patrick.net

Bigsby says

It still remains that buying a house does not mean you are renting it from a bank.

Correct. IF you are actually buying it...i.e. paying the entire cost with cash. Of course, only the very wealthy can do this.

When you have a loan or mortgage, the interest on the borrowed money is essentially the same thing as "rent." You're renting (borrowing) the money, and the cost of this privilege is paid by rent (interest).

The words are different, but the financial effect is the same.

CaptainShuddup says

Of course I'll be able to do so, with the tax ramifications of taking money out of a retirement account or 401k.

Don't buy, I'll buy in your stead.

Two wrongs don't make a right. i.e. take money out of your appreciating 401k to leverage the funds to buy a depreciating asset (house). Oh boy...

APOCALYPSEFUCK is Tony Manero says

If you can't pay cash, you're enriching a bank, another name for a financial crimes enterprise.

So, remember:

It's CASH or FUCK YOU, America!

I take it all your money is tucked under your mattress then. Where do you live by the way?

APOCALYPSEFUCK is Tony Manero says

It's CASH or FUCK YOU, America!

But don't forget that the headquarters of the financial crimes industry keeps printing more and more cash, making your stash worth less and less over time.

Right now, mort-gauge rates are so low relative to inflation that it might be a good time to buy a moderately-priced house rather than rent, depending on which part of the US you live in.

Bigsby says

I take it all your money is tucked under your mattress then. Where do you live by the way?

You might want to bring some ammo with you. ;-)

wthrfrk80 says

You might want to bring some ammo with you. ;-)

I thought he'd spent all his money on barb wire and chickens.

Bigsby says

I take it all your money is tucked under your mattress then. Where do you live by the way?

Near a mattress store! With all the money saved not paying interest to the banking cartel one needs a lot of mattresses.

Bigsby says

Yes, and when you have paid off your mortgage, you can sell it and keep the proceeds. What can you sell after 30 years of renting?

The renter can keep his savings, which could be huge, perhaps twice the value of the house.

Everything depends on the PRICE of the house. If you pay too much, you're screwed. If you get a good deal, then you can save money over renting, or make money as a landlord.

There is no meaning to the rent vs buy question if you don't consider the rent and the price. My calculator sometimes shows green, and sometimes red, depending on the rent and the price: http://patrick.net/housing/calculator.php

Usually red though.

The renter can keep his savings, which could be huge, perhaps twice the value of the house.

Everything depends on the PRICE of the house. If you pay too much, you're screwed. If you get a good deal, then you can save money over renting, or make money as a landlord.

There is no meaning to the rent vs buy question if you don't consider the rent and the price. My calculator sometimes shows green, and sometimes red, depending on the rent and the price: http://patrick.net/housing/calculator.php

Usually red though.

You say that, and I'm sure that some renters do save a lot, though I suspect rather a lot live from pay cheque to pay cheque. And if they do that for 30 years, they will have nothing to show for it.
Anyway, right now looks a pretty good time to buy for the majority of people in the US if they can afford to do so.

How about taking a class in property law if you don't know the difference between renting a property and purchasing a property.

Do you use the same analysis when you mock people for "buying" a car versus leasing a car?

Bigsby says

I suspect rather a lot live from pay cheque to pay cheque.

Those individuals should NOT be buying a house. That's far too much risk (for them AND the lender) if something goes wrong. Threre's a high risk they'll end up losing the house to foreclosure.

Bigsby says

if they do that for 30 years, they will have nothing to show for it.

If they barely make enough to cover the rent, then how are they going to make mortgage payments with are usually higher in expensive areas like CA?

DukeLaw says

Do you use the same analysis when you mock people for "buying" a car versus leasing a car?

I would if it were much more expensive to buy the car than lease the car, yes. Typically though, it isn't. Nobody "invests" in cars with the "get rich quick" mentality since cars depreciate rapidly.

Look, it's not always a bad thing to borrow money for a house in order to save on rent. It all depends on the ratio of the price to rent. Some areas have such high prices relative to rents that it can be better (from a purely financial perspective) to rent.

Use Patrick's calculator.

wthrfrk80 says

Those individuals should NOT be buying a house. That's far too much risk (for them AND the lender) if something goes wrong. Threre's a high risk they'll end up losing the house to foreclosure.

You say that, but looking at the rate at which people save, then a great many people clearly live little beyond pay cheque to pay cheque. That doesn't mean they can't buy a house. Maybe they've saved some money in the past, or have inherited money, or live in the great swathes of the US where house prices are very reasonable. Why exactly shouldn't those people buy homes?
And I imagine most people don't go from renting at a certain price to buying at 2 or 3 times that amount. Rent seems to be getting very high in the BA, so if you are a person paying 3/4/5k on rent, then I'm sure you can stretch to paying for a house purchase if you so wish.

