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Comment by camiller | Hacker News Reader

And the fact that at the end of 20 years of paying a mortgage I own a piece of property while at the end of 20 years of paying rent I own nothing.

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And at the end of that 20 years you own a piece of property. Or you could take that down payment and invest it. Will that property appreciate more than the return you can get for your money? Don't forget about property taxes too.

Renting gives you greater mobility too, which can be used to maximize income.

Also don't forget the home mortgage deduction on the income tax, which once you are itemizing opens the door to a whole host of other deductions. My effective federal tax rate this year was 4.6%, back when I was renting I could not have accomplished that.

True, but buying a house now is betting that that tax deduction is going to exist for the next 20 years. The financial situation of the US is insane. The next 20 years aren't going to look anything like the last 40.

I said that twenty years ago as a justification for not bothering with paying into a retirement account. This turned out to be a bad bet.

Thanks for the perspective. It's easy to get caught up in events and not realize this has been believed for many years.

What did you do with the money you would have saved?

I spent it entirely on things I now do not have. Going out to eat, buying books and CDs, etc. There were times I genuinely could not have afforded to save five or ten percent of what I was making, but lots of times I could have.

You can spend 20 years renting a home, or you can spend 20 years renting money in order to pay for a home. Either way you're paying rent.

and now you own a place with one bedroom, that can be sold for 2/3 (if you are lucky) of the price you paid in full for the mortage.

if you spent the same in rent, you would have lived in a 2-3 bedroom for 20 years, moving every time you changed jobs

20yrs is a LOT of time to be living in the same place you can afford downpayment when you are 20yr old. and a LOT of time to work/study on the same area

Well, it's a three bedroom, 2 1/2 bath with a two car garage. I've been in it since '93 Just after I turned 27. I'm the first owner. Original as built price ~$85,000. I'm not on the either coast and property prices were, and still are, a lot lower here. Last appraised value ~$122,000 (appraised 5 years ago), and similar sized homes in the same neighborhood are currently going for ~$135,000+. I'm in a nice neighborhood with relativly low crime compared to other parts of the city. In the intervening 18 years I have changed jobs once and stayed in the same city, and the new job is closer to home. I did refinance once to shave 2% off my interest rate so it will be another 7 years till it's paid off. Yes, mortgage interest does add up, but when you are renting an apartment you are basically paying the landlords mortgage interest anyway. If I did need to sell to move for a job I'd be able to roll the proceeds into the new home and have a much smaller, shorter mortgage to begin with. If I had rented for the same time period I would not have any built up equity. It would hurt to sell though, this house has seen me get married and gain two children. There are a lot of memories here.

I'm not sure that really proves your point. You've made about 2.8% annually over 13 years, not including your borrowing cost, agent fees, etc.

On the other hand, the S&P 500 returned 8.25% annually between 1993-2006. Say you put 10% down ($8500) and spend $800/year total on taxes, repairs, etc. (probably low). If you'd invested in an index fund, you'd have made $42,000.

If you'd invested in an index fund, you'd have made $42,000.

And also likely have moved several times at an average cost of around $2000 per move, seen rent increases above what his current mortgage is and so on. The odds are poor that all other things would have remained equal. I owned a house at one time. I benefited by about $2000/year over the time I owned it. When I refinanced, I got my escrow back and had no mortgage payment for a month. Then my payments after that were lower. No landlord in the world is going to drop by your apartment and leave you with a nice hefty check, say "Don't bother to pay me rent this month and, oh, next month your rent is going down. Cheerio!"

Great, then it worked out for you. I'm not saying there are no advantages to owning a house, but it's not a magical investment vehicle. Many people seem to just compare the purchase price to the sale price and think, "Wow, what a gain!" without considering all the other costs, or as what they could have made with another investment over the same period.

I never said it was an superior investment vehicle vis-a-vis investing in the market. Compared to renting is a different story.

At the end of that twenty years, you can keep renting for another twenty years. Or you can spend the remaining thirty or forty years of your life in the home you own clear and free without paying rent or mortgage any more. I sure as hell don't want to still be making out a monthly check for a place to live when I'm 50, 60, or even 70 (not that I seriously think I'm going to live to any of those ages).

Are you terminally ill or just have a really appalling lifestyle? To not make even 50 these days is pretty rare.

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