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Comment by maxaf | Hacker News Reader

I find intellectually dishonest the suggestion that not owning a house is somehow going to remove the ability to settle down and start a family. I don't own a house, and most likely never will, by the simple reasoning that I can either own a house 2 hours away from work and spend 1/6 of my weekday waking hours on public transit, or I can rent a great apartment 10 minutes from work and enjoy a vastly greater quality of life.

None of this stops me from living the family life. On the contrary, the shorter commute time arguably allows me to be a better father and husband than many of my coworkers, who travel such long distances to work that they can't afford to be home in time for dinner or their kids' bedtime.

Yes, they may have the big backyards and huge houses, but my family enjoys a Manhattan penthouse with a rooftop, located equidistantly from Central and Riverside parks, with easy access to everything the city has to offer.

The "American Dream" of owning a house at all costs - which also appears to be the British dream - would be just another distraction. It's unnecessary and, in my opinion, a waste of mindshare and money.

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>, or I can rent a great apartment 10 minutes from work and enjoy a vastly greater quality of life.

> The "American Dream" of owning a house [...], in my opinion, a waste of mindshare and money.

If we want to discuss city apartments vs suburban houses with "intellectual honesty", I would hope those in favor of downtown urban living acknowledge that some of us really do prefer living in houses.

I lived for 2 years in Chicago's downtown loop in a "nice" apartment. Yes, everything was "walking distance". I could walk to Grant Park, the lake, the museum, the restaurants. But I don't care about any of that. Even though I was on the 6th floor, I heard police sirens and taxi horns every day and never got used to it. I also spent a year consulting in downtown Manhattan and visited Tokyo,London,Paris. I can see how the vibrancy and immediacy of those cities appeal to others but they don't appeal to me.

I now live 35 miles away from downtown and the tranquility is wonderful. I can look out the window and watch squirrels and birds around the trees. Also, I can putz around my garage with noisy woodworking tools for weekend projects. I don't like the implication that my brain is somehow "broken" for not preferring city living. Many of us are not ignorant of the urban lifestyle. We tried it and we'd prefer to raise a family away from it. We will spend a big chunk of income to make that happen. It doesn't mean we're irrational or brainwashed.

The part GP highlighted wasn't the museum, or restaurants, or the lake. It was the short commute to work. Slashing the commute from 1 hour to 10 minutes gives you at least 1 and a half hours more each day, or about 10% more life. If you count it in "time spent with the family"(subtract work hours, personal time and various other engagements), it's anywhere from 20-50% more time spent with the family. Is a house worth that much time? Well, it probably depends on the people.

> The part GP highlighted wasn't the museum, or restaurants, or the lake. It was the short commute to work. Slashing the commute from 1 hour to 10 minutes gives you at least 1 and a half hours more each day, or about 10% more life. If you count it in "time spent with the family"(subtract work hours, personal time and various other engagements), it's anywhere from 20-50% more time spent with the family. Is a house worth that much time? Well, it probably depends on the people.

While true on paper here's what really happens to most people:

1) They spend the extra time working instead of what they would otherwise consider family/fun/relax time.

2) If buying a place costs X and renting costs Y, they end up spending (Y-X) frivolously and getting accustomed to that level of spending.

If nothing else, owning a home tricks/forces/cajoles people into saving money. Sure you can argue, "I'll save the difference and invest it at Z% ... Win!" but that's not what the VAST majority of people will do.

The question tho is simply: Are they happier?

If you spend 2 hours in transit... or 20 minutes. If you "invest" or "spend on frivolities"... If you use your time more productively instead of sitting on a bus/in a car...

While the trade off might not make sense to you, it obviously does make sense to the GP.

I live on family property... and it would actually cost more (no rent/mortgage... vs something new) to live close to work, but I would get ~2 hours of driving (~1 each way) if I moved closer. Due to a variety of reasons, I stay where I'm at.

Due to a variety of reasons, other people choose to move closer.

Just because they aren't super efficient (wasting money/time, as you seem to suggest), doesn't mean they aren't better off with that decision.

> The question tho is simply: Are they happier?

