Young adult here,
Redpill me on housing vs renting? or housing as an investment in general
Why does every boomer keep saying its an investment because when you sell it later, it will be worth more?
Like just thinking about it. If I buy a house now for $500k, then in 30 years its supposedly worth $1mil and I sell it for that much. Doesnt it mean that Im not really making an extra $500k because if I sold my house for $1mil then that means the new house Im going to have to buy to live in will be around that price range too?
Why do boomers keep pushing this meme? Are they trying to make a quick buck off us before they retire or something or are they oblivious to their stupidity?
Shouldnt a house be treated more as a lifetime asset that you plan on living in for life and pass on to generations to make it worthwhile. Rather than something to Profit off.
Housing is a shit investment (see pic), but renting is actually throwing money away to someone who has invested in a shitty investment.
Aim to reduce the amount you spend on housing as much as possible because either way it's basically dead money unless you luck out and pick a spot that is currently shit but starts to rise after you've bought it.
Buying is like forced savings
if you do your research you might get lucky and make a profit
After 30 years you stop paying it off
Rent is cheaper in the short run so if you use that extra $100 a week wisely you can make better returns.
As years pass your mortgage repayment will stay the same
And your rent will go up but you will make more money so the ratio you spend on rent will be about the same.
Also you have to think about the deposit and if you could invest that money to be more profitable.
First, you don't buy a $500k house, you trade up in homes over the years.
When you sell a home and don't pay more for the next home you go into, you have to pay taxes on the capital gains.
Traditionally, the government has allowed a SINGLE exception to this capital gains tax.
So what people would do, is buy a $100k home, then move into a $150k home, then a $250k home.
But then, when they retire, they move back down to a $100k home and THAT is when they would exercise their one time exception.
Doing it that way allowed them to accumulate a boat load of tax-free wealth that hit their hands just as they were retiring.
Next, the financial advantage of renting is only until the home is paid off. Once your home is paid off, all you're paying is upkeep and property taxes. Since property taxes will be around $2500 per year, it's much cheaper to live in a fully-owned home than a rental.
It's up to you to decide what is best for you. But there are advantages to going either way.
>When you sell a home and don't pay more for the next home you go into, you have to pay taxes on the capital gains.
no, you don't. you don't pay taxes for selling property that you lived at least 2 out of the past 5 years in.
I always hear about how my rent is going to go up but it literally never has in my 10+ years of renting. Maybe I just don't rent from soulless kikes? Or maybe I'm a good tenant that they'd rather keep steady income from than chance losing?
Dont listen to these fucks
Buying is good because you get to pass on your assets to your children and grandchildren when you die.
Unless you don't give a fuck about your descendants. Then rent and throw your money away.
Well first goigle "bigger pockets"
But without going into way detail you can generally expect the value of the home to outpace inflation (unless the neighborhood sucks)
And since living is a fixed cost (you have to live somewhere) paying a mortgage to eventually own the land vs paying rent is seen as the better option. Its not guaranteed though. You have to consider what else you could get for that money as far as return on i vestment. The house also ties you down to one area.
So its not really a black and white proposition and chance plays a big part.
Are you sure "boomers" actually push this? Like youve met baby boomers irl who have told you that? Or did /pol/ just feed that to you and you forgot it was a meme and now you think its reality?
Anon it 100% depends on your area. Let's compare where I am (any town in central or eastern MA) vs the Durham-Raleigh area (pricey but nice area in NC).
>Price of a 50 year old ranch style house that needs 10-30k in repairs: $250,000
>Average Rent: $1,100
>Salary for Non-Retards: $70,000
>Average price of a 10 year old starter home that needs no repairs: $160,00
>Average rent: $1,000
>Salary for Non-Retards: $50,000
Obviously if you lived in NC you should be buying, but if you're in MA then honestly, fuck that shit, rent until you have a solid down payment and then consider moving elsewhere with your accumulated wealth. But remember that money is meant to enrich your life, so if you value the area you live in and the people around the area then don't move for the sake of money.
That's $160,000 for the homes in NC, not $16,000. I missed a 0 because, despite my salary, I am in clearly a retard.
Renting is master race for nice houses. If you want to live in a million dollar house then rent it.
Also if you aren't going to live somewhere FOR SURE more than 5 years you need to rent.
I've always rented even though I bought a house I just rent it out. I like knowing that I can move anywhere I want at a moments notice.
>you can generally expect the value of the home to outpace inflation (unless the neighborhood sucks)
That's a pretty big assumption. Keep in mind that younger people are less interested in living in a house (preferring condos, apartments) than the older generations, combined with a low birth rate could mean a surplus of homes in 30 years.
I'm seeing all these boomers in my area with million dollar mcmansions that they want to sell and retire to Florida or Costa Rica, but they just can't unload them. For a lot of these people, their house was their retirement plan but now they can't sell them because younger people have no desire to live in these huge homes.
