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A Growing Problem in Real Estate: Too Many Too Big Houses (wsj.com)
166 points by ryan_j_naughton 27 days ago | hide | past | web | favorite | 426 comments

One of the trends that I can only hope continues is getting rid of this idea that home ownership (especially single family home ownership) is the American dream.

I live in and own a detached single family home (was a compromise with my spouse) and to be honest, I hate it. I hate having to take care of the yard, to deal with unreliable tradespeople when things break, to deal with the huge expense of minor home repairs - and this is even after outsourcing as much of that work as possible.

Compare that to renting an apartment, which I loved. If something broke, I just called the super, and that was that. This ridiculous idea that renting is "throwing money away" is absurd. I'm paying someone to deal with all the shit I absolutely don't want to deal with, and more importantly I'm paying for the freedom to easily up and move if something else fits my fancy.

I also hate maintaining a detached single family home with a yard. I also hate being responsible for the fixes. But that situation is still far better than renting.

When we rented, we were subjected to eviction at any time, for nearly any reason, for basically no notice (60 days, which in the US is effectively zero notice). Your subjected to every whim the crazy wildly-irrational housing market throws at you (we've had 12% yearly rental increases for a decade straight now, despite living in bumblefudge-nowhere Midwest).

Renting in the US today is capital-e Evil, and just wholly broken. Unless we're ready to implement some guaranteed nationwide rent controls and guarantees against unjust eviction and harassment, making housing ownership possible for all citizens has to be the number 1 goal. Because home/condo ownership is the only way to gain any sort of housing security in most of the USA today.

The thing I've noticed is that in my area all the modest neighborhoods (2 bed, 1 bath, sub $200k) are being bought up by landlords. This leads to a neighborhood of renters, which is a lot different than a neighborhood of owners. The Havers can buy a lot more houses than the Have-Nots and I'm left wondering what the price of single family homes would be if renting them was illegal and they were all placed on the market.

Yes. That's a "private equity" thing.[1] Blackrock can borrow at lower rates than homeowners. So they can buy up houses and rent them out at a profit. Plus they can keep raising the rent. And they outsource maintenance.

[1] https://www.theatlantic.com/technology/archive/2019/02/singl...

The agency cost of any landlord is much larger than the savings in capital cost. For example, for a tenant there is an incentive to complain over the smallest problem instead of fixing himself or just living with the problem. Management agents charge a fortune to deal with these issues.

This is something I think about as well. In my Midwestern city, some neighborhoods seem to be 60%+ landlord owned and always increasing. For every home sale to a young couple or first time owner it seems like another house is purchased in cash by some mid-size wanna-be property baron or a mega real estate conglomerate that already owns 200+ homes in the city.

It definitely feels like we're moving towards a system of feudal property barons extracting rent from people who are quickly being priced out of the means to own their own home.

It's another example of the high cost of being poor. The rent on my town home is several thousand more per year than what a mortgage (5% down), taxes, HOA fee, PMI, and home insurance would be.

Several thousand more per year doesn't sound too far off: if you own, you're responsible for home repairs: roof, HVAC, electrical, plumbing, appliances, siding, painting, etc.

I budget $2,000 a year for repairs on a modest-sized home; most years it's under $1,000, but HVAC and roof are infrequent and fairly expensive.

Landlords absolutely incorporate home repair costs into rent. I'm shocked at the number of people who assume that landlords just eat the cost of maintenance. Just because you aren't forking over the money directly to the repairman doesn't mean you aren't paying.

Even if we say that the owner is spending those several thousand dollars on maintenance that just means they're cash flow neutral. They are still making thousands through increased equity and appreciation.

Well, yeah, except 2008 kinda put a dent in that.

Only if you were forced to liquidate before the rebound. Even if you bought at the absolute peak in ~2008 you'd still be way ahead today.

It depends on the neighborhood and unfortunately the racial and the economic makeup of the neighborhood.


Anecdotally speaking, I bought a house in a new minority subdivision in 2003 brand new build. The value went up by about $40K by 2008, crashed to $40K less than I bought it, and today it’s still worth $4K less than I bought it in 2003. It’s still a nice neighborhood so it hasn’t gone “downhill”.

Being the numbers oriented, unemotional person that I am, I did a strategic default in 2012 realizing that I could be eligible for an FHA 3.5% down loan in 3 years after the foreclosure, applied and received a loan exactly three years later and had a house built in a new subdivision in a predominantly White neighborhood. The value of the house has gone up $70K in 3 years and a house with basically the same floor plan is being sold for $70K more than mine was 3 years ago. .

And to hopefully stave off some of the expected replies:

- No the world shouldn’t work like that. But to paraphrase Buffett, “the world can stay racist longer than I can stay solvent”.

- No I’m not racist and it’s not that “I don’t want to be around Black people”. I am Black.

- Yes I know “White Flight” is a real phenomenon. But there is also a well studied “tipping point” when that occurs. I don’t see that tipping point happening.

If you live in your house instead of paying transaction costs to sell, lower property value just means lower property taxes and a more prosocial working class neighbors.

You're not accounting for equity changes. Even if you lost 20% of your house value you've paid down more of your mortgage than that.

On a typical 30 year mortgage you haven’t paid much principle in the first 5-10 years. So if you’re still down 10% (as some of those cities are), you could still be in the red.

I'm in my first mortgage, 30 years on ~$200k, almost nothing down. Starting to look at selling next year, which will be year 10.

If it sold for the price I bought it, I'd walk with at least $40k of equity after closing costs. But it's also increased in value about $60k.

And I'll have maybe $10k in maintenance and fix up costs over that decade.

For a 4% loan you pay off 10% of the mortgage in the first 5 years and 22% after 10 years.

A townhouse in the western Chicago suburbs I bought in 2006 for $280k and walked away from in 2012 finally sold to the next owner this year for $208k. It will still be another decade or two (if ever, depending on the rate at which property taxes rise to offset Illinois pension obligations) before it appreciates back to what I paid.

What it put a dent in was the expectation that real estate prices only went in one direction. (Of course, the popping of several previous real estate bubbles should have dented that before 2008, but....)

The landlord makes the down payment and the landlord takes the risk.

Think of it instead as a player closer to the money printing machine that is the fractional reserve banking system. This is the inflation the Fed created directly, and these institutions probably are thinking: 'housing prices only go up, so the duration of my borrowing doesn't matter, borrow short term buy long term, it's all gravy!' If you're over 30 and feel like you've heard this story before, you have....

We really need some stronger regulation on renting.

I'd like something along the lines of federal rent control. Limit the rent that can be charged to reduce the profitability of buying up house after house. This would be unpopular with the current owners of homes as it would lower property values, but over time they would remain much more stable.

i agree with your sentiment, but i don't think that rent control is a federal concern. we need to hold our state legislators accountable here. living in CA frustrates me in that regard, because we cannot pass a single f'ing bill about housing affordability generally, even though democrats have a super-majority and every politician and news outlet talks a big game on the topic. i'm ready to vote against every incumbent at this point.

in any case, part of the solution is to equalize the capital gains tax with income tax rates and have the capital gains tax escalate with the number of homes owned (but keep a small tax advantage for long-term owners of a primary lived-in home). and get rid of 1031 exchanges for investment property, which greatly advantage large capital holders over the average citizen.

There are too many loopholes with holding property. You can create and diversify among enough companies and eventually you won't have to pay tax at all.

No politician will vote for this because they know where their bread is buttered. It would be suicide as they would find out when they lose every large donor. I doubt we'll ever get people into office that would vote for anything to disadvantage property holders.

Even if you vote it in through a referendum, I expect a judge will crush it through some weaselly interpretation of the constitution or other precedent. California in particular has had several major referendums reversed by the courts. Will of the oligarchy, not that of the people.

Much simpler would be to raise property taxes to a reasonable level and redistribute that via a citizens' dividend /UBI. That gives you free market efficiency with no rent-seeking non-local owners sucking away the wealth, only reasonable fees for management and liquidity services.

Why federal? The federal government has no authority to do so. Housing is literally, more than any other market, an intra state matter, and the feds cannot regulate intra state trade.

I can't seem to reply to your other comment so I do so here.

It is entirely different to move your company or business to another country vs another state. Most people are not going to expatriate and most companies wouldn't gain much from doing so. Property is already much cheaper in Mexico, but you don't see anybody with a high-skill workforce moving there.

Then we need to fix that. No state will pass legislation along these lines because it will put them at an economic disadvantage to every state that doesn't.

I mean, and if a country does that it puts them at an economic disadvantage to every country that doesn't?

> we've had 12% yearly rental increases for a decade straight now, despite living in bumblefudge-nowhere Midwest

Quick math for the rest of you out there: That means they paid 1000 in 2009 and now pay ~3500 in 2019.

Also, yes, I feel you there. Our rental agreement states a mandatory 10% increase if you rent from year to year. I've no idea why the company is this stupid though. The rents around us are falling or staying steady these days. So we just move to the block over every year and the old place stays empty for 3 months before then being rented out for the same or less than we paid. I'm sure there is some tax thing involved here that makes it so they don't have to care all that much.

Also, yeah, we don't have a lot, and we can just move houses in about a weekend in my 4-door.

It's similar to a telecommunications giant - as the customer, you need to pay a cost of switching (moving expenses, hookup fees etc.).

So it's in their best interests to try to squeeze customers when possible, even with the occasional person that moves out, they'll net a lot more from tenants who just don't bother to dispute the increase.

True! We've decided to be nimble, and it does take a toll (no pool tables, no big patio furniture, smaller couches, etc). But saving the cash is worth it to us. 12% on 1000k/mo rent comes out to an extra 1440/year that could be saved. To us, such a thing is worth the weekend of moving hell.

Don't you also lose a lot of the deposit money you put down on the old apartment and the services that went along with it though? Not to mention that moving is more than a weekend of shuttling around possessions (if you don't own much), you also have to change your address with everyone, sign up for new utilities... I always burn a lot of money and time when moving.

> Don't you also lose a lot of the deposit money you put down on the old apartment and the services that went along with it though?

Wait, what? It's a deposit, you get it back at the end of the lease.

Like, granted, if you have a lot of damage to the carpets, sure, you're gonna be out $80 for the cleaning of them. But I've always gotten it back in full after a month or so.

For me, moving is litterally a weekend (maybe including a Friday afternoon). We really don't have much to move. I'm not joking.

