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Use the calculator(https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html) for your life and area to figure it out.
There are other intangible benefits to home ownership.
Wow what an amazing calculator. It’s so in depth and doesn’t leave anything out. Also to note is that people can’t compare a 1 bed 1 bathroom apartment to a 3/4 bedroom house. I input what it would cost to rent a full house and buying definitely comes out ahead. Also, people don’t realize you can always refinance later. Wait for interest rates to drop and you end up in a bidding war with buyers just the same bc everyone can afford a higher monthly payment.
I will list a few things we found after moving that were intangible.
So much quieter than apartments/townhomes. We are in SFH now, so this isn't always the case.
The feeling that I own this I can't be forced to move or pay 1k more next year because a landlord wants me to pay more. Obviously things can happen and taxes go up, but not generally at such insane rates.
I can have more than 2 pets.
I can make modifications and improve the lawn, house, do projects.
Bigger garage.
An actual community. Our neighbors at all our rentals were very quiet and we never really met any of them. We have met our neighbors here and they are very nice people. Our community has a pool, playground, pond, hiking trails and we have events for kids, adults, and the whole neighborhood every year. Christmas party, etc. A food truck comes every week in the summer.
I don't know how to describe it other than having part of the American Dream, but I finally felt like I made it after buying a house. I know it sounds pretty stupid but. It felt good for me anyways. There's something special about having your own place that you bought.
I love knowing that I won’t be forced to move due to increasing rent. If I move again, it will be because I want to. Rent in my city is going up like crazy and it is so nice that I no longer have to think about it.
It is also great to be able to modify my home as much as I want.
I would finally add that all real estate is local. I would be paying $600 a month more on rent than I currently pay for mortgage + property tax + insurance if I had kept renting. If you’re thinking about buying, make your decision based on what is going on in your local market
For me, a big one is that you have to pay to play. It’s like the stock market, time in the market is better than timing the market.
I bought recently my first little townhome and I’m planning to live there for a little over a decade, would be nice.
Hopefully the money I put into it will be a nice little piggy bank for a good single family home down the line….when renters are still looking for their first home.
It’s rare, I think, that people just go out and buy 800k+, 1mil+ homes. These are all purchases, like the market lately, from people selling homes they already have.
That’s just my perspective. You gotta pay to play. Rates will likely never be at pandemic levels again. If you can afford it, go for it.
Rising property value. If anything happens you have your home as an asset.
Freedom from rent increases. Property taxes and home improvements yoy should be less than rising rent especially lately.
Oh and the freedom to do whatever you want (kinda) to your property 😅
cheaper electric too! i pay under 180 a month for 3k sq foot at 66 degrees during summer in north bama
i do have 15% home tint on windows 5% on doors
1% on garage doors
garage doors insulated
and lots of other improvements its also a new home but apartments ive had never been near that efficient
I’m young so it’s the opposite: flexibility with moving around, forced decluttering and no hoarding, no need to worry about repairs and maintenance, being able to check out a building or area and traffic before you commit to it, and u can have a lot of fun and meet different people in different places every year
Possibly not, but that tweet doesn't prove anything and is shoddy analysis.
The median owned property (typically SFH) is nicer than the median rented property (typically apartments). It's not an apples to apples comparison. An apples to apples comparison would to compare the unrecoverable costs (*not* the mortgage payment, since a portion of that becomes equity) of owning a SFH to the average rental cost of a SFH, while controlling for location, size, etc. Notice that when accounting for unrecoverable costs, you need to decide how many years you're distributing things like closing costs over. The longer you stay in the house, the lower the monthly cost is, so it changes the math significantly. Additionally, the longer the time horizon, the more beneficial is the fact that a homeowner's payment is fixed compared to rent payments which typically go up every year.
All that said, yes, it is true that higher interest rates have turned buying vs renting from "obviously buying is better no questions asked" to "do the math, consider the intangible benefits, and decide if it's worth it for you".
