this post was submitted on 29 Oct 2024
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also, cost. homeowner ship doesn't really make sense in a lot of situations anymore in the US If your mortgage costs significantly more than rent.
Have an asset that likely with appreciate, paid off after 30 years. Or continue to pay for a place to live for 60 years?
Financially, if you can afford it, housing is a good way to solidify your worth and lay a foundation for your future and retirement. If you pay off your mortgage, by the time you retire hopefully your set income won't have to pay for housing anymore. Only property tax and maintenance.
"Have an asset that likely with appreciate, paid off after 30 years."
big assumptions with no starting values.
are you paying 500k off? 750k?
are you adding in the cost of home repair?
escrow and finalization fees?
interest from your mortgage?
how about utilities?
property tax?
capital gains tax?
If you take average numbers for the costs of American homes right now (450-500k) plus all the practical costs of owning property, it is still cheaper to rent for 60 years at $1,000 a month rent then to pay for that house over 30 years. Indian
380k with a 30 year mortgage and something like $25k down. Amortization on 5.89% will show at the end of it, you'll pay over 774k for it. Mortgage payment would be $2150. That's after closing costs. Property insurance and property taxes about $700/mo. And I live in a high property tax area.
Utilities aren't included, but I haven't seen many rentals that include utilities either. The house may be bigger and use more utilities though.
The lowest rent in my area for 3 bedrooms is 2.2k/mo and that's an outlier. Most are $2,700+/mo. If I were to pay the $2.7k for 30 years, that's just shy of $1 million. And at $2200, it's just shy of $800k in 30 years. That's break even.
This isn't even addressing the instability of rental prices. My mortgage payment is locked in, at a fixed interest rate. If I were to rent, there is no guarantee that the rent i am paying today is the rent I'll be paying in 5 years.
Renters should be getting renters insurance too, so add that to the renters side.
Yea, I will have home repairs I'll need to pay for. But I'll also have equity that I can leverage for them if I need to. I'd have to put in $200k in the course of 30 years to match what a renter in my area would be spending. And that's just repairs, if I were to spend on renovations and/or additions than it would raise the property value.
As for capital gains, that's only when I sell, but if I have to pay taxes because I made money. Well, then I made money instead of... Only spent money?
If the house doesn't appreciate and only holds it's value, it's an asset that protects against inflation.
yeah, that checks out
if literally everything goes beyond right with your home purchase, you beat the market price by 100k, low property taxes, no emergency costs, you don't have any repairs, vs. you choose to rent near the center of the city and everything goes wrong with renting, then a home purchase can begin to match the convenience and more economical choice of renting.
overall and on equal footing, it's cheaper to rent plus you don't have to pay any of the necessary maintenance costs, utilities depending on the property or any taxes.
and renting is way less time and trouble.
Who the fuck is paying only $1000 in rent?
But that aside, no, renting is always more expensive than owning. Landlords are not renting residences out of the kindness of their hearts.
All of those expenses PLUS profit margin go into your rent price, there fore renting is always more expensive.
Yeah but at this point, I don't know a single person or family paying higher mortgage costs than the average rent in an area, across multiple northern and southern states.
True enough inside any sizable cities.
I'm factoring in traveling but didn't make that clear.
there are still a lot of rentals you can find outside of cities for 10 to 15 bucks a day with monthly specials, or there were a year ago when I was driving across the country last year.
If living 45 minutes outside of the city proper, you can get pretty good rental rates.
There are no rentals on any rental website or Craigslist for less than 700, with those specifically usually being 55+/Medicare subsidized communities.