Also, my state allows you to just forward the mail to the new address for free. It only lasts a year, but you can re-up that at any time. We've just done that without much worry and we also have a lot of online stuff that works through the phones and whatnot.

I guess I'm just old hat at doing this kinda moving stuff. It's not much stress for me, though you are right, it is some extra stress. For us, it's worth the savings.

In my experience I lose hundreds on my deposit every time (with very little actual wear to validate that loss). I've only ever rented in major cities though, so maybe it's less aggressively slum-lordy elsewhere.

If you do have more possessions than you can move yourself, or your moving long distances, you end up spending a ton of money. Movers usually cost me 5-10k and I didn't even have a lot of stuff (2bd apartment worth of possessions). Ditto if you need your car(s) moved.

> Movers usually cost me 5-10k

Wow! That is insane!

Here it's about $800 for anything less than 3 hours each way per truck load. And I think that is a rip-off. I've seen college towns that'll charge $50 for frat bros to move you about town all said and done (but then again a frat bro is moving your TV, so beware).

> Movers usually cost me 5-10k

For me, moving about the same amount is going to cost $1000 including storage for a month. I guess if you are also having the movers pack everything, it might cost that much, but I've heard of people moving across the country for less money.

I bet moving costs at least $400 out of pocket plus you have to value you time. 2 people packing and moving is 20+ hours each. 40 hours * $20/hr = $800 so you are breaking even at best.

Well, you loose that bet then! ;)

Also, paying myself is a strange concept. Yeah, it's 'lost time' but only to me and my family. It's not like other forms of employment. Besides, it keeps us a bit lighter on the clutter, though we would like some more things in life. $800 payed to myself is a lot different than $800 paid to some movers.

$1440/yr seems hardly worth the effort for he hassle and cost of moving every year. Compounding rent increase over years makes it substantial.

I suppose you don't have kids though, which may simplify things.

When I rented the company sent a letter every year asking us to agree to a 8-12% hike. Every year we ignored the letter until they called and we talked them down to either keeping the rent the same or raising it only a couple of percent. It's one of the headaches of renting, but it makes a huge difference over time.

A fixed mortgage is much less painful.

> A fixed mortgage is much less painful.

I'm in total agreement, but the housing prices around here aren't very good (obviously expensive). Besides, we don't have stable work yet, so locking into a mortgage that will go underwater isn't wise.

> I'm sure there is some tax thing involved here

Loyalty tax, perhaps. They expect people to just "take it".

> That means they paid 1000 in 2009 and now pay ~3500 in 2019.

Which means they're almost certainly exaggerating, unless they're in a condo in downtown Chicago, but they did say "bumblefudge-nowhere" so I'd say just straight BS.

"Our rental agreement states a mandatory 10% increase if you rent from year to year"

Why even sign that agreement? That landlord obviously isn't going to give a toss if there's a issue. Its just a huge red flag for me.

> Why even sign that agreement?

Honestly? It was a good place and a good price. We've no intention of dealing with that issue either. We tend to move every year as the jobs change. Would we like to stay in this place for longer? Sure! But it's unlikely to occur.

Were you a month to month tenant? If not, why would you sign a lease that lets the landlord break it with 60 days notice? Doesn't that kind of defeat the purpose of having a lease in the first place?

Every lease I've seen has a provision that allows the Landlord to kick you out if you are deemed to be a nuisance.

IIRC there are renters rights in many areas that make this more difficult, requiring a court order typically, but not all areas have this and Landlords will put those clauses in the lease regardless just in case the tenants aren't familiar with the law.

I mean, most HOAs will kick you out if you are deemed to be a nuisance, as can a city council.

HOAs don't have the power to evict you from your own house. They might act like they do, but they don't. Their power basically ends at sending sternly worded letters and in exceptional cases putting a lien on the property. If the homeowner just ignores their letters they can't do much.

Yes, they can? An HOA is added to the deed agreement. A typical HOA will be allowed to put a lien on the house if you do not pay them the agreed upon fee, and -- crucially -- whatever other fees they determine. Thus, if an HOA wants to kick you out for any reason, they mostly just have to continue to fine you until you can no longer pay, at which point they ask a judge, and take the house.

You can’t foreclose a house due to a lien. It only impacts selling the house.

Yes they can? https://www.nolo.com/legal-encyclopedia/hoa-liens-foreclosur...

In california for example, an HOA just has to get you to have $1800 in unpaid fines before they can simply evict you and sell the house to recuperate the costs.

> we've had 12% yearly rental increases for a decade straight now

That was part of the motivation for buying my first house. The rent was going up $50/month every 6 months, and the mortgage was going to cost only $100/month more than the rent. I figured in a year I'd break even, and in 2 years I'd be ahead.

lol at assuming mortgage is the only expense to owning a house

More like lol at assuming your rent doesn't cover the other expenses of owning a house. You think your landlord is just taking the loss? When you rent, you are paying, if not directly, for every expense associated with the house, plus extra for the landlords profit margin.

The rental market and the home buying market as separate and not perfectly correlated. In SF right now, it's cheaper to rent than to buy, so yes, if a landlord bought today and rented it out they'd be taking a loss.

The thing is that landlords may have purchased the place a long time ago. They can still make a profit with rent being less than what a mortgage+ would be today.

From a different perspective, 60 days is too long if you are a landlord trying to evict a drug user who has not paid rent in 60 days.

I’d like to invest in rental property, but would never want to be a landlord. My mother rented out a house and the renter trashed it.

Price controls do not work. High home prices are a symptom of a lack of available housing and the only way to fix the lack of housing is by building more housing.

High home prices are often a symptom of easy money and inflation localized to that sector. (Specifically, the houses described in the article seem to be poster children of this type.) That was the whole 2008 thing, right?

I know landlord-tenant laws vary a lot, but how could you be subject to random evictions with only 60-day notice? Most places I've lived, you sign a one year lease. The landlord can't evict you while the lease is in effect as long as you are abiding by the terms of the lease.

You must not live in Georgia or the South.

Rental contracts are not valid in the South and one party can unilaterally end the agreement for no reason? That really sucks, if so.



"If a landlord does not have cause to terminate a tenancy early and evict a tenant, then the landlord must wait until the lease term has ended before expecting the tenant to move. In some cases, the landlord may still need to give the tenant written notice to move.

"Month-to-Month Tenancy

"If a tenant is in a month-to-month tenancy and the landlord wishes to end the tenancy, the landlord needs to give the tenant a written 60-day notice. This notice will inform the tenant that the landlord is terminating the tenancy and the tenant must move out of the rental unit by the end of 60 days. If the tenant does not move out of the rental unit by that time, then the landlord can file an eviction lawsuit with the court (see Ga. Code Ann. § 44-7-7). For more information on this topic, check out Georgia Notice Requirements to Terminate a Month-to-Month Tenancy.

"Fixed-Term Tenancy

"If a landlord does not have cause to evict a tenant who is in a fixed-term tenancy (such as for six months or one year), then the landlord must wait until the end of the term before expecting the tenant to move. The landlord does not need to give the tenant written notice to move unless the terms of the lease or rental agreement specifically require the landlord to do so. The landlord can expect the tenant to move by the end of the term."

The rental contract includes a provision for either party to terminate the lease with notice.

Of course, there's no penalty if the landlord initiates it, but you lose your deposit if you do.

> When we rented, we were subjected to eviction at any time, for nearly any reason, for basically no notice (60 days, which in the US is effectively zero notice). Your subjected to every whim the crazy wildly-irrational housing market throws at you (we've had 12% yearly rental increases for a decade straight now, despite living in bumblefudge-nowhere Midwest).

Not saying you're wrong but at least where I've lived, I could very easily find a new place to live in 60 days. I think usually landlords give the terms of a new lease much less than 60 days away from the end of the current lease, and most people usually don't decide to move or stay before they know how much their current place is going to cost.

For a family, 60 days to pack everythig you own, and move, while supporting everyone is not easy at best, and untenable at worst. When I was single this was not the case.

This doesn't pass the BS test, especially if you are local. I have moved across town; with a family and a day job, in around 15 days, with most of the move taking place the first 7. Out of town, I can see 30 - 45. It would require planning and a UHaul (if within 250 miles) and a semi-truck moving company if further out than that. It literally just takes a bit of planning and follow through.

There are a lot more hoarders in this country than anybody will admit.

Some people will never move at all because the thought of having to "go through all our stuff and pack it all" is too daunting.

I do not see how this possibly applies to renters though.

>housing security

There is no such thing unless your home is paid off.

If you have a mortgage and are hit by a catastrophic life event that leaves you without a job and depleted of your emergency fund, your home is gone.

> If you have a mortgage and are hit by a catastrophic life event that leaves you without a job and depleted of your emergency fund, your home is gone.

That risk exists regardless of whether you rent or own.

The risks he mentioned are unique to rentals. It's very common for leases to essentially say "We can kick you out if we feel like it," no justification necessary. Even if the lease stipulates some justification, they'll find a way around it ("Our maintenance crew noted your excessive noise on 37 separate occasions. You also have a wreath hanging on your door, which is another violation of the lease.").

It's extremely rare for a mortgage to contain any sort of terms that allow you to be arbitrarily kicked out of your home.

The mortgage might be more secure, but an HOA can turn your life upside down if it's run by power-hungry busybodies and they can destroy the property values of the whole neighborhood while they're at it.

I've lived in several HOAs in the past, and yeah, they can be a pain. But in my experience, they are mostly concerned with not destroying the property values. In practice, they're only interested in stuff that's egregiously stupid. (Say that crazy old lady with the weird, creepy Halloween decorations including the beheaded baby that stay out from Labor Day to New Years.)

Plus, it's easy enough to avoid HOAs.

If you stop paying rent your ass is on the street in days.

Stop paying your mortgage and it can be months or years.

It takes at least 60 days in most areas of the US to evict a tenant.

When I call the super they drag their feet, do a half-assed job, take a dump in my bathroom, and then I get a rent increase for "improvements" they've made to the property.

I used to own a 1000 sq ft cape cod that was built in 1942. I fixed everything myself and since it was small, nothing could really get out of hand. I believe most of the pain involved in home owning lately has come from bigger houses with more complex systems/appliances.

