Buying is not always cheaper than renting. You’re on the hook for closing costs, ongoing maintenance, property taxes, insurance, HOA dues, PMI, etc. Then if you’re only living somewhere for a few years you have to pay real estate agent fees to sell. Depending on length of ownership it can very easily be cheaper to rent. Plus you can’t just up and leave like you can at the end of a lease. Renting is far more flexible and that’s attractive for some people.
There’s also something to be said for paying more to live in a house rather than an apartment for the reasons you listed, but the same math above applies to renting vs. buying a single family home, or some other standalone housing.
I’m sure it is, but when you throw in property taxes, insurance, HOA dues, PMI, and the big one: maintenance costs (which will vary dramatically on a case-by-case basis), comparing mortgages to rent becomes an apples-to-oranges comparison. For me personally, I spent $50k in the first six months of owning my home on maintenance & repairs alone. That could have paid for 2+ years of rent. Not to mention the ~$30k or so you’ll pay to sell it if you’re only going to be there for a few years.
Keep in mind too that the mortgage interest deduction is now capped at the first $750k. For people in HCOL areas, that’s starting to become a fairly low limit.
But yeah, I’m with you on the sense of stability is worth something too and that’s hard to put a dollar figure on. Most people want that stability, but there’s also people that want flexibility or may move around a lot such that buying a home every other year doesn’t make sense. My overall point is that it’s not always cheaper to buy and that renters can and do come out ahead, especially when they’re also investing excess funds appropriately.
I don’t disagree at all. Renting can be more practical for many people for many reasons. The reverse is true for many others that want to buy a house, like me. It’s just the original comment “Don’t buy a house” isn’t necessarily a life lesson, more like ymmv.
For sure, I’m not trying to say that buying a house is a bad idea by any means, just that for some people you can rent and still come out ahead of a homeowner. It seems like people always compare a mortgage payment to their rent and think “wow, owning is so cheap compared to my rent!” and then forget about all the other costs associated with owning that can easily result in monthly costs double that mortgage rate. For example, I pay much more for my house now than I did when I was renting. Yes, it’s building equity but if I took the difference in costs and invested it in index funds over the long term could easily be equal to or exceed money earned from property appreciation. Plus, index funds are far more liquid than real estate is and I never have the mow the lawn of my portfolio. But on the other hand the stability and sense of ownership in a home is worth something as well which is harder to put a dollar figure on. If that’s worth something (as it is to me) then buying is likely worth the premium.
Buying is not always cheaper than renting. You’re on the hook for closing costs, ongoing maintenance, property taxes, insurance, HOA dues, PMI, etc. Then if you’re only living somewhere for a few years you have to pay real estate agent fees to sell. Depending on length of ownership it can very easily be cheaper to rent. Plus you can’t just up and leave like you can at the end of a lease. Renting is far more flexible and that’s attractive for some people.
There’s also something to be said for paying more to live in a house rather than an apartment for the reasons you listed, but the same math above applies to renting vs. buying a single family home, or some other standalone housing.
My mortgage is cheaper than any rent I could get in my city and interest paid on said mortgage is tax deductable.
Renting is fine and dandy, but most people want someplace stable after their 30s
I’m sure it is, but when you throw in property taxes, insurance, HOA dues, PMI, and the big one: maintenance costs (which will vary dramatically on a case-by-case basis), comparing mortgages to rent becomes an apples-to-oranges comparison. For me personally, I spent $50k in the first six months of owning my home on maintenance & repairs alone. That could have paid for 2+ years of rent. Not to mention the ~$30k or so you’ll pay to sell it if you’re only going to be there for a few years.
Keep in mind too that the mortgage interest deduction is now capped at the first $750k. For people in HCOL areas, that’s starting to become a fairly low limit.
But yeah, I’m with you on the sense of stability is worth something too and that’s hard to put a dollar figure on. Most people want that stability, but there’s also people that want flexibility or may move around a lot such that buying a home every other year doesn’t make sense. My overall point is that it’s not always cheaper to buy and that renters can and do come out ahead, especially when they’re also investing excess funds appropriately.
I don’t disagree at all. Renting can be more practical for many people for many reasons. The reverse is true for many others that want to buy a house, like me. It’s just the original comment “Don’t buy a house” isn’t necessarily a life lesson, more like ymmv.
For sure, I’m not trying to say that buying a house is a bad idea by any means, just that for some people you can rent and still come out ahead of a homeowner. It seems like people always compare a mortgage payment to their rent and think “wow, owning is so cheap compared to my rent!” and then forget about all the other costs associated with owning that can easily result in monthly costs double that mortgage rate. For example, I pay much more for my house now than I did when I was renting. Yes, it’s building equity but if I took the difference in costs and invested it in index funds over the long term could easily be equal to or exceed money earned from property appreciation. Plus, index funds are far more liquid than real estate is and I never have the mow the lawn of my portfolio. But on the other hand the stability and sense of ownership in a home is worth something as well which is harder to put a dollar figure on. If that’s worth something (as it is to me) then buying is likely worth the premium.