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Comment by chrisco255 | Hacker News Reader

Renting an apartment vs owning a house is not necessarily a bad financial move. Depends on a number of factors. For instance, if you anticipate moving within a certain time frame, between closing costs, mortgage fees, commission, etc...it can cost more to own in the first 3-5 years, especially if prices are stagnant. Also, there are hidden costs of home ownership not necessarily factored in for, like repairs, maintenance, etc that are just implicitly included in rent. Finally, one can use the savings from paying rent to invest in the stock market and generally get a higher return than real estate.

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> Finally, one can use the savings from paying rent

What savings?

Rent as you stated already includes anticipated maintenance costs, property taxes, the landlord's mortgage costs, often an agency fee, plus a margin for the landlord.

I don't think I've seen rental rates ever cheaper than a personal mortgage. The main advantage of renting is avoiding long-term commitment but you'll pay a premium for that flexibility. Otherwise there wouldn't be an incentive for landlords.

No? In San Francisco median rent is much lower than equivalent monthly cost would be on median home.

You are correct that rent includes all the costs plus markup. But a big factor is that housing costs (esp in california) remain pretty steady once you buy. So that rent does include the housing cost...from 10, 20, x years ago.

Alternatively a developer builds a building and rents out the unit instead of marking up and selling units. So the cost isn’t as high as market price. An example: I recently rented a 1 bedroom in a desirable neighborhood for $3500 per month. Equivalent condos are over $1m dollars in that area. But it certainly didn’t cost the developer of my building $1m to build my unit.

Isn't SF an outlier in literally every financial question though? I'm currently in the process of buying a house in the UK and our mortgage payments are going to be a lot less than we were paying for rent in the same area. Like, 40% less. If you have any kind of stability and are not planning to move in 2-3 years it's crazy not to buy.

London's also a bit of an odd one in that regard. You either need half a million+ for a shoebox or to live way out of town, and run the risk that the foreign-investment-fueled housing bubble collapses off the back of Brexit, leaving you with more mortgage than equity.

(This is why I'm still renting...)

At this point one has to wonder, who's making money off Brexit situation still being unresolved...

People like me who live in the UK but work remotely for US companies benefit from a weak pound. But I don't think people like me are pulling the strings: it's just a political mess.

You could work backwards by looking at how the "Brexit party" managed to split and regenerate from UKIP to run a campaign across all the Euro election seats in a matter of months. Where did that come from? They claim to have raised ""£750,000 in donations online, all in small sums of less than £500" in their first ten days"; given that Farage is currently under investigation for his funding https://www.theguardian.com/politics/2019/may/21/eu-investig... , it might be worth considering alternative explanations.

The current situation is perfectly comprehensible without recourse to conspiracy theories. Brexit hasn't happened because there is no Parliamentary majority for any specific form of Brexit. Meanwhile, one of the main architects of Brexit doesn't appear to be too worried about the financial implications: https://www.theguardian.com/politics/2019/may/29/matt-hancoc...

London is similar to SF, as an example I rent a relatively nice 2-bed flat for £1850/m, but after looking at what it would cost me to buy my mortgage would be at least in the region of £2500 + the maintenance fee from the building + repairs which I don't have to pay for as a renter.

This pattern is really common in high cost of living cities.

> London is similar to SF, as an example I rent a relatively nice 2-bed flat for £1850/m

But what will the price be in 10 years? The mortgage will go down, especially if you pay above minimum repayments, your wages will go up (theoretically) helping you make those payments. The mortgage price will go down, bottoming out at $0 while the rent will always increase.

It's about the same here (Netherlands, excluding Amsterdam). Rent is about 30-50% more than mortgage payments before taxes and after taxes it's even cheaper (due to weird rules giving tax breaks to home owners). You definitely pay a premium.

note: Amsterdam an outlier like SF.

