[hans1729]

>Going into debt at the lowest interest rate you'll ever be offered to buy a leveraged asset that's likely to increase in price and reduce the overhead you pay on your largest expense, housing, and hedge against the risk of rent increases and security against the whims of landlords?

Look, if I had enough money around, I'd maybe consider the gamble. But I don't want to buy property to sell it later, I just want to live somewhere. I'm not interested in placing bets on my salary, and I'm not interested in financial longterm-obligations. Maybe in 10 years I want a year off? What then? Maybe I want to change careers to something less intellectually demanding. Maybe I want to spend 50 hours a week with my kids. None of those are feasible if I need the salary. "No debt" is synonymous to freedom on so many levels in life design. The choice is not even close to me.

I make enough money not to worry about rent, even if it should substantially increase, which I don't see happening anyway, simply because then most people wouldn't be able to afford it and political change would become opportune in election-based systems.

>If you owned a house in London

Whats the point of even thinking about owning a house in London? Seriously. I come from uneducated parents that left me €0 and completely unprepared for life, so in my 20s, I first had to dig myself out of that crap. Now I make a good living, but I'm not rich, or filthy rich, or even wealthy. I have to actually make the money to pay that thing. Look at the development of real estate prices in the last 20 years and tell me that's a reasonable choice if I don't even intend to sell the property later (just to be stuck in the same situation again, with more cash, but in the same dilemma). It's pointless. I don't treat my lifetime-expenses as a game of assets, I opt for quality of life, which I don't achieve by giving it all to some property-owning entity who sells it to me at 3 times the price they paid a couple decades ago. I mean, you can justify doing so, but I don't see me being able to justify it.

[ilammy]

> I'm not interested in placing bets on my salary

That's exactly what you already do if you're renting: you're betting that you will be able to work and earn enough salary to afford the rent, with your adjusted expenses. That's "pfft easy" when you're in 20's, easy in your 30's, okay in your 40's (kids need money, yo), doable in your 50's, oh shit when you're 52 because surprise! economic downturn / medical emergency / anything else that might happen. And now you don't have a place to live in and spending your retirement money to rent one, or take a dip in your quality of life.

If you're not paying for your mortgage, you're likely paying for one of your landlord.

[jjav]

> And now you don't have a place to live in and spending your retirement money to rent one, or take a dip in your quality of life.

As you say, keeping up with rent is easy (not necessarily, but for those in professional careers) early in life, but as your income plateaus later in your career it starts to become harder to keep up with relentless rent increases.

But then it's in retirement that a lifetime of renting really hurts. Suddenly you have no income anymore other than whatever small retirement benefits if any, but rents keep going up.

[ac29]

> But then it's in retirement that a lifetime of renting really hurts.

That assumes that the mortgage (+tax, +maintenance, +etc) is the same cost or less than renting is. That almost certainly isnt the case at first - at least in the area I live, I see houses renting for far less than just the interest on the mortgage would be (if purchased today, presumably the owners bought at lower prices and/or lower interest rates).

[jjav]

> That almost certainly isnt the case at first

Agreed, at first the monthly cost of ownership is likely higher than rent. But my quoted comment was about retirement age, which is at the tail end, not at first.

It doesn't take long for rent to catch up and from there on rent will forever go up while the mortgage will either stay fixed or only go down via refinances. Even if refinancing doesn't work (in a rising rate market like right now) the mortgage is effectively going down via inflation while rents keep up with inflation.

In my case the first year of ownership was fairly painful as the cost was much higher than previous rent (although for a nicer place). By the second year was able to refinance so it wasn't bad anymore. By the third year, with rents rising, my mortgage was already about par with local rents.

Ever since then, rents have gone up massively (about 4x-5x) and my mortgage has only gone down (today about 30% of the inital monthly payment in absolute dollars, or effectively only about 15% considering inflation).

Most importantly, it will be paid off before I retire so once I'm on a limited fixed income that's one monthly cost I won't have to worry about. Having seen some forever-renter extended family reach retirement age with rising rents, it's a sad and painful situation.