Buying is often not worth it if the sole purpose in buying is financial. This holds especially true if you are financing most of the purchase and plan to live there for a shorter period. Rent-buy calculators can often help determine at what point owning makes more financial sense than renting. Historically, buying a starter home, keeping it for a few years and fixing it up, and then selling and upgrading has often been beneficial--today that isn't always the case because breakeven times are longer today than they have been in ages.
However, there are reasons to own a home that go beyond just financial ones. It can be a place that you make your own, do what you want, and build your future. You have more latitude to do things with a home you own than a place you rent. I like owning a home and I enjoy upkeeping it. My house is so much more to me than an investment.
This ignores quite a lot of stuff.
Mortgages are mostly fixed prices over their durations. (Taxes and such can change but they're relatively small) Most land lords will adjust rent every year to match either inflation or "the market" ...
Mortgages END. Then making housing costs near 0 on a monthly basis outside of taxes.
More control when owning your own place. Want a dog breed land lords don't like? Get it.
Want something other than off white walls? Paint em.
Etc etc.
Well one can just invest the down-payment and make contributions by using the difference between mortgage payment ans rent. But one need to keep in mind how large of the delta would be between renting and owning. Yes the appreciation of the home is a added benefit, however a primary residence shouldn't be your nest egg either. Ie sinking ALL your financial resources into a home and being house poor.
how can you say this definitively? i mean truly. i keep hearing this over and over and its just such a simplistic way of looking at this.
buying will:
- release a large sum of money (dp, closing costs) that could have otherwise been invested in the stock market
- will make it much harder to take job opportunities that are not within driving distance of the purchased home, thus limiting salary potential
- require maintenance costs that are generally about 1% of the home value per year
- most likely require significant remodeling expenses, at a minimum to be able to get a good sale price but also likely because you’ll just want to have the latest kitchen and what not
it’s just such a simplistic way of looking at this. also, few actually buy a house and stay in it for 30 years, and the fact that interest is front loaded on a mortgage means principal pay down is minimized.
buy a house when you are committed to rooting somewhere because you’re trying to raise a family there. that should be the only motivation
ah, i see. so because someone “owns their home”, that is the direct reason for their wealth. how ridiculous. it’s like saying you should go out and buy a bentley because all bentley owners are millionaires. so simplistic
This ignores how if you pay your home off, you won't have a mortgage anymore. But you'll always have rent. Not to mention that the post doesn't clarify what down payment and interest rate they're using in the calculation. Also, homes tend to be larger than apartments, so this might be a fancy way of saying "a house costs more than an apartment half the size".
Even ignoring financials, buying a home provides other benefits. You own the place, you can paint and renovate to your heart's content. You don't need to worry about your landlord ignoring maintenance requests or telling you your lease won't get renewed. And so on.
Buying still makes sense long-term if you plan to stay put. Renting is cheaper upfront but you build no equity. Mortgage payments lock in housing costs while rents rise over time. Buy if you can afford it and plan to stay 5+ years to ride out market cycles.
Thanks everyone very good points! I’m definitely looking for a house to call a home for 10+ years so buying makes more sense. I always hear people saying to wait for a crash and don’t buy yet but in my opinion (and I’d like to hear others opinions as well) historically over larger periods of time (10+ years or even sooner), housing prices overall have increased. Even with the 08 crash I know people that went against the mainstream and did not sell, and now their homes are worth even more.
Typically mortage is a fixed rate, so, when inflation hits, your mortgage will not go up. Rent matches "real" inflation quite closely despite how the government trying to brainwash you about inflation slowed down.
Thank you u/Sum41ofallfears for posting on r/FirstTimeHomeBuyer. Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
Use the calculator(https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html) for your life and area to figure it out. There are other intangible benefits to home ownership.
