> For decades part of the logic for buying a house was that, after the down payment, mortgage payments were generally cheaper than renting.
I thought the logic was that, after say 30 years, you own the home you were making mortgage payments on.
My dad explained it to me best. He had bought a single-family house in Homer, Alaska after having moved up there and working in construction for a number of years. He had never owned a home in his life. He got a 30-year fixed loan. He said at the time he was questioning himself as to what he was doing — mortgage payments were something like $400 a month!
"Ten years on, you know what the monthly mortgage was?" he asked me. "$400 a month," was his (obvious) answer. He laughed when he said it because at the time that would have been peanuts for rent.
He wasn't there for the whole of 30 years but had enough equity in the home some years later that when he did sell it he was able to outright purchase land out East End and build a new home on it.
To be sure, times have changed — the market has changed (interest rates have changed of nothing else). But putting money toward ownership still seems like a win.
Ericson2314 · 16h ago
Certainly over mortgage payments is balanced by risk of unexpected repair and upkeep costs. Property capital gains is balanced by the capital gains you could have from investing in other things instead.
> My dad explained it to me best.
I'm glad you have a found memory of your dad explaining it to you, but this bunch of folk wisdom is killing is killing this country.
Calling them fond memories is not a way I would have characterized them. Regardless, the same strategy regarding home ownership worked for me.
Of course to your point there's no telling if I had been renting and putting every extra dollar into the stock market if I might not have come out ahead. But realistically how many people "invest" in that manner with their income? I can tell you my blue-collar background had not raised me to be investment savvy. (I would have no idea what capital gains were until I was probably in my forties.) I suspect that for most people with similar upbringing an investment in their home is their only significant investment in their lifetime — or it was once that way.
(Who knew they were killing this country.)
I guess that one's out the window now as well then if they can't even afford that.
Unexpected repair and upkeep cost — you're suggesting the landlords just eat that?
(In my case I have learned to do repairs myself. That has been very liberating, FWIW.)
If I am following, your alternative is that we all become renters for life — using any extra money we have to invest in the stock market?
Ericson2314 · 7h ago
> If I am following, your alternative is that we all become renters for life — using any extra money we have to invest in the stock market?
So yes, given the current situation, that is the mathematically best option for many, many people, far more than people think.
I'm sympathetic though to the idea that asking everyone to be "savvy" is not workable. (Of course, meeting the societal expectation that "unsavvy" home buying also yields nice returns also has major costs.) I think the right answer is probably that the government should think about making sure people have very simple retirement savings vehicles. For example, allowing you to buy more into social security and then get more back.
tomjakubowski · 15h ago
I think it's really difficult to put a number or dollar figure on the sense of security you'd feel living in a home you own with no mortgage, especially in retirement years.
Ericson2314 · 7h ago
Well, it's probably not $1 and also not $1,000,000,000 right?
The point is that people should run the numbers. If they are close enough, sure, go with your gut preference, but if they are way different than you expected, maybe give it a little extra consideration.
A lot of people point out these intangibles to give themselves licensed to not run the numbers, and just assume what they want to be true is true, and I'm sorry, but the argument ("intangible, hard to measure benefits exist" and yes they do) just doesn't support a conclusion that strong.
JKCalhoun · 14h ago
It's also a little more than that. After having raised a family and seen the nest empty, the wife and I can downsize at any time into a smaller (less expensive) home. The difference in the price of the homes will obviously help in retirement.
Ericson2314 · 9h ago
That's just the capital gains argument restated. The question is what the other capital gains would be.
nunez · 11h ago
Right. The mortgage is the floor; the rent payment is a rising ceiling
Ericson2314 · 9h ago
You get it :)
more_corn · 15h ago
Don’t be a dick.
Also, economists agree that owning property is still one of the best ways of generating long-term wealth. It’s not folk wisdom. It’s science.
We were lucky enough to buy this year, and I love the house we bought and the location it resides in, but honestly, I enjoyed being a renter, and I wish the stigma around renting would go away.
Until then, affordability will continue to suffer as long as housing is treated as an appreciating asset. They are diametrically opposing goals. To wit, Americans have been stretching their finances to get into their first homes for a long time (think 401(k) loans and ARMs of the past).
TheAmazingRace · 13h ago
In my very recent experience... I don't think this statement holds as much water as it did a year ago or even six months ago. Right now, in the Phoenix metro area, I'm seeing properties sit on the market for over 100+ days, complete with price cuts, before closing now. Sellers are also far more willing to factor in concessions to help a sale close.
It's for this reason that I'm now considering a purchase for the first time in years. I missed the boat after the pandemic… so I decided to wait. I think my patience is paying off.
2OEH8eoCRo0 · 13h ago
And in my experience a bunch of my neighbors are selling their homes for massively more than they bought them for a few years ago. One sold so fast I couldn't even go view it.