Bigsby says

That doesn't mean they can't buy a house. Maybe they've saved some money in the past, or have inherited money, or live in the great swathes of the US where house prices are very reasonable. Why exactly shouldn't those people buy homes?

As long as they can afford it with some "factor of safety" than there's no reason they shoulnd't.

a lot depends on taxes... where we are taxes can range from 7500 to 10000 for a 3 br 2 bath house... you will never see your spent tax money again just like you will never see your spent rent again...

RentingForHalfTheCost says

CaptainShuddup says

Of course I'll be able to do so, with the tax ramifications of taking money out of a retirement account or 401k.

Don't buy, I'll buy in your stead.

Two wrongs don't make a right. i.e. take money out of your appreciating 401k to leverage the funds to buy a depreciating asset (house). Oh boy...

That's precisely why you should never take money from a 401K for a down payment.

Having said that, you have to live somewhere and renting for us no longer made sense. We don't live in Palo Alto.

DukeLaw says

How about taking a class in property law if you don't know the difference between renting a property and purchasing a property.

Do you use the same analysis when you mock people for "buying" a car versus leasing a car?

Absolutely. Words are different but the effect is the same. If you don't have the cash then you will have to rent something; the asset from a true owner, or the cash from a bank. Pick your weapon. If you don't get this then I mock you. ;)

wthrfrk80 says

If they barely make enough to cover the rent, then how are they going to make mortgage payments with are usually higher in expensive areas like CA?

Because a little realtor told them they could. That is until they couldn't.

But,but after 30 years you do own the place,isn't it?

RentingForHalfTheCost says

If you don't have the cash then you will have to rent something; the asset from a true owner, or the cash from a bank. Pick your weapon. If you don't get this then I mock you. ;)

Exactly.

Bigsby says

Rent seems to be getting very high in the BA, so if you are a person paying 3/4/5k on rent, then I'm sure you can stretch to paying for a house purchase if you so wish.

Geez, you just said they were living pay check to pay check. Now they have extra money each week that they can squeeze? What you forget, is that as a renter they always have the option to downsize with ease. If rents do go up, and I don't see it, you can find a cheaper smaller place and your life hasn't changed that much. If you push your luck and take a 30 year pair of debt cuffs from the cartels, and find you can't keep up with the payments, life changes big time. You are betting on things going perfect, and this is not a perfect world. Hey, if you want to impress and have a gambling streak in your blood, then go for it. Good luck to all.

RentingForHalfTheCost says

If you push your luck and take a 30 year pair of debt cuffs from the cartels, and find you can't keep up with the payments, life changes big time. You are betting on things going perfect, and this is not a perfect world.

That's the thing. The world is changing rapidly, companies boom and bust (especially high-tech ones), RE in the Bay Area is volitile thanks to inelastic supply & demand, global oil production is peaking, etc etc.

If you're going to buy a place, you need a "factor of safety", as they call it in the engineering world.

RentingForHalfTheCost says

DukeLaw says

How about taking a class in property law if you don't know the difference between renting a property and purchasing a property.

Do you use the same analysis when you mock people for "buying" a car versus leasing a car?

Absolutely. Words are different but the effect is the same. If you don't have the cash then you will have to rent something; the asset from a true owner, or the cash from a bank. Pick your weapon. If you don't get this then I mock you. ;)

At least you're being consistent :p. Like I've stated previously, I had enough money to buy recently and my purchase/rent ratio was under 15. That was good enough for me in SF. But my point to the OP is whether he's going around to all these car "renters" and berating them for using the term "my car".

RentingForHalfTheCost says

Geez, you just said they were living pay check to pay check. Now they have extra money each week that they can squeeze? What you forget, is that as a renter they always have the option to downsize with ease. If rents do go up, and I don't see it, you can find a cheaper smaller place and your life hasn't changed that much. If you push your luck and take a 30 year pair of debt cuffs from the cartels, and find you can't keep up with the payments, life changes big time. You are betting on things going perfect, and this is not a perfect world. Hey, if you want to impress and have a gambling streak in your blood, then go for it. Good luck to all.

People can live pay cheque to pay cheque but still have extra money tucked away for a rainy day.
And from what keeps getting posted on here, rents are not going down, quite the opposite in fact. And it's all well and good you saying people can downsize blah-blah, but that's not necessarily so easy for a person with a family.
And quite frankly, if your life changes for the worse, then things wouldn't be too great whether you were renting or had purchased. Nothing in life is risk free. You make the decision that is best for you based on your current circumstances.

The same way I say "come over to my apartment " when I am a renter.

Buying RE is an investment that can have added value as home. In California -- near the coast -- smart investors have made fortunes off of RE.

