[skyyler]

> Some people prefer to rent rather than buy.

Why would someone prefer to give away money instead of invest it into their net worth ?

Are there really people that prefer renting, and wouldn’t buy even if they could afford to? Are they common?

[bombcar]

Yes, a moment's thought should reveal that this is the case.

Buying and selling a house costs about 10% (or more) (realtors, expenses, etc). So if you buy a house today for $200k, and sell it tomorrow for $200k you will lose about $20k. (Yes, there are flipping tricks and stuff you can do to reduce that, but there are costs for normal transactions.)

So the rule of thumb is "about seven years" - if you buy today, and sell in seven years, appreciation and such will "break even". Certainly if appreciation was insanely high, that will be a shorter period, if it is bad or a crash happens, it may be longer or even underwater.

But whatever the time period is, if you will not live in the house for that number of years, you're better off renting, unless rental prices are so high as to invert it.

Another example of this is where businesses often prefer to lease (even so far as to triple-net) for tax purposes and to free up capital.

[skyyler]

>88% of Americans would rather own a home than rent. Specifically, 76% of renters would rather own a home, but only 2% of homeowners would rather rent.

https://www.lendingtree.com/home/mortgage/homeownership-rent...

[bombcar]

I suppose most homeowners that want to rent sell and become renters, so we can deduce that 20-24% of renters actually want to rent, and some percentage of the remainder might go back to renting if they had a bad ownership experience.

Though some percentage of those renters are in highly favorable situations, like rent-controlled units that would be insanely more expensive on the open market.

[skyyler]

>I suppose most homeowners that want to rent sell and become renters

I see, so maybe selling isn't that big of a hassle then? People keep bringing it up as evidence that people would rather rent, but that really doesn't seem to be the case.

[bombcar]

Selling is a huge hassle, but it's not something that prevents you from doing something the way not having money prevents you from buying.

[skyyler]

Very interesting!

So people that want to own are often reduced to renting, yet people that want to rent can easily sell to do so?

How fascinating.

[rad_gruchalski]

> Why would someone prefer to give away money instead of invest it into their net worth ?

You mean… how. Cash? Mortgage? Buying is easy, running the thing not necessarily. What are you going to do if you lose the job? Health? What’s your plan for when you get old? Do you see the work around the house?

Do you remember Lehman Brothers and why it happened? Because so many thought they could afford it! Have they increased their net worth?

Is that a new build? Second hand? How old? When is the roof to be replaced? Hows the isolation? What’s the quality of windows and doors? Is the electrical installation ready for solar panels? And so on…

> Are there really people that prefer renting, and wouldn’t buy even if they could afford to?

Obviously.

[richwater]

Rent (in dollar terms) is the most you will ever pay per month.

Mortgage (in dollar terms) is the least you will ever pay per month.

Combine that with the ease of movement between renting and owning and it's absolutely something many people prefer.

[ghaff]

I'm glad I own a house but it can be a massive headache, expense, and time sink. It also places a big constraint on moving as you say. I absolutely wouldn't have wanted one the first 15 years or so out of school and I've been lucky enough that jobs have never forced me to move.

[freitzkriesler2]

Ease of movement is such a meme. Every time I've sold houses in 2nd or 3rd tier markets they've sold and gone into escrow in less than 2 months.

Maybe back when housing wasn't so tight this was the case. That isn't it anymore. Sure you have to queue up a bunch of things like a realtor and a mortgage broker but the benefits of getting equity outweigh the supposed convenience of renting .

[ghaff]

It's also often house vs. apartment. There's absolutely friction associated with moving from a house with its contents to another house than there is to moving from, say, a 1000 sq. ft. apartment to another. It's still a move but it's much less of an undertaking and, as a renter, you also tend to have a mindset that you will be moving.

[skyyler]

I’d love to see some numbers on the percentage of current renters that would prefer to own.

[sgerenser]

Probably the majority at what they think the house should cost. Probably very few at what the monthly payment for a market rate mortgage + downpayment actually costs, based on the recent run-up in home values and interest rates over the past 3-4 years.

E.g. would you prefer to rent the same house at $2000 month, or own at $4000/mo? It might not be this bad in Atlanta but in many areas the rent/buy ratio is that bad now.

[bombcar]

You'd have to correct for so many things - and it's actually quite hard to get down to the reality.

Obviously almost all renters would take a "free and clear" ownership of the same house they're currently renting; that's a six figure freebee.

And many owners will not fully exhibit "buyer's remorse" just because the cost of ownership is so high.

And no home-owner loves facing down the $10-50k repairs that a house can need now and then.

[ghaff]

Yeah. I live in an old house on a little bit of property. It's paid-off but it's still probably something close to $2K/month between property taxes, insurance, utilities/oil, and more or less steady state maintenance--some of which could probably be deferred but...

[bombcar]

It's totally worth the exercise (it's not terribly hard) to "rent to yourself" on paper, just to get a feel for everything involved.

And like you see, it is much more than you'd expect at first, because so many things only "pop up" every 10/20/30 years. A $20k roof replacement done every 30 years is $60 a month or so, and how many of those kind of things are hiding in a house? Hint: the depreciation tables from the IRS are not a gift ...

[skyyler]

>88% of Americans would rather own a home than rent. Specifically, 76% of renters would rather own a home, but only 2% of homeowners would rather rent.

https://www.lendingtree.com/home/mortgage/homeownership-rent...

Pretty clear to me.

[sgerenser]

That’s a completely dumb statistic since it doesn’t talk about the cost. Of course someone would rather have something rather than nothing, if the something cost nothing. In reality, if the “something” cost $1 Million and only saved you $2500/mo, is it actually preferred?

[skyyler]

"Cost"

Paying rent instead of a mortgage is a cost.

If the rent is bringing in less money than the upkeep costs of the property, why is the landlord renting it out?

There's an entire segment of the market that is priced out of buying. That doesn't mean they want to rent.

[0_____0]

I know a lot of people who would love to have the money to buy.

Whether they would rather have a house - or - rent but have a down payment's worth of money, I think is a better question

[freitzkriesler2]

It's high , many renters have given up hope they'll ever own.

[gwbas1c]

For awhile, I was friendly with a person who had a lot of material success and was recently retired.

He explained why he preferred renting to me: In the end, it was less hassle for him. All of the "upkeep" was someone else's responsibility. He just wrote a check every month.

(Granted, I prefer owning my own home.)