Nearly 1 in 5 Millennial Renters Expect to Rent Forever in Some Metros | Hacker News Reader

Nearly 1 in 5 Millennial Renters Expect to Rent Forever in Some Metros

apartmentlist.com

36 pointsotran44 comments

That's probably way too low given todays prices. The NYTimes has a good calculator for understanding if renting or buying is a better deal:

https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...

What you will notice if you play around with it is that the decision is most sensitive to "What Does the Future Hold", in particular to the home price growth rate. If you expect that to even stabilize (let alone decline) then renting is almost always a better deal.

Now, that being said, I expected home prices to stabilize back in the early 2000's and didn't buy in SF, so I have been fooled before.

That's true, but future prices and rents are very difficult to know. If you buy, your costs, ex-property taxes are known for the rest of your life.

This means you can customize the house for your needs, make friends, have you kids make friends, join community organizations, etc, without having to worry that one day when you go to renew your lease, your landlord will have an unaffordable surprise for you, and you have to give up everything you've built up.

Property taxes + HOA fees + homeowner's insurance aren't cheap. On top of that, a average run of the mill 3/2 home worth living in is about $350k-$400k in my area (South Florida)

If you can rent one out for $2.4k/mo - $2.75k/mo and not worry about the headache + not put 20% down... I'm sure that's a way to "stay poor" in some circles but... it works for me shrug

Also, last time I checked, if you file taxes as "single", I don't think the benefits of owning a home are even tax deductible. Meaning, the deductions for mortgage interest + property taxes combined aren't more than the $12k standard. I could be wrong.

You can apply the same math in SF. Why own a house for $8k/mo (mortgage + insurance + hoa + taxes + upkeep + real estate agent fee, etc) when you can rent it for $6k/mo?

Home owners are expecting to get their ROI on appreciation, so the rental deals are just too good.

30year fixed mortgage rate of say 3.5% is only ~1-2% higher than the rate of inflation.

The cost of owning the house is really just interest + hoa + taxes + upkeep. You'll get your principal back out when you sell.

Over a long enough time period, the yearly home ownership costs will be less than renting.

Owning even in SF can still be a better financial decision than renting. There's a lot of tax advantages that you get by owning a home as well.

E.g take this place: https://www.redfin.com/CA/San-Francisco/201-Sansome-St-94104.... Costs about 5.4k/month. Removing principal & tax rebate its likely costing you ~4-4.5K/month.

Somewhat equivalent rental is 3.3k/month. https://sfbay.craigslist.org/sfc/apa/d/san-francisco-916-pac...

Cost of owning is ~1k/month more expensive. However you've locked in your mortgage for 30 years. Likely after 7-10 years the place you were owning will end up cheaper than renting on a monthly cost basis.

> There's a lot of tax advantages that you get by owning a home as well.

If adding together mortgage interest paid for 12 months + property taxes paid for the year together is less than the $12k single filer standard deduction, are there any tax benefits to owning a home?

If the interest + itemized deductions are > 12k, then yes. E.g. do you give to charity...etc.

Of course SF doesn't compare to most of America. I live in an area closer to MCOL. Median houses are ~375k (and the median house is fairly spacious, 2 stories), while a median 1BR apartment rental is ~1.1k/mo.

When you add the fact that mortgage rates are low and house prices went up +50% last year, home ownership sounds pretty nice. People that bought a house a couple years ago have already broke even when you count equity.

Well the $6k is gone at the end of the month but some portion of the $8k becomes equity.

The apt comparison is between 8k cash and 6k cash + 2k opportunity cost (this is captured pretty well by the NY Times calculator)

At a certain ratio it doesn't make sense to buy (eg. imagine 1k rent vs 8k mortgage) This ratio depends on the growth rate of house prices vs opportunity cost (usually the stock market). Both markets have experienced recent instability, and their historical returns are pretty similar so it's a bit of a wash, but you do get much better liquidity with the stock market.

Personally I'm renting for 3k an apartment that would otherwise mortgage for 7k, which seems like a pretty good deal.

Gen Z'ers, please learn from my generation. Think about return before going into debt for student loans. Nobody cares about your school after your first job and many state schools are more than adequate

> Nobody cares about your school after your first job and many state schools are more than adequate

Few people say it out loud, but they do care. Both in social contexts and in professional contexts. I've been to a top-25 public state school for undergrad, and a top-3 private school for Master's. I've seen both sides of the spectrum and I've seen the privilege that I've gotten out of attending an elite university.

I would advise people to be smart about the student debt they are taking on. If your goal is to pursue a lucrative career path like Software Engineering, Law, Business, Consulting etc, go ahead and attend the university that has the best brand name. It will pay for itself over the course of your career. If your goal is to be a school teacher, then go to the best public university in your home state.

My little brother is gen z (born 2001) he seems very aware of it. I (1985) have talked with him a lot about it and he's very wary of taking out loans for school. He's open to basically whatever it takes to graduate with as little debt as possible. I don't know almost any other kids his age but I hope it's a commonly discussed topic for them.

> Nobody cares about your school after your first job

But your first job sets you on an important path

> many state schools are more than adequate

Very true. 2 years of CC + 2 years of public state school leaves you with little debt but the same degree as your peers.

Is it me or is that stat not that bad at all? Considering the price of ownership, having 80% of people being able to (eventually) afford to buy real estate seems alright, no?

Is eventually 3-5 years? 5-10? 10-20? I'm looking to have my current debts paid in 3-5 and down payment on a house or similar in 8-10, looking to buy (if reasonable) at that time. I'm also doing about 25% better salary wise than I'd expect at this point so that has accelerated my debt payments by a few years.

