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> To compile those numbers, realtor.com compared median home prices and the cost of renting a three-bedroom home in 382 local markets, then factored in estimate
by azakai 11y ago
> To compile those numbers, realtor.com compared median home prices and the cost of renting a three-bedroom home in 382 local markets, then factored in estimates for transaction costs, price appreciation, future mortgage rates, and interest earned on any money renters saved when it was cheaper to rent.
But those aren't the only costs. When you rent you are generally shielded from paying for various things, like fixing damage to the apartment or other serious maintenance. Also, renting saves you from the risk of the house losing value because of some local event like a neighborhood becoming less attractive due to a new source of noise or crime. Finally, these estimates assume home prices will rise according to "historical norms", which is a gamble.
Renting also lets you move around to pursue another job in another city, without needing to worry yourself with renting out your current location. The worry might deter you from moving and getting a higher salary, or it might make you spend the time, effort and risk to rent out the place you own, which brings its own costs.
It's hard to quantify those things. Some are unlikely events, some affect the variance instead of the mean, and some depend on the individual (how likely you are to find a job in another city - probably fairly high for people reading HN compared to other industries). But I never see them taken into account in articles like this.
- digi_owl 11y ago> Finally, these estimates assume home prices will rise according to "historical norms", which is a gamble. Especially as "historical norms" have been running on a massive Ponzi scheme for decades.
- rehitman 11y agoExactly, this is just an article by realtors to stress out people to buy homes, even if they cannot afford it or doesn't match their life situation. There are lots of cost associated with owning home that people usually ignore. They just see the mortgage, which sometime is less than their current rent. However, in my experience mortgage payment is just around 60% percent of the cost. You have taxes, more expensive insurance, and depending on your house. HOA, landscaping. large maintenance like furnace, water heater, roof, crawl space, and if you want to sell it in 10 years from now, you have to spend around 10-20k at the time to update appliance. I don't want to say it is always a bad investment. My point is it is a lot more complex investment and needs research, and not buying can also be a good option for some people.
- walshemj 11y agobut renting has lots of additional costs in the UK you can have the following just to move in: Tenancy Fee £360 Admin Fee £90 Referencing Fee £60 Checkin Fee £90 Guaentor Fee £90 Deed of Guarantee £120 Sat Checkin £72
- calgoo 11y agoHere in Barcelona, Spain, we normally have to do a deposit of normally 2 to 5 months and depending on your contract and share some communal costs such as garbage collection etc (might be included in price already). There could be 1 month more if it was contracted using an agency.
- DamnYuppie 11y agoThose fees, by comparison to home purchases, are very minimal. The doc fees to buy a house in the US alone runs well over $1300, that doesn't even include paying for points or inspections. You have the same type of fees to rent in the US as well, credit checks, deposits, pet fees, and move in fees for certain buildings depending upon access and parking.
- walshemj 11y agobut that is amortized over a much longer time frame than renters
- DamnYuppie 11y agoThat is probably true yet that time frame is on average 4-7 years, not the 30 years most people think.
- firebird84 11y agoReally? Are those paid yearly or only when signing a new lease?
- Hates_ 11y ago