Ditto, but that's the experience when calling most tradespeople. In many cases what looks like the super dragging their feet is actually the super calling their a series of tradespeople and having them all flake out. One window repair at my apartment took over a year to complete and I had 4 different contractors all come to the apartment, forget a part, say that they'd be back in a week, and never show up again.

The way to do it is really to find a small set of good, reliable tradespeople, give them your business for all your repairs and improvements, and pay them well. There aren't many of them, though, and they'll cost you. Finding that small set of reliable contractors is part of what your rent goes to.

My dad used to do a lot of the home maintenance himself. Sometimes it worked fine, and sometimes (like the time he tried to replace the roof himself right before a thunderstorm, without having a giant tarp) it was pretty disastrous. In any case, it's not really realistic in today's world (where you usually need two incomes to survive) with today's homes (which are giant, complex, and built to a labyrinth of building codes that you are probably violating when you do improvements yourself).

Did you enjoy making repairs though? In my experience that’s what makes people either love or hate owning their place.

Personally I loathe doing any kind of maintenance work. I hate dealing with drywall, paint, wiring, pipes, and whatever else you have to deal with when maintaining a home.

As an engineer (software) who owns his own SFH, I absolutely love doing repairs to my house.

I preemptively replaced my water system this spring (electric to gas heater, added water softener). Took me a whole week (5-10pm work) and lots of pre-planning, but every time I walk downstairs I can't help but admire all the coppers lines I piped in. I dunno it was kinda like Hello World of the building trades, hearing the heater kick in after all was done was awesome.

Now, I've worked with my hands my whole life and have done tons of smallerish projects around this house, but this was the biggest one I tackled. Saved me 3-5k I'm sure and it really gave me a sense of accomplishment.

To each is own though.

As an engineer (software) who owns his own SFH and also did a gut rehab. I hate doing repairs on my house. Between not having the correct tooling, the time premium I pay beyond what a reputable tradesman will take and how much I prefer working on software for dealing with home repair, it makes _zero_ sense for me to do this work. Every time I do repairs I think of my run rate vs the professional I could be paying to do the work and get disgusted. The only reason I ever do it is that finding said professional is a gig unto itself.

I like the _control_ I have in owning my place, but I abhor the responsibility of fixing systems.

Same. I just wrote in another comment in this thread that I hate spending hours at Home Depot searching for tools and parts. I find the whole world of home repairs hard to navigate. I watch a video on YouTube on how to repair X, and they talk as if things are standardized, but then I try it at my place and everything looks completely different and I don’t even know what those things are called.

Plumbing, woodwork,and even concrete work can be very enjoyable and rewarding experiences when done for your own purposes and very occasionally.

Yeah, we’re at opposite ends of the spectrum here :)

I hate all that stuff. I hate spending hours at Home Depot trying to find the right parts and tools to do things.

I just hate dealing with hardware in general.

Even worse, they make them bigger for the same price by cutting quality.

And walls. "Open concept" might look great in photos and provide good "wow" factor, and it's definitely cheaper to build, but it's also a great way to make a lot of square footage feel small when you live in it. Contrast smaller, older houses with lots of smaller rooms, which can often feel as big as much larger, newer houses.

Unfortunately, at least in our market, there's not much built in the last 20 years where the builders favored actual rooms instead of just one giant open public space. If you're lucky the basement's finished so maybe you get two of those.

What would you use all of the extra rooms for? One room for each person to sleep, a laundry room, a couple bathrooms, and a great room with living, dining, and kitchen is all you ever really need right?

Having different rooms really helps keep the kids’ shit from permeating everywhere. We’ve got a big living room mostly open to the kitchen and dining room and I’m very lukewarm on it. I’d love to be able to serve guests without everyone being able to see the kitchen mess, or being able to watch TV without seeing the kids’ toys and kitchen mess and dining table mess. (We have maids come twice a week and it’s still impossible to get that under control.)

A lot of the open concept houses around here use enough space for four rooms for one big one. Usually kitchen + dining area + a single living room easily large enough to be two. If you're lucky you have one other room in the public area, designated by design as a dining room (distinct from the merely-yards-away dining area!), and if you're super lucky it's at least got three walls rather than just being designated by flooring and maybe like one pillar.

More rooms is nice if you don't like being on top of every single other person in the house all the time, without having to go to your bedroom (aren't we supposed to only go there for sleep, for sleep-hygiene reasons?) to escape. In recent houses this means using ~3x the space you actually need to accomplish that, mostly by adding a room or two in a finished basement, because the main public area's gigantic, yes, but also entirely open.

It's also very nice to be able to contain messes. So nice. One large shared living space plus kids means no part of your house ever doesn't look like shit without heroic efforts or paid help.

The same logic applies to a living room that doesn't need to be as big as a football stadium: sofa,TV, a few chairs,table and sobe cabinets..what else is there?

Little boxes on the hill side made of ticky-tacky.

I've gone the full cycle from renting -> own -> renting, and I can tell you that you're forgetting about a lot of the limitations that come with renting. There are a huge number of things that are out of your control and hobbies you simply can't have. Especially if you want to compare apartment to SFH. You can't paint the walls, keep a bicycle outside, grow plants you want, have any loud hobbies, BBQ, even keep your muddy boots outside your door!

Also the quality of repairs completely depends on your land lord. I've had some great ones, but on average I much prefer having the ability to repair what I want when I want.

You can do a ton of home improvements yourself and save a ton of money, or work to build relationships with reliable trades people (they exist) and pay someone else to take care of all of that. If you rent your entirely at the mercy of your land lord.

The trend should not be to "give up on the dream of home ownership" but make it easier and more reasonable for most people to achieve.

I can paint the walls in my apartment and we have several free BBQs as well as ample event and leisure space. I also live within walking distance of all the shops and restaurants I could want. And I have easy access to public transportation.

Leaving my boots out isn’t worth half a million dollars and my spare time. I’m not muddy often enough to even consider where I leave my footwear. I worked in agriculture during college. It was literally never an issue.

My bicycle is in a secure storage room near my car and motorcycle. A security guard checks on them regularly, even when I am out of the country.

I have hobbies that I pursue outside my apartment. I even rent a garage with a friend for one of those hobbies.

Why does home ownership have to be made easy for most people? From where I’m sitting home ownership and “the American Dream” appear to be incredibly wasteful and not particularly appealing.

There’s a long list of things I would rather do than home improvements, regardless of how easy those improvements are.

Can’t we all just make the decisions that are best for ourselves?

I came here to make this same comment - renting forever is probably fine for people who are willing to accept a certain kind of lifestyle, but for most people it's too limiting. Got kids and want a playset in the backyard? Not in an apartment. Want a wall where there isn't one, or remove a wall that you'd rather not have? Again, nope. Want a home theatre with a big subwoofer so you can watch movies at home (one of my favorites). Nope, not unless you want some angry neighbors.

I don't think for a minute that owning a home costs less month-to-month over renting - with maintenance and upkeep, repairs and new appliances periodically, it's probably a break-even at best. But, at the end of it in 20 or 30 years I can sell the house and have that money (to buy a smaller house, or move into something senior-citizen appropriate, or a condo or whatever). With renting, that's not the case.

It also helps that I live in the Midwest, where property prices are not insane. I just sold my first house (made almost $30k over what I paid 18 years ago), and now I'm buying a 5-bedroom, 3k sq ft house in a nice neighborhood... for $230k.

Is it for everyone? No. But there's no way I'd rent, at least not at this stage of life.

The way I see it renting will always be more expensive because you have all of the same costs but you add in one other person to pay: the landlord.

Maybe the landlord can hire less expensive maintenance staff than you can, but maybe they can't. Is it really that different to have the house plumber come down and fix something vs. hiring a plumber from the yellow pages?

The landlord has to pay the mortgage same as you would. Maybe he gets a better rate because he can get some 1%er special equity deal, but fixed loans are like 3.5% so his margin can't be huge. He doesn't get a break on the taxes for the primary residence (although this went away I think?).

Ultimately it's difficult for a landlord to be so much more efficient that he can offer the rents at a lower rate and still make money.

Right, this is another downside to renting - landlords will tend to optimize for cost. So when a refrigerator or dishwasher breaks, it will be replaced with something reasonably priced. In my house, when the dishwasher breaks I can choose to replace it with something inexpensive, or I can spend a little more and replace it with a really quiet one that I can’t even tell is running (BOSCH are whisper-quiet, and totally worth the extra $$).

The rental market isn't based on what it costs to own a home plus a profit. It's a separate market and can often result in rents that are lower than the monthly cost of ownership.

At which point new rental units cease to be built/bought until rental prices rise to make it profitable again.

"Want a home theatre with a big subwoofer so you can watch movies at home (one of my favorites). Nope, not unless you want some angry neighbors."

How is that buy vs rent? Sounds like just house vs apartment?

Yes, that’s what I meant. The GP was specifically talking about an apartment. So yes, this one only applies if you’re not renting a house.

It has long been held that home ownership had a large stack of benefits for society over the alternatives.

For example, "Social Benefits of Homeownership and Stable Housing" (https://realtoru.edu/wp-content/uploads/2014/06/Homeownershi...)

"Research has consistently shown the importance of the housing sector on the economy and the long-term social and financial benefits to individual homeowners. The economic benefits of the housing market and homeownership are immense and well-documented. [...] In addition to tangible financial benefits, homeownership brings substantial social benefits for families, communities, and the country as a whole."

(Yeah, I know everyone is going to hate the "NATIONAL ASSOCIATION OF REALTORS" bit. But the citations and such seem reasonable. An older version is at https://www.nar.realtor/sites/default/files/migration_files/...) "Reexamining the Social Benefits of Homeownership after the Housing Crisis" (https://www.jchs.harvard.edu/sites/default/files/hbtl-04.pdf):

"Turning to the policy implications, federal homeownership promotion effects have been at least partially justified by claims that homeownership creates better citizens, results in healthier neighborhoods, and provides a range of other social benefits. Thus, it is important to assess the validity of those claims. This is not to say that other good reasons for supporting homeownership do not exist, only that if homeownership is not generating the claimed social benefits, we should stop using them as a justification.

"The updated literature review presented above does provide support for several social benefits of homeownership. Even after taking self-selection and other confounding factors into account there is considerable evidence that positive homeownership experiences result in greater participation in social and political activities, improved psychological health, positive assessments of neighborhood, and high school and post-secondary school completion. The jury is still out, however, on several other claims including improved physical health, and both the cognitive abilities and positive behaviors of children."