But if the economy tanks again, as it usually does after a conservative party owns the US government for a few years, then I won't have cash on hand to buy anything and could lose my job and more before paying off my debt and building serious savings for a house. I'd likely push this whole thought process out 12-15 years at best given rent costs don't increase dramatically.

In my case, I'd say it's bad.

This is what happens when boomer NIMBYs oppose new housing. They got theirs and are making sure nobody else can join the party.

As a millennial homeowner, I don't want my historic neighborhood destroyed in favor of high rise apartments. I also have been warmly welcomed by my neighbors and enjoy the community a neighborhood brings. Why do boomers get so much hate from protecting their communities and neighbors?

As a millennial homeowner, living in a historic neighborhood, I am all in favor of taking the empty lots that do still exist in my area, and turning them into high density housing. I watched a 4-5 story building appear on a empty lot just down the street from me. This kind of housing is perfect to help alleviate housing constraints, and offers people the opportunity to live in a walk-able, historic neighborhood and contribute to the community. Why is that a bad thing?

There are no empty lots because it is a desirable place to live. If I lived in a place with abandoned building/lots I agree they could be put to better use.

Straw man, almost no one is suggesting 50+ floor apartments in residential neighborhoods. Simply adding a few 4-5 floor apartments buildings with retail at the bottom would greatly improve quality of life in neighborhoods.

> Straw man, almost no one is suggesting 50+ floor apartments in residential neighborhoods.

Plenty of people are suggesting massive restructurings of residential areas in major cities.

> Simply adding a few 4-5 floor apartments buildings with retail at the bottom would greatly improve quality of life in neighborhoods.

You're conceding that even your smaller apartment buildings will change the character of the neighborhood. You think it will improve quality of life for some, but they think it will do the opposite for them.

And when you create these apartments you've concentrated a large piece of land under a single owner, who can then after a regulation change eventually build one of those massive apartment buildings. But it doesn't necessarily need to be that massive to have a negative impact on the neighborhood.

It's because the city can grow only so much. You are not buying the right to freeze the neighborhood in time. You are not buying the right to forbid everyone else from building up and altering the face of the neighborhood.

I am sorry but the price you paid for your house / apt was too little to justify this behavior.

Buying land does in fact give me the right to forbid everyone else from building up and altering the face of my property. If enough like-minded individuals do this you get this you get a neighborhood.

As a property owner, I don't care what you feel is just. I worked hard, saved money and invested wisely. We've been in a bull market for over 10 years now, if you want change then put some money down and start doing something about. All the internet points in the world won't win you a high rise apartment

If enough like-minded individuals disagree with you, we will force the change.

Thankfully we have both a 5th and 2nd Amendment protecting citizens from tyranny

> building up and altering the face of my property

Other people's property that happens to be near you is not your property.

Thankfully people who own property tend to want to preserve their self interest, if they didn't they likely wouldn't be owning property

No, it doesn't. You don't own or have a right to anything other than your house. The arrogance here is astounding. The average person in your generation does not have what you have and it's not because they are lazy (even if that thought makes you feel better about yourself)

Do you own any other buildings other than your home? Why do you feel entitled to make a claim on others private property?

Are there any specific reasons why americans go NIMBY ? In my country it's mainly due to lack of infrastructure (no subway, very narrow roads, no bus lanes etc).

https://www.strongtowns.org/journal/2017/6/26/the-party-anal...

I mean, life is finite. Eventually someone else has to join the party.

The joke is there are already sufficient vacant properties to house everyone, it is simply our defective economic system that fails to distribute them equitably.

For those asking what's wrong with renting, some problems from a UK perspective are:

1. Security of tenure. You can be a model tenant who never misses a payment, but if a landlord wants to do something else with your home for any reason, you've got two months and you're out. Wife, kids, stuff and all. Maybe with a change of school thrown in for good measure too.

2. Exclusion from the biggest one way bet in town. Forget the best index tracking ISA, nothing beats using massive leverage to invest several hundred thousand pounds of borrowed into existence money in an asset class that the elite will happily throw the rest of the economy under the bus to pump up. Much to the benefit of our politicians, flipping their tax payer funded second homes.

3. Welfare unfairness. Got a bit saved up? Maybe even for a house deposit ironically? Well if you fall on hard times, you'll need to burn through your years of savings until you're poor enough to receive benefits again. If you have a fortune of equity in your house though, you won't have to touch a penny of it.

What's so bad about renting forever ?

I am a millennial, I am not planning on buying a house pretty much for ever, I don't see it be a problem

A few possible non-financial negs.

You may have trouble renting the type of property you want.

You can’t modify the property for the most part.

You’re exposed to the property just being taken off the rental market. Regularly moving probably isn’t a big deal in your 20s but there comes a point where it’s less desirable.

Owning a property is generally a better financial move because it locks down what is usually your largest monthly expense and then after some years, its paid for. This really becomes a bigger issue when you want to retire. Think how much less of a retirement income you would need if you didn't have to pay rent.

If things don't change, home ownership is the only path to retirement for us millennials.

One problem is (for better or worse) home ownership stands in for a forced savings account, especially for retirement. If you rent forever but also max out your 401k or Roth then cool, if you’re renting and also not saving for the long term then...

Gotcha, I am not a heavy spender, save most of my salary, this must be the reason why I don't see renting forever as a problem

The study also says that if student debt was forgiven and payments were instead put towards savings, the percentage of millennial renters ready to buy a home is estimated to rise from 25% to 39%.

But your house. If you want to freedom to move around then find a good management company and rent it out.

Even if you have cash, investing can make more sense financially than owning. Plus you don't have to worry about repair/renovation, school taxes, fees, and the stress coming from mortagage payments.

You also get freedom when renting, for example being able to relocate anywhere in the country or the world when the opportunity comes.

So I don't understand why people are making a big deal about owning your property

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