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Comment by darth_avocado | Hacker News Reader

> assuming 1/3 going to a mortgage would give you $2.3k a month to work with

That’s the problem right there. Even if you’re locked in on the historically low sub 3% mortgages, there is a chance you’re spending more than 1/3 of your income on housing. People with higher rates and people who are renting, spend a lot more than 1/3 of their income on housing.

I know finance influencers and older generations keep talking about 1/3 income on housing, but that hasn’t been a thing for a while now. Even before the pandemic surge in housing costs, 1/3 on housing was dream in most cities across the country.

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> there is a chance you’re spending more than 1/3 of your income on housing. People with higher rates and people who are renting, spend a lot more than 1/3 of their income on housing.

We live in San Francisco and pay rent at about 15% of combined gross income. I think people really underestimate the value of renting.

1. Are you under rent control?

2. What is your income and what is your rent?

While I appreciate the anecdotal data point, it’s easy to conflate personal situations to “this is what everyone else can do”. I say this because for a good 5 years I lived with my spouse in a $2k single bedroom apartment in San Francisco that was under rent control when both of us were raking in tech money. It’s doable, but not something that you can extend to everyone in the country.

Good question. We make tech money and rent a 3bed. No more rent control than SF defaults, we’ve only been here 2 years.

The shocking part is that we pay 5k in rent, but mortgage on the same place would be closer to 9k. Plus the commitment part (annual lease vs 30 year debt)

Very important to do your own math on these things and not just follow common wisdom.

If $60k/year represents 15% of your income, you are well within the top decile of income for the US. The comment thread you are responding to is talking about households earning the average income.

> you are well within the top decile of income for the US

Yes and still can’t [responsibly] afford to buy in my locale :)

The situation is truly fucked and it’s about time Americans admit that housing cannot be both an expectation and an investment. Either everyone gets to own a house or it can be an investment. You can’t have both.

IMO housing is a consumption expense but people hate it when I bring that up at dinner.

> housing is a consumption expense

only the building portion.

The land is not consumed when you live there. It only appreciates due to the developments around that land, making it more desirable and thus, more valuable.

And if the land is more valuable, then it makes sense for it to cost more - either as rent, or as capital appreciation.

> everyone gets to own a house

which is not a truth, but a want/desire. So housing is an investment first and foremost, and will always remain so.

if you buy a house, you are entitled to rent it out and collect that rent.

if you then live in that house, you lose that rental income. That is what you are consuming. the rest of the investment remains intact.

as I like to phrase it, when you move from a rental into a house that you own, you still pay rent.

The idea of rent suggests that you're paying a use fee to an owner. But if you live in a house that you own, and therefore lose the potential rental income, who are you paying that use fee to? Is the loss of potential income really the same as rent? Because in that case almost every choice/action in life involves a potential loss of income. There's probably always something more profitable one could have done with time/money.

> Is the loss of potential income really the same as rent?

yes it is. The term is called cost of capital, and sometimes imputed rent. But it's not an "expense" per se like it is when you pay liquid cash to somebody for use of a capital good.

Your point about being both an investment and an expectation is important. It's a kind of perverse system. I have no idea how to solve it and I haven't heard any answer besides build more housing. I'll take that as the best answer until I hear more ideas. But even that is untenable because everyone who already owns a home blocks new builds. I don't understand why either in most cases given new development typically raises value of proximal real estate.

Yeah I think $5k/month at 15% of your income means you’re making more than $400k/year as household. (Even more if you’re counting it on net income)

The strong household income is the only reason why you’re able to limit how much you spend on housing, which unfortunately is not something most people are able to do, even if they’re renting. I get that renting is cheaper than buying at the moment with the interest rates, but it’s not cheap overall.

The abstract math can work out well but the practical reality is that every landlord exists on the slightly-shitty-to-living-slime end of the human continuum. Even if your municipality has "strong" renter protections it is so draining and stressful dealing with them and their weird invasive bullshit and petty malfeasance for decade after decade.

> every landlord exists on the slightly-shitty-to-living-slime end of the human continuum

I've been renting for the past 10 years across 5 different landlords and never had a negative experience

OK when you get another 3-4 decades of experience with it we should compare notes. I've had some pretty lucky ten year runs myself.

From a livestyle perspective renting sometimes makes sense. Financially almost never does. There are of course edge cases like very expensive urban areas where there’s no possibility to buy because there are no units on the market and commuting is not possible. But if you work remotely, or suburbs are nearby then owning a place is likely a much better choice than renting particularly if you take advantage of subsidies like state/federal assistance for first time buyers and tax abatements in opportunity zones.

> Financially almost never does

Can you support this claim by evidence? There are various sources [1] reaching the opposite conclusions:

> One thing is clear: renting your housing is not a waste of money, and it can even result in a greater accumulation of wealth over the long-term compared to owning

[1] https://pwlcapital.com/wp-content/uploads/2024/08/2017-07-07...

Sure but also I believe that the upper limit for most mortgage servicers is around 41, maybe 43% (one of those two, cannot remember which, or at least it was 4y ago).

There’s no limits per se. 43% is what they “prefer”. More recently with the low demand for mortgages, that number is more flexible. And all of this is on Gross Income and not net. So you could in theory be spending more than 50% of your net income on mortgage alone. If you want to consider “housing” costs, the number would be lot higher.

I bought a year ago and my max lending amounts were around 45-50% of my gross salary.

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