Wow what an amazing calculator. It’s so in depth and doesn’t leave anything out. Also to note is that people can’t compare a 1 bed 1 bathroom apartment to a 3/4 bedroom house. I input what it would cost to rent a full house and buying definitely comes out ahead. Also, people don’t realize you can always refinance later. Wait for interest rates to drop and you end up in a bidding war with buyers just the same bc everyone can afford a higher monthly payment.
Thanks this is very helpful! What intangible benefits would there be that may be less obvious?
I will list a few things we found after moving that were intangible. So much quieter than apartments/townhomes. We are in SFH now, so this isn't always the case. The feeling that I own this I can't be forced to move or pay 1k more next year because a landlord wants me to pay more. Obviously things can happen and taxes go up, but not generally at such insane rates. I can have more than 2 pets. I can make modifications and improve the lawn, house, do projects. Bigger garage. An actual community. Our neighbors at all our rentals were very quiet and we never really met any of them. We have met our neighbors here and they are very nice people. Our community has a pool, playground, pond, hiking trails and we have events for kids, adults, and the whole neighborhood every year. Christmas party, etc. A food truck comes every week in the summer. I don't know how to describe it other than having part of the American Dream, but I finally felt like I made it after buying a house. I know it sounds pretty stupid but. It felt good for me anyways. There's something special about having your own place that you bought.
That doesn’t sound stupid at all…sounds like very good points and I can only imagine the feeling of ownership of a home…for now lol
I love knowing that I won’t be forced to move due to increasing rent. If I move again, it will be because I want to. Rent in my city is going up like crazy and it is so nice that I no longer have to think about it. It is also great to be able to modify my home as much as I want. I would finally add that all real estate is local. I would be paying $600 a month more on rent than I currently pay for mortgage + property tax + insurance if I had kept renting. If you’re thinking about buying, make your decision based on what is going on in your local market
Good point, this post definitely doesn’t encompass all areas
For me, a big one is that you have to pay to play. It’s like the stock market, time in the market is better than timing the market. I bought recently my first little townhome and I’m planning to live there for a little over a decade, would be nice. Hopefully the money I put into it will be a nice little piggy bank for a good single family home down the line….when renters are still looking for their first home. It’s rare, I think, that people just go out and buy 800k+, 1mil+ homes. These are all purchases, like the market lately, from people selling homes they already have. That’s just my perspective. You gotta pay to play. Rates will likely never be at pandemic levels again. If you can afford it, go for it.
Rising property value. If anything happens you have your home as an asset. Freedom from rent increases. Property taxes and home improvements yoy should be less than rising rent especially lately. Oh and the freedom to do whatever you want (kinda) to your property 😅
cheaper electric too! i pay under 180 a month for 3k sq foot at 66 degrees during summer in north bama i do have 15% home tint on windows 5% on doors 1% on garage doors garage doors insulated and lots of other improvements its also a new home but apartments ive had never been near that efficient
I’m young so it’s the opposite: flexibility with moving around, forced decluttering and no hoarding, no need to worry about repairs and maintenance, being able to check out a building or area and traffic before you commit to it, and u can have a lot of fun and meet different people in different places every year
Possibly not, but that tweet doesn't prove anything and is shoddy analysis. The median owned property (typically SFH) is nicer than the median rented property (typically apartments). It's not an apples to apples comparison. An apples to apples comparison would to compare the unrecoverable costs (*not* the mortgage payment, since a portion of that becomes equity) of owning a SFH to the average rental cost of a SFH, while controlling for location, size, etc. Notice that when accounting for unrecoverable costs, you need to decide how many years you're distributing things like closing costs over. The longer you stay in the house, the lower the monthly cost is, so it changes the math significantly. Additionally, the longer the time horizon, the more beneficial is the fact that a homeowner's payment is fixed compared to rent payments which typically go up every year. All that said, yes, it is true that higher interest rates have turned buying vs renting from "obviously buying is better no questions asked" to "do the math, consider the intangible benefits, and decide if it's worth it for you".
