patrick.net

Katy Perry says

Ha ha It’s is funny . I say to all my neighbors, “yes I rent, but don’t hold that against me.” they still do I think.
but what I really want to say is
“look I do rent and own zero of this house but in real numbers I own more of this house than you own of yours. Zero is a larger number than any Negitive number I know of,…right.”
I’m really surly lately.

I like that "look I do rent and own ...." lol

American in Japan says

These giveaway rates started around 2004-05. I don’t think they stopped the decline in home prices, though. There was a blip from 2004-07 hwere home prices in major cities started up again, but that has finished as well.

here's a chart of that:

What is the point of these rent-vs-buy calculators when buying allows for a store of equity (assuming the property is priced at 3x property value to income ratio)

Oxygen says

What is the point of these rent-vs-buy calculators when buying allows for a store of equity (assuming the property is priced at 3x property value to income ratio)

Because prices are 10x the property value to income ratio now days. So there is no "store of equity" just very very risky debt.

Oxygen says

when buying allows for a store of equity

A "store of equity" is often just forced savings. If, as in the Bay Area in some locations, renting is cheaper than buying, a disciplined person can just save the excess and likely get better returns on it than housing would generate.

swebb says

After a year and a half here we are facing the housing hunt again — why? Because the owner is selling…So even when you can rent a house for less, there is no guarantee for how long.

You could have signed a two year (or longer) lease, but you didn't. To some extent, this is within your control. Landlords may be amenable to this too, since if you are a good tenant, they may want to keep you, and they don't have to worry about vacancies or the cost of finding a good tenant to replace you. Having a good tenant who doesn't tear up the house and pays the rent on time every month can be rather valuable for a landlord.

In addition, the buy vs. rent calculation is never the whole story. Ideally, renting is the price of buying plus a reasonable profit for the landlord. This reasonable profit also accounts for the fact that renters have more flexibility -- you have to pay for that privilege. But in paying for that privilege, you also have the flexibility to move to a new neighborhood, find a better school, get a job in a different part of the city, etc.

It's not like there's just one factor that goes into home purchases. One reason that buy vs. rent calculations can be important is that sometimes people consider their home to be an "investment," but don't put the proper thought into its investment criteria. There are plenty of properties that make crappy investments, and sometimes people buy these properties at a lower price "just so we can buy something, anything." It's better not to see your primary residence as an investment, but rather as either forced savings or consumption -- it's usually one of those two or a combination of the two.

swebb says

Moving is expensive, time consuming, stressful and disruptive. And especially hard on 5-year-olds.

Expensive, sure, but buying can be expensive too because of massive transaction costs. Time-consuming, sure, but so are many other things like maintaining your house. Stressful and disruptive can describe owning if you don't do your due diligence.

I don't understand the 5-year-old comment -- children of that age are usually quite adaptable, and you can make moving into a game, have them take ownership of their own things, and do other things to make it more pleasant. Also, in some cases you can find another house in the same neighborhood, so while a pain, it doesn't always have to be disruptive.

In addition, all the things you described can also describe moving if you do something foolish like buy a starter home or buy a house before you're really settled in a city.

I think this is going to be on a case-by-case basis.

The irony is that we have been renting the same house for longer than probably 30-40% of the people who "own" on our street. People move out of houses they've bought here in the Bay Area more frequently than some people buy shoes. Its ridiculous. I know all of my neighbors, go to their BBQ's, know their kid's names, know their pet's names, have probably one of the nicer yards in the neighborhood, and also live in one of the nicer houses. My rent at the time being is around $1,300. That's because the landlord has never raised the rent which I realize is unusual. The same house even today would carry a $3,500 mortgage not including taxes and upkeep.

As far as people worrying over moving often due to renting or thinking the must buy a house when they have kids- well I definitely know my fair share of people who have been forced to sell their houses because they lost a job or fell behind on their mortgages. Kids don't really care either. They won't care if you own or buy. If its about schools- rent in the same area as the school. Easy! The bottom line is that buying a house isn't a magic solution to avoid unforeseen outcomes. Both renting and buying carry risks.

corntrollio says

You could have signed a two year (or longer) lease, but you didn’t.

Have you spoken with the landlord? Do you know something I don't know? I wish you had let me know beforehand.

swebb says

Have you spoken with the landlord?

No, you could find a place with a landlord that'd be willing. Who's saying at the same place -- clearly your landlord had about an 18 month time horizon. Many experienced landlords (and not just bubble-waiters) will accept a 2 year lease.

corntrollio says

No, you could find a place with a landlord that’d be willing. Who’s saying at the same place

I guess my point is that you don't know the details of my situation, so your general comments fall flat. The landlord didn't have an 18 month time horizon, he had an unknown, developing situation. I did understand what I was getting in to, but I'm pointing out that the Pollyanna attitude that so many people (you included, it seems) have about renting is not always realistic. Maybe in the Bay Area (or wherever you hail from) renting is essentially interchangeable with buying (in terms of getting what you want), but for my parameters, in my situation I would have much more easily been able to find an available house for sale than one to rent. So while it is in fact possible that I could have found an equivalent house that would accept a 2 year lease, I didn't. In fact, in most of the places I have lived most (as in almost all) of the houses in the vicinity are owner occupied -- so finding a rental in those areas is nearly impossible. Which was my original point -- the idea that you always have the option to rent an equivalent house is, in my experience, not true. And not just a little bit not true. So, I object to this fairy tale part of the "buy vs. rent" argument that gets sold daily. (even though I agree that renting is often better than buying, in spite of these difficulties)

swebb says

So, I object to this fairy tale part of the “buy vs. rent” argument that gets sold daily.

You can object to it, but I think you'll find anything I personally have ever stated to be far more nuanced than a simple buy vs. rent calculation. I can't speak for other people.

Katy Perry says

but what I really want to say is
“look I do rent and own zero of this house but in real numbers I own more of this house than you own of yours. Zero is a larger number than any Negitive number I know of,…right.”

Nice.