To buy or rent a home, which is better? Great article (how much, house)

[Chuck5000]

Best article I've seen on this subject. It gets talked about here a lot so I thought it was worth posting

It's not a simple answer. I would add to the article that maintenance costs can be very, very steep, higher than the example in the article. I know somebody who needs to spend 40k on a new roof for 3 structures; it's a fairly big old house. 15k would be a dream for him. Moreover, natural disasters can also cause super expensive repairs, you can hit six figures easily.

http://www.nytimes.com/2016/06/05/up...rent.html?_r=0

[bmw335xi]

Or you can buy a separate policy for earthquake coverage...

If you can afford a property, it's almost always the better choice if you plan to live in that area long-term. Home prices will go up over the long-run, with each payment you are building equity and eventually you will own it free and clear or sell it for a much higher price than you paid. If all you do is rent, 30 years later, you'll still have no equity.

[mysticaltyger]

Originally Posted by Chuck5000

Best article I've seen on this subject. It gets talked about here a lot so I thought it was worth posting

It's not a simple answer. I would add to the article that maintenance costs can be very, very steep, higher than the example in the article. I know somebody who needs to spend 40k on a new roof for 3 structures; it's a fairly big old house. 15k would be a dream for him. Moreover, natural disasters can also cause super expensive repairs, you can hit six figures easily.

http://www.nytimes.com/2016/06/05/up...rent.html?_r=0

It's an intelligent article. A few things I would add.

They talk about the tax benefits of a house vs. a portfolio but they only compare those benefits to a portfolio in a regular taxable account, not one in a retirement account.

Also, the one thing I think that really matters is your housing costs as a total percentage of your gross income. If they get much about 25% of gross, your ability to save money is going to be compromised whether renting or owning and you're at greater risk of losing your house if you're stretching to buy one--as we saw in 2008.

[TheGreatCurve]

Originally Posted by bmw335xi

Or you can buy a separate policy for earthquake coverage...

If you can afford a property, it's almost always the better choice if you plan to live in that area long-term. Home prices will go up over the long-run, with each payment you are building equity and eventually you will own it free and clear or sell it for a much higher price than you paid. If all you do is rent, 30 years later, you'll still have no equity.

But what if you bought a house in Detroit 30 years ago? I'd bet you can't sell it for more than you paid for it (inflation adjusted).

[Chuck5000]

Originally Posted by bmw335xi

Or you can buy a separate policy for earthquake coverage...

If you can afford a property, it's almost always the better choice if you plan to live in that area long-term. Home prices will go up over the long-run, with each payment you are building equity and eventually you will own it free and clear or sell it for a much higher price than you paid. If all you do is rent, 30 years later, you'll still have no equity.

It's almost always better. Except when it isn't.

[livinfairfax]

Anybody here live on a boat? I feel like this is a reasonable alternative in terms of price...

[bodyforlife99]

Originally Posted by TheGreatCurve

But what if you bought a house in Detroit 30 years ago? I'd bet you can't sell it for more than you paid for it (inflation adjusted).

Originally Posted by Chuck5000

It's almost always better. Except when it isn't.

If only the moderator could just put a sticky up so we wouldn't have to have half this forum filled up with people whining about housing prices on a daily basis. Surely there must be more going on in the Bay Area.

[bmw335xi]

Originally Posted by TheGreatCurve

But what if you bought a house in Detroit 30 years ago? I'd bet you can't sell it for more than you paid for it (inflation adjusted).

I still bet you'd sell it for more than you paid and you wouldn't compare it to inflation, you'd compare it to your total rent expense.

How much rent would you have paid over 30 years?

[neutrino78x]

Originally Posted by bmw335xi

If you can afford a property, it's almost always the better choice if you plan to live in that area long-term.

Yes, but you still are not "priced out" if you cannot afford to buy. If people who make $10.15/hr can afford to live here, so can people who make $100k.

Home prices will go up over the long-run, with each payment you are building equity and eventually you will own it free and clear

That doesn't mean you don't make any more payments related to housing, though. You still pay property taxes, you still pay for repairs, you still have to deal with maintenance etc.

If all you do is rent, 30 years later, you'll still have no equity.

Who cares? If you can afford the rent, you're fine.

[neutrino78x]

Originally Posted by bodyforlife99

If only the moderator could just put a sticky up so we wouldn't have to have half this forum filled up with people whining about housing prices on a daily basis. Surely there must be more going on in the Bay Area.

No, man. Cost of living is one of the main topics in this type of forum, and the CoL is high here. Therefore it is the main thing we talk about.