I don't know what it's like in the US, but in Sweden you can get a much better deal on your mortgage if you only have to borrow 80% of the cost of the house than if you have to borrow 95+%, even when borrowing the same amount. If you have a good job and can afford $1500/month but don't have any savings to use as a down payment on a house you're not going to able to get as nice a place buying as you will renting.

There are many places where you can't borrow 95% of the cost, or you can only with additional guarantees

It’s similar in the US. If contributing less then 20% you have to pay PMI (mortgage insurance). This may add a few $100s per month to your payment but in no way contributes to the principal. It works against you in other ways because it limits your upper price limit as banks want your payments to be within 30% of your AGI

They recently changed the lower limit of the down payment to 15% in Sweden. But yes, you'll generally get a better interest rate if you put more of your own money into the purchase.

As a Swede in the middle of buying a house in the U.S. I have to say it's surprisingly similar.

The big differences between Sweden and the U.S. is the loan terms. Here in the U.S. the terms are extremely long, you'll typically get 10, 15 or 30 years with a locked interest rate. In Sweden you'd normally lock your rate for 1-5 years up to 10 years depending on your financial situation. When I owned a condo in Sweden I went for 1 year locked rate and then month-to-month once that first year passed. What you have instead of a fixed term is a fixed amortization. By law you have to pay back 2%/year until your principle is down to 70%, 1% until it's down to 50% and after that you can just pay interest if that's what you want to do.

The math might not work out as poorly as you imagine. I don't know the exact numbers for Sweden, but in Canada (where insurance is required for downpayment less than 20%), putting 5% is actually not a bad move, even if you have 20% down ready, because, similar to the arguments for rent, you can invest the difference and make similar returns to the extra costs for the mortgage.

I live in the UK. It's cheaper to buy than rent almost everywhere but I never minded that. The main thing that moved me to buy was because the protection for renters is nowhere near as good. I moved on average every 18 months for 10 years because the landlord decided they wanted to sell the place or just wanted me out so they could increase the rent. One landlord didn't even bother with that and just asked if I'd be willing to pay 2x the current rent. If you complain about something being broken, they might fix it or just evict you with 2 months notice.

Now I own my own place and I finally actually have rights and I will choose when I move on.

> If you complain about something being broken, they might fix it or just evict you with 2 months notice.

This is why you shouldn't agree to a rolling tenancy. When the initial tenancy period is over, negotiate for a year or two. Most landlords, in my experience, don't want their houses sitting empty so they're happy to have you on the hook for a year. Although, it depends where you live: I work remotely so I tend to rent in less expensive parts of the country like Devon where there isn't so much volatility in the market.

Yes but often you have no choice but to agree. When I've tried to negotiate in the past the response was for them to say "thanks but no thanks" and wait for someone else. Given this is London it moves very quickly and another tenant will be along soon.

Yes, that's why I was enthusiastic about the Government's plans to introduce three-year minimum tenancies, but the idea was unfortunately scrapped.

https://www.gov.uk/government/news/longer-tenancy-plans-to-g...

Unless rents are going up (and in London they are not) I don't see how longer tenancies help you. It certainly doesn't give the landlord an incentive to fix.

They already have an incentive to fix. In the UK they're legally obligated to and tenants can take them to Small Claims Court if they don't.

Periodic (rolling) tenancies can be ended with two-month's notice, so the landlord might decide to evict rather than repair. With longer tenancy agreements, the landlord can't evict until the tenancy expires, and so tenants can use their legal rights to compel the landlord to make repairs.

In short, the landlord can't kick people out as an alternative to spending money on repairs.

... in theory

>They already have an incentive to fix. In the UK they're legally obligated to and tenants can take them to Small Claims Court if they don't.

Yes, they're technically "obligated" but only real recourse is to pay somebody to fix it yourself and deduct that from the rent. While doing that you have to be 100% reasonable though (no overcharging, get multiple quotes and landlord must be kept informed).

If you stop paying rent because repairs aren't made you can be evicted.

