
Nearly 1 in 5 Millennial Renters Expect to Rent Forever in Some Metros - otran
https://www.apartmentlist.com/rentonomics/2019-millennial-homeownership-report/
======
vearwhershuh
That's probably way too low given todays prices. The NYTimes has a good
calculator for understanding if renting or buying is a better deal:

[https://www.nytimes.com/interactive/2014/upshot/buy-rent-
cal...](https://www.nytimes.com/interactive/2014/upshot/buy-rent-
calculator.html)

What you will notice if you play around with it is that the decision is most
sensitive to "What Does the Future Hold", in particular to the home price
growth rate. If you expect that to even stabilize (let alone decline) then
renting is almost always a better deal.

Now, that being said, I expected home prices to stabilize back in the early
2000's and didn't buy in SF, so I have been fooled before.

~~~
cameldrv
That's true, but future prices and rents are very difficult to know. If you
buy, your costs, ex-property taxes are known for the rest of your life.

This means you can customize the house for your needs, make friends, have you
kids make friends, join community organizations, etc, without having to worry
that one day when you go to renew your lease, your landlord will have an
unaffordable surprise for you, and you have to give up everything you've built
up.

------
MuffinFlavored
Property taxes + HOA fees + homeowner's insurance aren't cheap. On top of
that, a average run of the mill 3/2 home worth living in is about $350k-$400k
in my area (South Florida)

If you can rent one out for $2.4k/mo - $2.75k/mo and not worry about the
headache + not put 20% down... I'm sure that's a way to "stay poor" in some
circles but... it works for me _shrug_

Also, last time I checked, if you file taxes as "single", I don't think the
benefits of owning a home are even tax deductible. Meaning, the deductions for
mortgage interest + property taxes combined aren't more than the $12k
standard. I could be wrong.

~~~
itake
You can apply the same math in SF. Why own a house for $8k/mo (mortgage +
insurance + hoa + taxes + upkeep + real estate agent fee, etc) when you can
rent it for $6k/mo?

Home owners are expecting to get their ROI on appreciation, so the rental
deals are just too good.

~~~
cobookman
30year fixed mortgage rate of say 3.5% is only ~1-2% higher than the rate of
inflation.

The cost of owning the house is really just interest + hoa + taxes + upkeep.
You'll get your principal back out when you sell.

Over a long enough time period, the yearly home ownership costs will be less
than renting.

Owning even in SF can still be a better financial decision than renting.
There's a lot of tax advantages that you get by owning a home as well.

E.g take this place: [https://www.redfin.com/CA/San-Francisco/201-Sansome-
St-94104...](https://www.redfin.com/CA/San-Francisco/201-Sansome-
St-94104/unit-404/home/12402258). Costs about 5.4k/month. Removing principal &
tax rebate its likely costing you ~4-4.5K/month.

Somewhat equivalent rental is 3.3k/month.
[https://sfbay.craigslist.org/sfc/apa/d/san-
francisco-916-pac...](https://sfbay.craigslist.org/sfc/apa/d/san-
francisco-916-pacific-move-in/7022195137.html)

Cost of owning is ~1k/month more expensive. However you've locked in your
mortgage for 30 years. Likely after 7-10 years the place you were owning will
end up cheaper than renting on a monthly cost basis.

~~~
MuffinFlavored
> There's a lot of tax advantages that you get by owning a home as well.

If adding together mortgage interest paid for 12 months + property taxes paid
for the year together is less than the $12k single filer standard deduction,
are there any tax benefits to owning a home?

~~~
cobookman
If the interest + itemized deductions are > 12k, then yes. E.g. do you give to
charity...etc.

------
frockington1
Gen Z'ers, please learn from my generation. Think about return before going
into debt for student loans. Nobody cares about your school after your first
job and many state schools are more than adequate

~~~
whack
> _Nobody cares about your school after your first job and many state schools
> are more than adequate_

Few people say it out loud, but they do care. Both in social contexts and in
professional contexts. I've been to a top-25 public state school for
undergrad, and a top-3 private school for Master's. I've seen both sides of
the spectrum and I've seen the privilege that I've gotten out of attending an
elite university.