I think Patrick sums it up nicely here, although I bet if he could go back in time to Palo Alto in the early nineties, he may buy even if renting was cheaper. ;)

Bigsby says

People can live pay cheque to pay cheque but still have extra money tucked away for a rainy day.

You just smeared the definition of living check-to-check. If you have ever been in that situation then you would know this. It means not having money stashed away for anything. It means hoping for that next check to cover the bills. I know more than one home-owner in the BA that is in this boat.

Bigsby says

Nothing in life is risk free. You make the decision that is best for you based on your current circumstances.

Finally something I agree with you on. I see little risk in renting in the BA and lots in buying right now. You see it different. Good luck to you.

RentingForHalfTheCost says

You just smeared the definition of living check-to-check. If you have ever been in that situation then you would know this. It means not having money stashed away for anything. It means hoping for that next check to cover the bills. I know more than one home-owner in the BA that is in this boat.

I just 'smeared' the term? Don't be silly.

Bigsby says

I just 'smeared' the term? Don't be silly.

Usually when people say "living paycheck to paycheck" they mean not having any money stashed away and needing the next paycheck just to cover basic essentials. In other words, they have no "emergency fund."

RentingForHalfTheCost says

Bigsby says

Nothing in life is risk free. You make the decision that is best for you based on your current circumstances.

Finally something I agree with you on. I see little risk in renting in the BA and lots in buying right now. You see it different. Good luck to you.

I couldn't care less what you do. I don't live in the BA and I don't rent. However, you can keep parroting your line all you like and if you are happy renting then fine. There will, more than likely, come a time when you will be less happy about it. You'll just have to see how many years you spent renting and what the current house prices are in the BA when that time comes. It doesn't look that great for you as things stand.

wthrfrk80 says

Bigsby says

I just 'smeared' the term? Don't be silly.

Usually when people say "living paycheck to paycheck" they mean not having any money stashed away and needing the next paycheck just to cover basic essentials. In other words, they have no "emergency fund."

And I'm still hardly smearing the term, am I? And if you look back, I was actually making the point that most people don't save a great deal of money and live little over cheque to cheque. If I didn't keep restating that exact point, then please forgive me. The actual comment that caused RFHTC to get his knickers in a twist was as follows:

You say that, but looking at the rate at which people save, then a great many people clearly live little beyond pay cheque to pay cheque. That doesn't mean they can't buy a house. Maybe they've saved some money in the past, or have inherited money, or live in the great swathes of the US where house prices are very reasonable. Why exactly shouldn't those people buy homes?

RentingForHalfTheCost says

Bigsby says

Nothing in life is risk free. You make the decision that is best for you based on your current circumstances.

Finally something I agree with you on. I see little risk in renting in the BA and lots in buying right now. You see it different. Good luck to you.

This pretty much sums up 99% of all RE threads here.

Okay Patrick, we can shut down the RE forum now.

Bigsby says

RentingForHalfTheCost says

You just smeared the definition of living check-to-check. If you have ever been in that situation then you would know this. It means not having money stashed away for anything. It means hoping for that next check to cover the bills. I know more than one home-owner in the BA that is in this boat.

I just 'smeared' the term? Don't be silly.

Say that to people who actually do live check-to-check. Make sure you have a mouth guard in place when you do. ;)

RentingForHalfTheCost says

Say that to people who actually do live check-to-check. Make sure you have a mouth guard in place when you do. ;)

That post makes no sense. And why not look back at the comment I just reposted above and explain to me exactly why you got your knickers in a twist over it.

Bigsby says

That post makes no sense.

I know what he is referring to. ;-)

Make 359 payments and miss that 360th payment and watch what happens to your house.

To the OP, generally the difference between renting from the bank and renting from a landlord is that the individual renting from the bank put down a down-payment, which carries a certain amount of lucre. But to be fair, that's not even completely true always.

There are folks with FHA loans that are putting down in the ballpark of rental security deposits.

wthrfrk80 says

Bigsby says

That post makes no sense.

I know what he is referring to. ;-)

Yes, yes, I'm sure that saying people who save only small amounts and live little beyond pay cheque to pay cheque can still buy homes constitutes a smear on the term and warrants physical violence. Clear indeed.

wthrfrk80 says

Bigsby says

That post makes no sense.

I know what he is referring to. ;-)

Yes. People living check to check handle conflict with violence. RentingForHalfTheCost ironically has stereotyped the working poor while defending them.

BayArea says

Make 359 payments and miss that 360th payment and watch what happens to your house.

You'll be able to live in your house rent free for a year or two?

Bigsby says

BayArea says

Make 359 payments and miss that 360th payment and watch what happens to your house.

You'll be able to live in your house rent free for a year or two?

If that happened today in San Francisco, the owner would just sell the property for a 400% profit over the original (1982) sales price.