
Maybe Americans aren't dumb enough to keep buying houses? - spottiness
http://blogs.law.harvard.edu/philg/2011/05/13/soft-housing-prices-maybe-americans-just-arent-dumb-enough-to-keep-buying-houses/
======
bmccormack
Five years ago, I thought about buying a home, and everyone around me was
saying "You HAVE to buy a home. Don't THROW AWAY YOUR MONEY by renting. Houses
NEVER lose value."

While it's obvious that this flawed logic existed five years ago before the
bubble burst, I'm surprised at how much of it still remains. I'm surprised
that consumers are still trying to play numbers games to justify purchasing
homes, but perhaps as the OP suggests, the supply of buyers is less than
before. If you want to buy a home for lifestyle reasons, great, but make sure
that's clear; there are so many people who are stuck in their homes without a
job because they thought they were clever at math.

When my wife and I were figuring out what to do with our lives, we decided to
put my finding a good job above owning a home. Because of this, I was able to
accept a job in NYC and move from the suburbs of Atlanta without worrying
about selling a home in a horrible real estate market.

We'll consider buying a home after I feel more rooted in the tech industry,
but for now, we appreciate the flexibility that renting affords.

~~~
pstack
A very valid point. As others have stated, buying a home should be more about
quality of life and living than making a buck and that has to be on your time
schedule; not someone else's. The worst thing you can ever do is buy a home
when you're not ready for a home -- and you know better than anyone else if
you're ready.

When you start waking up in the morning and thinking "god damn, I wish I had a
home, so I could . . ." then it might be time to start giving it
consideration. For me, I had dealt with a home invasion. I'd lived in my
apartment for five years and someone walked in while I was asleep and stole
everything (the layout of the apartment was such that I wasn't disturbed by
the intruder - if you were in the back bedroom, you couldn't even hear someone
banging on the front door). I lived alone. Nobody else had keys . . . except
the leasing and maintenance offices. Took $30k worth of stuff.

So, I started waking up in the mornings feeling a bit unsafe, wishing I had a
sweet surveillance/alarm system, and also thinking about how great it would be
to have room for my entertainment system (and get to blast it as loud as I
wanted). Also, I kind of still want to get a dog and that wouldn't have worked
in the apartment. Enough things started to bug me that I just sat up one day
and said "let's go look at houses".

Until you are home shopping for those reasons (or similar reasons of your
own), then you may be doing it for all the wrong reasons. Maybe because
friends are all buying homes. Maybe because you feel like you're still a "kid"
as long as you keep renting. Who knows?

In the mean time, definitely don't buy into the idea that you have to go for
it because people around you are talking about it and you feel like you're
missing out. You might be the sanest of them all. I didn't buy a home until I
was starting into my 30s. I could have done it a decade before and went so far
as to check out homes and even get approved for loans. It just never felt
quite right, until last year. And I have been happy that I finally did so,
when I did.

Well-being accounts for a lot, too. Whatever you may be losing "on paper" with
renting, you may be compensated for in peace of mind, right now. You can focus
on work and savings and family rather than finding a trustworthy and
affordable lawn service, worrying if your boiler is going to make it another
year, wondering why in the hell that sink is draining slowly, when it isn't
clogged up, wondering how much it would cost to turn that spare room into a
sex dungeon. . .

------
drp
It's really difficult to make general statements about the wisdom of buying
versus renting across an entire country with extremely diverse local real
estate markets. We made an up-to-date heat map of US rent ratios here:
<http://hotpads.com/search/rent-ratio-heat-maps> that demonstrates how some
markets, even at the state level, are still tilted toward the buyer while
others favor renters.

~~~
caffeine5150
I think that it's not just an issue of region but also of price range. I am a
life long renter and I've seen that rents tend to stay within a certain band -
they only go so low or so high generally. So a small apartment might be still
$1200 to rent vs. a mortgage of $1100 whereas for a high end home, rents might
only get to say $5k or $6k vs. a mortgage of $12k on the same home. I rent a
house for $4500 per month that would cost me a $7500 mortgage if I bought it.

