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Ok, but a $30k house that rents for so much per month is impossible to find for those living in HCOL areas, and moving to an area like yours might equate to a lot of lost career potential, especially for Millennials with advanced degrees in STEM fields such as myself. I don’t get why it is so hard for some people to understand that buying a house is not always a good idea for everyone.
Well not to mention buying something for 30k that’s worth 60k isn’t normal.
My stance hasn’t shifted at all. I’ve said I think the financial benefits are oversold and they are. That doesn’t mean I’m against buying or that I believe there are no benefits to buying. I believe the benefits are oversold and you won’t convince me otherwise.
1. Interest and property taxes being tax deductible are over selling and it’s done everyday on this board, parents advising children, real estate agents to buyers, by your coworkers etc.
2. People typically buy more than they rent
3. The transaction cost of buying/selling rarely come up in conversation when discussing buying or not
4. Selling within 5 years typcially puts you in bad shape or usually at a large disadvantage
If you understand all those and decide to buy more power to you, I’m not against it but trying to convince me the above doesn’t happen isn’t going to work.
1) is irrelevant. Not everybody gets a tax break, but nobody gets a tax advantage from renting either.
2) another discussion completely. The only way to play the rent vs buy comparison is to keep all other factors equal.
3 and 4) it is expensive selling your house within 5 years as closing cost eats into your equity, but renting leaves you with no equity to eat into.
Ok, but a $30k house that rents for so much per month is impossible to find for those living in HCOL areas, and moving to an area like yours might equate to a lot of lost career potential, especially for Millennials with advanced degrees in STEM fields such as myself. I don’t get why it is so hard for some people to understand that buying a house is not always a good idea for everyone.
High cost of living areas typically enjoy high home appreciation. This is even more reason to buy instead of rent. High incomes plus home ownership qualifies you for the tax breaks as well. If you move to a HCOL to advance your career, so is everybody else, meaning the renter is still at a disadvantage. Why would home owner’s in high demand, high paying locations with skyrocketing home values rent their home to some renters cheaper than they’re paying for them?
1) is irrelevant. Not everybody gets a tax break, but nobody gets a tax advantage from renting either.
It may be irrelevant to you but it’s entirely relevant to my point of the financial benefits being oversold in part exactly for the reason you’ve stated that not everyone gets the tax break.. Renters getting no tax breaks is irrelevant to the discussion of financial benefits of buying being oversold.
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2) another discussion completely. The only way to play the rent vs buy comparison is to keep all other factors equal.
Wrong it’s not another discussion it’s actually the correct discussion. Playing to comparison game on equal properties is truly a false comparison because people in general don’t spend that way. They rent less than they would buy and that’s the appropriate comparison because that’s what people actually do
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3 and 4) it is expensive selling your house within 5 years as closing cost eats into your equity, but renting leaves you with no equity to eat into.
Am I ever going to face potential losses exceeding what’s outlined in my lease/rental agreement when I lease/rent? How about when I buy? Equity isn’t a guaranteed
It may be irrelevant to you but it’s entirely relevant to my point of the financial benefits being oversold in part exactly for the reason you’ve stated that not everyone gets the tax break.. Renters getting no tax breaks is irrelevant to the discussion of financial benefits of buying being oversold.
Wrong it’s not another discussion it’s actually the correct discussion. Playing to comparison game on equal properties is truly a false comparison because people in general don’t spend that way. They rent less than they would buy and that’s the appropriate comparison because that’s what people actually do
Am I ever going to face potential losses exceeding what’s outlined in my lease/rental agreement when I lease/rent? How about when I buy? Equity isn’t a guaranteed
Its not oversold. Perhaps the tax break is oversold, but what is undersold is the hedge against inflation. This very thread is proof that not everybody is getting a grasp on the whole inflation thing.
Also apparent is not everybody is understanding that you aren't saving any cost above what the owner is paying. Unless you live in a declining market where homeowners all ended up upside down on their house and are renting it for a loss (which these days is the exceptions rather than the norm), rent will be higher than a mortgage.
I've lived both scenarios. I'm living in a high cost of living area with rapidly rising home values, and tight inventory and renters are getting hosed.
I used to own a low income apartment building in a low cost of living area with stagnated home values, and the low rent I was charging was far more than my mortgage because I got the apartment for pretty much nothing.
The only time I can think of that it was better to rent vs buy was just before the housing meltdown and we now know even that was short lived.
Its not oversold. Perhaps the tax break is oversold, but what is undersold is the hedge against inflation. This very thread is proof that not everybody is getting a grasp on the whole inflation thing.
The financial benefits are oversold and that includes property taxes and mortgage interest being a federal tax deduction. I can agree with you on the inflation point but that doesn’t change my overall stance
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Also apparent is not everybody is understanding that you aren't saving any cost above what the owner is paying. Unless you live in a declining market where homeowners all ended up upside down on their house and are renting it for a loss (which these days is the exceptions rather than the norm), rent will be higher than a mortgage.
This is just false. An owner’s cost doesn’t dictate the rental market. If you over paid for a house or bought your house 60 years ago that’s irrelevant to the rental market
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I've lived both scenarios. I'm living in a high cost of living area with rapidly rising home values, and tight inventory and renters are getting hosed.
I used to own a low income apartment building in a low cost of living area with stagnated home values, and the low rent I was charging was far more than my mortgage because I got the apartment for pretty much nothing.
The only time I can think of that it was better to rent vs buy was just before the housing meltdown and we now know even that was short lived.
You can pay a higher rent even on equal properties and come out ahead vs buying. It depends on the length of time you are there and how the houses market does during that time
The financial benefits are oversold and that includes property taxes and mortgage interest being a federal tax deduction. I can agree with you on the inflation point but that doesn’t change my overall stance
This is just false. An owner’s cost doesn’t dictate the rental market. If you over paid for a house or bought your house 60 years ago that’s irrelevant to the rental market
You can pay a higher rent even on equal properties and come out ahead vs buying. It depends on the length of time you are there and how the houses market does during that time
We've pretty much beaten the tax vs inflation thing to death.
Owners cost does affect the rental market. If I'm paying $1000 a month for a property, I'm not renting it for $1000 or less unless I'm in trouble as there is no incentive to rent it. However if I paid off my house 30 years ago my mortgage is $0 and I will rent it for market rent which is in todays dollars and collect the entire rent as profit. I'm not passing that savings onto the renter.
High cost of living areas typically enjoy high home appreciation. This is even more reason to buy instead of rent. High incomes plus home ownership qualifies you for the tax breaks as well. If you move to a HCOL to advance your career, so is everybody else, meaning the renter is still at a disadvantage. Why would home owner’s in high demand, high paying locations with skyrocketing home values rent their home to some renters cheaper than they’re paying for them?
Rent can only be raised to what the market will bear, regardless of the landlord’s outgoing cash flows. If the landlord tries to raise it too much, no one will move in, resulting in no rent. Landlords will happily take some money over no money. And what you are saying about high income appreciation assumes that incomes will continue to go up faster than inflation. If you had used this reasoning in Detroit a few decades ago, you would be in for a rude awakening. If I take a highly paid job now it doesn’t mean I expect the same job to pay twice as much in 15 years in the same city.
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