I agree and disagree.

On the one hand, yes, you're right that the repair expenses can be a big deal. If you don't want anything but the basics for the technology in your home, sometimes a home warranty can be a good option too but experiences vary significantly.

On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing. On a 30 year, you'll still pay a fortune over the life of the loan which makes the renting argument a lot closer.

It also depends on the phase of your life. Personally, I can't imagine having kids and dogs without a yard. If I didn't have kids or hadn't found an area where I really wanted to settle down, renting would make perfect sense.

At the point that you find somewhere to spend the rest of your life, become a part of the community, get involved, make local friends, raise a family...home ownership makes a lot more sense.

I'm a firm believer in outsourcing repetitive work. I've had a yard company since the first 2 months in my first house because the time trade off for me was more than worth it. You also will eventually learn your way around finding good and reliable contractors for the important things (plumbing, electrical, general repairs). Word of mouth is hugely important there.

A lot of this stuff is pretty easy to learn too. I was pretty proud of myself the first time I disassembled a toilet to fix it. The more you learn, the less you need to call for help for small stuff.

> On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing. On a 30 year, you'll still pay a fortune over the life of the loan which makes the renting argument a lot closer.

If you can assume historical returns, renting is a financially superior choice. Well, assuming my math was correct. Both are big assumptions admittedly.

The reason is that when you buy, while you are effectively saving by having your money go towards your home, over the long term on average home prices don't increase.

On the other hand if you invest that down payment, it will compound.

Note that the result is not the same if you buy a place with cash and rent it out to others, because in this case you can reinvest your returns. However if you buy a place to live in, for most people they need a mortgage and their theoretical savings can not be reinvested.

Or in other words, O(c^n) is a superset of O(n) for c > 1.

> over the long term on average home prices don't increase.

I assume you mean adjusted for inflation here? Even then that hasn't been true.

The problem with renting is that you're still paying the mortgage, only in the renting case you're also paying the middleman who then pays the mortgage. This is why rent per month is higher than mortgage per month for the same house. So the returns from that downpayment you instead invested need to make up for the monthly loss in rent, plus the lack of an asset at the end of the process.

It's not a small difference either. My current mortgage is $1250/month for a single family home. 13 years ago when I was renting the rates started at $1600/month for a tiny studio apartment unless you were willing to commute an hour each way. Rents have gone up in the meantime. You need to be making some baller returns on your downpayment if you're going to beat that.

This comparison isn't entirely fair because the rental unit also included maintenance and groundskeeping. In my house I have to do all that work myself or hire someone. However, in the rental unit I had to pay for the utilities. This is a problem because the landlord will never replace something like an AC unit or a refrigerator with anything but the absolute cheapest and most expensive to run model. In my house when I replace it I have the option of buying the high efficiency model and enjoying the cost savings over the life of the unit. Plus when something breaks in my home I just fix it or go out immediately and hire someone to fix it. In the apartment you have to contact the landlord who then sits on it for two weeks before contacting his maintenance guy who only comes by once every couple of weeks to look at it and then order the part so maybe he can fix it on his next visit. In the meantime I'm freezing my ass off with no heat for all of January. I don't miss renting at all.

The problem with renting is that you're still paying the mortgage, only in the renting case you're also paying the middleman who then pays the mortgage. This is why rent per month is higher than mortgage per month for the same house.

That statement is very location specific.[1] In SF, it's cheaper to rent than to buy (on a monthly basis) and because of rent control, it's often cheaper to rent versus buy over your lifetime.

In SF, it costs ~$1,000 to rent what would cost $600,000 to buy. In Cleveland, it cost ~$1,000 to rent what would cost $100,000 to buy.

Obviously very different outcomes if you rent versus buy in each city.


Well yes, Prop 13 continues to be a huge mistake.

That analysis is overly simplified for a number of reasons, two of the big ones are 1) You often aren't comparing the same properties and 2) while it's true that you are potentially indirectly paying a mortgage, it doesn't have the same terms as what you could negotiate yourself for buying the same property today.

These and other reasons contribute to why rental costs and TCO for residential properties are not in lock-step.

So the real answer is (unsurprisingly) "it depends". Sometimes you are better off financially to rent, sometimes to buy - very dependent on location, dwelling needs, frequency of moving, etc. In the USA the balance is often tipped towards buying by tax incentives, which are politically if not economically popular.

> I assume you mean adjusted for inflation here? Even then that hasn't been true.

I used the numbers from here: https://economics.harvard.edu/files/economics/files/ms28533....

Specifically in section IIIA

"The stylized fact from the studies on long-run housing capital appreciation is that over long horizons, house prices only grow a little faster than the consumer price index"

> The problem with renting is that you're still paying the mortgage, only in the renting case you're also paying the middleman who then pays the mortgage. This is why rent per month is higher than mortgage per month for the same house. So the returns from that downpayment you instead invested need to make up for the monthly loss in rent, plus the lack of an asset at the end of the process.

Right, but the down payment ends up compounding to greater than the value of the entire home at the end of the 30 years and the difference is significant enough to cover (rent - mortgage)

> This comparison isn't entirely fair because the rental unit also included maintenance and groundskeeping. In my house I have to do all that work myself or hire someone. However, in the rental unit I had to pay for the utilities. This is a problem because the landlord will never replace something like an AC unit or a refrigerator with anything but the absolute cheapest and most expensive to run model. In my house when I replace it I have the option of buying the high efficiency model and enjoying the cost savings over the life of the unit. Plus when something breaks in my home I just fix it or go out immediately and hire someone to fix it. In the apartment you have to contact the landlord who then sits on it for two weeks before contacting his maintenance guy who only comes by once every couple of weeks to look at it and then order the part so maybe he can fix it on his next visit. In the meantime I'm freezing my ass off with no heat for all of January. I don't miss renting at all.

I completely agree. The thing I actually really wanted to buy a house because I want a grand piano and to not have to worry about moving it. Sadly at least from my own calculations I just can't justify it.

The thing that pushed me over the top on renting was purchasing a house with an accessory dwelling that we could rent. Houses with rentable space often don't sell for that much more than those that don't have said space, but they come with an income stream.

That's an excellent point. Like I said in my original comment, it is comparable if you buy a place outright. I suspect if you are able to both extract rent while also save on your own rent, that may be the best of both worlds.

Perhaps I should take your idea and use it myself =D

From what I've seen, the assumptions tend to dominate this discussion. I'm absolutely cherry-picking to make a point, but if you took your down payment in 1965, thinking the market looks pretty darn good, and put it into a DJIA index fund while you rented, about 30 years later, your investment would finally be worth again what you put in [1], while the person who bought the house would have some sort of equity in it.

To cherry-pick in the other direction, if you could either buy or rent starting in 1980 or so, in 30 years you'd see ~7x return (no inflation adjustment). There are homes you could buy in 1980 that would exceed that, but not very many places, and it's tricky to know what those are without hindsight. (Investing is pretty easy in hindsight, in general.)

To the extent that the stock market is modeled by an exponential curve, it has deviations from that curve on the order of your entire working lifespan.

Discussions about the utility of the stock market for retirement revolve around you investing in it continuously. In that chart, even though a point investment in 1960 may not turn out well, the money someone is putting in every year will start to do pretty well in the 1980s. The analysis around buying in a bit every year is different, but in the previous paragraphs, I'm talking about a point-in-time investment of a particular sum, so we can just follow the chart across. If you can finagle a rent that is significant lower than a mortgage, then you can also include in your model putting that difference into the market. (Though, for that to be "valid", note you actually have to, you know, do that.) But while rents and mortgages tend to be close to each other for various reasons, at different times and places they trade off which is more expensive, so that's not an assumption you're justified with in the general case.

So if you've got a mortgage cheaper than rent in 1960, you're going to pretty handily beat the guy investing in 1960 for quite a span of time. If you can get rent cheaper than a mortgage in 1980, and invest the difference over time as well, you're going to handily beat the guy buying the house.

What about if you buy a house, say, right now? Well... that's the million dollar question, isn't it?

[1]: https://www.macrotrends.net/1319/dow-jones-100-year-historic...

Well that is simple, minimize your down payment even if it means taking on PMI as long as your mortgage payment is less than rent then you are better off with the house.

It's not that simple of course, because there are many other concerns like property taxes, insurance, maintenance, renovations/upgrades, furnishings, etc... But the idea that you have to lock away a massive down payment into a non compounding asset isn't necessarily true.

In my calculations I found a home to be slightly more expensive than renting when taking everything into account. But it's a huge lifestyle upgrade for some people, myself included.

Are you accounting for the fact that if you pay off the house you are now living rent free with only maintenance + property taxes + insurance?

Would the difference between rent vs buy be enough to draw down at what is considered a safe rate of 4% to pay for some place to stay - ie if you could save $1000/month by renting instead of having a paid off house would you be able to have an extra $300,000 (12000/.04)?

If you run the numbers and assume that whatever you’re putting into the mortgage will be invested instead once it’s paid off, the house catches up over time.

Of course, this is varies a bit depending on the numbers involved.

How do you invest a would-be down payment such that it compounds effectively?

Put it in an index fund like VTI and don't touch it or use one of the robo investor platforms like Wealthfront and Betterment.

>On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing.

You'll have property taxes as well, which could be meaningful depending where you live. I was talking to one of my neighbors the other day who has lived in his home here in Seattle for over 40 years and he told me he is taking out a equity line of credit against his fully owned home to pay the property taxes as they've increased beyond what his retirement income can cover.

Once the home gets older you get into more than just maintenance as well; you get into replacement. Replacing the appliances, roof, windows, mechanicals, etc can be lead to some very serious expenses. The same neighbor needs to replace his roof, which he also can't afford until he gets the credit line.

You are absolutely correct. However, there are better ways to handle a roof replacement than incurring the $10k+ cost in one year. It's a foregone conclusion that you will need a new roof, just a matter of when. Best to start saving right away every month and include that in your overall cost calculation. It's much easier to pay for a roof over 25 years instead of all at once. Plus then you can use interest to your advantage.

>On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing.

Property taxes on 3 bedroom place in san francisco are going to be at least $1,000 a month. Even when you've paid it off, it stays expensive.


Would you please stop posting flamebait comments to HN? There's no information here.