Having done both (short and long commutes), I'd say yes, but only in the short term. There's a distinct joy in not taking any form of powered transit to work. You feel it with every step you take walking in the mornings.

Eventually that joy wears off though as you realize that you haven't saved squat over the past N years and if that trend continues, you'll eventually get priced out of renting too!

While I understand what you are saying - Short commutes and not making forward progress lead to short term happiness - not everyone agrees with you.

Growing up, I lived closer to where I worked... I'd walk or bike to work. Getting older, I moved around and anything I've done in the longest time requires "long" commutes (30-60 minutes each way). I've been on both sides and am fine with either.

Given a slightly modified set of circumstances, I would probably pay a bit more to shave an hour or two off my commute... the added time and lessened stress (so many bad drivers on the roads... more time to play CoD...) would be worth it.

I am lucky enough to live on Family Property - so the economic benefits of having zero rent/mortgage can't be understated (and is a major reason I commute) but it does come at an expense in time commuting.

I gained 50 pounds over the course of a year spent with a commute pof 1.5 hours one way. For all my interest in owning a house, I'd rather not be morbidly obese because I've given up all the time I have to work out. The only solution I have is to live close to work, and that means renting.

Time is money, you can spend that extra time however you wish, and working more can have a payoff even if it shouldn't. And not everyone can buy, especially if they aren't in high home ownership cultures (or can't afford the $1 million needed to break into the market).

Homes as a trick to saving or not spending seems vacuous, it's like the enforced marriage wedding debt hyped up about a certain tribe in the phillipines. If you need to be deeply in debt to spend money wisely, something is wrong.

>The part GP highlighted wasn't the museum, or restaurants, or the lake. It was the short commute to work.

The GGP highlighted both the commute and the city amenities. He specifically contrasted the house with "big backyards" vs apartment access to "Central/Riverside parks, etc"

I was countering the notion that those city amenities are so wonderful that supposedly clueless suburbanites "don't know what they're missing out on". Well, we do know what those city benefits are. We enjoyed them at one phase in our lives. We just don't prioritize them.

As for the longer commute time of suburbia... to me, it was already an underlying premise. In any case, there are also several factors affecting it. In two-income families, if one spouse works in the city, it's common for the other spouse to work outside of it. So, depending on the type of jobs the husband & wife have, they really don't reduce total commute time for the entire family unit by choosing to live in downtown. Another interesting data point is that many wealthy earners (e.g. hedge fund mgrs, etc) in NYC deliberately purchase their family homes out in the suburbs instead of a high rise apartment next to Central Park. They have the high income to live anywhere and yet they also made the "irrational" decision to commute 2 hours every day to live away from downtown.

>Is a house worth that much time? Well, it probably depends on the people.

Exactly. People prioritize different things.

I had a balcony with my nice Chicago apartment but I never used it. My ears didn't like the constant noise of traffic. On the other hand, my house has a covered outdoor area with a grill that I use all the time. It seems like people spend their "commute" time as a calculated tradeoff to enjoy a certain lifestyle away from the office.

Wait, you lived in downtown Chicago -- not a community by any stretch, but instead a commercial and tourism district that rolls up its sidewalks by 7PM -- and you call that "living in the city" and imagine that area descriptive of "city benefits"?

Hey, you prefer the suburbs and long commutes. Great. But neighborhoods do actually exist in a city of 3 million+. Commutes are minimal, with few taxis and sirens to rattle one prone to rattling. Let's not for a second indulge the idea that you made a fair comparison.

Wow, I'm not exactly sure where this intense hate of Chicago came from. I grew up in Chicago and lived there as an adult as well for a stretch before moving where I live now and I still have a lot of friends who live there.

Chicago is large enough there are a lot of communities [1] not a central one. Depending on what you're interested there are different neighborhoods for whatever kind of lifestyle you're wanting to find yourself in and always new developing ones if you want to make your own.

[1] https://en.wikipedia.org/wiki/Community_areas_in_Chicago

If I had to guess, what we're seeing in the post above is almost certainly someone who grew up in wealthier suburban enclaves and whose comfort level is forever pegged to those enclaves. How else might one mistake downtown Chicago for a community representative of city living? No friends in neighborhoods, no familiarity with neighborhoods.

