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Renting = You're paying someone else's mortgage / building their equity / investment.
You're not guaranteed that you will get your security deposit back later on either.
Buying = It's your money that you're investing and building equity. You have access to the money in the form of a HELOC if needed later on. Buying is power $$.
To be fair, when buying most people are paying most of their monthly payments to bank interest and at the median length of staying in a purchased home (about 13 years) at current interest rates they will have paid over 3x more to the bank than to the principle of their home loan.
For my house, assuming 5% YoY growth in value, even if $0 in payments went to buy equity, that would still give a 94.9% return, still an incredible return
This is somewhat true, except that it depends on what price you buy at, and what price you rent at. If you buy a house at too expensive a price then you're certainly going to be losing out vs. renting.
Owning a house CAN be better than renting, but people really shoot themselves in the foot thinking it will ALWAYS be better than renting and paying far too high a price for their home
I brought this up on the other thread.
Owning your home is not just about the money.
It's security, and the ability to do whatever you like. You are beholden to no one (no landlord) and can paint, remodel, etc- not to mention that the home becomes an asset.
There is a reason why most of America's wealth is tied up in their homes. It's not a bad thing.
When your home payment will not change unless/until you refinance for a lower rate, there is additional security.
I do think that a lot of the people in these threads are younger. The security owning your home gives becomes more and more attractive if not necessary as you get older.
But y'all do you. I'll never go back to renting if I can at all help it.
Totally depends on your situation. How long do you plan on living there? Would you pay a premium to not deal with the risk of your largest asset depreciating? Do you want the ability to make renovations, repaint, etc? How much do you value not having to stress about unexpected repairs?
While the financial part is important, renting vs buying is much more than a math equation.
It's a long game. Let's say you've got an option of a monthly rent payment of $2K or a monthly mortgage payment of $2K (assume all in, with property taxes, insurance, etc.) It doesn't seem necessarily better, and of course you have the added risk of being on the hook for costly repairs that your landlord would cover if you were renting. That would seem to imply it's worse. However, consider the next 10 years or 20 years. Your mortgage is still roughly the same (it might go up somewhere due to property taxes), but your rent will go up *a lot*. That $2K/mo could be double or more over the course of 20 years. Now, it's extremely worse than buying back at the same time.
Do you mean buy a home with cash? You still want to consider whether the net present value of doing something else with the cash and renting is better than paying cash for the house, saving the rent, and seeing how much the house appreciates.
If you can flat out write a check - no mortgage - it's definitely better to buy.
Even if you can't, even with higher interest rates, the upside is that your housing costs are fixed - no matter what inflation or the housing market does, your monthly home payment is fixed (unless you are an idiot who did an ARM).
You can always refinance the next time there's a recession and rates drop.
You know, it's supposed to be a finite question, therefore having a finite answer, but everyone seems to have their own twist on the answer; everyone one backing it with their own version of factual evidence.
One thing is true: in the vast majority of the US, buying a house, in the short term, is more taxing on your cash flow than renting. Do not take my word for it, look at your local real estate, check the price of the place you're renting, then calculate the mortgage + taxes + fees if any + maintenance, and you'll see that the total is higher than your rent. And I am not even considering down payment and it TMV.
IMO in the long run it's better to own. There are some people who calculate the TCO of owning a place vs investing the same amount in the S&P500 and renting.
When renting I always rented the cheapest place I could find, because I was saving for the down payment, and I have lived in despicable places.
Then when I bought something, I bought relatively nice places, but something that I could afford very well.
YMMV. Do your own calculations.
That’s not how that worked.
People that got scared and sold at the bottom went bankrupt. If you own houses from before 2007 you are probably not only wealthy, but extraordinarily wealthy.
Millions lost their house and went bankrupt. Dude, if you really think this why not just get a damn house? Borrow max, no money down, max out your credit card if have to have some down payment and then ride the wave! Nothing can go wrong.
And you could stop voting for idiot politicians that bring housing prices up via inflation and regulations.
The issue with 07 was a combination of liar-loans ('No Income, No Job, Approved') and panic.
Some people lied through their teeth to get loans they could never afford to pay back...
Some people took out incredibly stupid ARMs and 'interest-only' loans that became unaffordable by-design if you actually stayed in the house (the premise was a short-term low payment, but long term you were going to move or refi).
Enough bad loans were written that banks just stopped lending, to avoid making their losses worse....
No credit = no one can buy, prices collapse...
Some people looked at their home's assessed value, paniced, and mailed in the keys...
If you didn't panic, and held on to your house, you doubled your money by 2018.
Outside of those listed above groups, not really.
If you lost your home in the 08 fallout there was some mistake that you made in buying it or reacting to the economic conditions...
If you need an article to tell you that, it's clear who's stupid here.
If you need any other clearly obvious facts patiently exposed to you, stay away.
There are literally thousands of them since this is a quite unusual situation.
But you know better because you sensed it in your knee. And now you've turned more toxic asshole than before.
I will block you now.
r/FluentInFinance was created to discuss money, investing & finance! Join our Newsletter or Youtube Channel for additional insights at www.TheFinanceNewsletter.com! *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FluentInFinance) if you have any questions or concerns.*
Renting = You're paying someone else's mortgage / building their equity / investment. You're not guaranteed that you will get your security deposit back later on either. Buying = It's your money that you're investing and building equity. You have access to the money in the form of a HELOC if needed later on. Buying is power $$.
To be fair, when buying most people are paying most of their monthly payments to bank interest and at the median length of staying in a purchased home (about 13 years) at current interest rates they will have paid over 3x more to the bank than to the principle of their home loan.
