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Comment by nartz | Hacker News Reader

One of the main values in a mortgage is that money is worth less in the future due to inflation, so over time the mortgage payment actually gets cheaper. Similarly, mortgages can often be cheaper than the alternative of paying rent, and are incentivized by allowing interest deduction.

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An excellent point often overlooked. A mortgage is also a great way to leverage debt and do more with money during the near term, over the full term of the note.

The market is generally already aware of stuff like this, and builds it into the price.

It’s included in this thingy called “interest” :-)

When I bought my first house, the mortgage wasn't cheaper than the rent - but the rent was going up every six months. The second year, I think the mortgage was about the same as the rent was going to be (if it kept raising at the same rate). After that, I was ahead.

What market? I'm assuming coastal because where I'm at (midwest) this seems ridiculous.

I’m in a major metropolitan area in the South. I walked away from an underwater mortgage in 2012 and rented an apartment in the burbs - 3 bed/2 bath 1600 square feet for $1300 month.

When we bought our our house a little further north in 2016, rent was already up to $1700 a month. Now, rent for the same apartment is $2100.

Our mortgage is $2070 a month for a brand new build - 5 bedroom/3-1/2 bath - 3000 square feet.

Is there any form of rent control which would limit the increase?

Rent control is only in a few areas of the US.

...and a universally disastrous policy that results in higher prices, less maintenance by landlords, and less residential mobility/adaptation to changing job realities.

Outside of zoning, it is SF's original housing market sin.

Salt Lake City, 1992.

I experienced that same scenario in PDX during the 90's.

Rent on a nice place was $325 / month. One year, they announced a bump to $375. Big jump!

We went looking and got a starter home, 15 year fixed, payments of $425 / month.

No brainer as we watched rents rise right over our cheap mortgage.

My income improved and we put some of that into the house. Paid it in 11 years.

Sold the home for $125k.

Rents at the time were something like 800 / month.

That and also I'm going to have to be pay to live somewhere so would I rather put my money towards an asset I control or give it to someone else for their asset?

This can't be the full picture. If your rent were $0.01/year would you still use this argument? No? What if your monthly rent was $0.01 less than your equivalent monthly mortgage payment? Yes, right? So at what point does the decision flip? That point is where it's worth it for you to pay rent without ever owning anything.

I don't think this a good analysis of the cashflows. My rent for a similar asset, lets say a 1k sq/ft 3 bed SFH, would have to be significantly cheaper since my house can appreciate in value while sticking to a fixed mortgage who's effective costs go down due to inflation not including that my landlord is going to (if smart) increase my rent each year. This situation is highly unlikely due to the fact that the person who owns the asset is likely using leverage and thus needs to make money to cover their costs which if anything are going to be higher than mine since the cost of capital for a 30 year mortgage on a 2nd home is always higher than primary residences.

Have you ever paid for a new roof, furnace, A/C, paint, etc? Maintenance on a house is expensive. If the value of your home is mostly in the value of the house and not the land, then maintenance is usually 2-5% of the value yearly.

Our total cost of our house monthly is over twice the mortgage when you include insurance, taxes, garbage, water/sewer, and maintenance (~$5000) and I can do most things like fixing minor electrical or plumbing myself.

If rent was .01 a year I would rent everyplace and rent them out at a higher cost while I lived in a home I own.

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