To spell it out, places a large burden on you.

And then you get evicted after the negotiated period ends anyway.

Yes, ultimately you don’t own the property you rent. The landlord has rights over the property too, and you have to factor that in when choosing whether to rent or buy.

I live in Germany. We have crazy-strong renter protection.

You cannot evict people because you want to sell (the new owner is your new landlord) or because you want to increase the rent. Unless you do something really wrong (like break things on purpose) you cannot be evicted.

About the only time to get rid of tenants is when you want to move in yourself, and then there is a longer protection time (3-9 months depending on the time you lived there). (Or I guess you can pay the renters to move out which I've seen sometimes.)

The rent can only be increased up to 15-20% in 3 years (without amenities), and can only be increased every 15 months. If you do renovations that improve the place you can demand 8% of the costs per year, but only up to 3€/sqm (or 2€/sqm if the place was cheap).

Still, prices in the cities have been going up a lot in the last few years (you can increase the rent when new tenants move in), but the prices to buy have gone up even more.

In many ways I'd prefer to rent (in the UK as well) but won't because the rental market is so poor. We have been in the same location for over 20 years, I would have moved twice in that time if it weren't for the upheaval of buying and selling.

rental rates ever cheaper than a personal mortgage.

This comparison is usually apples to oranges. For example, in Austin, a 20s-30s homebuyer may have a budget of 300-400k for a property. This amount pretty much limits the options to homes on the edge of town or in suburbs. The same person may prefer renting in or near downtown, if they aren’t buying, and that could cost just as much as a mortgage on a much larger house (in a much less expensive location).

So, hard to do fair comparisons.

And most people don't bave that kind of money, already have a mortage to pay and must rent anyway.

That's because Austin (and Denver and Seattle for that matter) are basically SF Lite. Pick any city that isn't having it's housing market turned upside down by California monopoly money (well, tech monopoly money) and you statement does not apply.

>Pick a city where there aren't many jobs, there isn't much to do, and young people aren't interested in moving their and my antiquated ideas about what the housing market should look like hold. FTFY

I suspect people, especially people considering buying their first home, have a specific profile of locations that behave in this new way because of that interest.

There are cities up and down the east coast and throughout the Midwest that have plenty of jobs and stuff to do. The only thing they don't have is a freight train full of tech startups barreling out of control down a mountain while VCs shovel more coal into the boiler.

Basically just strike SF, NYC, Boston and Seattle of your list. Then strike off every city that lots of people from SF, NYC, Boston and Seattle are cashing out their inflated home values and moving to to raise their families off your list. The US is a big country. You're left with a very long list.

My sample size is <10 but 100% of the first time home buyers I know opted for a 2nd tier city or an exurb that's just barely within commuting range of wherever the big fat salaries are. The nature of the city other than physical location had approximately nothing to do with it. The techies who can drop a quarter mil on a 800ft^2 condo that's within biking distance of work and walking distance of a bunch of overpriced bars are in the minority and not indicative of overall trends. Take your narrow world view and even narrower assumptions of what young people want and shove it somewhere.

Left with a long list of cities maybe, but not many (any?) population centers. Im sure for small N you can find people that want to live an hour deep from the Baltimore suburbs, but the size of the cities you insist on excluding compared to the population of the US would indicate the majority don't hold that position (if they did you'd be complaining about other mega centers since capital tends to follow people).

Buying a house has all sorts of costs that need to be paid upfront. If you're only staying somewhere for a year, those costs need to be accounted for in that year. Yes in the long term buying works out cheaper, not in the short term though.

Specifics, specifics. The rent vs buy debate will not be answered with finality, it always comes down to specifics. You're wrong about renting, I save a lot and invest much of it, while renting.

Have you ever gotten a six figure check when you move out? Happens to buyers all the time.

I guess the flip side is not owing a six figure mortgage.

I'm too young and poor to have had time to save up, buy a house, and sell it. Again, specifics are king in this debate.