Another issue is the fact that not everyone can buy a house that they're going
to realistically want to live in for 30 years. Your family grows, you change
cities due to job opportunities, etc.

So for the guy who knows he's going to be single and stay put, it may make
sense for him to buy a $200k house instead of paying $1200 in rent for an
apartment. But for many others, buying makes absolutely no sense.

------
tatsuke95
There are a few defensive home owners in this thread who seem to be missing
the point:

The main problem is that the general public sees renting as throwing money
away, and that owning a home is unconditionally "better".

I'll make the assumption that this community has higher-than-average financial
literacy, and hence there are people who have made the right decision with
respect to rent/buy. However, I don't think this is true in general, and often
times the rent/buy choice is much, MUCH closer than people assume.

------
ahi
The rent vs buy index is misleading. I used to live in Ann Arbor where rent is
mediocre, but home prices are ridiculous. On paper the ratio still looks
pretty good because the median rental property is downtown while the median
home for sale is in the suburban neighborhoods. I was on the board of a
downtown housing cooperative and the ROI on properties in the downtown area
was nonexistent. I moved 5 miles to the east to rough around the edges
Ypsilanti and the situation was completely reversed. You can have a house
downtown paid off with 5 years of rent payments. Further out you go into the
surrounding farmland, the lower rent becomes and the higher sale prices get.

~~~
antidaily
Interesting. The perception when I was in school was that the rent was too
damn high. I never really looked at house prices, but I knew someone who got
into a 2 bedroom off Main near Stadium for around $190k (in 2005 or so), which
seemed reasonable considering its location.

related: Ann Arbor/Detroit HN group <http://groups.google.com/group/hn-ann-
arbor-detroit>

------
jdvolz
Can we just all agree that owning a business is the real American dream and
whatever you choose to do (rent or buy) after that has significantly less
affect on your situation than owning your own business?

I would certainly rather own a business that generates whatever my rent or
mortgage would be, than to own a house that costs me that mortgage.

------
jbail
Referencing Zillow is the first indication you have no clue about the real
estate market.

Two examples: The house I live in has a carriage house behind it. It's zoned
as a rental, has a kitchen, bathroom, bedroom and about 800 sq ft of studio
type space with about a 15 ft ceiling. Does this information appear on my
Zillow page? Nope. Zillow has no way to enter that type of information and its
valuation is missing this very crucial bit of info.

Secondly, where I used to live (in the mountains above Boulder), there was a
house for sale next door. It was on one acre and was a modified single wide
trailer. Zillow said it was worth $350,000. They said the property I was
living on next to it (5 acres, a main house twice the size of our neighbor and
a detached cabin) was worth $420,000. Seemed way off to me. Well, the house
next door went for sale and sold for $149,000.

After that, I don't trust Zillow at all. They have a lot of work to do before
someone could take any statistics they provide seriously.

------
angstrom
Perspectives obviously vary by market and circumstance. In mine I'm fine with
renting. I tend to stick around the 1700/mo range in NYC. For that, I don't
have to own a car or the maintenance and depreciation associated with it. I
still pay transit, but it is significantly less than the cost I paid in Ohio
to drive 40-60 miles to work.

My income mirrors my actual worth. I've seen people shortchanged because
companies know that person is chained to a mortgage. I'm not paying
maintenance, insurance, or front loaded interest on a home. (Tax deductible
not that impressive)

After rent is subtracted from my net pay I still have enough to turn around
and invest in a diverse array of investment options. A home is a savings
account with a maintenance fee. Viewing it as anything else IMHO is wishful
thinking. An apartment is that same service fee condensed. Remember, in my
situation both the house and a car have costs I don't have to worry about.

Having freed myself of those problems I have much more spare time, more
investment options, and flexibility. I'm perfectly ok with not having a lawn,
neighbors degrading property values, or surprise expenses. To other people
those negatives are perfectly acceptable, they cite the lack of space, public
transit, and neighbors as negatives. I don't mind any of them.

------
pingswept
I think it's interesting to compare Greenspun's attitude to Mike Rowe's recent
Senate testimony about the lack of skilled workers in the trades in the US.
Greenspun thinks that going to Home Depot and pulling weeds clutters the mind
and prevents us from writing novels and building empires. Mike Rowe wishes
that we weren't a nation of people who just left a check on the counter for
the plumber.

I rented for years, and not being able to fix stuff when it broke (without
losing the investment when we moved) drove me crazy. I feel a strong desire to
maintain my own home, even though I know I'd do better financially hiring
cheap labor to do the work while I go make money faster building an empire.

------
ck2
Wrong, Americans aren't dumb enough to buy houses until prices drop to pre-
bubble prices.

Prices are still kinda crazy and unjustified compared to 2005.

Also, the average person can probably not get credit anymore and the wealthy
desire only so many 2nd homes.