My advice to anyone is that unless you hate your future self, buy a house in your 30s if at all possible.

[edmundsauto]

Rent rises, your mortgage doesn't. I have locked in $3500/month current cost to have a home, which is about what rent would be (once you account for gains from investing the down payment to offset the rent).

Since 1980, in the US, rents have increased 9% per year. In 20 years, the rent will be 2-4x, whereas my mortgage will remain the same (modulo a lowered interest deduction).

Even if it's about as financially efficient (which I doubt), it's a very powerful feeling to have locked down a fixed cost of housing for as long as I want to live in California.

[matwood]

> I just want to live somewhere

Same. Which is exactly why I bought a house in 2011. In hindsight it was the perfect time, but at the time the market was still bumpy. At the end of the day, I had a stable job and needed to live somewhere.

> I make enough money not to worry about rent, even if it should substantially increase

The house next door to me rents for 2.5x my mortgage.

My salary has continued to go up, while my cost to live has continued to go down (I refied at the rate bottom). If I want to take a year off I can either rent out my house or just carry the cost at this point. Buying this house gave my wife and I more flexibility because with some decent certainty (+/- small amounts for taxes/insurance fluctuations) I can tell you what my cost to live will be next month or 24 months from now.

Finally, buying a house with a mortgage is best way for a normal person to protect against inflation. Housing is typically a families #1 or #2 expense, and being able to mostly lock that cost is a huge win 3-5-10 years out.

[lotsofpulp]

>Same. Which is exactly why I bought a house in 2011. In hindsight it was the perfect time, but at the time the market was still bumpy. At the end of the day, I had a stable job and needed to live somewhere.

And you were more likely to be able to because it was 2011. Fewer people can do the same today, at least at a similar comfort level of cost of house to income ratio.

[matwood]

Sure, but what about 1-2-3 years ago? The person I responded to said they never saw the point of taking on 30 years of debt, so my response was in more general terms.

Also, 2011 was still very uncertain. Would the market continue to go down, and would I keep my job were all real questions.

Is today a questionable time to buy? Probably, but what type of correction is needed in a ~7% inflationary environment for it to shift into an ok time to buy? 10%? 20%?

The point is there is always uncertainty and only in hindsight did 2011 look like a great time.

[darrenf]

I spent most of my 20s thinking, man, fuck home ownership, I'm gonna rent forever (to my knowledge, no-one in my family had ever owned; I grew up in charity housing and inherited nothing at all). Then I got booted out of a place because the landlord wanted to sell. They offered it to me first, but I had no savings for a deposit. The same story played out amongst my friends, repeatedly, and it totally changed my mind. It wasn't rent increases that were worrisome or painful, it was being forced to move. I wanted to find somewhere I liked and bloody stay there, a literal impossibility all the while I rented. But if I could get a deposit together† then ownership would do it - plus it was revelatory to me that my mortgage payments would be less than the rents I'd been paying AND I could have them fixed for 10 whole years.

I didn't buy because it was a step onto the property ladder. I bought because it was less of a gamble than renting. I ended up staying in my first house for 17 years, whereas my record under a single landlord was 3.

> Maybe in 10 years I want a year off? What then? Maybe I want to change careers to something less intellectually demanding. Maybe I want to spend 50 hours a week with my kids. None of those are feasible if I need the salary.

During those 17 years I took at least two pay cuts, and multiple 2-6 month breaks between jobs, all affordable because I owned rather than rented. Lower outgoings made it possible to save more, plus my mortgage provider offers payment holidays. No landlord ever did!

> I opt for quality of life, which I don't achieve by giving it all to some property-owning entity who sells it to me at 3 times the price they paid a couple decades ago.

I mean, isn't "paying rent to a private landlord" doing just that? Except "sells it to me" is actually "allows me to live there, until they decide not to" and all the money you spent is gone.