I think it's more likely to happen to the seller.

Ever gotten a six figure bill on your way out? Happened to lots of buyers around 2008.

In most places they walked away with nothing.

Yeah, once every 100 years...

Many buyers often neglect that they put $50k into their kitchen remodel, bought a new roof, and repaired the water heater/AC/washer along the way. So that $100k check feels like pure profit, but often is just reimbursement for past expenses.

Whether you see rental rates cheaper than a personal mortgage is extremely dependent on where you live. Many 'hot' housing markets have a big anticipation of future capital gains already priced in (rationally or otherwise) and house prices are not remotely in line with rental returns (Sydney, Australia is an example of this).

I would imagine things would be quite different and more like you say in more normal markets.

The houses you rent are not economically the same as the houses you buy and live in.

Renting is absolutely cheaper in some cities, San Francisco included. Just look at the rent to price ratio. A ratio of 15 is breakeven, anything higher means it’s cheaper to rent. SF is in the high 20s.

The rental market and housing market are two separate markets. Just because it costs $X to own a home doesn’t mean rent has to be $X or higher.

Well they typically don’t make 500 ft^2 homes for $1M, but you can find 500 ft^2 apartments for $3k/month. I think a house has a minimum size, thus a minimum price over that of rent.

The same holds true for houses. As someone who has been following the SF market closely, an 1100 sq ft house that's worth $1.1M would cost $5,300 in cash flow per month (mortgage, taxes, insurance) plus another $925 in opportunity cost (down payment @ 5%) for a grand total of $6225. And that's not including maintenance costs.

The same home could be rented for ~$4500 per month.

Keep in mind that most rented houses were purchased a while ago. If you bought the same house when it was $700K, you could still make a profit on a rent of $4500.

The reason why owning costs more is because buyers are also assuming appreciation. If you sell the same house for $1.5M 5 years later, you still make a nice profit even if your monthly cash flow is negative.

Don’t forget that part of that $6225 is paying down principal, which will be recouped when selling or simply disappear from monthly costs after the mortgage is paid off. Also, most ownership costs move less with inflation than rents do, so in 10 years the comparison is $6225 2019 dollars vs $4500 2029 dollars.

Also, once you hit 20% ownership, you no longer have to pay mortgage insurance.

I haven’t run the numbers lately to figure out which side wins, but the analysis is significantly more complicated than comparing monthly outlays in the first year.

which will be recouped when selling

That assumes that you can sell the house for more than what you bought it at.

You are correct that principle may be recouped and in addition, you get a mortgage interest tax deduction. However, you also pay 6% when you sell the place and maintenance costs (~1% per year) need to be accounted for.

There are several assumptions you need to make for owning to be cheaper than renting - that usually involves owning for a longer period of time (>5 years) and some modest appreciation (~3%+).

Of course, my numbers were from the SF market. There are many cities in the US where owning is cheaper than renting from day 1. SF just isn't one of those.

A good place to mention the NYTimes rent versus buy calculator: https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...

> That assumes that you can sell the house for more than what you bought it at.

Not necessarily; as long as the value of the house[1] doesn’t fall more than the principal you’ve paid, you’ll get more cash from the sale than you put up as a down payment. The trouble with buying on margin, though, is that it amplifies losses— the worst single day in the stock market[2] was about a 20% drop, but you get the same effect from a 1% drop in your house value if you hold the 95% mortgage that you described.

  [1] Folding transaction fees into the effective value
  [2] https://en.m.wikipedia.org/wiki/Black_Monday_(1987)

Rent on an apartment that you'd be very happy to rent is often cheaper than a mortgage on a house you'd want to buy!

It's not unusual for people to accept different compromises when they're not necessarily going to have to live somewhere indefinitely.

There is also a tendency to "invest" in your house in a way you wouldn't bother with if you didn't own it. We just bought a new oven, if a landlord was paying for it I'm sure they would have spent half of what we did.