~~~
mikeryan
One data point, we just bought our house (Berkeley CA) in January for the
exact same price the previous owners purchased it on 2003.

My sister closed 5 days ago on a house in a very desirable part of Mountain
View CA. Through their process they had houses with up to 25 bids.

I'm seeing (anecdotally, in the SF Bay Area) a lot of people buying right now.
These are generally savvy folks too, they're putting 20%+ down getting awesome
fixed rates, and staying well within their means . We may still see a slight
dip in prices but my feeling is that we've bottomed out a bit here and on the
way up. We think we'll be able to sell our house in 5-10 years and make a
profit. That may be wishful thinking, but I'm fairly confident in that
position, especially as the tech sector heats up.

The tricky thing about the SF Bay Area however is its very resistent to
outside pressures, it was one of the last places hit and will likely be on of
the first to recover. Its very hard to time a bottom in the housing market
here.

~~~
chopsueyar
_Through their process they had houses with up to 25 bids._

Can you please clarify what these means?

~~~
pstack
I think he just means that there were 25 offers on the house.

~~~
chopsueyar
But he said houses plural.

~~~
thwarted
They were looking to buy a house and some of the houses they were looking at
were in such high demand that up to 25 different people had put offers on
them.

~~~
chopsueyar
Thanks for clarifying.

------
mdasen
One of the things that he's critically missed is that it's unfair to only
compare the price of buying vs. the price of renting _today_. When you
purchase a house, your mortgage is set for the term of the mortgage. Rent is
usually only set for a year at a time and does go up.

The NY Times buy vs. rent calculator in the article that he links, uses 3% as
a baseline rent increase per year. So, after 5 years, a $1500 rent could be
expected to cost $1740. That's not too impressive if you assume it's a place
worth $375k and at his 2% taxes and maintenance price, you'd have $625 in
costs in addition to the mortgage - well over the $240 that the rent had
risen. However, after 15 years, that theoretical rent would have risen to
$2300 and eclipsed the cost of taxes and maintenance. Now, as home values
rise, taxes would rise with it, but then you own something that you can sell
for more money and have made a good investment so it isn't a good argument to
say, "well, one's home could go up in value a lot every year which would mean
more taxes."

It depends on what you're buying a property for. Frankly, the NY Times
calculator ([http://www.nytimes.com/interactive/business/buy-rent-
calcula...](http://www.nytimes.com/interactive/business/buy-rent-
calculator.html)) is going to be a lot better than my crude calculations.
However, if you're buying a property to stay in for a good while, it can be a
better idea to buy. The costs of selling don't matter that much when you've
stayed in a place for a long time. It also depends on your market. I've priced
things out in the Boston area against rent (more urban than Greenspun), and it
really depends on how long you're going to stay in that place. Most of the
cities here offer you a homestead exemption on your property taxes if you live
there and it's usually around 200k - meaning that if you buy a place for $400k
to live in rather than rent, you're actually only paying half the property tax
rate. The towns tend not to have that exemption. So, if you want to be in one
place for a decade, the calculator shows that buying can be a nice option.

Buying a house isn't something to go in for like buying an iPhone and getting
a two-year cell phone contract. It requires a careful look at the costs and
that you're relatively settled in life. It isn't a panacea of money, but it
can be cheaper and can be stabilizing. While it isn't everyone, there are
people who really like an area, have a job that won't see them have to move,
and would stay in that house for 20-30 years.

\--

Plus, if you look at Trulia's rent-vs-buy index
(<http://trulia.movity.com/rentvsbuy/>), you'll see that Greenspun has cherry-
picked the worst cities to buy to do his calculations. Trulia notes that in 36
out of its 50 cities studied, it is "much less expensive to buy than rent".
That includes real cities like Chicago, Wahsington DC, San Diego, Minneapolis,
Philadelphia, and Atlanta. He's used a buy-to-rent ratio of 30:1, but the
average for the 50 cities shown is 14.22. So, we live in the Boston area and
buying here is an expensive proposition that might not make sense. However,
there are many places that have much more favorable ownership conditions. If
you're in a market where the buy-to-rent ratio is below 15:1, the NY Times
calculator will show you how favorable buying is. And, frankly, that's most of
the country. Where Greenspun and I live seems to be the exception, not the
rule and his calculations are based on data that doesn't apply to most people.
It applies to him and it applies to me based on where we live, but it probably
isn't something that one should generalize to the country.

