back
25 comments
If all you care about is increasing wealth, sure. If you care about a stable home, no.

You can sign up for rent at $2k a month, get the kids into school etc, then a year later the owner decides to sell, or increase the price by 50%, and you're stuck trying to find somewhere else to live near the school, subjecting yourself to the cost and stress of moving.

Moving across town every year when you're in your 20s is easy, rent a u-haul and you're done in a weekend. Owning a house when you are changing jobs every year or two like many people now is a ball-and-chain.

However later in life when you want stability, and want to stay in the same home for a decade plus (average time in a given house in UK is 21 years), owning is very beneficial. You only move when you want to move, the landlord can't kick you out on a month's notice.

Although no one enjoys moving, it's not exactly common enough to factor in a decision between renting vs owning. The bigger factor is not having to spend any time doing maintenance or yard work. Those tasks can take up weekends or entire weeks.
I think a lot of that depends on whether you have kids. If you're single, or even married, moving is a hassle, but so are yard work and maintenance. But after you have kids, yard work and maintenance don't actually get any harder. Moving does.

Yard work and maintenance can also be fulfilling, either in the sense of "this is my home and I'm putting work into it to benefit my family", or in the sense of, "riding lawnmowers around is a decently fun way to spend a couple hours outdoors". Hell, I volunteered for that chore when I was a kid (and was old enough to safely operate the lawnmower).

I kind of miss yard work now. At least some parts of it. Chainsaws are fun.

It's not the effort of moving (although that is massively painful), it's the effect on children's friends, schooling and education
This is not really an issue. In fact if you rent a house sometimes the landlord wants you to maintain the yard!
This is true. But you're not the one buying and installing a new washer or stove.
That's £10 a month, out of your £1500 rent.
I feel the opposite is true, but I have no data to support it
You're right, you could be forced to move. However, there are plenty of rentals that will remain rentals for very long periods of time, effectively forever. I've been on both sides, i.e. Having to move out sooner than I wanted but alternatively being in a rental home that's been so for decades. The main thing is having a conversation with the landlord or property manager and sussing out their longer term goals for the property.

By saving on renting I'm in a much better position financially than I otherwise would've been owning a home. My savings rate is high enough where if push came to shove I could buy the property I'm renting.

One of the things that I believe is that decent homes in established areas shouldn’t change in price substantially, at least compared to inflation, without major external events that adjust the desirability of said city/neighborhood.

Watching home prices skyrocket in CA while the state’s population has leveled off has me very concerned.

What do you think is causing it?
Honestly, I’m not sure. I think the power of property holders in local zoning is part of it, along with foreign investment properties taking up available units. The middle class using their property to bolster stagnant wages is probably a part too. I have no clue if any or all of those is sufficient to explain it.

Particularly worrying is that suburban homes should be falling in price, since most American municipalities have unfunded obligations to maintain infrastructure like roads and pipes, which are insanely expensive per person in low density suburbs. The expectation of future tax raises or infrastructure decline should be priced in by the market, but it isn’t.

The supply curve is ~0 due to homeowner capture of laws, so the price elasticity is huge. Very basic stuff.
Can you explain more please?
Homeowners create laws that benefit them at the expense of non homeowners. The two biggest are refusing to expand supply and Prop 13 (they enhance each other’s effects which is why the California situation is the worst).
I’m familiar with both of those, prop 13 in particular has made a landed gentry in my area with million dollar run down bungalows.

What I’m more interested in is this elasticity thing. Are you saying that the effective 0 supply has unmoored the price and it can wander, or is it that 0 supply sends the price up into the stratosphere?

100k salary is equivalent to minimum wage jobs elsewhere. So people have high salaries, and there must be enough people that are getting paid enough disposable income to sustain 2-3k a month rent.

Meanwhile, the average software salary across us is 105k

Full disclosure, I am a homeowner and while I agree with the overall message I can also, fully say, it depends. We bought our apartment in a building where 75% of the residents are renters. We live in an Alpha- city [0] in a one of the few affordable buildings you can still purchase in. Everything else is luxury flats starting in the $500s with $1k+ building charges. For the last year renters have paid less than us after PITI + building charges. This changed in the summer and now the renters are paying more than we are in housing.

The city we just moved from I would say is better to rent. Even our city I would say is better to rent. But renting does not prevent buying. While renting, put in the footwork and find something to buy. if you are buying to rent be able to purchase 4 or more units.

I'm worried less about the missed investments than the rising cost of living in major cities.

[0] https://en.wikipedia.org/wiki/Global_city

That's a very broad statement. Owning vs renting is dependent entirely on the local market. It hasn't been a good time to own in Detroit for a long time. It hasn't been a good time to rent in San Francisco in a long time.
The article included a list of cities where it was favorable to rent and a few areas where ownership was favorable including a couple cities.
It's a good time to own in SF. Spoken like a true 0.1%er.
It is a good time to own, assuming you bought like 5 years ago.

2013, average home was around $850k, with monthly PI payments around $3450 (30 years, 20% down, 4.5% rate). [0] Meanwhile, average rent around that time was around $4000 for a two-bedroom. [1] Now, average rent is around $4500 while a house is closer to $1300k or $5270 PI... Certainly does not look like buying now is a good idea at all.

Unless you expect rent to break that $5270 mark. But, considering that gap is larger than the one seen in the past five years, with all the craziness that has involved... Seems like a pretty risky bet to me.

[0] https://sf.curbed.com/2018/4/5/17201888/san-francisco-median...

[1] https://www.rentjungle.com/average-rent-in-san-francisco-ren...

$5270 seems possible. It's 2 techies in a nice two bedroom where a one bedroom is $3-4k. You might get 4 people in there. I've noticed that 1 bedrooms typically price at over half of the equivalent two bedroom rent.
But why would you pay $5270 for the priveledge of owning the house, rather than renting it for $4500? Also keeping in mind, that number is only PI (principal + interest). You still have all the nice incidentals of ownership like insurance, property taxes, and maintenance that are included in that $4500 rental.
Well, you could possibly rent out part of the house. Same as splitting an apartment with a roommate. You would want a situation where your total cost is less than $4500. You have the option of selling later at a higher price (it is a risk though).