[pepinator]

This is obviously not true. You don't have to do the math to realize: when you pay rent, every moth, an important part of your salary simply disappears, leaving nothing for the future. When you pay a mortgage, your paying the house you'll own. Of course, there are interests and fees and whatnot, but you'd need to pay huge amounts so that it becomes unviable; I can't imagine a single scenario where that occurs.

[Swizec]

> This is obviously not true. You don't have to do the math to realize [rent is throwing money away]

This greatly depends on your specific numbers.

We did the math with my partner: our current rent is 5k/mo. Our mortgage for the same place bought when we moved in would be 9k/mo + transaction cost + maintenance. It will take our rent almost 10 years to catch up to the cost of a mortgage. Max increases are capped in California.

Over those 10 years, investing the delta in index funds puts us about 200k ahead of buying in terms of net worth. We’re also not handcuffed by a mortgage for 30 years which gives us optionality.

Not buying has let us build about 700k net worth debt free in the last 10 years we’ve been together. We’ve also moved 3 times with essentially zero transaction cost. I think that’s fine

[hintklb]

you definitely came ahead by not buying and you did the math. Good for you!

Generally, this holds true today for most HCOL and MCOL areas. It is still a good idea to buy in a few LCOL areas.

What I have seen is that in high-earner areas (Bay area for example) buying completely outpaces renting in cost (buy to rent ratio_. Mainly because the pool of buyers outbid each other. This is mainly due to the narrative and social pressure to buy at all cost. Similarly, renting stays relatively low as people do not compete as much.

[Swizec]

> Generally, this holds true today for most HCOL and MCOL areas. It is still a good idea to buy in a few LCOL areas

We have friends who rent to live in SF and buy in LCOL as investment properties. Also seems to work well as a strategy.

I think of primary residence as a consumption expense. It's not really an investment because you can't cash out[1]. So unless you put value on the act of owning itself, it's best to do whatever gives you a lower monthly. In our case that's renting.

[1] yes I know about HELOCs. I'd rather get margin loans on index funds than risk getting kicked out of my home.

[hintklb]

I fully agree with you. I also think that there are as many good intangible argument for owning as for renting.

Renting allows you to be flexible for new opportunities. They allow you to focus on other things in life than your house, treat your landlord as a service provider, free your time to do more important things.

Frankly it is sad that as a society we value homeownership so highly and judge people that decide to rent so harshly.

[globular-toast]

With those kind of numbers it doesn't really matter what you do, you'll still come out ahead.

1. Be rich,

2. Don't be poor.

[Swizec]

Yes that’s a pretty good strategy achievable by most people who hang out on Hacker News. Lots of variance tho. Poorly timed life events can really mess it up

[lesuorac]

In the majority of markets an individual that invested the down payment into the SPY500 as opposed to a house comes out a head. Especially if you sell the house on average every 7 years ...

Just do the math yourself; it's pretty easy [1] [2] [3] [4].

That said, not every decision in life needs to be profit maximization. You can enjoy owning a house.

[1]: https://research-tools.pwlcapital.com/research/rent-vs-buy

[2]: https://www.nerdwallet.com/calculator/rent-vs-buy-calculator

[3]: https://www.zillow.com/rent-vs-buy-calculator

[4]: https://www.calculator.net/rent-vs-buy-calculator.html

[ternaryoperator]

This doesn't take into account that you need to live somewhere.

If you spend $2K on rent (which gets no return) and put $1K into the SPY500 every month or put all $3K into your house, you will be far, far ahead with real estate.

[hintklb]

I don't know why you think this is not taken into account by those calculator. They obviously include the cost of rent for a similar place...

[bluecalm]

You seem to be completely clueless about the issue. There are many resources to learn about it. One very good one is Ben Felix on YouTube. Search for his owning vs renting videos and spend some time trying to understand the analysis. It will be a bit difficult when you come from "rent is money disappearing" mindset but it will be worth it.

[hintklb]

if you buy a house today, you are literally paying a "huge amounts so that it becomes unviable". Check the concept of opportunity cost.

[esseph]

The problem is you still have to live somewhere, and buying is a real asset.

I would like to take the Opportunity to not pay a fucking landlord, thanks.

[hintklb]

you obviously include the price of the rent-equivalent of the place you would buy in the math. Cannot even believe I have to say this.

[esseph]

Recently I looked at what it would cost me to move.

First, I would be giving up several acres of land, and my dog and cats would be very unhappy.

Second, for me to get a house with the same bedrooms, housing cost would almost DOUBLE, and on average it looks like I'd lose around 800sqft.

I've been here for more than a decade. Moving would cost us a TON of money for no gain. (If we went to buy another home)

And that calculator also agreed (on rent not being viable, either!)

[LeonM]

> I've been here for more than a decade.

I think that is where the difference is.

The buy-vs-rent discussion is more aimed at first-time buyers. If you already own a property that is largely paid off and has had the benefit of appreciation over the time you owned it, then yes, it may be more beneficial to keep the property, as you have seen from the calculator.

If the answer was always that rent would be cheaper, then the calculators wouldn't have to exist ;-)

> housing cost would almost DOUBLE

Except that you will now have the profits from selling your previous property, which you can invest. That investment payout can partially or even completely offset the cost of renting, which means your monthly costs will be much lower.

Say you make 500k by selling your house, and invest that against 6% ROI, then you make 30k/year passive income, thats 2.5k/month. So deduct that from the rent you'd pay and compare again.

[esseph]

Except in a LCOL/MCOL you won't make $500k, in fact that may even be double the price of the home!