~~~
johngalt
Additionally the 3% rent increase theory may be true in aggregate, but doesn't
take into account the real world practices of landlords. It's exceedingly
common to list a property for a low lease then jack it up after the first
lease term. They understand the friction of moving puts them in a better
bargaining position the second year vs. first move in.

As a whole rates may increase 3% per year, but individually it will look more
like a 7-10% increase the first year followed by 3% increases thereafter,
unless you move.

~~~
ojbyrne
I've rented for most of my life, and never seen that happen. In fact most
leases I've signed switch to month-to-month after the first year, thus
decreasing the friction.

~~~
pstack
When I rented last, my lease switched to month-to-month if you didn't sign up
for a new term, too. It went from (at the last number) $1,200/mo under lease
to something like $1,900/mo without a lease.

------
RealGeek
The real property inflation is in New Delhi and Mumbai, India. Real estate in
Delhi is more expensive than New York. A house built on a 500 yards lot will
set you back $6 million. Moreover, the real estate prices are growing @ 50%
every year and high as 100% in some areas.

Compared to that, I would say houses in America are affordable. I hope India's
real estate bubble gets burst.

------
carsongross
If you play around with the rent vs. buy calculator at the NY Times for a
while, you will come to two conclusions:

1) The rent vs. buy decision is almost entirely based on your expectation of
future house price changes versus rental prices changes. Everything else is
around the edges.

2) Regardless of your opinion on the first question, you should never buy a
house when you think there is a significant chance you will leave in less than
five years.

I think housing will go down another 20-40% from here (causing widespread bank
failures and eventually the dissolution of the Federal Reserve) and rents will
be stable to down due to the deflationary pressures we are facing. Therefore,
I will not buy a house.

YMMV.

------
pstack
I'm glad I bought a house, because paying $1,100/mo (including tax and
insurance) for a 3,000sqft home with a yard where I can mostly do what I want
and have control over my living environment and get a tax break on about half
of that monthly payment sure beats the $1,200/mo I was paying for a 1,000sqft
apartment in which I had been robbed of $30,000 during a home invasion where
the person had a key (maintenance crew, surely, who had access to the keys)
and let themselves in while I was sleeping.