I live in a "legit" Chicago neighborhood. There are plenty of taxis and sirens around. OP's comparison isn't that far off. Definitely looking forward to living in suburban house someday. IMO apartments suck and city living is overrated. I do like not having a car though.

>OP's comparison isn't that far off.

No, it's actually ridiculous.

Again: you like suburbs and necessarily the long commutes that go with them.

Let's not for a second indulge the idea that you made a fair comparison

Fine. Then I'll try to make one. I used to live in a beautiful part of Minneapolis. A tree-lined, peaceful street near the edge of town that was so bucolic I had a friend who came to my house for over a year before she realized that I lived within the city limits, not an inner-ring suburb. I knew my neighbors, could walk to the grocery store, restaurants, movie theater and the big museums, theaters, etc were a 10 minute drive away in downtown. We went to art galleries and performances fairly regularly.

Now I live on a small farm about 40 miles outside the city. The two closest non-agricultural businesses to my home are a bar and a McDonald's. Yet I will never move back to the city; I simply prefer it here.

The problem with so many of these articles, and the resulting comments, is that everyone comes out of the woodwork claiming that their way is best and anyone who disagrees doesn't know what the other side looks like. Not so: as the GP stated, we know the pros and cons of either choice. We also know better than you what we prefer!

>We also know better than you what we prefer!

Not sure where you think I've claimed to know better than you or anybody on that matter.

You like long commutes and exurbs and aren't so hot on having close neighbors. Great. Call it what it is.

>Not sure where you think I've claimed to know better than you or anybody

Probably because your replies have an undercurrent of condescension in them. Take your following comment for example:

>and whose comfort level is forever pegged to those enclaves.

This type of psychological profiling of my background to make it look like my living preferences are "defective" smacks of smug superiority.

My mother didn't buy a suburban house until I was 19 so I grew up living in apartments. And yes, I had friends in Chicago's Gold Coast and other "community" neighborhoods where you see people riding bicycles, etc. Those benefits don't tip the scales for me. It's still sharing walls and ceilings with neighbors. Yes, townhomes are less dense than apartments but it's still sharing walls. Besides, the Chicago loop was a quick 10 minute walk from the office. The Gold Coast means a 20+ minute subway ride -- and more walking after the substation. That kind of negates the convenience aspects. In any case, none of those urban environments make may say, "gosh, this apartment and community is my dream."

Here's another unproductive comment from you:

>You like long commutes

Nobody here said he "likes/enjoys/favors long commutes". Please don't put words in people's mouths to try to win an argument. The commute is a tradeoff (aka a necessary evil). It is not something we "like".

And another one:

>Again: you like suburbs

You just ignore the fact that he stated, "apartments suck and city living is overrated."

Your style of replies to everyone has that fingers-in-the-ears-I-can't-hear-you vibe to it.

>Probably because your replies have an undercurrent of condescension in them.

I think I know better than you do what I mean with I've written, thanks.

You DO like long commutes and you DON'T like being near neighbors. Why not own it?

No one fails to acknowledge that lots of people like houses and living outside the city. But government policy at all levels is so tipped in favor of detached-home suburban development that there's a severe lack of options in most places for people who prefer urban living or who would choose the tradeoffs of living in the city.

So, please, live where you want. It's great that you can afford it. But the assumption in the media and government policy that your particular dream of an isolated home is right for everyone is what the GP was griping about.

In the UK at least a mortgage tends to work out about half the price of renting in my experience. Also add in the extra security ownership provides which I would much prefer if I had a family. If I had a family, lost my job, and was renting instead of owning/paying a mortgage, I would be on the street much, much quicker. Also, outside of London I don't think commuting is as big of a thing here. At least when I lived in Northern Ireland I didn't know anyone who commuted more than 60 mins to work and these people also owned houses in the suburbs. Looking at it from the perspective of a well paid tech worker who can find a new job very easily renting isn't a big deal but for most people finding a new job can be a long and difficult process so renting can be a huge risk with a family.

Additionally, as the price of houses in London increases, Landlords are much more likely to end / refuse to renew tenancies.

