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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

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".
    - deleted 13y ago
      [deleted]
    - dragonwriter 13y ago
      > Isn't the issue with property taxes that weath taxes are not legal under the constitution. No, because that's not true (federal property taxes would probably be problematic under the Constitution, which restricts non-apportioned federal taxes, but property taxes aren't federal.)
      - 001sky 12y ago
        Property taxes are used (primarily) because states & localities don't have clean jurisdiction or nexus on a household's financial assets. (which makes "wealth" taxes problematic or impractical)
- eropple 13y ago
  Do you have a better method for accounting for the externality of restricting that land to your private use and accounting for your local externalities? (This is not a rhetorical question.)
  - AnthonyMouse 13y ago
    The amount of wear one homeowner causes to the roads or the amount it costs to educate one family's children is not dependent on local property values. And the "externality" in restricting that land to your private use is captured by the housing market. If you're sitting on a plot of land worth a million dollars, it means you value that land at more than a million dollars, because otherwise you would sell it. Sitting on it is costing you access to a million dollars. Living there is costing you the money you could get by renting it out.
    - refurb 13y ago
      That is true, but you have to remember that rates are often adjusted when property values increase. In other words, if home values double in 5 years, the city doesn't get twice the property tax revenues, as the rates are often adjusted downward to meet the desired budget.
      - AnthonyMouse 13y ago
        > That is true, but you have to remember that rates are often adjusted when property values increase. If your argument is that the property tax rate on a million dollar home will be lowered until the absolute number of tax dollars paid is the same as that paid on a $250K home, the evidence is to the contrary. Municipalities that see an increase in tax revenues at the same rate more often see it as an excuse to expand the budget than an excuse to lower tax rates, especially in California.
        refurb 13y ago
        I'll admit my anecdote is an outlier, but I have seen a few examples of it. Take a look at local city budgets. When housing prices doubled, the cities tax revenues didn't. They certainly went up overall (I mean, when has a gov't ever not expanded?), but my argument is that often 2house price =/= 2property taxes.
- pbreit 13y ago
  If you buy a $500k house you pay $5k/year in prop taxes. If that home doubles in value, you have $500k more in wealth (that you can tap withou cash out refinance) and pay an extra $5k in prop taxes. I'd say you're doing ok.
  - samstave 13y ago
    How exactly are you going to tap that wealth? Take out a loan, on which you pay interest. If you lose ability to pay that loan, a lien on your house - or even a foreclosure results. Basicallly there is no real way to not be a beholden slave to the monetary system and debt.
    - selectodude 13y ago
      You tap that wealth by selling the house. You don't just get to turn something that you get to continue using into cash for free. Somebody is taking the risk that the value of the house is going down. And anyway, usually interest on refis are lower than what you can get prudently investing the money.
    - pbreit 12y ago
      As I said, cash out refinance (easy with 50% equity). Yes, if you're buying a house in the US you are typically going to take on some debt.

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".
  - deleted 13y ago
    [deleted]
  - dragonwriter 13y ago
    > Isn't the issue with property taxes that weath taxes are not legal under the constitution. No, because that's not true (federal property taxes would probably be problematic under the Constitution, which restricts non-apportioned federal taxes, but property taxes aren't federal.)
    - 001sky 12y ago
      Property taxes are used (primarily) because states & localities don't have clean jurisdiction or nexus on a household's financial assets. (which makes "wealth" taxes problematic or impractical)
eropple 13y ago
Do you have a better method for accounting for the externality of restricting that land to your private use and accounting for your local externalities? (This is not a rhetorical question.)
- AnthonyMouse 13y ago
  The amount of wear one homeowner causes to the roads or the amount it costs to educate one family's children is not dependent on local property values. And the "externality" in restricting that land to your private use is captured by the housing market. If you're sitting on a plot of land worth a million dollars, it means you value that land at more than a million dollars, because otherwise you would sell it. Sitting on it is costing you access to a million dollars. Living there is costing you the money you could get by renting it out.
  - refurb 13y ago
    That is true, but you have to remember that rates are often adjusted when property values increase. In other words, if home values double in 5 years, the city doesn't get twice the property tax revenues, as the rates are often adjusted downward to meet the desired budget.
    - AnthonyMouse 13y ago
      > That is true, but you have to remember that rates are often adjusted when property values increase. If your argument is that the property tax rate on a million dollar home will be lowered until the absolute number of tax dollars paid is the same as that paid on a $250K home, the evidence is to the contrary. Municipalities that see an increase in tax revenues at the same rate more often see it as an excuse to expand the budget than an excuse to lower tax rates, especially in California.
      - refurb 13y ago
        I'll admit my anecdote is an outlier, but I have seen a few examples of it. Take a look at local city budgets. When housing prices doubled, the cities tax revenues didn't. They certainly went up overall (I mean, when has a gov't ever not expanded?), but my argument is that often 2house price =/= 2property taxes.
pbreit 13y ago
If you buy a $500k house you pay $5k/year in prop taxes. If that home doubles in value, you have $500k more in wealth (that you can tap withou cash out refinance) and pay an extra $5k in prop taxes. I'd say you're doing ok.
- samstave 13y ago
  How exactly are you going to tap that wealth? Take out a loan, on which you pay interest. If you lose ability to pay that loan, a lien on your house - or even a foreclosure results. Basicallly there is no real way to not be a beholden slave to the monetary system and debt.
  - selectodude 13y ago
    You tap that wealth by selling the house. You don't just get to turn something that you get to continue using into cash for free. Somebody is taking the risk that the value of the house is going down. And anyway, usually interest on refis are lower than what you can get prudently investing the money.
  - pbreit 12y ago
    As I said, cash out refinance (easy with 50% equity). Yes, if you're buying a house in the US you are typically going to take on some debt.