The rent/own ratio may be different in San Francisco (where I've lived) and
New York, but there's a lot of other country out there that exists besides
those two and Seattle. There's Portland, Denver, Chicago. Plenty of places. I
live in a fairly expensive city (on par with Portland, where I lived most of
my life). Still, my house didn't cost a lot more than the mount I'd already
paid in rent during my adult life. I did the math and I have paid about
$170,000 in rent. That includes apartments I've lived in in Portland, San
Francisco and Denver since 1999 and is not adjusted for inflation. It includes
the 400sqft hellhole in San Jose that I paid $1,200/mo for in 2000 and the
400sqft studio and 585 sqft 1bdrm in Portland, and the 1,000sqft 2 bdrm in
Denver. The house I bought last year was only $25,000 more than that. Even if
my home loses a ton of value (and it probably has and will), at least at the
end of paying $200k into it, I'll have something worth _something_ , versus
what I have after about thirteen years of renting for $170,000 . . . which is
_nothing_.

The real problem with the home market is that it's being artificially buoyed,
to keep current home owners happy at the expense of houses dropping even more
in price, so someone can reasonably eventually buy a home even if they're
making an average income. After all, isn't that how the market is supposed to
work? Stuff drops in price, other people get an opportunity to own that stuff
who previously may have been priced out of participation.

Also, the article states that someone who just bought a house and lost 10% due
to decrease in value plus commissions when selling is unlikely to enter the
market again any time soon. Well, why are you buying a house just to sell it a
few years later?

I bought my house so I could live in it. I would like it to increase in value,
eventually, too. I'm not counting on it, but it would be nice. If it doesn't,
at least I have a home to live in and will eventually own it (because I didn't
buy the maximum house that my credit score and loanability would have
allowed).

I don't know a lot about the housing market and I'm not an economist, but I do
know that I'm glad I bought a house last year (with a rate under 5%) and wish
I would have done so many years ago, instead of putting it off for a decade.
(On the other hand, if I had done it a decade earlier, I probably would have
taken a big hit over the last few years, so whatever).

Also, the other nice thing is that I'll be paying the same amount (except for
tax changes) for the next 15-30 years that it takes me to pay off the house.
In my apartment, I'd gone from paying $900 to $1,200/mo in only four years for
the same unit. Oh, and I don't have people stomping on the floor above me
24x7, so I can't sleep. And I don't have to allow someone from the
maintenance/leasing office come into my home nearly any time they want with a
24hr notice. And I can (and did) run ethernet in the walls. And I can (and
did) setup my home theater and run it at 50% power instead of having neighbors
complain when I ran it at 5%, before. And when I have a guest that stays for
more than three days per year, total, I don't have to register them with the
leasing office. And I know my neighbors and they have lived here for a couple
decades and are friendly and helpful. I never even _saw_ the neighbors at my
apartment.

So, yeah. I guess I'm dumb enough.

~~~
jamesbritt
_Well, why are you buying a house just to sell it a few years later?_

Your post mentioned at least four different cities where you lived in an
apartment. How would owning a house have changed your mobility? What would it
have done to your overall cost of housing if you needed to sell one house and
buy another?

~~~
bane
I'd probably just rent my house out. Over the years I've purchased enough of
the principle (by overpaying on the mortgage, the difference buys down the
principle) that my monthly payment is about the same as the rental rate for a
home this size in my area. Even if I lose a little bit every month, I'm just
buying more of my own place with somebody else's money.

Something the parent mismentioned is not that he'll be paying $1000/mo 5 years
from now while rental rates will simply go up, but you can actually reduce
that rate now and free up more of your income for later. It's actually the
sole reason I've been able to fund my co-founder to work on our startup full-
time while I work a regular boring old day job, I've paid down so much of the
principle the past few years that, along with pay raises from my day job, I
have enough cash on hand to float another person for the foreseeable future.

~~~
notauser
"I'm just buying more of my own place with somebody else's money."

At the cost of incurring risks including but not limited to:

    
    
      - Property damage by renters and others.
      - Property damage by acts of god (flooding/fire/subsidence).
      - Default on payments & long eviction periods.
      - Low occupancy/months without rent.
      - Downward price movements in the market as a whole.
      - Downward price movements in your location due to ghettoization, tax increases, service/school decline, structural unemployment or other factors.
    

Could be worth it for the gain in equity, but it's something to think about -
especially as some of these risks can't be insured against.

You are also forgoing returns on your existing equity if you invested it
elsewhere. Risk free interest rates for retail deposits here in the UK are
currently above 3% for example.

In addition to that you also have the costs (in time and money) of:

    
    
      - Management time/effort.
      - Time to deal with renters and searches.
      - Organizing maintenance.
      - Costs of credit scoring etc.