Maybe they want to sell, and maybe they want to renovate first. Maybe they want to bank the gain in price, or convert a house they own 50% of into two houses they own 25% of.

Either way, a lot of my friends who rent in London have been politely evicted every year or two for the past few years. Once evicted, they usually find they can no longer afford rent in that area and need to move.

Getting your kid into a good school is difficult and based on where you live here, so moving is going to compromise your childs schooling unless it is planned in advance. Ideally, parents don't want to have to move at short notice every few years.

>In the UK at least a mortgage tends to work out about half the price of renting in my experience

It depends where you live. It is only in London that house prices have risen to silly heights compared to income, so I assume that is what the article is referring to:

http://moneystepper.com/property/rental-income-vs-house-pric...

If you look at rental yields in the above graph, they have been sharply dropping in London in recent years. This makes sense if people are buying houses as investments: unless they're going to be sitting empty, they will be rented out and that will increase supply and reduce demand.

Essentially these London real-estate investors are subsidising cheap rents. So it's really a great way to save money by renting instead of buying, and investing your money in the stock market instead.

>If I had a family, lost my job, and was renting instead of owning/paying a mortgage, I would be on the street much, much quicker

Nope. If you were sensible you would put the money you saved by renting into investments, and you would have at least a year of runway before being on the streets. With a mortgage (assuming your mortgage is higher than rent, and you can't save much) you will have about 90 days before being kicked out.

>At least when I lived in Northern Ireland I didn't know anyone who commuted more than 60 mins to work and these people also owned houses in the suburbs.

Belfast is completely different to London in terms of commuting. Also, house prices haven't gone up the same way they have in London.

>> "Nope. If you were sensible you would put the money you saved by renting into investments, and you would have at least a year of runway before being on the streets. With a mortgage (assuming your mortgage is higher than rent, and you can't save much) you will have about 90 days before being kicked out."

That's assuming your rent would be cheaper than your mortgage. My impression is that it's the other way around and that's what my assumption was based on. Also, if you lose your job you can probably re-negotiate mortgage payments. That's not going to be possible when renting and if you have a family finding somewhere suitable (still close to schools/doctors etc.) and less expensive is going to be difficult - especially considering you'll need to come up with another deposit.

>> "Belfast is completely different to London in terms of commuting. Also, house prices haven't gone up the same way they have in London."

You must have missed the sentence before what you quoted: "Also, outside of London I don't think commuting is as big of a thing here."

It's all a part of this baby boomer generation narrative glorifying owning a house. I've got one kid and we're thinking about number two. We rent in the city so we can be close to friends and work. Meanwhile, my parents and their friends are leveraged to the hilt in housing, carrying mortgages that they will definitely not be able to pay off before retirement. And leverage is the name of the game. Housing here in the DC area is subject to their weird island effect driven by what two people on GS-scale salaries can qualify for. Just under a million and you're looking at cramped fixer-uppers. At just under two million, you're looking at mansions in Georgetown.

Homeownership has been glorified because, over the past few decades at least, it's been an unbeatable investment.

There is no need to pay off a mortgage before retirement. You can sell up (likely for a huge profit) and use the proceeds to buy a smaller property, rent, or retire to somewhere with significantly lower living costs.

Agreed. I save and invest aggressively and my housing returns for the last 9 years are greater than my total 401K and IRA balances (and I've been working and investing heavily into 401K and/or IRAs for 22 years).

A friend of mine moved to a different coast and sold his house. His return from his house was more than his income over the past 5 years ... and we're talking about high, bay area salaries. The cash he got was also tax free.

I think that only $500K was tax-free (for a married couple filing jointly).

If you can sell.

Lots of people not buying means it can be difficult to sell your house for what you think it's worth.

People are only going to have trouble selling when the bubble bursts.

Until then, there is always a greater fool.

> Meanwhile, my parents and their friends are leveraged to the hilt in housing, carrying mortgages that they will definitely not be able to pay off before retirement.

Are those mortgages more than rent in the city would be? At least in my area, there are literally zero apartments of any size for a rent that is less than my mortgage payment in a ~1700 square foot house.

I mean, it's not like you get to stop paying rent when you retire, either, and you don't have any equity renting.