In the GTA (Toronto area) it costs around $2500 for a SFH, or $1M+ to buy. Around Ottawa, a house rents for similar prices, perhaps a couple hundred less, but the same house can be bought for half the price. It absolutely makes sense to rent in the GTA but less so around Ottawa. Landlords in the GTA are banking on ever escalating real estate prices to make a profit when they finally sell. Rent doesn't always scale with land-value.

In many high cost of living markets rent for a modest apartment is much cheaper than the cost of a mortgage on even the smallest house you can find.

For example, you can rent an apartment on the peninsula in the Bay Area for less than $3,000 a month, but buying the smallest house you can find on the peninsula will cost you at least $4,500 a month for just the mortgage.

If you rent in this case you can take the $1,500 in savings (plus the savings from no property tax, maintenance, homeowners insurance, etc.), and save/invest it.

In very hot housing markets the cost of owning exceeds the cost of renting, because buyers are gambling that prices will keep skyrocketing and they will make up for it in capital gains. If prices fail to increase for some reason (e.g. tech bubble bursts in SF) then buying will cost them hundreds of thousands or millions.

In Denmark where I live you can loan 1 million Danish kroner at around 5k each month. A decent downtown apartment in a bigger city or a house in the suburbs is 2-4 million. Renting the equivalent is 10-15k, and with renting you obviously skip a lot of the maintenance cost and taxes. On the flip side loans are tax-deductible, meaning you actually don’t pay 20k to borrow 4 million, you pay 12k.

It can still be cheaper to rent, at least if you look at the small scale. Because in 30 years, those 4 million will be yours while people who rent will still have nothing. It’s also risky, because maybe those 4 million will really be 1 million.

Over all, owning real estate in a safe location is always going to be much better than renting. At least in Denmark. Hell, if you can manage to buy around 15-30 lower-cost apartments in a university city and rent them out, you’ll be able to pay your loans and have enough spare in passive income that you never have to work again.

I doubt that the house would be 4 million. Thanks to reducing population, increased building and housing. Plus who knows how the weather will be, I'm not sure that owning a house is the right thing in 20 years.

"Buy land, they're not making it anymore"

- Mark Twain

The problem is we've started deleting it now.

https://en.wikipedia.org/wiki/Sea_level_rise

This is perfect. It’ll make my land worth that much more!

Just have to be careful to only buy land 2.4m above sea level.

Yeah hope you plan to hold for 100 years.

Humans build houses with their children and grandchildren in mind. Holding to land for 100 years and longer is not that an uncommon thing.

Not in the US!

If you choose the right spot, it'll become oceanfront property!

When I lived on Amager about six years ago, the prices were definitely around the 3-4 million mark in the suburbs. Prices fell somewhat once you got out of Copenhagen, but it was still ludicrously expensive.

Are you saying the prices droppped sharply the last 5-6 years?

No.

But I probably should have been more clear. I mean, first of all, there are more cities than Copenhagen. I have a 3 room 92m^2 apartment that is 15 minute walking distance from Aarhus H that cost us 2.2 million. Secondly, I’d personally call a place like Valby “downtown” Copenhagen even though it would probably be more correct to label it surburbia like you do.

I wouldn't call Valby suburbia, although it'd definitely a suburb. The real Copenhagen suburbian hell start out at Kastrup, Glostrup, Ballerup, Lyngby and thereabouts.

Of course, there are other Danish cities than Copenhagen, and prices do vary. The parent comment I replied to simply stated that there are no 4M DKK houses, which simply isn't true.

Denmark's population went up by more than 15% in the past 30 years, FYI :)

That is interesting loans are tax deductible in Denmark, I always thought that was just a US thing! From my understanding of the new federal tax law though, the higher standard deduction makes the mortgage tax credit less feasible for most people.

Nah, it's the same in Sweden :)

Ditto in Finland. Nordic thing I guess?