~~~
bane
All good points. You have to figure in costs of use when renting. As it turns
out in my locale, you can reduce your taxes when renting under the assumption
that renters are beating your place up and thus reducing the property value.

I'm fortunate enough to live in an area where finding renters will never be a
problem should I end up that route, but you make an excellent point about
that.

Also, eviction periods are not too bad in most parts of the U.S., you can
write terms into the lease that also help short fuse eviction on non-payment
if many places.

The biggest concern I have above all others is just managing the renters.
There are services you can hire to handle all that and maintenance, but they
consume some not insignificant part of the rent as payment.

------
dangrossman
You have to pay something to have a place to live. If you rent a little
townhome for $1700/month for just 5 years, that's over $100k gone with nothing
tangible in return. Even if your house will depreciate $50k between buying and
selling it, are you worse off than renting?

~~~
lutorm
I think the point of the post is that, yes, often you _are_ worse off than
renting. There are extra costs and responsibilities that come with owning,
plus the substantial financial risk in case your home does drop in value.

Check the NYT rent calculator
([http://www.nytimes.com/interactive/business/buy-rent-
calcula...](http://www.nytimes.com/interactive/business/buy-rent-
calculator.html)) and see what the situation is if it costs you 30 years rent
to buy a place. If the value does not appreciate, you have to rent go up at a
rate comparable to mortgage interest and property taxes to even have a chance
of breaking even after 30 years.

~~~
dedward
If you _buy_ a home, market fluctuations don't matter. It's your home, you are
going to live in it. If you were in the business of flipping properties for a
living, it would matter, but not if you buy.

If you toss a mortgage into the mix, which is what I gather most people mean
when they say "buy" a house - then yes, market fluctuations can matter a lot -
but these are two very distinct things.

~~~
pstack
Market fluctuations should only impact you when it comes time to sell. Unless
your mortgage is an adjustable rate, which is part of the reason we're in this
whole mess in the first place. Put enough payment down up front so that you
can lock in a good rate that you can tolerate and don't play the ARM game.
That seems like lose-lose, to me. Maybe things go really wonky and I find in
five years that I could have locked in an even better rate if I just waited?
Well, that sucks, I suppose -- but I locked my rate in at an amount that I was
willing to commit to (and I bought far less house than I could afford, so that
I had some long term wiggle room).

Unless I'm missing another aspect of potential impact, which is totally
possible. I can barely tie my own shoes, sometimes. :)

~~~
dedward
Just curious (because I've never honestly looked) - can you really lock in a
rate for the entire, say, 25 year length of the mortgage?

When I asked a mortgage broker friend (Canadian) about this not too long ago,
it was explained to me that yes you could lock in a rate for the "term" - but
the "term" was 5 years, and after 5 years it would be adjusted depending on
the prime rate, etc..... so from what I gathered you coudln't actually just
get a plain old "25 years, x%" mortgage.

~~~
hexis
In the US, it's standard to have a fixed rate for the entire life of the
mortgage. It's my understanding that this state of affairs is due to US laws
and that most other countries tend to have floating rate mortgages.

~~~
pstack
That may explain why renting is the norm in a lot of other countries and
owning a home isn't considered a big deal (while, in America, it's almost an
obligation before you can feel like you've made it). Shifting terms is
unsettling. I don't know the history of loans in the states, but I wonder how
much of the 30yr fixed was established in response to everyone returning from
service after WWII and starting families and buying property?