In the UK (or London, at least), "house" means "a place to live", so it can mean appartment as well. According to my observations, most young people won't be able to afford an apartment either.

> my family enjoys a Manhattan penthouse with a rooftop

If anything, the intelectual dishonesty is pretending that it matters whether it's a proper house or an apartment; if you were to sell your NY penthouse, you'd be able to afford a good house almost anywhere on Earth, unlike many "lazy millenials" who will never own any property.

What's your point? If you can afford to rent a manhattan penthouse, you could afford a house pretty much anywhere on earth.

You're just bragging..this article isn't about choosing to live in the city or the burbs - it's about those of modest means who in the recent past have been able to afford homes and now can't.

You must live in the Bay Area or the East Coast. In the heavily cost inflated economies this is the reality. In the cost depreciated realities this is a complete farce.

For comparison I like to use Texas versus California because the demographics are often nearly equally comparable given comparison of various metros and distributions. The biggest differences between the two states are that in California the cost of living is about 8x more (or 12x more in more extreme comparisons) even though both locations have near equal employment capabilities, same currency, and often many similar laws. To be clear earning $100,000 per year in Texas is a far greater indicator of wealth than earning $300,000 per year in California.

Owning an apartment in California is the reality in a major metro with a booming economy. Housing prices cost so much that owning a house often becomes completely unrealistic for many people. Not that it matters since past a certain point an apartment becomes a better value per square foot than a house anyways.

In Texas the opposite is true. After the housing crash of 2008 many people who could not pay their mortgage were forced out of their homes. The costs of apartments dramatically increased and the cost of homes dramatically decreased. It has always been a better value to own a home than live in an apartment, but that value gap increased noticeably. I can remember spending about $1200 per month for a 1200 sq ft apartment at that time and moving to a 3000 sq ft house and paying less per month. This gap is less noticeable in my geography now with Facebook and various other companies setting up shop minutes away.

I have also noticed that working in Texas (at various employers) there is a huge demographic divide among home owners and apartment renters at the work place. Once you get past around 27-30 years of age generally everybody in the office who is an employee owns a house. For contractors (non-employees) the home ownership rate goes down slightly. For non-citizens the home ownership rate goes down dramatically. Generally, given the income rates associated with technology work price is not a primary discriminator from owning a home in Texas, but mobility is. Those who have a greater need for increased mobility are less likely to own a home.

The bottom line is that if you want to own a home with a yard close to solid jobs you absolutely can and it is absolutely within reach. You must be willing to sacrifice your geographic location to achieve it though.

All a great and good till you do the math. In the UK you can own a house 2 hours away from work or you can rent a house 3 hours away from work. Rental prices in the UK are well above the rate needed to service a mortgage so if you can get a mortgage it's much cheaper. To give you an idea the 3 bedroom flat I live in has a mortgage repayment of around 800pounds a month but a rental income of 1700pounds a month.

Which part of the UK can you rent for £1,700 but mortgage for £800? The housing market varies greatly in the UK, e.g. London is an extreme outlier. It's usually only useful to talk about specific locations

Probably anywhere if you bought the house 15+ years ago.

London is more extreme but it's the case in almost the entire UK that rents are higher than mortgage payments.

Perhaps so. e.g. in Greater Manchester rent might be £470 for a 2 bed terraced house whereas the mortgage would be about £300-400, depending on interest rate, but a mortgage payment isn't a direct comparison to a rent payment: you need life insurance, buildings insurance, contributions to a repairs fund, service fees if a flat, upfront costs to be amortised over the duration of ownership etc (but those payments are not necessarily the difference).

Also, the set of people who are renting and unable to get a mortgage I imagine is quite large.

What does life insurance have to do with owning a house? Is that required for a mortgage in the UK?

Wow, now that's the major difference from NYC. A mortgage payment for anything decent anywhere in Manhattan is far beyond my current means, yet I afford the rent easily enough. I wonder why the UK is so different? Are landlords simply profiteering off a bad situation?

I find the inverse to be strange, i.e. the notion that the rental value of a property should be less than the cost of a mortgage.

Not least because landlords incur overheads over and above those an owner-occupier does.

