But that's the thing. Most people can't afford a home here; we're renters. The exception is upper class people riding stock market hype bubbles.
I'd rather take all the extra money I save by renting and invest it in other assets. I also value my time and I don't want to have to do all the chores and upkeep a house needs. Sure I could pay someone to do all those things I suppose, but then it makes renting even that much cheaper.
Owning a house used to be a goal of almost everyone? But I wonder if like me younger generations don't even have an interest in buying a house and maybe that also affects the homeowner rate.
But I mean stuff like mowing the lawn, shoveling the snow, cleaning out the gutters, and various other repairs and such that happen over time. That is what I mean by I value my time, and those things can take a considerable amount of time.
Also my rent is only ~$1000 per month for a 2-bedroom. It would cost me like 3x that for a basic house in mortgage plus property tax plus utilities plus maintenance etc. Sure a house is much larger space, but I don't really need all that space... And I don't find any smaller homes really. Property taxes alone would be like 1/3 to 1/2 my rent...
Your $1000 per month rent can only be compared with the interest part of a mortgage you'd get for the exact same housing you are paying rent for. If the rent is less than the interest would be, then yes, you are better off renting. You also have to be able to invest any money that would have gone to a mortgage to make more than the price of your rent in profit every month, because that is your loss each month on rent. It is achievable if you're shrewd and can stay cold headed. Compounding effects help you, but you're also vulnerable to rent hikes. If you stay for more than a few years with the same landlord, they will catch on to that you have a stable situation and are saving/investing, and they won't be able to sleep at night thinking about all that juicy income that you're saving and investing, that could belong to them.
I've shoveled snow and cleaned gutters, even put on a new coat of paint a few times. It is not worth paying somebody $1000 per month for that. That's a salary for somebody working 50% of full time just taking care of maintenance on the unit you're renting. You're also comparing renting a smaller place vs buying a bigger house. That's also part of the problem. Landlords have hogged all of the apartments and smaller housing in order to extract the lifeblood of young workers, when such units would also be available for sale and not rent in a healthy environment.
"Your $1000 per month rent can only be compared with the interest part of a mortgage you'd get for the exact same housing you are paying rent for. If the rent is less than the interest would be, then yes, you are better off renting."
Why just the mortgage interest? Why not the property taxes, the utilities, the repair costs, the time to perform the upkeep and maintenance (which for me has a monetary value).
I have been renting where I am at for 14 years now and there have been no crazy rent hikes.
It was ~800/mo 14 years ago and has climbed slowly to ~1000/mo currently.
I have looked many times at buying a home in my area, but there is nothing in a similar area, and a nice house that I would actually want to own for less than about 2000/mo for a mortgage (probably more like 2500/mo now). That doesn't even count property taxes which would be like another 500/mo.
Then, if I value my time, I would need to pay someone to do the mowing and shoveling and other maintenance beyond that...
It's way more expensive than renting.
With renting I'm paying about $12,000 a year and that's it. That includes water and heat too and me not having to spend any time or money on upkeep or maintenance.
With all the money I save, I do multi-family real-estate investing and development. That generates me a passive income plus huge deductions from asset and property depreciation. And when the property is improved and sold after several years nets a large gain which I move into a new property thus not having to pay taxes on that transaction either. The return on this is far greater than the average rate of a home appreciation minus mortgage interest.
More people are in more significant debt bondage than in the past, that’s not an improvement.
The proportion of owned outright homes has been declining in the western world for 30 years.
So long as you make your payments on time, the lienholder cannot confiscate your property to make the pie whole. The money might be theirs, but the property is yours.
Correction, most people have been able to afford a home in the past in the US.
Homes used to be affordable, now they aren’t.
https://www.forbes.com/sites/katherinehamilton/2023/04/21/ge...
> Roughly 30% of 25-year-olds in 2022—the oldest of the Gen Z (born between 1997 to 2013)—owned their home in 2022, a slightly higher percentage than the 28% of Millennials (born between 1981 to 1996) who owned homes at that age and the 27% of Gen Xers (born between 1965 and 1980)—but lower than the rate for Baby Boomers (born between 1946 and 1964), 32% of whom owned homes at age 25.
The other thing is remembering that cost of living varies significantly. Even 25yo FAANG engineers struggle in San Francisco but there are other parts of the country where someone with middle class income can buy if they live modestly and are thinking along the lines of a basic condo in a non-luxury neighborhood.
If anything, such numbers indicate to me that homeownership rates haven't meaningfully changed and the only thing that did change is the advent of noisey narratives.
Isn't it in fact the opposite? The bigger population, the easier to find a significant signal? Those are variances of millions of people. We wouldn't treat a 5% swing in unemployment as a rounding error, would we?
If unemployment keeps hovering around 29% +/-3% over basically a century, that variance is a rounding error.
“rounding error” isn’t typically used to describe double-digit percentage changes. You might say within normal variation but it’s a significant change and, ignoring the fact that those numbers are much greater than the actual unemployment rate, it’s well over the measurement precision and real shifts of millions of people are going to be scrutinized.
What? We're talking about a 5 percentage points variance, that is a single digit percentage point change. This is regarding a 29 percentage points average over a span of like 80 years concerning millions if not billions of people.
That is a rounding error, whether it's home ownership or unemployment or whatever you want those numbers to be.
At the moment, that’s a change of 16 million people. A century ago, it was 5 million people. Both of those numbers are large enough that they absolutely would get attention and public discussion.
If something trends give or take 30% for 80 years or more, a +/-3% variance is a fucking rounding error. I don't care if it's home ownership or unemployment or whatever the number is, it is a rounding error not worthy of concern.
It's like the lowering and rising of the tides. It goes up and down, but the sea level remains basically the same overall; thus, nobody cares about the exact tide at an exact time for figuring out sea level because it's a rounding error.
Put more bluntly: The trend has not changed, what is there worthy of my concern?
And declining.
Homeowner vs. renter statistics reflect a decline in homeownership
https://www.census.gov/library/stories/2023/07/younger-house... has some nice statistics.
> The name "homeownership rate" can be misleading. As defined by the US Census Bureau, it is the percentage of homes that are occupied by the owner. It is not the percentage of adults that own their own home. This latter percentage will be significantly lower than the homeownership rate.
https://en.m.wikipedia.org/wiki/Homeownership_in_the_United_...
If you have one person living on their own in a house they own, and four people renting bedrooms in a shared house, the home ownership rate is 50% despite only 20% (1 of the 5) of the people being home owners.
If the home owner then rents out one of their bedrooms to someone expanding the population between the two houses from 5 to 6, then home ownership rate is still 50% but now it's 16.6% (1 in 6) of people who own a home.
On one income, I owned my first house in 1994 for $425/mo and next in 2001 for about 2x that. Hurricanes hit elsewhere in 05 & 07 (last here 1921) & I lost the 2nd when my (mandated) insurance doubled my monthly house payment.
By 2021 we could minimally survive on 1.5 incomes (did 1). Today it's 3.5 incomes (have 4).
35-44: 62% 45-54: 70% 55-64: 75% 65+: 79%