There are some good rent vs own calculators out there. One thing that each person has to weigh is how much they value their time. Owning a home requires a certain amount of time that renters don’t commit. Not counting the considerable time in seeking out and buying a home or the preparation and process of selling a home, there’s an enormous amount time spent on maintenance, repair, renovation, etc. I’ve owned and rented and, for me, renting is a far superior lifestyle.
you can pay somebody else to do all that. that's no different from renting. what's different is that when you pay off a mortgage, you're buying yourself a house. when you pay off your landlord's mortgage, you're buying him a house.
This is oversimplifying and lazy thinking. The rent vs buy decision matters on _a lot_ more factors than what your framing includes:
- prevailing interest rates
- predicted future interest rates
- mortgage cost
- predicted house price appreciation
- predicted rent increase
- risk tolerance
- opportunity cost on passing on other investment options (e.g. stock market)
- liquidity
- how much you value your time
- how much you value the option of being able to up-and-go whenever you want
- property taxes
- property sales taxes
- and others
Seeing someone declare, with confidence, that one option is better than the other is a clear indication they've done close to no thinking about this decision.
Landlords don't typically operate under a loss. Rent will include all those costs plus some extra profit.
If there's a scenario where long-term renting is cheaper than buying, then you're lucky because you've got a landlord that did not adequately calculate what rent should be.
Honestly even if you’re trying to operate your rental property as a ‘non-profit’ you’re still going to wind up in trouble if you don’t ’over-charge’ to build up a repair / emergency fund for the property. Such is the cost of owning a house - unexpected expenses may cost tends of thousand dollars, and may not be possible to put off, even legally, nevermind ethically.
The cost of ‘what if the roof caved in tomorrow’ or ‘what if the furnace blew up’ should be built into the rent.
Landlords charge whatever the market will bear, which is largely unrelated to the mortgage costs - it's driven more by supply and demand, salary levels in the area, inflation etc.
Also, you're ignoring all the other factors I mentioned.
Housing is one of those goods that's just not really optional. People NEED a roof over their heads, and they will sacrifice a lot of quality of life in other areas to ensure they still have a place to live.
The market will bear a lot more than it should because the market doesn't have any other choice. As far as I'm concerned, people who buy real estate for the sole purpose of renting it out are financial vampires, sucking every last cent from their tenants, finding every justification for raising rents. You gotta be a cartoonish villain to raise rents just because your tenant got a new higher-paying job.
The absolute worst part of it all is how so many landlords have this savior complex, thinking they're providing a service that's good for the community. No no no. Landlords provide housing the same way scalpers provide concert tickets.
> which is largely unrelated to the mortgage costs
It's not unrelated - if the costs go up, they won't operate at a loss. They might sell to somebody who can buy it outright - but then many won't and just raise the rent. And then others can claim "muh market rates" to match them.
There's a shortage of housing in most places with jobs, so they have a large queue of people willing to pay through the nose. What are they going to do - live under a bridge? They will cut out most other expenses before they give up on housing.
Only two of those points weren't bullshit: the ability to up and move in the next year or the concern that you may be about to lose your job in the next few months. Anything else makes buying cheaper in the long run.
I'm sorry to say, the first few are all bullshit. Landlords will absolutely pass on interest rates to you, whether or not they have a mortgage. "muh market rates".
the only things that make sense is if you're planning to move in the next ten years and "risk tolerance", which is an issue if you expect to lose your job in the next few months.
or you can budget such that you could still pay off your mortgage on minimum wage - it won't be a big expensive house, but it'll be yours.
Hiring contractors to work on your house is also high cost, in money and stress.
You commonly end up paying someone a lot of money who then turns around and gets underpaid subcontractors, of dubious employment eligibility status, to do the actual work.
If you’re going through the trouble of owning a home, it makes sense to do as much work yourself as you can.
Your rent will go up 5% a year, every year, compounding to infinity.
That pays for a lot of contractor time.
Even if you have to take a line of credit against your house above your current loan amount, your equity is based on it's current value, and that's still a static price in the end.
That rent increases every single year, percentage based so it compounds, is asinine and literally only serves to make some holding company's line go up infinitely.
As long as the US has 30 year fixed rate loans, it will never be better to rent.
My rent did not go up this year, actually. And it did not go up one year during COVID either.
Plus, as a renter, I took the option of renting in a cheaper (unattractive) building with no amenities in an otherwise expensive neighborhood in a very expensive city, to be close to work.
If I wanted to buy a condo in the same neighborhood as I live in now, roughly the same layout, I’m looking at a monthly mortgage payment plus condo fees at least 75% more than my _total_ cost to rent where I am now, including utilities.
Is owning a home the financially responsible thing to do, generally? Yes. But owning a home is more money and more work than most people wondering about the decision realize, even if in the end you come out on top when you look at your bottom line.
> My rent did not go up this year, actually. And it did not go up one year during COVID either.
And yet properties around you will have gone up by some average amount. When your landlord does raise your rent (or when you move out, as the pro-landlords keep telling us people love to do), the rent you will pay at the new place will have kept pace with the average raise.
I mean it just compounds until you die. At some point you decide that you're comfortable with whatever financial number you're going to end life with and instead of taking steps to further maximize it you just enjoy your life, and for some people that means renting an apartment on the beach.
That's easy if you know when you're planning to die. If you're stuck renting beyond that plan, good luck. The stress and ensuing homelessness might bring you back on schedule.