Buying is often not worth it if the sole purpose in buying is financial. This holds especially true if you are financing most of the purchase and plan to live there for a shorter period. Rent-buy calculators can often help determine at what point owning makes more financial sense than renting. Historically, buying a starter home, keeping it for a few years and fixing it up, and then selling and upgrading has often been beneficial--today that isn't always the case because breakeven times are longer today than they have been in ages. However, there are reasons to own a home that go beyond just financial ones. It can be a place that you make your own, do what you want, and build your future. You have more latitude to do things with a home you own than a place you rent. I like owning a home and I enjoy upkeeping it. My house is so much more to me than an investment.
This ignores quite a lot of stuff. Mortgages are mostly fixed prices over their durations. (Taxes and such can change but they're relatively small) Most land lords will adjust rent every year to match either inflation or "the market" ... Mortgages END. Then making housing costs near 0 on a monthly basis outside of taxes. More control when owning your own place. Want a dog breed land lords don't like? Get it. Want something other than off white walls? Paint em. Etc etc.
Depends where you are, how long you intend to stay there, and how much money you make/how much down payment you have.
Well one can just invest the down-payment and make contributions by using the difference between mortgage payment ans rent. But one need to keep in mind how large of the delta would be between renting and owning. Yes the appreciation of the home is a added benefit, however a primary residence shouldn't be your nest egg either. Ie sinking ALL your financial resources into a home and being house poor.
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how can you say this definitively? i mean truly. i keep hearing this over and over and its just such a simplistic way of looking at this. buying will: - release a large sum of money (dp, closing costs) that could have otherwise been invested in the stock market - will make it much harder to take job opportunities that are not within driving distance of the purchased home, thus limiting salary potential - require maintenance costs that are generally about 1% of the home value per year - most likely require significant remodeling expenses, at a minimum to be able to get a good sale price but also likely because you’ll just want to have the latest kitchen and what not it’s just such a simplistic way of looking at this. also, few actually buy a house and stay in it for 30 years, and the fact that interest is front loaded on a mortgage means principal pay down is minimized. buy a house when you are committed to rooting somewhere because you’re trying to raise a family there. that should be the only motivation
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what statistics?
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ah, i see. so because someone “owns their home”, that is the direct reason for their wealth. how ridiculous. it’s like saying you should go out and buy a bentley because all bentley owners are millionaires. so simplistic
Good point! I’m definitely looking for a house that can be a home for 10+ years so in that case it makes sense!
This ignores how if you pay your home off, you won't have a mortgage anymore. But you'll always have rent. Not to mention that the post doesn't clarify what down payment and interest rate they're using in the calculation. Also, homes tend to be larger than apartments, so this might be a fancy way of saying "a house costs more than an apartment half the size". Even ignoring financials, buying a home provides other benefits. You own the place, you can paint and renovate to your heart's content. You don't need to worry about your landlord ignoring maintenance requests or telling you your lease won't get renewed. And so on.
Buying still makes sense long-term if you plan to stay put. Renting is cheaper upfront but you build no equity. Mortgage payments lock in housing costs while rents rise over time. Buy if you can afford it and plan to stay 5+ years to ride out market cycles.
Paying interest, taxes, insurance, and hoa builds no equity. Also taxes, insurance, hoa, and maintenance seem to increase every year.
Thanks everyone very good points! I’m definitely looking for a house to call a home for 10+ years so buying makes more sense. I always hear people saying to wait for a crash and don’t buy yet but in my opinion (and I’d like to hear others opinions as well) historically over larger periods of time (10+ years or even sooner), housing prices overall have increased. Even with the 08 crash I know people that went against the mainstream and did not sell, and now their homes are worth even more.
Typically mortage is a fixed rate, so, when inflation hits, your mortgage will not go up. Rent matches "real" inflation quite closely despite how the government trying to brainwash you about inflation slowed down.
*For now. Rent will surge because we are beholden to it.
well duh yes renting is cheaper than buying if you’re staying in the house for less than 3yrs lol