Well, it's cool to see that Undisc's future employees are thinking about the same things I am (#1422689).
(this is published early Jan, but I swear I hadn't seen it... though I suspect they're spying on the terms I'm using/googling for and emailing me articles accordingly!)
"That our people should live in their own homes is a sentiment deep in the heart of our race and of American life,” said President Herbert Hoover, perhaps the most important advocate of mass homeownership in the country’s history, in 1931.
Interesting find... (#1421984)
When rich-world interest rates began to surge in 2022, renting became a better deal than buying. House prices have since stagnated or slumped in many places, and rates are falling. Even so, there is reason to think that the winning streak for renters will continue.
Same in Australia and the UK. And then The Economist writers pull out my op-cost investment point:
Renters often fear they are throwing away money by handing it to landlords, while buyers build up home equity. But property is not the only investment available. Arthur Cox of the University of Northern Iowa finds that, even from 1984 to 2013, a period in which house prices rose overall and mortgage rates fell sharply, people were sometimes better off if they avoided homeownership.
...yeah, not when those idiots are holding sats, LOL look at that pathetic bitcoin thing.
As for maintenance costs vs rent, Undisc claims the opposite is true:
Picking a likely victor in the battle between tenancy and ownership therefore means taking a view on the future of long-term interest rates. Your columnist would suggest that they look worryingly sticky. Concerns about government debt and long-term inflationary pressures are not going anywhere. [...] Without a much steeper fall in house prices, a sudden decline in long-term interest rates or a protracted surge in rents, renting will remain the better option.
I guess I'm sympathetic to that point... everything is just one trade/one money (=rates) indicator these days.
archive: https://archive.md/Wg7Ix
All I know is that I hated ownership. It was a constant pain in the ass, and it wasn't my cup of tea. I honest to god hate yard work, and maintenance, and the never ending supply of headaches.
More power to anyone who wants to do it, but I'm not going to do it again.
As I get older (50s now), the more and more I agree.
There are 2 main negatives of renting: One is psychological (but that can be mitigated by realizing that we never really own our real estate - try not paying property tax, etc). The other is more practical: Neighbors.
I think thats where ownership excels is you (a) can get more distance from your neighbors, and (b) your neighbors tend to be higher quality on average (ownership fosters a public good mindset).
I had loud neighbors where I owned too. Assholes exhist everywhere. I actually had a fair bit of distance, but they liked to have fires and stay up all night drinking and partying.
We had insane neighbors with our first home. You definitely have to buy into select neighborhoods to get this advantage, which I imagine is also possible with rentals.
I love my current place, I don't imagine I'll be leaving soon. It's more of a living/shopping hybrid. I walk to the grocery store daily.
Yep thats one of the ideas that are driving me and wife to consider renting once the nest is empty. There are upscale rental development near us that has Whole Foods and anchor with 6 or so restaurants along the strip. Park + gym + etc.
Goal would be to also downsize to a single vehicle (not really for cost reasons, just less mental hassle), so that type of lifestyle is a big plus....
That's exactly the type of place I live. There's restaurants, entertainment, etc. My wife works from home, but both of the cars are paid off. There may be an argument to downsize to just one eventually though.
Do you have personal property taxes assessed on your cars?
That plus insurance make multiple cars insanely expensive.
Yeah, there are lots of ways to play it actually. You could downsize to one "bigger nicer" car and one beater (ie. 20 year old honda civic) for running around.
We've always done single vehicle.
My parents constant complaints about their apartment definitely has me reluctant to rent, but I also recognize that they did a very poor job selecting the place they live.
That's awesome. If we move again, being walking distance from stuff will be a high priority.
Very true. Our starter home had sketchy neighbors (but should add that a fair amount of them of them were renting).
The one place where rental totally breaks down is for 5+ member families. Trying to find 4+ bedroom / 2+ bath that maybe also has an office that meets the other requirements are very very slim.
In those cases you are renting from an individual owner, so all those economies of scale disappear. There are no large real-estate development that caters to this demo....
In the end if you are just looking for a 2 bedroom place, then renting can often be the better deal.
It's just me and the wife, but I can definitely see the upside to having a home with a family.
rude to not invite you
That's why I'm going to move in next to you. At least you'll invite me over.
this (plus being able to cheaply/tax-advantaged 7x short the fiat currency) are the two major things that will ultimately push me over the edge, I'm afraid
When I retire, my ideal situation would be to own a small condo or apartment with a good HOA. I know people hate HOAs, but I'd rather pay a fee to have someone else take care of all the maintenance tasks than to do it myself.
I wouldn't mind renting either. But with renting I'm always afraid of the potential instability posed by landlords.
The people who hate HOA's probably didn't read them before they moved in, or they shouldn't have moved in if they didn't agree with the rules.
I wouldn't live in an HOA personally, but they exist for a reason. If you find one that works for you, I say do it.
it's like division of labor and comparative advantage are serious concepts!
I feel that one needs to look at the sociocultural norms in his country before deciding either way. More than 85% of my countrymen own their own place. I am also Chinese and have a cultural noose that forces me to find a place that I can call my own. So I not only have my flat but also have paid off my mortgage haha
It's a super big deal in China. Not sure if also for Chinese Singaporeans.
My brother-in-law couldn't get married, he said, until he owned his own house. And it was true. He didn't get married until after owning his own house.
I wonder, though, with the Chinese property market collapsing, whether that will hold true 10 years from now. The Chinese may have gotten infatuated with real estate because it was working for the last 10 years. But if it stops working, it might no longer carry the same cultural cachet.
I didn't say the opposite is true for new homeowners, specifically. There's a reason so many people are postponing moves that they would have made at lower interest rates.
Still, my point is that the renter pays those fees every month, regardless of need or service quality. Owners can set aside that difference and decide how much they want to spend when those expenses arise. Generally, this works like insurance, where renters pay more on average and pay consistently but can't be hit with a huge shock.
That is true with 2 caveats:
tldr. economies of scale.
I hadn't thought about that.
This makes sense on a per repair basis. Is it still true when you account for the incentive misalignments between renters and landlords? For instance, moral hazard leading to more frequent repairs.
Also, landlords are incentivized to minimize costs, where owners maximize the utility of the occupant.
yahz, I'm starting to get the point. Thanks for hammering it into my slow brain
I agree.
Boomers like me enjoyed the pump from continually declining mortgage rates from the late 1980s until the bottom was reached at peak covid.
From here forward however, interest rates will be stuck in a lowish range and there is no room for the pumping that the constantly declining cost of debt 1990-2022 drove.
House prices will be generally stagnant.
There is a fair chance of decline in property prices as people gradually realise these dynamics and the perceived 'need' to own is disproved.
All that said, if you want security of tenure ownership still has advantages.
There is no common answer for every one.