[yieldcrv]

its not renting vs owning that's the problem, its renting vs mortgage where mortgage is improperly considered synonymous with ownership. but that's because its so rare to be able to own the home near the places you can rent.

so sure, renting vs buying a home in cash will give the cash ownership a leg up. but then it shifts over to people that would love to espouse about the 'time value of money' and leverage, where putting all the cash down is suboptimal vs a mortgage. the % increase of the home value isn't amplified when using cash up front either.

so lets optimize this further, renting vs mortgage with the option to pay it off at any moment is always better. but nobody has that cash, so we're back at square one.

if you HAVE to do a mortgage, then its likely that renting will be a better deal for you for over 10 years straight, before the mortgage pays dividends.

[kamaal]

From where I come(South Indian Muslim), there is a saying that how quickly you own a home, get married and have kids decide the overall affluence you have in life.

If eat that frog is a think for daily schedule, there is also such a thing for life itself. You just have to get a few things done as early in life as you can. Or you end up living for other people.

[somenameforme]

It's only as one ages that we begin to realize how much wisdom there is in 'traditional' ways of life. It's almost like over millennia of humanity, we gradually found ways to maximize overall outcomes, even if they might come with aspects that aren't as ideologically ideal. At least this is something I can pass on to my own children.

[kamaal]

There is a saying in Kannada language ವೇದ ಸುಳ್ಳಾದರೂ ಗಾದೆ ಸುಳ್ಳಾಗದು which means the vedas can go wrong, but a saying never turns out wrong.

There is a wisdom in this. Most of the sayings in any culture are largely a distillation of a kind of civilisation darwinism. All it took people to survive big problems in life, distilled in neat statements.

[eru]

Most 'traditional' ways of life often aren't all that old. Definitely not millennia.

(However they might still be a good idea. I don't know.)

It also depends on how you translate the 'traditional way'. For example, on the one hand, for most of history people had about one surviving descendant per person, ie two kids that made it into adulthood to have their own kids. [0] On the other hand, they gave birth to many, many more kids. Which of the two perspectives do you want to preserve?

Similarly, during most of the last few millennia most people used to have kids really late in life: they typically only had about perhaps 20 years or less left to live when their first child was born. Should we emulate that? Viewed through a different lens, people used to have kids really early in life: the distance in years between your own birth and the birth of your children was much shorter, too.

Of course, the above paragraph is just a long winded way to say that people live longer these days. But still: how do you want to translate past behaviour? It's a choice that's up to you.

[0] I'm basing that purely on the mathematical observation that population numbers have only gone up substantially in the last few hundred years. Thus replacement level fertility used to be the norm.

[somenameforme]

You're relying on a typical misunderstanding of the past. The increases in life expectancy in modern times are owed almost exclusively to reductions in childhood mortality, not actual extensions of life. In the past it's not like people just hit 40 years old and keeled over.

So for instance the Founding Fathers died at an average age of 72 including things like Hamilton being killed in a duel at 47 years old. Only 2 of them died before 60 - Hamilton and Hancock (who had health problems throughout most of his life). John Adams lived to 90, and Sam Adams/John Jay/Ben Franklin/Jefferson/Madison died in their 80s. In fact this mortality age of ~70 expands all the way back to at least the Ancient Greeks. [1] The Bible also references this in Psalm 90:10: "As for the days of our life, they contain seventy years, Or if due to strength, eighty years, Yet their pride is but labor and sorrow; For soon it is gone and we fly away."

All the advances in medicine over the past millennia have dramatically reduced childhood mortality, but its impact on people who would have already made it into adulthood has been relatively small - perhaps 5-10 more years of very limited quality.

[1] - https://aeon.co/ideas/think-everyone-died-young-in-ancient-s...

[eru]

Your 'Founding Fathers' only lived a few hundred years ago, not thousands of years ago, and were elites in one of the richest societies in the world at the time. I wouldn't use the bible as evidence; from what I heard they also talk about people living hundreds of years in that book, don't they?

I agree that most of medicine itself hasn't necessarily made much of a dent in average adult life expectancy at, say, age 30.

In any case, feel free to ignore that part of my comment. And concentrate on the part about the number of children.

Or you can replace the now missing part with: how much should you spend on clothing? Should you spend the same in inflation adjusted terms as your ancestors? Or should you spend the same in terms of proportion of overall income (or time, in case of home production)?

[somenameforme]

Germ theory didn't exist, or at least wasn't accepted, until the late 19th century. In fact even things like handwashing before surgery weren't accepted until a similar timeline. Prior to that it would have been insulting to insinuate that a surgeons hand's might be 'unclean.' All the money in the world couldn't change this lack of knowledge. And indeed one of the Founding Fathers, George Washington, was likely killed more by the bleeding edge treatment of the day, than the disease that was being treated. In response to a throat infection he was bled for nearly 5 pints in order to remove 'bad blood.' His deathbed portraits showed him as white as a ghost.