† I lucked out with a lump sum/windfall through my employer; I'm making no claims that getting a deposit is easy/attainable

[jjav]

> and multiple 2-6 month breaks between jobs, all affordable because I owned rather than rented

Indeed! I've taken a long break from working to be with my child, which I could afford to do only because I'd bought a home years earlier. If I'd been renting with ever-increasing rents I never could have done that.

[throw8383833jj]

house ownership is just a legal construct. you don't really own the house, even when it's paid off. even if you own, and pay off the entire house, you'll still have to pay "rent" in the form of property taxes, an unfortunate reality.

[olyjohn]

In some places that can be a lot of money. Like New York, I hear property taxes are close to half your mortgage. In places like Washington, property taxes amount to a few thousand dollars a year on a modest house. I'll pay that over $2000/mo in rent any time.

[mrep]

About a third of my mortgage payment here in chicago is for escrow.

[ClumsyPilot]

> house ownership is just a legal construct

Stange argument, all rights are legal contructs - how do I know my employer will pay me for work done, or my neighbour won't rob be in my sleep and slit my neck?

If we don't trust legal constructs, we can't have a civilisation.

[throw8383833jj]

You can trust them, that's not the point. the point is, you can keep your pen or your calculator without having to pay rent on them. You can't keep your land/house unless you pay rent on it to the govt. Considering that all humans require shelter to continue living (surprising: the homeless in the US die 30 yrs younger than the average), a case can be made that property taxes for a minimum amount of land necessary to live are unreasonable. otherwise it's a tax on life

[ak217]

That case doesn't work because the property taxes mostly fund essential local services that are also necessary to live and have a functioning society - there are many locales in the US where the property taxes are zero but there are no improvements or people around you.

[darrenf]

I'm in the UK. AFAIK we don't have any ongoing property taxes to pay, at least not if I have bought the freehold. Leaseholders may have to pay ground rent, but that's often a peppercorn and anything above that is being legislated into oblivion this year[0].

Regardless, ownership is a useful legal construct the benefits of which seem to outweigh those of being a tenant.

[0] https://landlordknowledge.co.uk/ground-rents-banned-under-ne...

[throwaheyy]

Do you pay council rates? That’s what are called property taxes in the USA.

[darrenf]

Ah yes, there’s council tax - but tenants pay that too, so it’s not a difference between the scenarios. Also I wouldn’t want or expect to stop contributing to local services just because I don’t have a mortgage!

[throwaheyy]

Tenants in the USA do not pay it directly but do so effectively by proxy, because they pay rent to the landlord and the landlord pays property taxes to local government.

Property taxes in the USA go towards local government services like garbage collection and street maintenance, just like council rates. So I believe property tax and council rates are still analogous.

[foobarian]

You seem like an engineer, so you should be able to start up a spreadsheet, put down a bunch of reasonable numbers, and project forward 20-30-40 years and see what makes sense for you. If a loan is involved, read up on the IPMT Excel/Google Sheets function! [1]

I don't know how things work where you are, but here in the US if you are renting, you are essentially helping someone else pay their debt. And they can kick you out when they please. The main benefit is that you can stop paying on a much shorter time scale (1yr lease contract?) or take time off, but if you don't rent you should require a smaller cash flow which should be possible to save up for.

One last thing, don't forget that you can sell the property in the future (or even rent it out, hence letting someone else pay YOUR debt). That should factor in your cost/benefit calculations. Even if it does not appreciate at crazy rates like the current insane market has led us to expect, it will very likely be a lot more than zero.

[1] https://support.google.com/docs/answer/3093175?hl=en

[Beldin]

Around here, monthly rent is as high as or higher than mortgage payments. With mortgage payments, you accrue ownership (for the "standard" mortgages around here). If you expect house prices to remain stable or increase during your residency in a property, ownership financially makes more sense.

[antiframe]

Why do people compare monthly mortgage amount and rent? It misses several big elements to housing costs: taxes, maintenance, closing costs, realtor costs, and opportunity cost of the money tied up.

Renting vs buying comparisons need to account for lot more than those two numbers but that's all I see posted most of the time.