------
bluekite2000
Relevant:[http://www.khanacademy.org/video/renting-vs--buying-a-
home?p...](http://www.khanacademy.org/video/renting-vs--buying-a-
home?playlist=Finance)

------
wanderr
In my area at least, buying makes a lot of sense. Prices are at an all-time
low, but rent hasn't gone down at all. The same type of house renting for
$900/month can be had with a mortgage of $350/month. As long as you are
comfortable with renting the place out when you want to move, it's had to
imagine why buying would be 'stupid' right now.

------
supercanuck
Its interesting to me and a testament to how the topic of housing impacts the
psyche of Americans that even on Hacker News the emotional arguments take on a
stronger conviction than the logical ones.

~~~
nhangen
It is interesting, but it reminds me of the TV vs no TV argument. Very strange
division here.

------
nemik
This thread reminds of those articles about how people without children are
happier. Then a bunch of parents post how giving birth was the best decision
they made.

------
ams6110
A bit off topic, but what justifies paying a realtor 5-6 percent in real
estate commission anymore? Actually last time I talked to an agent about
listing a property they quoted 7.5% but obviously that's negotiable.

Before the internet, realtors were the gatekeepers of "for sale" property
information. But that's all online now. What do they really do to justify such
a large cut on the transaction?

The times I have bought and sold a house with a realtor they actually did very
little. They helped prepare the offer (using boilerplate that can be easily
found online now, or you can pay a real-estate attorney a couple of hundred to
prepare one) and introduced me to a couple of lenders, then showed up at the
closing to get their check.

------
djacobs
_[http://www.nytimes.com/2011/05/11/business/economy/11leonhar...](http://www.nytimes.com/2011/05/11/business/economy/11leonhardt.html)
has some data on the price-to-rent ratio in various markets._

From a grammar perspective, I think this sentence is interesting. It is
literally the first time I've ever seen a URL as the subject and first word of
a sentence.

Of course, this violates everything I know about a) link sharing [0] and b)
good writing, but it's interesting nonetheless.

[0] [http://www.goodusability.co.uk/2009/01/dont-say-click-
here-o...](http://www.goodusability.co.uk/2009/01/dont-say-click-here-on-link-
text/)

------
jleyank
Decades of personal experience shows that unless you can switch jobs without
moving owning a house is a good way to lose money. It can also act as an
anchor, preventing or delaying job changes that should be made.

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dirtyaura
Khan Academy has a great series on renting vs buying

Part 1 [http://www.khanacademy.org/#/v/renting-vs--buying-a-
home?p=F...](http://www.khanacademy.org/#/v/renting-vs--buying-a-
home?p=Finance)

Part 2 [http://www.khanacademy.org/#/v/renting-vs--buying-a-home--
pa...](http://www.khanacademy.org/#/v/renting-vs--buying-a-home--
part-2?p=Finance)

Detailed analysis [http://www.khanacademy.org/#/v/renting-vs--buying--
detailed-...](http://www.khanacademy.org/#/v/renting-vs--buying--detailed-
analysis?p=Finance)

------
visava
<http://patrick.net/housing/crash3.html> Analysis to help you decide whether
to buy or rent.

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tt
I'm surprised no one has mentioned the Case-Shiller index chart showing home
value fluctuation over the past 100+ years: [http://www.ritholtz.com/blog/wp-
content/uploads/2011/04/2011...](http://www.ritholtz.com/blog/wp-
content/uploads/2011/04/2011-Case-SHiller-updated.png)

It's pretty telling what you should do regarding buy or rent (beyond the NYT
calculator).

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adharmad
I have always wondered how the housing/renting market would be if mortgages
were not tax deductible (or rents were also tax deductible).

~~~
shawnee_
The Realtor lobbying group (the National Association of Realtors) is bigger
than Exxon's, number 4 on the list:
<http://www.opensecrets.org/orgs/list.php?order=A>

Getting rid of the mortgage interest deduction would probably be the best
thing to happen to the US since the Constitution. Especially for people in
less than desirable neighborhoods. Slumlords wouldn't be able to function.
Housing prices would go down, rents would go down, people who wanted to own
could own affordably, and renting would be insanely affordable.