Only 30% of your loan costs are deductible in Sweden.

Renting anything really isn't a bad move. There's not much upside to owning something that depreciates in value. Instead of buying a sofa for 2000$ renting one for 50 and putting the rest of your money into some productive financial asset is actually perfectly reasonable.

The calculation gets more complicated with appreciating land, and leverage.

Also if you pay off the mortgage let's say $2k/m then you are $2k/m better off after tax. Otoh if you rent and invest you need to make $2k/m after tax (so maybe $4k/m before tax, depending on where you live etc.) from the investment to be in the same position.

Yes! You can also do 1031 and things like that to defer taxes. And value adds by doing renos.

Technically you're right but the reality is that most people who choose to rent things other than a place to live are doing so because they want to use something that's better than what they can afford to buy on credit or outright. It's much more often about living a luxury lifestyle rathe than pragmatic financial sense.

After 4 years you paid for the sofa 2400$, "rest of your money" is -400$, sofa doesn't belong to you, and in case of scummy renter you own money for damage repairs and cleaning. Ready for legal litigation?

The point of the exercise is to invest the money you didn't pay into something that earns you money. If you put the 1950 bucks you didn't spend into stock, you're making money.

And in case of damages and repairs, if you own the sofa, you're always sitting on the damages. Homeowners for example routinely spend thousands of dollars per year on their houses, whereas renters (generally), have repairs covered by the landlord.

this is a basic situation of opportunity cost. You can't just tally up the renting costs while ignoring the freed up capital, this is the exact mistake people make when they prematurely buy.

As a regular middle-class person, how do you put $1950 in stock to make more than $400 in 5 years risk-free and time/effort-free?

index funds, they've averaged about 7-8% over the last 20 years and cost you basically nothing.

mind you renting your toothbrush probably isn't worth it, but if you're thinking about spending thousands of dollars and compare that to the compound interest you earn in a passive fund over a few years, you'd be surprised how much you lose out on.

In fact that's one of the drivers between middle class and upper class inequality. The upper class invests primarily in capital.

compare that to the compound interest you earn in a passive fund over a few years

So I did. Remember you've still got pay the $50/month out of that savings. Even with 7% guaranteed annual interest on your initial investment you're still losing money after month 46 with renting at $50/month compared to paying $2000 up front.

If the company renting out the couch didn't come out on top, they'd just put their money in index funds instead of buying inventory...

$1950 invested and pulling out $50 every month. If you get 10% interest, at the end of four years you have... negative thirty dollars.

And you still don't own the couch.

$50 a month for a $2000 couch is equivalent to a debt at 26%. You can't overcome that with investment. It only makes sense if you're planning to throw it away very soon.

Apparently, you buy Apple, Tesla, or Netflix, and get lucky because you chose to invest during a wild expansion like we’ve seen since the early 2010s.

I’m not sure what you do when you’re in a down market. Last time I lost a lot of money because I was dumb.

I was under the impression that putting money in stock market is basically gambling and you should be ready to lose that money.

Putting money in a property especially if you can do your own upgrades can really pay off. Example, bought a house for $280k,I invested about $50k, its worth about $400k now.

Putting money into real estate is also gambling. Remember 2008?

It is a lot less risky.

Yeah 2008 happened, however, the prices at least in my area are back to 2007 levels. Short term real estate can be risky but long term it is a relatively safe investment.

The stock market has historically been very safe in the long term while risky in the short term as well.

Edit: As long as you are diversified and not putting all your money into meme stocks, of course

> You can't just tally up the renting costs while ignoring the freed up capital, this is the exact mistake people make when they prematurely buy.

And you're deliberately oversimplifying the calculation, which is just as bad. You're assuming a guaranteed return of 7%, and that the capital isn't touched for the years. If withdraw $50 from your investment capital per month to pay the rental, the numbers don't come out as favourably. similarly, if you reduce the returns (7-8% is an average return, but it's not a guaranteed return, especialy on smaller sums where you may have to pay $25 per trade, or 1+% fees in fund management every year, or tax on the returns).