There is a large 'buy-to-let' industry in the UK, whereby millions have taken out mortgages to buy properties for the sole purpose of renting them out.

The rental income pays the mortgage, and usually provides some profit on top, all while the value of the property itself continues to appreciate.

In the US anyways you have favorable tax treatments for interest and property taxes, but rent (of private properties like houses) tends to exceed principle + interest + taxes in many areas. I find that to be fairly weird, because you've essentially got a very low out of pocket expense at that point (or even nearly net positive) in raw money exchanged, yet principle is recoverable on sale and tax deductions offset a portion of property taxes.

Basically if buying a house and renting it out immediately turns a profit, that's a renter-saturated market, and it seems best to be on the non-saturated side of the market

Not least because landlords incur overheads over and above those an owner-occupier does.

But isn't there also an economy of scales argument to be made. If you own dozens of buildings and hundreds of flats, you should be able to keep your pr. flat cost lower than someone who just bought one flat.

None of the overheads I'm thinking about lend themselves to economies of scale.

I'm talking about things like:

* Admin costs (contracting, etc.)

* New tenant costs (marketing, agency fees, reference checks, credit checks, inventory, etc.)

* Landlords' insurance

* Extra safety checks (e.g. annual gas safety checks)

* Cost of downtime between tenants

* Cost of rectifying wear and tear (cannot recover from tenants)

There's also a difference in terms of maintenance. If I'm an owner-occupier and something breaks, I can live with it for a while, shop around, get a few quotes, and get it fixed at my leisure.

As a landlord, if something goes wrong with one of my properties I have an obligation to repair it as soon as reasonably possible.

Then every now and then you get a tenant who completely trashes a property, causing damage far in excess of any deposit, and which you're unlikely to ever recover.

>> "I wonder why the UK is so different? Are landlords simply profiteering off a bad situation?"

In my experience landlords tend to buy property and then use renters to pay for their mortgage. And then they add more on top of that so not only is their mortgage being paid but they're earning money too. I know some people for example who are buying a 2 bedroom apartment (they only need a 1 bed) and are renting the second room at a price high enough to cover their mortgage. So basically they're not paying a penny for their accommodation.

I think in NYC many real estate buyers are really speculators. They don't buy to live there, but because the prices are expected to go up. With this increased demand the price for houses keeps going up, but the price to rent is based on how many people want to live in NYC. In most areas of the country there is a balance between renters and buyers. People may prefer one or the other, but they will switch to renting or buying to save money. This keeps the market from going out of whack. NYC is different because for investors renting isn't an alternative to buying, hence the mismatch.

London is an even more extreme example of speculation in the property market. There are no restrictions on foreign ownership. In South Kensington an area of London 1 in 50 homes are designated as long term unoccupied. Buy-to-leave is a well known term in London and it's even a sensible decision. London property appreciates at a rate greater than 10% a year.

As said in other comments buy-to-let is a massive thing in the UK and in London buy-to-leave is big too. But yes profiteering is a major part too.

While rental can be above mortgage repayments in the UK (particularly London), 2x is unusually high. It sounds like the mortgage in question is only for a small part of the total value of the flat.

My mortgage is £350/month but the house next door is rented out at £750/month so it does happen, but then I had a reasonable deposit and got a low rate.

I think the best apples-to-apples comparison would be to compare the mortgage payment, property taxes, and insurance calculated as if the full market value of the property was mortgaged. That takes out the variance from deposit variances and purchases made many years ago.

Isn't that how it's usually done? My mortgage payment is somewhere around $2,700/month, but I'm pretty sure that covers insurance and taxes.

Yes, but I'm talking about something else.

If landlord A puts down 50% of the purchase price and landlord B puts down 20%, their mortgage amounts (and montly cashflows) will be different, but the inherent value proposition to the landlord will be about the same.

Likewise, if someone bought 10 years ago and their value doubled (but their mortgage stayed the same), that property will "appear" more profitable to that landlord than if they sold that rental to another landlord. That's why I think the "property holding costs" should be based on the full, mark-to-market, cost of the property today, and be based on a 100% financing mortgage rate.