We've asked you countless times to stop posting low-quality comments to HN. If you keep it up we are eventually going to ban you.


I'm right there beside you - I'm coming on two years of home ownership, and I'm not terribly enjoying it. I love the neighbourhood, but I just don't think I'm cut out for home ownership. I've had more problems in 2 years of home ownership than I had in a decade of renting. It's cost a ton more money. Is it an investment? Possibly, but I've sunk a fair bit into it as well. I now wake up on Saturday mornings with a list of things that I "really need to get to". It's been terrible for my mental health, and I don't know if my bank account will ever reflect the extra mental strain.

I had the same home ownership experience...I kept waiting for it to get better but it just got worse. Really took a toll on my partner and I's mental health. Owned for just shy of 10 years. Been renting for a little over 2 years now after finally getting out of it. Renting has its own pains, but that stuck feeling of home ownership + all the maintenance it entails far eclipses rental annoyances in my opinion.

I never hear anyone discuss that - everyone I ever talk to seem to experience nothing but joy - I'm glad that I'm not crazy for having a less than stellar outlook on the whole endeavour.

Definitely not crazy. I think some people feel pressured to make their life look like it's going well at all times so the ones that are having a hard time just don't talk about it.

Are these problems that would have shown up on a survey, I assume that like in the UK you did due diligence on the property first.

Due diligence will only go so far, though. Last time we bought, our surveyor was clear that there were parts of the property they would not be able to inspect, and obviously they could not give any assessment of the state of those parts. For example, they weren't allowed to move the seller's furniture to check underneath or behind it, and naturally there would be structures and services that couldn't be inspected without taking floors up or the like. We have since identified several significant defects that were missed as a result of those limitations, but there is nothing either we or our surveyor could realistically have done to anticipate them given there were no visible warning signs in accessible areas.

Some were - we knew we needed a new furnace, and needed to get our fascia repainted, but others, like having our waterline freeze, weren't things I don't think the inspector can look for. Ultimately the inspector can only see what they see, and you're taking on responsibility for the rest.

Information asymmetry between buyers and sellers is pretty high. Most home "inspectors" rely upon referrals from agents, so they tend to provide favorable inspections. And their agreements usually indemnify them against recourse. Many buyers don't realize this and think that their stamp of approval is valid.

You can always try to find someone you can relatively trust to do an inspection but a good contractor can be just as hard to find, and finding one willing to take a day out of his busy schedule to checkout the home you're interested in can be difficult.

It's not an investment if you live in the property.

Yes and no.

I don’t consider a home an investment in the traditional sense.

I do consider a paid off house to be worth the amount of money that I would have to save to have a safe rate of return to live somewhere minus maintenance and property taxes.

If a paid off house will save me $12000 a year. The value of that house to me is $12000/.04

Also, a house is a great inflation hedge. Rent goes up with the market. The mortgage stays the same. Property taxes and insurance can go up.

> Also, a house is a great inflation hedge. Rent goes up with the market. The mortgage stays the same. Property taxes and insurance can go up.

It's actually even better than that: if inflation goes up, you pay back the mortgage with cheaper dollars than you bought it with. If you're expecting higher inflation in the future (and it hasn't yet been priced into interest rates) a house is a great purchase.

The flip side is that if you get deflation (say, an economic recession hits and a lot of people in your area lose theirs jobs, possibly including you), a house is a leveraged asset, and you can quickly lose everything. As many homeowners found out in 2009.

But you have to live somewhere. The eviction process is a lot faster than the foreclosure process. A landlord is incentivize to evict you as fast as possible. The bank does not want your house - especially during a recession where the value is dropping and then they become responsible for insurance and upkeep.

Anecdotally when my parents bought their house in 1978, the $600 a month they were paying on their mortgage was a slight stretch. When they were in their last year in 2008, that amount was laughably small.

> Anecdotally when my parents bought their house in 1978, the $600 a month they were paying on their mortgage was a slight stretch. When they were in their last year in 2008, that amount was laughably small.

Hopefully wage growth keeps up with inflation then.

That’s the beauty of a fixed mortgage. Wage growth doesn’t have to keep up with inflation. The mortgage stays the sane - the only thing that goes up is the property taxes and insurance. One of the few benefits of living in one of the most conservative suburbs of one of the more conservative states is their aversion to raising taxes.

But the only way to make it hurt less is if you have more spending power in relation to it - if your wages don't rise much, but the price of living goes up, the mortgage is still going to hurt just as much.

The eviction process varies quite a bit by municipality. Evicting someone in San Francisco is _much_ harder than evicting someone in another city. I would much rather rent in SF than own a home.

I hate mowing. I don't care about lawns. But I like being in control. No more moving every year to keep rent low. Update & customize to meet my desires & save money. Grow a garden & wildflowers. Remember the names of my neighbors (because the neighborhood isn't a revolving door).

But, I've always loved the long game. Plant trees for shade in ten years. Build a pergola (more shade, cooler house). Replace the old crappy X with a higher quality model that will pay for itself in five years. So on & so forth.

You do have to learn to do some of the work yourself, because tradesmen are more trouble than they are worth for small jobs.

If you hate mowing and have the space, consider getting some https://en.m.wikipedia.org/wiki/Ouessant_sheep ... They’re cute too.

Glad to see this near the top and glad to know I’m not the only one who thinks like this.

Like you, I only own a place as a compromise with my wife. And like you, I hate everything that comes with homeownership. People don’t realize there are a lot of hidden costs in owning a home.

When you rent, if you secure a 12 month lease, you know exactly how much you’re spending in housing over the next year.

When you own, all bets are off. This year for example we’ve already spent a couple thousand dollars on appliances that broke. There are things around the place we know are gonna need repairs soon and those are gonna cost us a few hundred more.

Our situation is compounded by being under an HOA, so special assessments are always a possibility.

I know two people who sold their homes and went back to renting specifically because they couldn’t put up with maintaining a home anymore.

I saw renting as paying for a service. I know I wasn’t building equity, but I saw it as paying for not having to worry about all the crap I have to worry about now. Any issue was a phone call and $0 away from getting resolved and the maintenance folks were always awesome at the place where we lived.

> When you rent, if you secure a 12 month lease, you know exactly how much you’re spending in housing over the next year.

Only for exactly 12 months though. After that, your rent could double for all you know, and there’d be nothing you could do. You can move, of course, but now you’ve been forced to upend your life.

I live in a rent stablized apartment, and I feel lucky not just because my current price is lower than market rate overall. But of course, that’s not a scalable economic solution.

True, but from my perspective moving is a small, point in time hassle that you go through every couple years as a renter, as opposed to a lifelong stream of issues that you have to deal with as a homeowner.

If the rent is going up where you live, it’s probably going up everywhere else you would want to live in lockstep.

And from my perspective moving is an enormous hassle. Multiple vehicles, recreational vehicles, even a project car, and then of course a garage full of tools. Thousands of pounds of weights and gym equipment. King size latex beds that weigh a small ton, 4 beds altogether. Couches, dressers, half a dozen large TV's, file cabinets, a six-monitor desktop setup. Moving once a decade is more than enough, thanks.

Oh, I forgot that benefit of renting!

* As my ol' granma used to say, two moves is the same as a fire. New furniture all around!

When you rent, if you secure a 12 month lease, you know exactly how much you’re spending in housing over the next year.

But you don’t know what you are going to be paying in year 2,3,4,5 etc.

Our rent went up from $1300 in 2012 to $1700 in 2016. It’s now $1900/month.

Besides that, I don’t have people making noise all around me and everyone had the apartment mandated Comcast bundle including the wireless router where we had 10-15 wireless signals interfering with ours.

> Besides that, I don’t have people making noise all around me

I had the opposite problem. When I lived in a condo previously, I had the poor luck to live next to a shitty neighbor who would have parties at 5AM on Monday morning because she didn't work. The fact is anyone can get unlucky and have a shitty neighbor, but at least when you rent if the hassle is bad enough you can much more easily up and move.

> paying for the freedom to easily up and move if something else fits my fancy.

There is something to be said for this.

However, there is also something to be said for the ability to not be kicked out of your living space directly ("we have decided not to renew your lease") or indirectly ("should you renew your lease, we will be increasing rent by $500 and installing smart locks in every apartment").

I totally agree with you. Certainly there are tradeoffs to both owning and renting, and different people will find the tradeoffs stronger in one direction or the other.

However, the reason I made my original comment is I feel that so often, at least in the US, the downsides of home ownership are completely minimized (I think people usually vastly underestimate maintenance costs, both in time and money) while the downsides of renting are blown out of proportion (the "you're just throwing money away" false comparison).

Home and property ownership are deeply tied to some of your fundamental rights given as a citizen in the US. Many freedoms granted to you can be superceded once property is owned by other private entities because they require a spatial context.

Take gun ownership or something less controversial: a grill. If you own the home, you can grill to your heart's content. If you rent, there's likely all sorts of rights you forfeit in a contractual agreement (lease) and using a grill is often explicitly banned (it's a fire hazard and doesn't effect the property owner to disallow it, only helps them).

Thankfully, many states have enacted protections that override what can be contracturally restricted for living dwellings, granting new explicit rights but these are by no means exhaustive and vary from state to state and even by municipality.

In the case described, you're choosing convenience over liberty. "Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety." In this case I would support home ownership over dealing with mild inconveniences of maintenance (then again, I'm used to performing maintenance).

At the same time, many don't have that same choice and its not about choosing prefered conveniences. Renting is the only option for many because they can't even imagine starting a mortgage or gathering the necessary downpayment. On-top of that, as mentioned by others, property ownership becomes a huge financial liability that in today's economy and job market for many makes juggling finances even harder by reducing socioeconomic mobility. Maybe they wish to own and could currently afford it but the liability is too great to consider due to volatility in the job market.

With ownership, slightly better income opportunities often have to be passed by because once relocation fees, market flux, and logistics of a current mortgage are factored in, many opportunities turn out to be large setbacks. Unfortunately many must choose between renting and flexibility for enough income to live reasonably vs many granted rights they're forced to give up in order to survive--I dont consider this a convenience choice. This should not be the case, but IMHO, it's a result of the ongoing further and rapid concenteation of wealth and power in the United States that lead to these scenarios.