The U.S. Tax Code is one giant game that steals short-term investment power
from the majority people (low to medium income people) and gives it to the
wealthiest people for them to write new rules of the game.

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raintrees
Well, if true, this is good news for cash flowing investment real estate
purchases, on both sides...

Property Owners may have a better chance at returns, if they are able to raise
rents to match inflation. And Property Managers (people to buffer the owner
from the tenants) are typically charging 10% of rent. There is income to be
made...

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gopi
If you think US rent-vs-own ratios is expensive than you have to check other
countries. Every country from the developed western europe/canada/australia to
the developing india/china to the thirdworld african countries have worst
rent-vs-own ratio than US, yet the prices are still appreciating there.

------
jodrellblank
tl;dr: author feeling unhappy, unexcited and trapped, fears becoming boring,
blames house ownership.

 _More and more Americans will be conditioned to the idea that home ownership
is a waste of time and money, not to mention the inflexibility that it imposes
on a person [..] That would barely pay for property tax, maintenance (winters
are harsh), and landscaping (weeds are aggressive). [..] Another advantage for
renters is that they can free their minds from the clutter that prevents
homeowners from doing or thinking anything interesting. [..] The rest of us go
to Home Depot every few days and pull weeds. [..] They withdraw themselves
from the market of potential buyers, at least for 10 years or so until they
forget what wounds they suffered and how boring they were when they owned._

------
code_duck
Why not? Americans, like most humans, are dumb enough to keep doing a long
list of stupid things that would exceed a reasonable comment length if listed
here. Usually the only time they stop a stupid activity is when it's
impossible to continue.

------
nhangen
Those of you renting and hating on home ownership should ask yourself where
you'd live if someone hadn't bought a home and allowed you to rent it from
them.

~~~
cgopalan
Wrong argument.

Firstly, rented homes are not only from homeowners. Second and more
importantly, for people that already have a home through say inheritance, or
ability to pay outright cash, it makes sense for them to use it as a source of
income. Not saying those are the only people for whom home-ownership makes
sense, but the cases above are the easiest non-subjective examples to cite in
favor of home-ownership.

And neither homeowners nor renters need be indebted to each other.

~~~
nhangen
Personally, I don't understand the anti-mortgage sentiment at all. I can buy a
home at 5%, and then use the money I'm saving to build something else in order
to make a higher return. Point being is that it's not always black and white
(banks bad, cash good).

Also, though homeowners aren't the only source of rental properties, outside
of city life, they are the most prominent. Either way though, the same
argument applies. Without someone buying a property and renting it, there
would be no place to rent. The house I'm renting to someone in NC is being
paid off because of my renters. It's not income now, but when it's paid off,
that's $1k/month free to me.

~~~
cgopalan
This might be going off the main topic here, but I'll address it: For someone
who has the ability to pay outright, I agree that paying a monthly amount
might give some flexibility. If someone is making a monthly payment because
thats all they can do, its basically debt and holds you down. I agree though,
that its not always black and white.

Back to the main topic: Should renters be indebted to home owners? Its all a
case of supply/demand. I dont see renters having a shortage. Which means that
more people are willing to rent out their home, than renters wanting to find a
place to rent. In this market, homeowners need renters more than renters need
homeowners. If say in a hypothetical situation all homeowners stopped putting
out their houses for rent, more people will gravitate towards other sources of
rentals like rental properties owned by companies. These rental property
companies do not have an emotionally-vested interest in their home. They see
it just as a service.

I agree when you pay off the money for your house, the renters give you free
money. But this is close to the end-game and by this time you would have to
factor in also opportunity costs. I am not saying the opportunity cost is
huge, but usually a mortgage holds you down for 30 years (in most cases), and
its too long a time to just consider what happens at the end of it.