I'm in Rhode Island
TheAmazingRace · 13h ago
I think this goes to show how hyper local real estate really is.
motbus3 · 13h ago
It is a mistake to think this is not by design. The lack of proper taxing for big companies owning land and houses for renting is ridiculously low and completely put on tenants.
These taxes should be exponential and force a cap to where such businesses can make money.
Own nothing structure is the worst possible future. You become a slave of work and your life is completely unstable as little fluctuations are passed down to people.
This is already happening with all little services that we pay for and there is absolute no reason to not think it will happen to everything.
tracker1 · 13h ago
I'd really like to see individual states put limits on foreign ownership as well as the number of rental 1-4 family units a company (including subsidiaries) one can own.
guywithahat · 13h ago
I think there are just some kinds of housing where ownership doesn't make sense; any sort of shared building requires an HOA fee, and the mortgage for a 1-bed in a shared building could easily have an HOA fee that's half the cost.
What's more is the most up-to-date data says housing is becoming more affordable, at least in cities with a high percent of illegal immigration. This is a story about millionaires who now have to temporarily rent after their million dollar home burned down and they wait for the market to adjust. It's sad, but not reflective of the average person or their experience
dismalaf · 12h ago
I envy Americans. Your average house price is 5x the average income and you all are becoming aware of it and complaining about it.
In Canada, that ratio is 12x and we're taking it while convincing ourselves it's normal...
BobaFloutist · 12h ago
On the other hand, Vancouver is doing a phenomenal job building up compared to San Francisco. So there's plenty to be jealous about on both sides of the equation.
I thought the logic was that, after say 30 years, you own the home you were making mortgage payments on.
My dad explained it to me best. He had bought a single-family house in Homer, Alaska after having moved up there and working in construction for a number of years. He had never owned a home in his life. He got a 30-year fixed loan. He said at the time he was questioning himself as to what he was doing — mortgage payments were something like $400 a month!
"Ten years on, you know what the monthly mortgage was?" he asked me. "$400 a month," was his (obvious) answer. He laughed when he said it because at the time that would have been peanuts for rent.
He wasn't there for the whole of 30 years but had enough equity in the home some years later that when he did sell it he was able to outright purchase land out East End and build a new home on it.
To be sure, times have changed — the market has changed (interest rates have changed of nothing else). But putting money toward ownership still seems like a win.
> My dad explained it to me best.
I'm glad you have a found memory of your dad explaining it to you, but this bunch of folk wisdom is killing is killing this country.
One has to actually run the numbers to see how all the things net out. I would start with https://www.nytimes.com/interactive/2024/upshot/buy-rent-cal...
Of course to your point there's no telling if I had been renting and putting every extra dollar into the stock market if I might not have come out ahead. But realistically how many people "invest" in that manner with their income? I can tell you my blue-collar background had not raised me to be investment savvy. (I would have no idea what capital gains were until I was probably in my forties.) I suspect that for most people with similar upbringing an investment in their home is their only significant investment in their lifetime — or it was once that way.
(Who knew they were killing this country.)
I guess that one's out the window now as well then if they can't even afford that.
Unexpected repair and upkeep cost — you're suggesting the landlords just eat that?
(In my case I have learned to do repairs myself. That has been very liberating, FWIW.)
If I am following, your alternative is that we all become renters for life — using any extra money we have to invest in the stock market?
So yes, given the current situation, that is the mathematically best option for many, many people, far more than people think.
I'm sympathetic though to the idea that asking everyone to be "savvy" is not workable. (Of course, meeting the societal expectation that "unsavvy" home buying also yields nice returns also has major costs.) I think the right answer is probably that the government should think about making sure people have very simple retirement savings vehicles. For example, allowing you to buy more into social security and then get more back.
The point is that people should run the numbers. If they are close enough, sure, go with your gut preference, but if they are way different than you expected, maybe give it a little extra consideration.
A lot of people point out these intangibles to give themselves licensed to not run the numbers, and just assume what they want to be true is true, and I'm sorry, but the argument ("intangible, hard to measure benefits exist" and yes they do) just doesn't support a conclusion that strong.
Until then, affordability will continue to suffer as long as housing is treated as an appreciating asset. They are diametrically opposing goals. To wit, Americans have been stretching their finances to get into their first homes for a long time (think 401(k) loans and ARMs of the past).
It's for this reason that I'm now considering a purchase for the first time in years. I missed the boat after the pandemic… so I decided to wait. I think my patience is paying off.
I'm in Rhode Island
These taxes should be exponential and force a cap to where such businesses can make money.
Own nothing structure is the worst possible future. You become a slave of work and your life is completely unstable as little fluctuations are passed down to people.
This is already happening with all little services that we pay for and there is absolute no reason to not think it will happen to everything.
What's more is the most up-to-date data says housing is becoming more affordable, at least in cities with a high percent of illegal immigration. This is a story about millionaires who now have to temporarily rent after their million dollar home burned down and they wait for the market to adjust. It's sad, but not reflective of the average person or their experience
In Canada, that ratio is 12x and we're taking it while convincing ourselves it's normal...