We are losing our country to a very few peoples' gains. Perhaps its always been this way but it feels like a more recent trend from my limited view

> ... and using a grill is often explicitly banned ...

Don't know if it is still the case, but last time I was in an apartment (early 2000s) there were also limitations for Internet and Television. DirecTV was popular at the time, I was the first to put a dish in a bucket on the balcony. The apartment managers said I had to take it down and use Comcast. Fortunately, when presented with a printout of the FCC rules they reneged and dishes started popping up all over the complex... Which didn't do great things for the brochure :)

Having ownership and responsibility is nice imo. Pay off a house, and you have some nice real estate that you can live in, sell off, rent out, transfer to your children/grandchildren later in life. Way more options than having to pay for rent indefinitely. I've lived in way too many apartments in the past decade, purchasing a house and land has been the best decision of my life. There are tradeoffs to both lifestyles - I'd say that apartment / renting is great for 18 - 30 and gets progressively worse the older you get.

I'd rather have a dream where I have more responsibility and ownership as I progress in life rather than the dream of eternally renting and owning nothing. Sure I have to deal with shit I used to just call up my landlord and have them deal with it, but learning new skills and how to fix random things is fun too, at least to me. Not everyone's cup of tea I get it, but neither is renting forever.

Am I the only one who has always seen renting as a temporary arrangement only? If you don't own something, somewhere, doesn't that mean the same as being homeless? Not trying to offend anyone. Genuinely wondering, are there people who really don't want to own real estate ever in their lives?

It's the same bargain as being dependent on anyone else for anything else. Whether it's a problem depends on how abundant that "something else" is, which depends on the larger societal context.

I'll give an analogy: my dad used to hoard toilet paper, preferring to "own" large stockpiles of it rather than just get it as necessary from the store. Why? Because he grew up in WW2, in an occupied country, and had to shit in the river and wipe his butt with stones. This doesn't even compute for my American-born generation: to us, the supermarket is always there, and if you need toilet paper you go buy it.

Similarly, if you can assume that another rental will always be there when you need it, there's no need to own. And in dense urban areas with lots of landlords, that's a pretty valid assumption. Somebody refuses to rent to you (which has happened), just rent from somebody else. I'd rather own financial assets like stock - which I can take with me anywhere, and which usually have a much greater monopoly position than the landlord - and then use the income thrown off by them to rent accommodation.

Would I be fucked if there were a financial crisis or breakdown in social order? Yes. But if I were to own a typical 1/4 acre suburban detached home, I'd still be fucked - because you're still renting water & sewer access from the city, electricity from the utility, Internet from Comcast, food from the grocery store, etc, not to mention that your ownership only extends to your ability to pay the bank monthly. If you want to actually be secure & independent, you not only need your own land with a sturdily-built home, you also need solar panels, well water, a septic system, and obscurity. And you need to own it free & clear with no debts.

A similar logic applies to people who take Uber instead of owning a car, or who pay monthly for a SaaS instead of buying software outright, or who get food delivered rather than owning cookware and cooking themselves. As long as they can count on the service always being available, it works.

I've been renting for a long time and I have never considered myself to be homeless. When it rains I generally stay dry. I'm not sure how renting implies or is in any way similar to homelessness. I still have the means to provide shelter for myself. I could even rent a hotel room for quite a while, long enough to find a new place for sure.

I don't see how the risk of being evicted (is this something people worry about?) is any greater than the numerous possible disasters that could strike a place you own in ways renters don't have to worry about.

How many kids do you have? I have 6 and moving in the elementary school district is a huge pain. There aren't alot of rentals and big surprise, nobody wants to rent to someone with 6 kids. Not only is 60 days notice not enough time. The landlords require 60 to 90 days notice and of course every rental wants you to move in immediately. In my experience, it's rare to find someone advertising a rental more then 30 days out from availability.

No. People who rent are not homeless. That's ridiculous.

This kind of semantic babble only serves to cloud people's judgment. For some people, owning makes more sense. For others, renting makes more sense. Not sure what is hard to understand about that.

Renting an apartment is actually the opposite of being homeless. Homeless people have no secure housing and need to sleep on the streets, in cars, or in shelters. If you are renting a place, you have 24/7 access to it and can stay there for shelter.

I do see renting as a temporary arrangement only in the sense that at any point it's possible I will be forced to move out.

However, after doing the math I think I will rent for my entire life since it makes much more sense financially (much to my surprise)

No? It give me freedom to rent.

At any point that I feel like it, I can pick up and move. Whether it is to a place across the street or on the other side of the country.

I wouldn't have nearly that much freedom if I had the misfortune of owning my own place.

As someone put it: freedom is just another word for "having nothing left to lose". Homeless people are generaly most free of all, they do not have any obligations, bills to pay, work to show up, but I wouldn't consider that something we should aspire to.

Do you see this as a temporary or permanent situation in your life? What is your "end game" so to speak?

> What is your "end game" so to speak?

One very reasonable 'end game' for those who do not want to own is to invest enough cash in the stock market so that your rate of return supersedes your rent, thus guaranteeing that, if rent increases are within reason, you are able to finance renting interminably. Stock markets typically have a higher rate of return than real estate, so...

Nothing is permanent. The end game is death.


Buying a home is a bad investment, because I could have all that money getting 7% returns in the stock market.

There's lots of places (entire countries) where people of ordinary means have little chance of owning real estate.

In SF you probably have more freedom as a renter than property owner.

Plus, there are all the benefits of renting an apartment:

* If your neighbor decides to throw a party at 2:00 a.m. on a Wednesday, you're automatically invited!

* Getting to meet all your neighbor's pets on the 4'x6' area of lawn designated for walking them!

* No need to worry about interior decorating; your favorite wall color is always white! (And your favorite exterior color is that weird greenish-beige!)

* No need to worry about that hobby that takes up too much space: you don't even need to consider it!

* If you're really lucky, the excitement of drug busts and gunfire in the parking lot. Your own action-adventure show!

An apartment doesn't have to be a terrible apartment.

But a non-terrible apartment can become a terrible apartment in a surprisingly short time. And by god I hated moving every year or two.

One way to think about it is the Spread between the cost of owning vs the cost of renting. For example, in SF, the spread is very small and hence favors the renter.

Here's an example: In SF, your cost of ownership is roughly 2% per year (1.4% property taxes, 0.5% for Earthquake Insurance, 0.3% for repairs and depreciation and HOA), which comes to a total of 2.2%.

The average Rent for an equivalent house is roughly 3% of the purchase price per year. So the spread is just 0.8%. Which means, if you can take the equity you would have put into the house and put it somewhere else, as long as you get a 0.8% real return (easier said than done with the high PEs we're facing), then you'll be ahead with renting. And of course, if you need to do a mortgage as most do, that adds a additional 1-3% to the cost of ownership making it even more in favor of the renter.

Now keep in mind, here in SF, it's pretty extreme. Most places have a much larger spread between renting and owning.

In a high-demand area like SF you're probably seeing an appreciation in the value of the owned property equal or greater than whatever you would be likely to earn from other investments.

According to Trulia[1] the median sale price for two-bedroom homes increased from $1.010M five years ago to $1.407M today, which corresponds to an annual return of about 6.8%. Assuming that trend continues, the actual spread would be more like -4.3% for ownership (2.5% cost minus 6.8% appreciation) vs. 3% for renting, or 7.3% altogether in favor of ownership. You'd only come out ahead by renting if you can find an investment returning more than 7.3% per year.

[1] https://www.trulia.com/real_estate/San_Francisco-California/...

The very long term house/condo appreciation will always match incomes. Don't expect SF real estate to appreciate the way it has in the last 40 years.

You're right, but this also requires the renter to actually make their extra money work for them. Sounds simple, but so many people don't. It's similar to why people like tax refunds; it makes no sense financially, but it acts as a quasi forced savings account.

My earthquake insurance is more like 0.1% and I'm pretty sure the rates are set by the state - where are you getting your numbers?

If the cost were 0.5% I don't think it would be worth paying, that would buy a lot of seismic reinforcement.

You must of got one hella of a deal!

For CA: "Based on where you live, insuring a single-family house can cost from $2.50 to $5.50 per thousand dollars of coverage" .25% to .55% That's quite significant.


That’s a percentage of the value of the structure, not the structure+land.

When buying insurance, you answer questions about your property and the insurance company estimates the cost of replacement of the structure. In my case, it’s about 30% of the market value of the home.

Yes, but most earthquake insurance policies have huge deductibles and the house is often worth ~1/3 of the entire property, so your number could still align with what others said.

+1, my annual SF earthquake insurance premium is 0.06% of the appraised value of the house. It's not even worth mentioning in adding up the total cost of ownership.

are you sure? That's almost 5-10 times cheaper than the averages posted, above.

It's also not clear if any of these numbers are %ages of the total property value, land + house, or just house rebuilding costs (which are often over $400/sqft in California after a disaster).

My worry with CEA is in "the big one", will they have enough money? They have $17 billion in assets, which is theoretically enough. However, the Northridge quake caused over $10 billion in damage, and the 1906 earthquake was over $8 billion in todays dollars. (Although I question that number too. 500 city blocks were destroyed in 1906. Would it only take $8 billion to rebuild 500 SF city blocks?)

If we see a major San Andreas quake that devastates LA, the CEA could run out of money.

I do agree it will be a shit show when the big one hits. Don’t rely on earthquake insurance to fix your problems. Unless you have $$$$, your house is not going to be in the front of the line for rebuilding. Spend a thousand dollars now on braces and bolts.

I imagine everyone in the building trades will be fully employed in the rebuilding effort even if CEA runs out of money. The state would probably bail the CEA out, but either way people are going to be waiting for a long time for someone to come give them a new house.

>This ridiculous idea that renting is "throwing money away" is absurd. I'm paying someone to deal with all the shit I absolutely don't want to deal with, and more importantly I'm paying for the freedom to easily up and move if something else fits my fancy.

Yet you'll almost always come out ahead financially, so not ridiculous at all. Real estate is a great way to build wealth, and owning your home comes with all sorts of financial advantages.

Also, you're paying that super. Nothing is free; it's a part of your rent. You may get lucky and have a responsive management company... or you may not, and that is likely tied pretty closely to how much your rent costs each month. It's not hard to get in tough with service people and, you know... you can always just learn how to fix things yourself.

Those two complaints are easy to fix.