[Dave3of5]

It's very hard to compare some of those things as they differ from home to home and country to country. Here in the UK most landlords will do extreme minimal maintenance and taxes on the house are paid directly by the tenant and not included in your rent.

"Realtor costs" are again different some estate agents in the UK charge a % of the sale price others a minimal fixed cost.

I'm sure that these things differ massively in different countries as well so it's hard to put an average number on that.

In terms of opportunity cost of the money again it depends on how you would invest that money you could put it in something very high risk and show a huge imbalance in buying a home vs investing in crypto or something like that. In the UK most low risk savings accounts will track lower than inflation on a property only the stock market will track higher but again that's higher risk and so not comparable. Also most savings accounts in the UK are capped at a max amount that can be saved per year.

As I said though if you try to compare mortgage vs something like stock market it's not really comparable. Also to note the large index funds in the USA track much higher on average than most other countries.

I've seen people use the S&P as an example that house prices don't track to the same amount and that you can compound any gains to make large sums of money. What's interesting about this is that the reason you make so much money with that model is that compound interest is non-linear in growth which means over say 40 years you make most of the growth at the end of the period (Literally in the last 20%). This also means that if the end of your growth curve ends on a bad few years for the S&P you'll do much worse than the average so the risk is still very high on even index funds.

Overall though my current mortgage cost is 2.5 x lower than rent for a comparable property. So you'd have to factor in the opportunity cost of that extra per month I save not paying into rent into your equation as well.

[mbg721]

Maintenance is a big one. When you pay for an apartment, you're also paying for the landlord to fix plumbing/electrical/whatever issues.

[ChuckNorris89]

>When you pay for an apartment, you're also paying for the landlord to fix plumbing/electrical/whatever issues.

Not always, in some EU countries, some rental agreements have the tenant pay for certain maintenance, plus insurance.

[rchaud]

Many banks set up blended payments so your mortgage payments include property tax. Closing costs occur at the time of purchase and are one-time fees, not recurring. As for the opportunity cost, it's only relevant if your mortgage+taxes are higher than what you were paying in rent.

The big unpredictable element is home repair costs.

[almost_usual]

You can write off a good chunk of the interest paid on a mortgage come tax season. Saved me thousands of dollars in taxes this year.

[smugma]

Most places in the US, a mortgage from 5-10+ years ago will be less than renting an equivalent place, but a recent mortgage will be higher because prices have gone up so much.

This is generally true because prices generally go up. My brother almost bought a $200K condo in SF 30 years ago but it was slightly out of reach on his $60K Sun micro income, and his $500 room for rent was cheaper. The condo has gone up about 8X and rent (assuming market rate, it was under rent control) 5X. So as expensive as it is to rent in SF, it’s relatively more expensive to buy. It’s unknown if that trend will continue. It doesn’t seem rational but the city seems intent on continuing to severely restrict supply.

[ac29]

Where do you live? Mortgage rates are over 5% now, which means >$5k/year per $100k mortage just in interest.

[lmt55]

If in 10 years you want a year off is your landlord going to give you one?

[bombcar]

I think he’s saying that in ten years he can stop renting and shove everything into a storage unit and go travel.

The rent/but dichotomy really comes down to what axis of “freedom” you want to optimize for, and if you want to stay in the house and area more than 10 years.

[ClumsyPilot]

"think he’s saying that in ten years he can stop renting and shove everything into a storage unit and go travel."

He can rent out the house and travel. And probably make money.

Aibnb or estate agents, managed properties, whatever.

[jjav]

> "No debt" is synonymous to freedom on so many levels in life design.

No debt is indeed great freedom in general.

But housing is different. Do you plan to live somewhere? You still have to pay for it. For as long as you live you'll need to live somewhere and that means paying for it. Whether you call it rent or mortgage, you're still paying, there's no escape.

So, within those constraints, it is better to invest in a house than to enrich someone else for the rest of your life.

[possiblelion]

I just wanted to say that I agree 100% with your worldview. It's hard to explain it here often. Maybe it's a Protestant thing? From Estonia here.