Yeah it's definitely arguable whether young people can afford homes or not, to me it seems they can not. Just wanted to post an article backing my claim that young people are less interested in home ownership.
>Redpill me on housing vs renting?
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This is interesting I don't know how to play it. On one hand you might have more homes available but on the other hand millennials are big time renters. Good time to buy a rental house or bad?
Obviously local trends are way more important than any national trends though
>Like just thinking about it. If I buy a house now for $500k, then in 30 years its supposedly worth $1mil and I sell it for that much. Doesnt it mean that Im not really making an extra $500k because if I sold my house for $1mil then that means the new house Im going to have to buy to live in will be around that price range too?
>As years pass your mortgage repayment will stay the same
>And your rent will go up but you will make more money so the ratio you spend on rent will be about the same
Yes - mortgage stays the same, while your income grows - making it a better deal long-term vs rent
Say you can pay $1000pm rent or $1000pm mortgage - mortgage is 'less' because interest portion is tax deduction, principal amount is going into your own pocket. Renting, it's all gone. I rent because I don't want to buy right now and am happy to give someone my money, but I also look forward to more stability, establishing roots etc. by purchasing a home in the next few years
when it was time for me to make that decision a few years ago, I simply refused to rent unless I could directly save/invest the money I would be putting into rent instead of equity building.
Not many 22 year olds have 1400/month laying around to play with after housing costs/bills/ every day living expenses. So I have a mortgage. (and 85k in equity).
500k is expensive for a starter. Look for something half that. Build equity and stability, and worse case scenerio, you can always walk away ( assuming your home is worth more than your bought it for.)
This totally ignores putting extra towards the principle every month. 1 extra payment a year shaves off 4 years on a 30 year mortgage. 15 year mortgages are cheaper over the life of the loan.
So much nonsense here.
You start saving money immediately when you buy for a fair price. There is no argument, unless there is some tax voodoo going on.
>There's no property tax where I live.
>You pay back 2% of your principal at a 20% deposit / 30 year loan / 3% interest in the first year.
>Your typical mortgage repayment rate is likely to be about 40% less than a rent rate, meaning you can set aside some cash for other (profitable) activities.
Just but beneath your means, if you're young. I am looking to buy soon and pay less than 10% of my salary on monthly repayments (split with GF).
Meanwhile will save 50% of paycheck clean to invest in rental property / dividend stocks (both after collapse) and live comfortably on my 40%.
Maybe a bad idea to buy a mcmansion at $15 million, but I am looking for a 1 bedroom apartment for $60k in my area, so hardly a bad price for a permanent roof over your head.
I could potentially pay the mortgage even if I got relegated to burger flipper tier.
Houses don't go up in value. They only fall apart and degrade. Land sometimes goes up in value. Keep this in mind. If your land value doesn't increase as fast as the value of the building on the land decreases the total property becomes worth less.
A lot of land in urban centers has been increasing in value rapidly in the last ten years and it has some people thinking that the value of homes will just go up forever. A lot of people also delude themselves into thinking their houses have to be worth so much because otherwise they will go upside down on their mortgage.
tl;dr: People are dumb and irrational
I dont like the " house is muh investment" meme. Sometimes that works out and some times not. And it's at least partially outside your control.
Housing can be efficent. Not if you are just keeping up with the joneses, but if your situtation is stable, and you are not in some cesspit with outrageous home speculation you can elevate your lifesyle, help you save and build equity, and sometimes can even be cheaper than renting a comparable space.
My housing game
>mortgage payment is less then 12 percent of income
>interest rate is 3.25 with a partial interest refund that drops it down into somewhere in the high 2s
All in all its pretty tits. Our payment is about what we would pay for an apartment half the size, with only 1 bathroom, less space. And no outdoor space, let alone a private back yard and deck.
The only real bummer is no garage. Had to sacrifice garage space because I like saving money more than I hate scrapping ice off my windshield (and I hate it alot)
One of the few voices of reason.
It's inevitable that you need to live somewhere and unless you relocate yearly, it makes sense to buy.
In my country, with a 20% downpayment, I can buy a 1 bedroom apartment (first buy) for €180 per month (about 18% of my salary).
It costs about €400 to rent a comparable apartment.
So not only am I saving €220 monthly in hard cash, I am also "depositing" about half of the remainder in equity.
You can say that my building is depreciating or whatever, but this is simply not true for older buildings (the buildings I am looking at are from 1960s).
Bottom line is that in 5 years time I will have saved over €13k in cash and will have accumulated €10k of equity on the property.
As hard as it is to believe, I will get away with selling it for what I bought it forand be €23k ahead if I chose not to rent.
>inb4 maintenance costs. These are about €30 a month only.
Depends on the market/future plans
Only buy if rent=mortgage, if you have a stable 5yrs+ job with median income, if you plan on staying in one place then best option is to buy. If none of the above then rent.