Get a yard service - I pay $150 a month for them to come twice a month.

Get a home warranty - it’s about $600 a year and they fix everything - appliances, hot water heaters, plumbing, etc. I haven’t purchased one for current home because it’s a new build, but I did for furnished rental property I previously owned. In the grand scheme of things for an owner occupied home it’s probably not a great deal but it’s worth the peace of mind for some.

Do not get a home warranty. It's about $600 a year and they do nothing when you report an issue. When you call to complain, they send a contractor. Who doesn't show up. When the third contractor they promise to send finally shows up, they're the cheapest contractor they could find in 100 miles and they make the problem worse. Finally you threaten to sue and they close the policy and give you cash in lieu of replacement and you take care of it yourself.

It very often costs a lot more than $600 to maintain a home for a year. The warranty service only makes money if they can spend less than that on the home. As a result, the biggest and most profitable warranty companies are the ones that promise the most and spend the least.

I had two furnished rental properties and I never had any problems with them.

Just bought a new house and requested the seller pay for a home warranty for the first year. I may look to keep it after that. It doesn't take much in home repairs to justify $600/year, provided that the work is done well and on time.

That must be a huge yard, or is there some landscaping involved?

Not a huge yard by any means.

Heck, now that I’m looking, it is overpriced.....

I hate having to take care of the yard, to deal with unreliable tradespeople when things break, to deal with the huge expense of minor home repairs

So, how often do things break, then?

I've always thought of home ownership as full control of what gets replaced and when. No unnecessary refurbishments unless you like that sort of work, or opt in for preventative maintenance. Most people I know who live in single family houses haven't had to do much actual or imminent repairs. Wirings last for decades. Ditto for pipes and sewers. Heating too. Some have done minor jobs like repainting a few rooms, or painting the roof every ten years. Others couples do a lot of redesign, refurbishing, and redecorating all the time but they seem to like it.

In my experience, owning your house is a very cheap way to live unless you like to re-do things all the time. There's the risk of disasters like pipes breaking and flooding walls but those are, honestly, dead rare (and you carry insurance, of course).

Ditto for yard. You can make the yard do with minimal maintenance if you choose to do so. Or you can create a varied garden that generates a lot of work throughout the season if you like that sort of thing. But it's quite easy to create a minimal maintenance yard and most home owners I know seem to have opted for just that.

Disclaimer: I don't live in USA and maybe things are different there.

Really comes down to lifestyle - I love having a home. Want to run 220v for a basement milling machine? Easy. Want to knock out a wall to put in a big spa tub? Done. Want to put a spray booth in the garage to paint wooden kayaks? No problem. Much of what I want to do in my spare time wouldn't be feasible in an apartment. Then again, I don't mind doing some minor home repairs so my costs are minimal. You can always get a home warranty plan if repairs bother you that much.

Hmm, that leads to a really interesting business idea (if it doesn't already exist). The reason a building can have a super is because there's scale. You only really need 1 super to deal with multiple units and overall building issues. Why not start a business where people pay a small monthly subscription fee (effectively as some kind of insurance premium), where a service person can come fix their home issues? This wouldn't be much different from renting an apartment but the key is that with renting your rent includes a portion the landlord should be reserving for maintenance and to pay the super/property manager. This would be the same as condo maintenance/strata fees basically. For major repairs, it's the same thing as being a landlord/owning a condo. Most the time major repairs aren't covered in fees, and you should have a reserve fund. Maybe this business can actually manage that for you and leverage scale of having multiple homes.

Transportation time/costs. Supers work because they are in the building (generally), and can respond quickly and be efficient in handling multiple simultaneous issues.

What you describe does exist, it's called property management, and they generally take some %age of your rent.

You are conflating home ownership with house ownership. You can buy a condo and pay someone to maintain it for you, just as your apartment landlord can hire unreliable managers tradesworkers to fail to fix your water heater.

I grew up in a small house with about 700m2(7500sq ft) land around it. I didn't like moving lawn or watering plans and veg in our small garden.I moved out to live on my own when I was about 19 and have been living in flats ever since.I bloody hate flats.. There's always some bastard neighbor who ruins the whole thing, you can't even go outside and have a bbq,not to mention the lack of privacy or space for kids to play...While I'm not an American, I do see the appeal of house ownership and still not losing hope to have one day at some point in my life.

I think the point here is "to each their own", and there shouldn't be such a thing as "the" American dream, or rather that the American dream is for every person to live their life exactly as they want.

My wife and I would not give up owning our house for anything, and would never go back to renting. I pride myself in being able to make minor repairs to all kinds of things around the house, and seeing them as fun engineering challenges rather than burdensome responsibilities. My wife loves gardening and needs plenty of yard space for planting.

Most of all (and I may be in the minority here), I really value peace and quiet, and true peace and quiet can only be achieved in a detached house, and preferably even with some generous distance from the next house. If I think back to living in an apartment, I was super easily annoyed by any noise made by neighbors, including pounding footsteps, loud music, screaming children, barking dogs, etc.

Of course the house we own isn't exorbitantly large, or not larger than what we need it for, but even if we'll need to "downsize" at some point in the future, it will be to another detached house, and not an apartment.

> I really value peace and quiet, and true peace and quiet can only be achieved in a detached house

Irony: one of the few reasons I continue to put up with the hassle of homeownership is that it affords me the freedom to play music as loud as I like, as late at night as I please, without irritating my neighbors.

Good for you for being mindful of other people's desire to live without noise. There should definitely be more of this mindset in apartment buildings and other communal spaces.

And to clarify, I like to play music too, sometimes very loudly. It's just when I don't have control of the noise that I have a problem.

This seems like a great area for disruption. You can imagine a property manager for a homeowner who you call for anything. They can charge a monthly fee plus a percentage on top of any (vetted) subs they use. A single person can probably juggle dozens to hundreds of homes; then scale that.

It's the services of a rental property manager without the rental part.

With adults these days (me included) being more technically savvy but less... handy, it seems perfect.

Such things exist. I hear ads for them on the radio. They pitch themselves as "maintenance insurance" or some such, but I think it would do what you're asking.

You can get a home warranty that will cover a lot of the systems in your home.

As someone who has been through the pain of using a home warranty I highly recommend against it. When we had one we found one of 2 things always happened:

1. Whatever broke wasn't covered by the warranty. For example on a fridge, the most common component to break is the compressor, and that's not covered by a home warranty because it costs just slightly less than the cost of a refrigerator to repair. 2. The warranty company gets to choose who fixes your problem and they choose the lowest bidder, which is almost always a person who doesn't have better work to do because they aren't very good. Every single time I've used a home warranty, I had to have someone come back and re-do the work because it was so shoddy.

YMMV, but I've heard similar stories from others who have used them. I now consider a home warranty to be a negative rather than a positive because I've had to pay another person to come in and fix something correctly that was done improperly by a home warranty repair person.

All the time I used my warranty the work done was fine. You do have to pay a service fee for them to come out which is annoying.

Free startup idea: property management for your own single family home. "I want to own, but I don't want to deal with all this stuff."

I rented for years and it was easier than owning a home. In my case, though, my job moved two years ago and, now, renting would be "throwing money away." An apartment half the size of my house would be twice my mortgage payment.

Luckily, growing up, my father made sure I could do just about every possible home repair. I may not do them all now; but, I can and I know enough to avoid being ripped off.

Actually this is a great way if that works for you. But I love a detached SFA precisely for this reason. I love taking care of my own yard. Doing my own repairs with my own two hands (for me there is a certain satisfaction in it - must be pathological). I want absolutely no restrictions to what I can do with my lawn, my walls, my decorations etc. I want to be able to have my own workship with own tools etc. It may not be an American dream (I am not even one) but it is my dream and is the dream for millions of others (americans or otherwise).

So don’t buy a house with a big yard, etc.? We’ve got a house in a waterfront area that was laid out in the 1920s. Back when Americans were still free and there were no zoning codes. The houses are detached, but the lots are tiny (less than 3,000 square feet). No yard to take care of, close to neighbors, etc. And because people own rather than rent, you’re not getting a new set of neighbors every year.

Around here you sacrifice school quality, hard, for almost anything other than a typical big yard, large house, boring suburb house. The intersection between older neighborhoods or any trendy newer ones built more "urban" style and places with schools you'd be happy to send your kids to is practically nil.

YMMV in other places, but that's why we're in a non-walkable boring suburb with dumb, giant yards making the distance to the nearest pools and parks (and everything else) further than they need to be.

Where we live it’s illegal to make tight neighborhoods where children can walk around. Minimum lot siZe is 1/4 or 1/3 of an acre. We got lucky because we’re grandfathered in.

Yeah, just sold our home this month in the Midwest and moved into a townhouse that we rent for now. We did end up making a little money (bought in 2016) due to the great market we were in but I think that was just luck for the most part.

The issue with fixes gets even worse when you live in an older city and most of the homes are 80+ years old. It was a nightmare when you start to think about all the little things that are eventually going to need repaired/replaced in the not so distant future.

For now I am happy not having to do any yard work and only having to pay and electric and internet bill. The simplicity is great but I do miss having a little more space for storage/hobbies.

I have a love/hate relationship with the responsibilities that come with home ownership. I hate the feeling of having an ever-growing todo list and knowing that I am going to have to spend my free time on the weekends doing chores, most of which have significant costs that go with them.

But on the flip side there is a huge feeling of satisfaction and pride when you accomplish certain tasks or home improvement projects. You've bettered the property you own and often have learned new skills. It also makes the beer taste even better when you're finally ready to relax.

Your paying for the Super as part of your rent/service charge (and get no choice in who fixes your stuff) but you can you know pay some one to do the plumbing if you own your own home.

Flip side, I get most/more of my money back by owning a home so I look at it like free rent for just doing maintenance. Buy a newer home, less problems.

Everyone is different man - I'm tired of dealing with rent that only goes one direction, up - I'm tired of neighbors who do shit like bang on my ceiling or seemingly do some sort of bowling in their living room, I'm tired of repairs that take forever too.

Someone should come up with a model for younger people to sell to medicine/an insurance and lease back their body. It would be taken care of much better, it’s such a hassle after all to own something and be responsible...

When you have kids it’s nice to have some security around the school district of your choice. This is difficult in the Bay Area where in some neighborhoods there’s sometimes just nothing suitable to rent in the district.