You're right we don't need to have as many children per person thanks to reduced infant mortality. Each and every woman having an average of 2.1 children is all that's required for a stable population. So each family that can/does have children should probably have somewhere between 2 and 5 to compensate for those who will not or cannot.

And indeed we do need to start relatively early. By the time a woman reaches her 40s her fertility (assuming a perfectly timed effort) is going to be around 5-10% per month. When she's younger that can be > 30%. And in between each child you really want at least 9 months before starting on the next, a bit more is even better. And then you need to actually succeed at pregnancy. Contrary to popular conception things like IVF are not just guaranteed pregnancy. They're an extremely expensive roll of the dice. The dice are more weighted in your favor, but the odds of success can still be quite low for older parents. So perhaps 2-3 years per child, increasing with age, multiplied by 2-5 children. That's a lot of years and you want to finish this all up before your 40s if possible.

And most importantly of all - this isn't an option. Societies that fail to maintain themselves will simply die off and end up being replaced. Much of what I'm saying here runs face first into contemporary ideological ideals, but the reality of what I'm saying will win simply because contemporary ideals are not self sustaining.

[eru]

> if you HAVE to do a mortgage, then its likely that renting will be a better deal for you for over 10 years straight, before the mortgage pays dividends.

How do mortgages pay dividends?

In any case, it's all about opportunity costs, and yields.

To give an extreme example: if the house costs 100x the yearly rent, you are probably better off putting your money in the stock market instead of buying the property, and paying your rent from the returns on the stocks.

[Sohcahtoa82]

Where I live, rents are about equal to the cost of mortgage + property tax, if not slightly more. This means you don't save money in the short term by renting.

Mortgage is temporary though, rent is eternal and usually increasing over time. This means you don't save money in the long term, either.

[elif]

When i paid off my house and calculated my total payments, it came out to 6.8 years of the rent we had been paying when we bought it, (which was of course going up annually so it's probably better than 6x)

100x is just bad decision making

[eru]

100x was a bit extreme for the sake of a simple example, but rental yields in eg Singapore are around 2-4% apparently. And they don't have capital gains tax. So investing in stocks or bonds and using the returns to pay rent really does look more realistic in that part of the world.

[kamaal]

Having to pay rent likely makes retiring early, or even retiring itself impossible.

Somethings like marriage, kids, buying home just have be done in life as early as you can.

Note money is just a number at the end. The idea is not to have max($money), rather max($free_time, $health). Optimise for $free_time and $health, and then you have a very different life strategy to work towards.

[eru]

You are still ignoring opportunity costs.

If you have $x, you can buy a house and save on $y rent. But you could also buy eg bonds, and make $z return per year. If z > y, going for the bonds is better.

Free time and health don't even come into the picture here. [0]

(Of course, taxes and regulations can make this more complicated. And there are systematic and idiosyncratic risks to take into account.)

It's not automatic that buying owner-occupied property is always the best way to invest your wealth.

[0] Well, I assume renting is better for your health: I was significantly less stressed about all the water damage that we had about two years ago, because I knew it was ultimately my landlord's problem, not mine. But the overall effect is likely to be rather minor, and it can go either way, as some people get a mental health benefit out of knowing that they own their home.

[kamaal]

Im guessing different people have different life priorities. So in some way its not correct to argue a point derived from an assumption/axiom other person doesn't believe in.

>>Well, I assume renting is better for your health: I was significantly less stressed about all the water damage that we had about two years ago, because I knew it was ultimately my landlord's problem, not mine.

Paid by your money.

>> But the overall effect is likely to be rather minor, and it can go either way, as some people get a mental health benefit out of knowing that they own their home.

I get a feeling if one is fairly rich they don't have to worry about money. When you are that rich, it doesn't matter whether you rent or own.

[eru]

> Im guessing different people have different life priorities. So in some way its not correct to argue a point derived from an assumption/axiom other person doesn't believe in.

Yes, definitely. That's why I am saying that whether it's better to invest in owner occupied housing or in something else and using the returns to pay rent, depends on yields and prices and personal preferences. It's not automatic that buying a house to live in is better.

> Paid by your money.

Yes, definitely. Just like when I go to a restaurant, all the ingredients and the chef's labour is paid for by my own money.

Owning a house is a bit like having an extra part-time job with all the things you have to worry about and work on.

[tanewishly]

Around here, houses appreciate in value. Quite significantly, actually. A house can gain 100k in value in just a few years.

If you bought it, you're paying off the old price. If you're renting, rent increases every year to keep more or less in line with the accruing value. So while renters and buyers may both start out paying (eg) 20% of their income on housing, for buyers, this will typically go down (due to inflation --> higher wages), while for renters, it will stay the same and might even increase.

You're right about considering opportunity costs, but around here, it just turns out far, far worse for renters.

[eru]

For a proper comparison, you need to pay up the guy paying off the mortgage with someone who eg invests similar amounts in an index fund.

To be even more proper, you'd need to allow the stock market investor to use leverage, just like the guy with the mortgage does.