Your point about renting being a viable option is valid though, your numbers are just inflated.

Very good point even if only because I was too lazy to do the math in my head.

$2000 is a lot for a sofa, and if I understand correctly is what people spend if they want a sofa for a long time and not just a cheap IKEA sofa to throw out after the dog / kids ruin it in 2 years. If someone’s spending this much on a sofa, I hope they expect to keep it 10 years and should be buying not making payments!

A $2000(!!!) sofa should last you a major phase of your life. If you have three newborns then it should take everything they can throw at it for the next ~20yr. If your kids just moved out for good it should be the last sofa you ever buy.

That said, you don't get what you pay for, you never get more than you pay for. Not being an expert in evaluating sofa quality I'll take the cheap Ikea sofas that last half as long.

> There's not much upside to owning something that depreciates in value.

Sure, so why is the sofa rental company in the business of owning sofas?

You've got to ask the question from the other side. You're paying someone else's cost of ownership and interest and overhead and profit margin.

In practice what consumer goods rental competes with is consumer credit. People don't sit on the floor for months while they save up the $2000 for the sofa, they buy it on credit. Lots of places offer interest free credit too! e.g. https://www.dfs.co.uk/content/finance

For most people there is no "rest of the money".

Using your example, renting the sofa only makes sense if you expect to only need a sofa for about 40 months. I say about because if you're super diligent, and most aren't, and put the extra 1500 in some investment you're still only going to stretch out the break even point to something like four years. Most people have sofa's more than four years.

This is totally true and something a lot of people seem to forget about when they want to move out of their apartments to buy a house! I think the most important thing is to wait until you know your living situation is relatively stable (married, family, job, etc) so you can stay in your place 10+ years hopefully. Moving sucks!

Especially in Germany, where there is a new law coming out every five to ten years where you need to isolate your house or build solar or replace your old gas heater etc etc etc. Its all in the name of environment protection. But makes owning a house more of a risk then anything else..

If you establish regular communication with your Gemeindeverwaltung, and simply get approval for all changes and renovations, you will never be surprised.

I live in Germany and I never heard of this "need". Nobody forces you. Yes, you may want to change your old heating (that's what I do), but you get a lot of subvention from the state. You do this, then you also get some good terms on taxing etc.

Same with electricity. You get a better insurance policy if you have it new.

Actually, you have to replace your heating every 30 years. Unless you are exempt, which is becoming more and more unlikely. See EnEV §10.

A ton people don't hear about stuff like that,until they need a new credit for all those things...

True ( I didn't know! ), but is damn 30 years!! I'm not sure that they last so long, especially the gas-based.

And I am getting an exempt, because I am using Holzpellets ( not sure how are they called in English )

EDIT: Wood pellets, that is.

I would be astonished to find any heating system more complicated than an open fire that lasted more than 30 years.

Here in the US steam boilers routinely last that long as long as your water quality isn't too terrible and you do some teeny tiny bit of maintenance. The natural gas ones tend to last longer than the oil ones but both often have a many decade service life. The radiators and pipes themselves last upwards of a century.

Wood stoves last basically indefinitely (i.e they are only taken out of service when the building owner decides they're sick of using wood) but you're probably gonna have to do something to make the seams seal better every several decades.

Fireplaces last as long as the masonry they're made from (~250yr and counting) as long as you don't let them fall apart and leak CO everywhere. I know some people who live in a house built in the 1700s and while they have forced hot air for "base load" they use the fireplaces to make the downstairs rooms extra warm almost daily in the winter. That said, this is only one step above your "open fire".

Just checked the paragraph,on the site I found they list related laws .. Jesus,it's worse than I thought.its like a stack of cards.it can happen if you touch one thing,you are forced to renew other things...