This is not only "first world problems", but 1% first world problems. Well, maybe 5%: given

> For their retirement in a suburb of Asheville, N.C., Ben and Valentina Bethell spent about $3.5 million in 2009 to build their dream home: a roughly 7,500-square-foot, European-style house with a commanding view of the Blue Ridge Mountains.

Put $3.5m into https://dqydj.com/net-worth-percentile-calculator-united-sta... and you find that they are at least in the 96.5 percentile. (They are unlikely to have mortgaged it, as most lenders won't lend past retirement for obvious reasons)

The house is 700 (seven hundred) square meters. By comparison, London is banning the construction of "mega homes" over 150m2 in an attempt to prevent hypergentrification by oligarchs. These people in the article are the wealthy who haven't noticed that the ladder has fallen away behind them leaving nobody to buy their mansion.

I don't get why you'd want to build an enormous house for your retirement? If anything, I long for the day my kids leave and I can move to a "simpler" place where I don't need to worry about, or pay for, maintainnig a detatched house.

What does a rich older couple do in 7500sq ft/700sq m? I'd run out of ideas for rooms after about 200 sq m, and then I'm left to clean the remaining 500 sq m. anyway...

My grandmother is living alone at the moment in a house where she and her husband raised 4 boys, each with their room and a bathroom for the children at the first floor and a bedroom, an office, a kitchen and a living room at floor level. There's also a basement with a parking space for the car and three rooms and a laundry room. And it's surrounded by a 0.35 acres garden.

Yet, it's cheaper to live in the empty house than renting something smaller or getting into a elder facility care house.

Staying in the home you own and have raised your family in makes sense (my own grandmother is in the same situation). The article is not about that, it's about people who decide to move to gigantic "dream homes" as they reach retirement age, and apparently we're supposed to feel bad that they have a hard time selling them for more than they built them.

It's about being stuck with something inadequate.

I'm not saying it's reasonable, but I think these people are designing their house for peak capacity, not average. people with these kinds of houses might fly their entire extended family out for holidays (or several of their friend's families). they don't necessarily care that the place is empty most of the year; it's probably not their only house anyway.

obviously they hire people to maintain the place.

The couple in the Asheville home said their only son visits once a year. They aren't flying anyone out.

My last kid is leaving for college in less than 2 months, and I'm right there with you. I need a place big enough for me, and for the visit of kids. (And hopefully, grandkids?) But that's nowhere near 700 sq m.

To be honest, I didn't even need 700 sq m to raise kids in. Some people are just so rich that enormous homes like that make sense to them. But then they are so out of touch that they don't realize that very few people even want lives like that.

For the imperial folks, 700 sq m is about 7500 sq ft. That's big.

It's tough for me to imagine using that much space, it's just going to accumulate dust. But then again, the people building houses that big probably just hire someone to dust it for them.

Right there with you. We sold our 1800sqft single-family for a 1500sqft townhome shortly after the kid flew the nest. And we still have two bedrooms that are seldom used (one is a guest room, used 3-4x/year, the other is an office used never, except by the dog).

My wife and I have a 2k square foot, 3 bedroom house, along with a kid (11 years) and a dog. (We recently moved there from the city) We're trying to figure out what we're going to do with all that space when kiddo is gone. Even though that's a way off, the likely plan is to downsize to a 2 bed in the city.

By all means, downsize. Every older person I see who doesn't, ends up living in a borderline hoarder situation.

It's easier for some people to blame others and hold on to nostalgic knick-knacks, then maintain good relationships.

We looked at condos. But the monthly fees in our area were high enough to make the economics unfavorable.

awww.. what kind of job does the dog have?

Hard to tell given the number of industries that allow Woof From Home these days.


Since he works in an office, I'm assuming the job is white collar.

What does a rich older couple do in 7500sq ft/700sq m


I like your style!

So much making could be done. I'm in a ~4000sqft home right now and all I really want is a workshop with and office. I'd downsize to almost nothing if I could detach from the house and do stuff and thing.

How do you not have space for a workshop and an office in 4000 sqft?

Well you can't expect someone to displace the third dining room with a workshop can you?

A house won’t support the weight of a 2 ton milling machine. Need a detached building with concrete pad.

1. As an investment to pass down

2. As a status symbol

3. If you have kids (and grand kids), you want a place to host them all at the same time (and this location happens to be popular with the kids...)

They eventually came to the realization that they want a smaller place though...

If you can afford to have staff, you get to live in what amounts to be your own private world, completely disconnected. This is the end result of the dream of an individualistic society. Alternately, you can afford to have basically all your personal "village" living in the same spot with you - close friends, family, etc. This usually works out mainly if all your income is passive.

Exactly! The goal would be to find a newish small house that you could buy. I would not want to clean/maintain a house that big when I am retired and should be working on my relaxation techniques.


For the families in the story, the problem is they can't get rid of homes that are uncomfortably big. Definitely a 1%-ish problem (hell, a .1% problem. I would have plenty of use for more space but I simply can't afford it in London).

However, there's another problem here, one for the rest of us — The site used for a single-family 700sqm home could've been used for something denser, that would've lowered housing costs for everybody else.

> However, there's another problem here, one for the rest of us — The site used for a single-family 700sqm home could've been used for something denser, that would've lowered housing costs for everybody else.

That's not really relevant in this case. All of the neighborhoods mentioned are low density distant suburbia. There are few jobs nearby and little incentive for growth there for working people. Housing costs are already pretty low for normal-sized houses in this area.

The US is huge and most of it has very low density. Unfortunately, with the transition to a service economy, automated agriculture, and the outsourcing of most manufacturing, fewer and fewer jobs exist outside of urban centers.

So you get insane housing costs in the increasingly few areas where there are lots of jobs, meanwhile other areas just languish. For the price I paid for my small Cape Cod house here in Seattle, in the small town I grew up in, I could buy a 4,500 square foot 5 bedroom / 5 bathroom mansion on a lake with a pool, two kitchens, study, game room, theater, etc. I just couldn't find a job there that would let me afford it.

Same. I'm looking at buying here in ~2021, and I'm looking at houses that are ~half the size of the one I grew up in on ~half the land for 2x the price. Shortly after I moved here I rented a 450 square foot condo that sold last fall for around the current value of the house I grew up in (2800 square feet, 1 acre, creek out back).

That said, those exurb mcmansions (particularly those featured in the OP) do push the boundaries of the wildland urban interface, and while their lack of density might not have the same impact on housing prices that you see in urban areas, they more or less have the same environmental impact.

While 700 square meters is indeed absurd for any family, 150 square meters seems a bit limiting. There are reasonable use-cases for houses larger than that. A living room, a kitchen, three bedrooms and an office will be hard to eke out of that much space.

The justification is pretty idiotic: https://www.telegraph.co.uk/news/2018/11/13/mega-homes-banne...

50% higher than the average? OK, but what if you have above average needs? (Four kids, live in grandparents, etc.) There are plenty of "real people" who derive legitimate benefit from more than 150 square meters.

Ah well. My city has its share of idiot housing policies, but at least this isn't one of them. We are buying a 300 square meter house in a few days, and it feels like it'll be just about right for our needs.

Yeah, it would be better to only give zoning approval to projects that can meet certain density requirements.

I would hardly call a 150m2 home a "mega home", even in London.

Apparently, the average home in the jurisdiction of Westminster council is 100m²: https://www.telegraph.co.uk/news/2018/11/13/mega-homes-banne...

There's also the issue that house prices are insane:

> Earlier this year, the council banned a 1,590 square metre, £40m, mega-home

1600m^2 is ~17,000ft^2. That's...huge.

> They are unlikely to have mortgaged it, as most lenders won't lend past retirement for obvious reasons

You can't deny a loan due to age in the U.S. It's specifically forbidden by federal law.

Yes, but you can deny a loan for not having steady source of income. That's what retirement usually means. It refers to whether you are working, not how old you are.

It's also not true. Lenders don't give a shit who they lend to so long as the loan qualifies for insurance by the government or can be sold to a GSE.

you can deny a loan due to the applicant not being employed though, right?

Last time I bought a house, being an employee was a requirement (in the US, post 2008). I had a good job and plenty of income for the loan, but since my job at the time was as a contractor they wouldn't lend me anything unless I'd been a contractor for at least several (5 IIRC) years.

No need to deny it. Just make the terms and conditions unreasonable.


There's certainly some truth in what you say, but a lot of variability in such a large country too.

I mean, not really. I knew plenty of people buying new mcmansions on credit when their household income wasn’t above 80k. Many many Americans over leveraged themselves by buying up huge properties with no down payment.

People use two different definitions of "McMansion", to mean wildly different things.

To some people, a "McMansion" is any single family house they happen to dislike. Those are the kind of things working-class people buy on credit. (Homes in the 1200sqft to 2400sqft range). These are basically cheap disposable housing, they are popular because all people have to have somewhere to live, and this is usually the cheapest possible housing available that's still slightly comfortable to inhabit.

This article is not talking about those. This article is talking about actual McMansions or just real Mansions, homes in the 5000sqft to 8000sqft+ range. They're like 2x to 4x bigger than a typical house (even when using American sizes for 'typical house'). No regular person owns these, you have to be entirely in the "wealthy" category to even begin to look at them.

And done the right way (self build) that sort of high quality home can be more cost-effective (depends how much you do your self)

They're talking about multi-million dollar homes in the article. Even at the absolute height of the housing bubble craziness in 2007-2008 nobody was getting approved for a $3.5M house on an $80k salary.

> McMansion is a pejorative term for a large "mass-produced" dwelling

The subjects of the article:

> Ben and Valentina Bethell spent about $3.5 million in 2009 to build their dream home: a roughly 7,500-square-foot, European-style house with a commanding view of the Blue Ridge Mountains.

> Robin and David Saltman moved from New Jersey to Ponte Vedra Beach, Fla., where they spent more than a year custom-building their dream house with a pool on the ocean.

> George and Diana Hambleton […] selected the materials for the roughly 4,200-square-foot house, including reclaimed barn wood and Wisconsin flagstone.

The McMansion isn't mass produced just ugly.

The title of the article is literally: "A Growing Problem in Real Estate: Too Many Too Big Houses."

Since mcmansions are large (as you said), I think they are relevant to the discussion.

Masklinn kind of has a point. Clearly, the subjects of this article are not "mcmansion" people.

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