Or, if you want to avoid the mortgage/leverage complication, we can compare someone buying a house outright with someone investing the same amount in stocks, and uses the returns to pay rent.

> Around here, houses appreciate in value. Quite significantly, actually. A house can gain 100k in value in just a few years.

Total returns on eg the S&P500 over the last few decades have been pretty good, too. And it's a much more diversified and liquid investment than a single house in a single location.

For some people in some places, buying a house might be better than buying stocks, for some others it might be worse. Results also depend on taxes and jurisdiction and personal preferences. But it's not automatic that buying a house is better than renting.

[kemitche]

An important thing to consider is not just average return, but risk factors, and worst case scenarios.

If you buy a home instead of investing, you've got a locked in, controlled rate for your housing expenses. (Yes, there's some variability with property tax and insurance). In difficult times, you can still plan very carefully around your housing costs and wait for better times.

If you rent and invest, your housing costs can be highly variable and uncontrollable over time. Your investments may not cover increases in housing costs.

A critical factor is that housing is more or less a _required_ cost of existence - just like feeding oneself. It is not something where one can necessarily "invest in other areas" instead. There are extreme cases (living out of an RV or in a tent on the side of the road), but for the most part those extremes are not representative of how someone wants to live. One can only downsize so much, and downsizing your housing investment comes with very real changes to quality of life (storage space, commute time, access to grocery stores, etc).

[pjc50]

> Results also depend on taxes and jurisdiction

If things were different, then the results would be different; but, being as they are, for most people in most Western jurisdictions the rules favor homeowners.

[pjc50]

https://trustforlondon.org.uk/data/housing-as-proportion-inc...

"Households living in poverty are spending a significantly larger proportion of their net income on housing costs than households not living in poverty. This is true both in London and in the rest of England.

London households in poverty are estimated, on average, to spend 54% of their total net income on housing costs. In comparison, those living in households which are not in poverty spend just 11% on average.

The trend is similar in the rest of England with households in poverty spending 32% of their income on housing compared to 8% for those not in poverty"

(a lot of that is numerator/denominator issues - of course if you have more income you're spending a lesser fraction on housing - but it does show just how dominant housing costs are in people's lives)

[consp]

> 20% of their income on housing

Wha a world that would be. More in the 35-45 range.

[somenameforme]

[0] is so unbelievably true having lived through a major natural disaster. People don't realize how much, in general, you're on your own you are after something like that. Really life and perspective changing. BUT I think you're also misunderstanding his point about buying - it's not about maximizing your wealth which in the end doesn't even matter, but rather about minimizing the things you need to worry about. Even bonds can be stressful because they're not guaranteed money as they might seem due to 'guaranteed returns.' If rates/inflation go up you're left with money losing pieces of paper. See Silicon Valley Bank [1] for the obvious example. Even if your house depreciates, it's still a house! There's even an upside - your rent to the government decreases.

The one case where I think buying doesn't really make sense is for people who enjoy traveling long-term. You can still theoretically rent or sell the place, but now you're back to increasing life stresses especially in the rental cases because you have a lot of obligations there that would require employees if you're remote and so on. And then moving money internationally, especially between currencies, and all of this stuff. Just ugh, no no no.

[1] - https://en.wikipedia.org/wiki/Collapse_of_Silicon_Valley_Ban...

[eru]

Yes, even bonds can be stressful.

But also: an owner occupied house is a single lumpy, undiversified asset. And in many cases it's bought on so much leverage, that its value is bigger than the buyer's entire net-worth.

> Even if your house depreciates, it's still a house! There's even an upside - your rent to the government decreases.

Yes. Though depending on government policies, you can also lose use of your house (or even lose your house). Depending on where you live and how you set up your holdings, investing in international stocks and bond can be more stable.

To summarise: owner occupied housing does make sense for a lot of people. But it's far from being automatically always being the best choice.

[kelnos]

This is a bit of a weird take.

For starters, people don't buy a house to live in solely because of the financials around it. They also buy the house because they want it.

When it comes to mortgage vs. buying outright, it just depends. I managed to get a very low interest rate for my primary home; the money I didn't put into the house is busy making quite a bit more than that very low interest rate for me yearly. If I were to rent out the house, I could probably get more for it than what I'm paying in mortgage interest + property taxes, so renting isn't really better (and then I'd be subject to the rent-jacking whims of my landlord). But even if I couldn't, I still just... want this house to be mine. There's value in that to me.

> if you HAVE to do a mortgage, then its likely that renting will be a better deal for you

This is very regionally-dependent. There are places where rents are significantly more expensive than mortgage payments, and places where homes cost so much that most people rent at a fairly reasonable rate in comparison.

[yieldcrv]

> This is very regionally-dependent.

Exactly, and so is a mortgage to home equity belief system. That's the point. Be objective.

[thowawatp302]

You can’t ever roll rent forward into the new purchase. That’s not the same for a mortgage