There's also a strong argument that we shouldn't include the principal paydown part of the mortgage payment when doing this analysis, as that's a forced-savings (and cashflow) item, not an inherent profitability impact.

Ah, but "forced-savings" doesn't work if that means you can't afford to eat. So it's very much relevant to the "young people can't afford to buy a house". True, it's slightly different problem - but it's also (probably) why people are forced to rent, driving up prices for rent vs buying a house/apartment. This also include the saving you need to do before you get a mortgage (which is harder to do if rent prices are inflated...).

It's of course true, that even with a catastrophic collapse in the housing market, the money sunk into the principal are rarely truly lost. At some point the market is likely to recover to the point that it is worth something. If you can afford to wait.

When did you purchase your house? Because we're talking about people moving into the market. If you managed to buy a house that only costs you 350 GPB/Month for both interest and downpayment, that's great. But is that what it would cost you if you bought your house today? (I'm not saying it'd wouldn't, but it's relevant for the discussion to know for sure).

Bought in 2011 for £90,000. Current Zoopla estimate is £110k

This raw number doesn't tell us very much. We still don't know the length of the mortgage, whether the house is larger or the condition of the building and a whole lot of other variables that I didn't mention.

Particularly in London, houses are overvalued to the extent that rents are comparatively cheap vs. the rest of the country. Rental yields in London are significantly lower than they are in e.g. Manchester.

Yet you miss the key issue - which is mortgage availability.

I end up where I can afford to buy my own flat and rent it out to someone who is not myself at the rent I am paying and make a profit. But I would not be offered sufficient mortgage to simply own it myself despite the fact that the rent I pay is higher than the mortgage would be (and indeed even accounting for 2% rate rise I'd be fine).

Even with a 10% deposit it's still only repayment of 1100 a month.

The point is that rents are higher than mortgages which gives the case of having money means you can save money. And that's before you consider the massive asset you own then.

Noticed you said the property value is £275k?

£275k property with £1700/pm rental yield is very, very good.

Average rental yield (before tax) is around 4-6% of property value per year.

Generally speaking though, your point is true of course. Having enough capital to buy a property in London instead of renting (especially if you bought a few years ago) will save you a lot of money in the long run, provided that property prices don't go down between your your buy/sell dates.

Not untrue in the states either, it's common for the rental price on a house to be 1.5-2x the mortgage payment or more, especially with rates the way they are.

I'm not talking about major, top ten city, I'm not familiar with the pricing there. I'm speaking from experience in 2 "B" tier cities.

Rents in our neighborhood are around 2-2.2x our payment of mortage+insurance+taxes, though we put 20% down so the payment is a little lower. In our previous location it was around 1.5x and rents are rising.

That's the premium you get for owning property in a B city. Imagine having a portfolio of 50+ properties in Detroit in this day and age. Imagine owning high value property in a city like Detroit - it'll be hard to sell, hence the premium.

I guess so, our current city is redhot property wise so anything is expensive relative to what it was, the other city has a very large portion of renters which lends to the increased cost I'm guessing.

At ~3% interest rate (ie: less than one should plan for in case of change in the economy), a 25 year mortage comes to approx 480 GBP/month per 100K. Are you saying your 1700GPB/month rental property sells for ~200k? Certainly rent should come at a premium to buying (eg: in the example above, down payment isn't considered as an investment -- mostly because you'll need somewhere to live. If you sell your house, were will you live?).

As far as I've been able to figure out in Norway, you'll generally end up paying more (total) per month if buy than if you rent. But like all things in life, if you can afford the monthly total of rent+downpayment, you'll be better off than renting due to the presumed price increase of the house. Worst case, you'll pay it down and live "for free" the rest of your life.

I think it's interesting to look at median yearly wage and house prices. How many years wages does it cost to buy a place to live outright? And as the article states, how can it be more expensive now, than it used to be?

Close 275k but with a slightly larger than 10% deposit. 2% interest rate but the point that it is cheaper to pay a mortgage than rent is valid even if interest rates go to 8 or 9%. Also you consider that in a vacuum. What do you think happens if interest rates go up? All the buy-to-let people that require the rental income to pay for the property will also raise their rental rates. There are enough of them that they will move the market.

