: $864k. Capital: $0 Buy: pay $2400/mo for 30 years. Spent: $864k. Capital: Whatever the house is worth. Hopefully around the 3-400k the loan was for, but half would still be better than the rent scenario Together that doesn't sum it up, sure in that cheaper neighborhood maybe a rental would be $600 a month cheaper, $216k over those 30 years and more with compound interest. But rent doesn't stay the same like a mortgage does (baring intervention). An apartment that went for $1800 a decade ago (locally) goes for well over $2400 now.

smsm42 13y ago

You are condemned to a future of uncertainty anyways. That's the nature of living - you don't know what your income would be in the future, your health, your expenses. You can make some preparations - but you'd never be certain. If you want the services the city provides, you have to pay for them. They are paid from property taxes. As those raise, so does the rent - after all, you live in the city, so you consume those services, so why don't you have to pay for them? That's your return - getting city services. If you don't like taxes being linked to property value - enact fixed taxes, but then you'd have to rein in city budget costs, including salaries, pensions, benefits, entitlements, etc. Somebody has to pay for all that. If not people living in the city, then who? If you want to stop paying for it, then you need to either stop consuming them, or find some other way to pay - what that would be?