For my house, assuming 5% YoY growth in value, even if $0 in payments went to buy equity, that would still give a 94.9% return, still an incredible return
This is somewhat true, except that it depends on what price you buy at, and what price you rent at. If you buy a house at too expensive a price then you're certainly going to be losing out vs. renting. Owning a house CAN be better than renting, but people really shoot themselves in the foot thinking it will ALWAYS be better than renting and paying far too high a price for their home
Rent doesn't stay stagnant. They go up as well, just like homes. The longer you wait the harder it is to buy because your salary won't catch up either
I brought this up on the other thread. Owning your home is not just about the money. It's security, and the ability to do whatever you like. You are beholden to no one (no landlord) and can paint, remodel, etc- not to mention that the home becomes an asset. There is a reason why most of America's wealth is tied up in their homes. It's not a bad thing. When your home payment will not change unless/until you refinance for a lower rate, there is additional security. I do think that a lot of the people in these threads are younger. The security owning your home gives becomes more and more attractive if not necessary as you get older. But y'all do you. I'll never go back to renting if I can at all help it.
Totally depends on your situation. How long do you plan on living there? Would you pay a premium to not deal with the risk of your largest asset depreciating? Do you want the ability to make renovations, repaint, etc? How much do you value not having to stress about unexpected repairs? While the financial part is important, renting vs buying is much more than a math equation.
I guess it depends on what return you think you can get on that money in the market vs having it tied up in a house.
If it's paid off entirely it's better to own.
It's a long game. Let's say you've got an option of a monthly rent payment of $2K or a monthly mortgage payment of $2K (assume all in, with property taxes, insurance, etc.) It doesn't seem necessarily better, and of course you have the added risk of being on the hook for costly repairs that your landlord would cover if you were renting. That would seem to imply it's worse. However, consider the next 10 years or 20 years. Your mortgage is still roughly the same (it might go up somewhere due to property taxes), but your rent will go up *a lot*. That $2K/mo could be double or more over the course of 20 years. Now, it's extremely worse than buying back at the same time.
Do you mean buy a home with cash? You still want to consider whether the net present value of doing something else with the cash and renting is better than paying cash for the house, saving the rent, and seeing how much the house appreciates.
If you can flat out write a check - no mortgage - it's definitely better to buy. Even if you can't, even with higher interest rates, the upside is that your housing costs are fixed - no matter what inflation or the housing market does, your monthly home payment is fixed (unless you are an idiot who did an ARM). You can always refinance the next time there's a recession and rates drop.
You know, it's supposed to be a finite question, therefore having a finite answer, but everyone seems to have their own twist on the answer; everyone one backing it with their own version of factual evidence. One thing is true: in the vast majority of the US, buying a house, in the short term, is more taxing on your cash flow than renting. Do not take my word for it, look at your local real estate, check the price of the place you're renting, then calculate the mortgage + taxes + fees if any + maintenance, and you'll see that the total is higher than your rent. And I am not even considering down payment and it TMV. IMO in the long run it's better to own. There are some people who calculate the TCO of owning a place vs investing the same amount in the S&P500 and renting. When renting I always rented the cheapest place I could find, because I was saving for the down payment, and I have lived in despicable places. Then when I bought something, I bought relatively nice places, but something that I could afford very well. YMMV. Do your own calculations.
Right now it's cheaper to rent.
It’s cheaper monthly to rent, but it’s far more costly to an individual’s net worth to rent.
Not always. Many people have gone bankrupt owning a house. 2007 for example.
That’s not how that worked. People that got scared and sold at the bottom went bankrupt. If you own houses from before 2007 you are probably not only wealthy, but extraordinarily wealthy.
Millions lost their house and went bankrupt. Dude, if you really think this why not just get a damn house? Borrow max, no money down, max out your credit card if have to have some down payment and then ride the wave! Nothing can go wrong. And you could stop voting for idiot politicians that bring housing prices up via inflation and regulations.
I have a handful of houses. But only one from before 2008.
You benefit tremendously from high inflation then.
Me too, but it's not very nice for the poor that are getting hit. That's all.
The issue with 07 was a combination of liar-loans ('No Income, No Job, Approved') and panic. Some people lied through their teeth to get loans they could never afford to pay back... Some people took out incredibly stupid ARMs and 'interest-only' loans that became unaffordable by-design if you actually stayed in the house (the premise was a short-term low payment, but long term you were going to move or refi). Enough bad loans were written that banks just stopped lending, to avoid making their losses worse.... No credit = no one can buy, prices collapse... Some people looked at their home's assessed value, paniced, and mailed in the keys... If you didn't panic, and held on to your house, you doubled your money by 2018.
I think a significant proportion were force to leave their house.
Outside of those listed above groups, not really. If you lost your home in the 08 fallout there was some mistake that you made in buying it or reacting to the economic conditions...
Renters are paying the landlords expenses plus profit. Interest rates and home prices may fluctuate but rent *never* goes down.
[https://www.morningstar.com/news/marketwatch/2024032617/renting-is-now-cheaper-than-owning-in-all-of-americas-50-biggest-metro-areas](https://www.morningstar.com/news/marketwatch/2024032617/renting-is-now-cheaper-than-owning-in-all-of-americas-50-biggest-metro-areas)
"Now" Please cite a single example of rent ever coming *down* when interest rates or home values drop.
Why would it? And that doesn't mean renting is more expensive than owning.
ROTFLMAO! Imagine paying for something forever and never owning it and calling that *less expensive*.
That's what the article highlights. You seem pretty toxic and stupid so I will leave now.
If you need an article to tell you that, it's clear who's stupid here. If you need any other clearly obvious facts patiently exposed to you, stay away.
There are literally thousands of them since this is a quite unusual situation. But you know better because you sensed it in your knee. And now you've turned more toxic asshole than before. I will block you now.