Is It Better to Buy or Rent? | Hacker News Reader

Is It Better to Buy or Rent?

nytimes.com

21 pointsBrentley_1114 comments

Hysterical. I've been telling people about the cost-benefit of rent/own around our neighborhood for years. I can buy a 1000sq. ft. home with an arm's length of property around it for $419,000 or I can rent a 1000sq. ft. home for $1400. With default yearly increases and 5.5% mortgage rate it's better to buy after... never! With a 2% annual increase in home value, never! 3%, same as rent, never! 4%, never! Houses have to increase at 5% just to be positive, after 13 years. (We have 2.7% tax rate.)

Damn. Nice to see a chart like that.

Another element of the buy-vs-rent-home issue that I think is important but it rarely mentioned is the whole illusion of "owning" a home.

In my lingo, if I own something, I'm done paying for it. I paid for it. Done. Now it's mine. I don't have to KEEP ON paying for it. In the typical "own a home" scenario, even after a mortgage is paid off, you have to keep right on paying for that house each month/year. At a minimum, you have to pay home ownership taxes. Notice you do not have to pay ongoing "just because you own it" taxes on most other items that you own. A computer. A book. Clothing. Once you own them, they are yours, you don't need to keep paying for them.

But if there's some fee an external entity is essentially forcing you to pay, either directly or indirectly by threat of force, then you do not really own it. You are renting it. The key question is if you were to stop paying a certain fee whether some big mean people will come and take it away from you. If that's true, you are only renting it.

Arguably the OA is about comparing one kind of renting to another kind of renting. There are advantages to each, but in both scenarios you will be paying for the home for the rest of your life. And so will the next "owner", and the next, and so on.

There is no spoon.

I own property and rent it to others. I rent property from someone else to live in and have mobility. Best of both worlds.

Most of the time, this is the best way to do it (financially speaking) - alot of people still like to live in a house they "own" though.

I do this too, but it's only the best way to do it if you really need the mobility. I own property in my home town, but will sell it and buy locally as soon as I decide where I'm likely to be living in the long term.

The main problem is that the rent I receive is taxed as income and the rent I pay isn't tax-deductible.

the main problem is that the rent I receive is taxed as income and the rent I pay isn't tax-deductible

Your costs as a landowner are tax-deductible, right? So you're only taxed on actual profit? Doesn't seem like you should be any worse off

Also the financial cost is part of the decision for buying vs. renting, it is not the only one for me. I feel I have a better quality of life in my own house. For example, I did not want any carpet on the floor for my toddlers and can remove it in my own house, I can change the isolation, etc. On the other side, other people could prefer not to have to worry about a leaky roof, replacing the plumbing, etc.

I agree, for me owning a home is about quality of life and having complete control over my housing. When my fridge started going south, I replaced it. When my girlfriend's fridge started making loud noises and running constantly, she complained to the landlord who had it fixed enough so it was quieter, but it still ran constantly, running up her electricity bill.

The renter's manifesto http://www.mint.com/blog/goals/rent-vs-buy/

I think that if you have a steady income and a family, buying (or building) makes more sense considering the fact that the landlord/owner of the rented property can ask you to vacate any time. Even with an advance vacation notice, finding a new rental property and moving with a family is a huge hassle. With your own property you at-least have the peace of mind that it's yours to keep (alright, not really so until you pay off the mortgage, but still better than renting in this one scenario).

How much is that hassle worth though?

1. You may lose money so there is monetary cost.

2. You may lose the ability to easily relocate for a job - lack of options

3. You may lock yourself into something you may not be able to afford due to change in circumstance - lack of agility

I just had this discussion with some friends who got their PhDs and bought homes. "Paying rent is just throwing your money down the drain" they said. It's easy to ignore the opportunity costs of owning a home. I wrote a blog post explain the economic reasons why the cost of owning and renting might differ: http://aspiringeconomist.com/index.php/2010/04/17/rent-vs-bu...

Literally the other day I posted a comment with a link with the previous version of that calculator from the NY Times from 2006:

http://news.ycombinator.com/item?id=1275691

Weird coincidence. Nice to see they've updated that calculator, it's even more useful now.

From today & apropos: http://sethgodin.typepad.com/seths_blog/2010/04/how-to-buy-a...

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