I would advise people to be smart about the student debt they are taking on.
If your goal is to pursue a lucrative career path like Software Engineering,
Law, Business, Consulting etc, go ahead and attend the university that has the
best brand name. It will pay for itself over the course of your career. If
your goal is to be a school teacher, then go to the best public university in
your home state.

------
stanski
Is it me or is that stat not that bad at all? Considering the price of
ownership, having 80% of people being able to (eventually) afford to buy real
estate seems alright, no?

~~~
charwalker
Is eventually 3-5 years? 5-10? 10-20? I'm looking to have my current debts
paid in 3-5 and down payment on a house or similar in 8-10, looking to buy (if
reasonable) at that time. I'm also doing about 25% better salary wise than I'd
expect at this point so that has accelerated my debt payments by a few years.

But if the economy tanks again, as it usually does after a conservative party
owns the US government for a few years, then I won't have cash on hand to buy
anything and could lose my job and more before paying off my debt and building
serious savings for a house. I'd likely push this whole thought process out
12-15 years at best given rent costs don't increase dramatically.

In my case, I'd say it's bad.

------
matchbok
This is what happens when boomer NIMBYs oppose new housing. They got theirs
and are making sure nobody else can join the party.

~~~
frockington1
As a millennial homeowner, I don't want my historic neighborhood destroyed in
favor of high rise apartments. I also have been warmly welcomed by my
neighbors and enjoy the community a neighborhood brings. Why do boomers get so
much hate from protecting their communities and neighbors?

~~~
fetus8
As a millennial homeowner, living in a historic neighborhood, I am all in
favor of taking the empty lots that do still exist in my area, and turning
them into high density housing. I watched a 4-5 story building appear on a
empty lot just down the street from me. This kind of housing is perfect to
help alleviate housing constraints, and offers people the opportunity to live
in a walk-able, historic neighborhood and contribute to the community. Why is
that a bad thing?

~~~
frockington1
There are no empty lots because it is a desirable place to live. If I lived in
a place with abandoned building/lots I agree they could be put to better use.

------
hanoz
For those asking what's wrong with renting, some problems from a UK
perspective are:

1\. Security of tenure. You can be a model tenant who never misses a payment,
but if a landlord wants to do something else with your home for any reason,
you've got two months and you're out. Wife, kids, stuff and all. Maybe with a
change of school thrown in for good measure too.

2\. Exclusion from the biggest one way bet in town. Forget the best index
tracking ISA, nothing beats using massive leverage to invest several hundred
thousand pounds of borrowed into existence money in an asset class that the
elite will happily throw the rest of the economy under the bus to pump up.
Much to the benefit of our politicians, flipping their tax payer funded second
homes.

3\. Welfare unfairness. Got a bit saved up? Maybe even for a house deposit
ironically? Well if you fall on hard times, you'll need to burn through your
years of savings until you're poor enough to receive benefits again. If you
have a fortune of equity in your house though, you won't have to touch a penny
of it.

------
maxencecornet
What's so bad about renting forever ?

I am a millennial, I am not planning on buying a house pretty much for ever, I
don't see it be a problem

~~~
hellisothers
One problem is (for better or worse) home ownership stands in for a forced
savings account, especially for retirement. If you rent forever but also max
out your 401k or Roth then cool, if you’re renting and also not saving for the
long term then...

~~~
maxencecornet
Gotcha, I am not a heavy spender, save most of my salary, this must be the
reason why I don't see renting forever as a problem

------
otran
The study also says that if student debt was forgiven and payments were
instead put towards savings, the percentage of millennial renters ready to buy
a home is estimated to rise from 25% to 39%.

------
tdburn
But your house. If you want to freedom to move around then find a good
management company and rent it out.

------
mtw
Even if you have cash, investing can make more sense financially than owning.
Plus you don't have to worry about repair/renovation, school taxes, fees, and
the stress coming from mortagage payments.

You also get freedom when renting, for example being able to relocate anywhere
in the country or the world when the opportunity comes.

So I don't understand why people are making a big deal about owning your
property