Certainly sounds like the difference between rental and mortage is much bigger where you live, than here. One obviously need to look at the concrete market one is buing/renting in.

Interesting, this is quite the opposite from Beijing. 7500 RMB/ month rent translates to around a 20,000 RMB/month mortgage (not exactly since down payments are much larger). But we are also at peak proper bubble.

I can either own a house 2 hours away from work and spend 1/6 of my weekday waking hours on public transit, or I can rent a great apartment 10 minutes from work and enjoy a vastly greater quality of life

In the UK the rent/mortgage price calculation is the other way round, especially in the hearts of big cities. Not only is the mortgage cheaper on a monthly basis, it's also not subject to arbitary increases.

UK renters are also subject to arbitary eviction due to shorthold tenancies. If you were told you had 1 month to find a new rental for your family, would you be able to? At the same cost? Including the cost of moving all your stuff? And moving the kids' schools in the middle of term?

> In the UK the rent/mortgage price calculation is the other way round, especially in the hearts of big cities. Not only is the mortgage cheaper on a monthly basis, it's also not subject to arbitary increases.

What?! Maybe you're not including London, but AFAIK, mortgages to buy a flat in London are at least as expensive as rents, if not more; in addition, with interest rates being at historical lows, it's more than likely that they'll be a subject to arbitrary increases in the years to come.

My experiences are from Edinburgh, Cambridge and secondhand reports of various London suburbs. Certainly I don't know very many people who regard renting as a choice which makes economic sense for them if they could buy (which they can't).

London may be a bit strange due to overseas money putting up prices.

If you have a fixed-rate mortgage, you will never experience an increase in your payment, so I'm not sure why you think there will be arbitrary increases. Also, while the payment will be higher on a mortgage, you also have an asset. The only part of a mortgage payment comparable to rent is the interest. Do you really mean to say that the interest on a flat is more than rent?

Unfortunately, there are no fixed rate mortgages available in the UK. The second part I agree with, the interest is cheaper than rent, but the mortgage isn't.

True, but house ownership + mortgage (as opposed to rent) may be the only way to accumulate some wealth for a lot of people.

Regular (monthly) investments are available to nearly everyone. Investing is perhaps even easier- no points to pay with mortgage and investments are liquid and highly portable.

Yea, but you can't live in your annunity fund. With a home, can rent it out. You can use it to start a home business. You can help out family members in need. You can work on your vechicle on the driveway. (Just read a housing rental agreement. A 42 page agreement. The agreement was so restrictive, the renters would only be able to sleep in the over-priced, code ridden, chit box. They literally had a clause in the lease that restricted opening the hood of your vechicle for more than 10 minutes in their carport. No quick trouble shooting on that old vechicle. You are forced to roll it on the street, and then risk a municipal ticket?

I still think a house is a good investment for most poor, and middle class people.

I'm so dissalusioned, at this point in my life; I would just like to see areas where you can pitch a tent, without the fear of racking up tickets.

I hate to be that guy, but I forsee a lot more homeless in the near future. I'm just asking for a few fields, and some restrooms. A safe place where people could go after an deviating life event--like a nervous breakdown, or the loss of a key job. A place where you could save a few bucks, so you could get back into the system.

There are very few investments that have outperformed the average UK property over the last few decades.

Let alone investments that you can live in.

You can also maintain a line of credit through the equity in your house, allowing you to borrow money at lower interest rates than most other types of credit.

The reality for a more typical household isn't a Manhattan penthouse, it's a choice between some gritty apartment a 90 minute commute away in Queens or a nicer apartment/dumpy house in Jersey, Rockland/Orange County or Long Island.

The issue is not having space aka house in suburbia... the issue is ownership.

I am assuming you don't own your apartment. It would be ideal if you did and speaking as a landlord in a semi urban area it is not "It's unnecessary and, in my opinion, a waste of mindshare and money.".

It is funny how many people like to take the risk of creating or working for a startup often because of control factors but yet do not want to take the risk of owning property with a group of friends (or even strangers... yes people do this).

Well, here in UK I could pay 1/2 of what I pay in rent on a mortgage for a similar home. Buying houses is just a lot cheaper than renting in the long run.

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