I wish such laws existed in Germany, but I never heard of them. It's still legal to build new houses that depend on fossil fuel for heating and are poorly insulated, even though we need to become carbon neutral in the next fifteen to twenty years if we want to stay below 2° of warming. The Denkmalschutzbehörde can still prevent you from upgrading your windows and adding insulation to your home.

Never heard about the payment for streets in front of your house for example?

That seems to be a form of property tax and very different from insulating your house.

That "property tax" can - in some cases - cost you 100k Euro or more.

In return you get a road to your house I suppose. That seems pretty useful. You can also do your research when purchasing a home and check how old the road is and what the local regulations are. That roads need to be redone every twenty five to forty years shouldn't come as a surprise.

Germany is special in more ways than one, as I understand owning isn't so heavily subsidized vs. renting there compared to other western countries. It's at least far more common to rent in Germany.

You also ran pretty clear of the housing bubble. I wonder if there's a connection there.

I'd argue that the connection is that owning real estate here is not as heavily supported by the overall tax and financial framework. Two examples: Mortgage payments are not tax-deductible and and you are personally on the hook for the mortgage, as in you cannot send the keys to the bank and simply walk away without debt.

Those are also true of the UK with its massive property bubble, although curiously landlords can deduct mortgage from tax but owner-occupiers can't.

I think the real difference is that Germany has proper tenant's rights and a functioning social landlord system.

If you are actually moving a lot this might be true. Otherwise probably not and most people renting aren't moving anywhere and just need to get by.

Paying rent isn't that much lower than pay off a loan. And in one case you actually end up with property. Additionally, people invest much more in their own homes than rented property.

I am not in the US with a high property tax, but I believe this to be true almost universally.

Of course, you always pay a price if you commit to anything.

Only in very specific, unusual market conditions. Less than 3 years it makes sense to rent, but even then it’s difficult to time it so you align with the lease end.

I live in a national average housing market, bought a house in 2006, and save about 30% on a monthly basis as compared to a much smaller two-bedroom apartment. I include mortgage, tax, insurance and a 7% holdback for repairs.

Long term, renting is always losing proposition given the low cost of capital.

The housing boom of the last few decades is a 'very specific unusual market condition'. Is it realistic for housing prices to keep rising at their current rate?

Also in your cost calculation did you include the rate of return you would've made of your principal by putting it into equities? I imagine if you bought in 2006 and held you would be very happy right now.

I'm talking about living in a stupid place, like in the 75 mile radius from San Francisco as an unusual market condition.

From a cash flow perspective, I'm spending about $20k in housing related costs annually. Given that it was 2006, I did a 15 year 105% ltv fixed mortgage. Renting, I would have saved a few bucks for a few years. Right now, renting a 3 bedroom in a neighborhood acceptable to me would add about $750/mo in costs. Total cash in hand with market returns would be around $10k.

Meanwhile, the house will be free and clear in a few years. When we move in 5-7 years, we'll be recovering the original equity, plus capital gains, which will likely be in the $50-150k range depending on the market timing.

If the choice was between have near zero housing costs and living on property my family owns or buying a house as an investment, I would agree you that the market is a lower cost, likely higher return investment. Unfortunately, I don't have that choice!

Except in NYC, SF, Seattle, and maybe a few other HCOL metro areas. HOA fees usually make it a losing financial proposition even on an infinite timeline. There is literally (and not figuratively) no benefit, financial or otherwise, to buying unless you get a really good deal. I know because I'm in the market to buy something and there's not much out there that will "beat" my current renting situation long term.

I completly disagree.

When you are owning a house or apartment - each payment of mortgage builds your own equity. This is not the case with renting, plus when you actually own it and have to move - you can also rent it.

Also, rent over here costs almost as much as mortgage(or in some cases - even more) - the only issue is the down payment - so the investment bit is very off.

I think it’s very natural that rent costs as much as, or a bit more than mortgage.

Has your rent ever decreased or stayed the same over a long period of time?

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