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Comment by Dylan16807 | Hacker News Reader

I agree that house prices should come down.

But given that you need a home, what's the difference between $1000 in rent+fees and $1000 in mortgage+taxes+fees?

Normally the biggest difference between renting and buying with debt is that you can stop renting. But you're not going to stop having a home.

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My view has always been that buying gives me price stability. $1000 in mortgage + taxes + fees is only going to change by a hike in taxes but rent changes at the whim of the market. Here in my west coast city, the mortgage on a 4 bedroom house purchased 10 years ago is the same as a 2 bedroom apartment today.

my landlord friend told me, many of her tenants earn decent salary, definitely more than her income, they can even spend $8000 or more to remodel a car or things like that, but can never save up to the 20% down payment ever.

> spend $8000 or more to remodel a car

> can never save up to the 20% down payment

something tells me those two things are connected

Well, at that rate, one could not remodel 15 cars and maybe have enough for the down payment on a studio in some markets.

Or one could remodel a car and give up on home ownership, because it seems like a losing idea atm, and they'll have pursued something they find fruitful for the time being. At least they'll have the car in common with their boomer neighbors.

    > remodel a car

What does this mean?

Restore a classic or like high performance (or other) customizations.

This truth has come up quite a lot lately in conversations. It's not just the down payment though, it's like ok first I get together $120k for the down payment, then I'm on the hook for potentially double the already obscene amount the same place would cost to rent for the mortgage payment, then utils, then repairs, taxes (almost like one would need to be a landlord to afford it). Like, pass, ~$4k+ a month is more than I'd prefer to be on the hook for, and that's just a mediocre 1 bedroom condo. Doesn't help that there are no viable jobs or enough stability to ride out any volatility now that you've drained your savings on the mortgage.

Instead, a modest trip and a few gadgets is wildly less compromising and stressful.

> then utils, then repairs, taxes

Remember you're paying for all these costs (+ landlord profit) when you rent.

Right now in many places we're in a bit of an inversion where you can rent for less than the cost to buy - because some owners have old properties with low mortgage rates, etc.

But the main deal is people are still in "appreciation mode" where they don't really care if on paper they're losing money, because the house is appreciating faster than that.

Once appreciation slows or dries up (or prices start going back down) then things will get suddenly interesting.

We pay whatever they can get away with charging or increasing it to, and often have the standard utilities rolled into the number, which generally seems favorable. I pay rent, insurance, and Internet, rhe rest is rolled into to a max 2% increase per year. If they tried something excessive we'd start looking elsewhere.

Sadly the case in a lot of places is the difference is control over your environment, or simply stability. In a lot of places your rights as a renter are so bad you can basically do nothing to improve the place you live, and even if you were allowed you would be foolish to do so because then your landlord could just kick you out or hike up the rent (and might just do that anyway). (where I live even multi-year tenants are frequently forbidden from putting up pictures on the walls, let alone repainting them, FFS). In places with proper rental rights, rent vs buy is a lot less clear-cut, especially if prices don't have much room to go up any further (buying only looks like a non-brainer financially in the past decade's environment of extreme price increases, or if you fail to consider opportunity costs. Even if you can afford to buy a house, it's not necessarily the best use of your money, but the non-financial side can be a really big part of why people go for it anyway).

Right, I was talking about the financial aspect, not the quality of life.

Where is anyone forbidden from putting up pictures on the walls? 99.9% of residential rental contracts just state that the dwelling has to be returned in the condition rented. Go ahead and paint and put holes in the walls, just be sure it’s repainted and patched when you move out.

Just a minor nit pick, but important: When comparing the costs of renting vs owning, you need to compare rent+fees to mortgage_interest+property_taxes+fees, minus any real estate tax deductions (if you itemize). The principal portion of your mortgage payment is not an expense, it turns into your own home equity so it's money coming out of one pocket and going into the other. The interest portion is generally federal tax deductible, and your property taxes as well (unless you hit the SALT cap which hopefully expires after 2025).

    > it turns into your own home equity so it's money coming out of one pocket and going into the other

What if house prices are falling?

Your home equity = your property's value minus your loan balance. So even if that value is currently negative, every dollar you pay towards principal increases it. It's not an expense.

Your expense is that you've hitched yourself to an oversized loan, so you're putting money from one pocket to another, except the latter has a hole in it and you have an obligation to keep feeding it. If your cost was only mortgage interest, you'd be happier with 600k outstanding at 1% than 300k at 4% for the same house.

> Just a minor nit pick, but important: When comparing the costs of renting vs owning, you need to compare rent+fees to mortgage_interest+property_taxes+fees, minus any real estate tax deductions (if you itemize). The principal portion of your mortgage payment is not an expense, it turns into your own home equity so it's money coming out of one pocket and going into the other.

You need to compare both numbers, because that equity doesn't do much to help you make your payments.

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