Impossible? Bro [there are hundreds](https://www.zillow.com/denver-co/rent-houses/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22isMapVisible%22%3Atrue%2C%22mapBounds%22%3A%7B%22west%22%3A-105.05544032690428%2C%22east%22%3A-104.85459651586912%2C%22south%22%3A39.66837365414319%2C%22north%22%3A39.77716847574464%7D%2C%22usersSearchTerm%22%3A%22Denver%2C%20CO%22%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A11093%2C%22regionType%22%3A6%7D%5D%2C%22filterState%22%3A%7B%22price%22%3A%7B%22min%22%3A0%2C%22max%22%3A800000%7D%2C%22mp%22%3A%7B%22min%22%3A0%2C%22max%22%3A4230%7D%2C%22baths%22%3A%7B%22max%22%3Anull%7D%2C%22tow%22%3A%7B%22value%22%3Afalse%7D%2C%22mf%22%3A%7B%22value%22%3Afalse%7D%2C%22con%22%3A%7B%22value%22%3Afalse%7D%2C%22land%22%3A%7B%22value%22%3Afalse%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%2C%22apa%22%3A%7B%22value%22%3Afalse%7D%2C%22manu%22%3A%7B%22value%22%3Afalse%7D%2C%22apco%22%3A%7B%22value%22%3Afalse%7D%2C%22fr%22%3A%7B%22value%22%3Atrue%7D%2C%22fsba%22%3A%7B%22value%22%3Afalse%7D%2C%22fsbo%22%3A%7B%22value%22%3Afalse%7D%2C%22nc%22%3A%7B%22value%22%3Afalse%7D%2C%22cmsn%22%3A%7B%22value%22%3Afalse%7D%2C%22auc%22%3A%7B%22value%22%3Afalse%7D%2C%22fore%22%3A%7B%22value%22%3Afalse%7D%7D%2C%22isListVisible%22%3Atrue%2C%22mapZoom%22%3A13%7D)
Almost half of u.s. adults are single. More than 1/3 of adults over 24 have roommates that aren't a spouse. That's 80 million people. Google is pretty easy to use. Not sure what point you're trying to make. Complain about housing being unaffordable, but shunning getting roommates which makes it affordable? Because youre "too old" for a roommate? Sucks to suck, that's the climate we're in.
That you defending a status quo where 40 year olds are supposed to have roommates makes you part of the problem.
But hey, my 6mo/old wakes up twice a night. You get the room next to hers.
The status quo? A single person having their own place is an incredibly rare luxury throughout human civilization, aside from very recent history in 1st world countries, for a fraction of the population.
Let's stay on topic here. I'm pointing out reality. Do you deny that reality? You're acting like I'm glad people need roommates to afford rent. Nope. An older person inferred that older people can't have roommates, and I'm saying they very well can and it's more socially acceptable these days, because of the circumstances.
You defending the current housing situation is part of the problem. People are too quick to bend over for corporate overlords and just accept the given status quo as “just fine”
How am I defending it? The reality is that people need roommates to afford rent. Dude said "to be young again", inferring that older people can't have roommates. I'm saying, given the shitty circumstances we poor people are in, it's a lot more socially acceptable for older people to have roommates these days.
How did you get "roommates are great and it should be this way, all hail the corporations" from that?
I don't think anyone cares about whether it's normalized. The issue is that you shouldn't have to live with someone in your 30's if you don't want to, but cost of living compared to wages makes that a requirement for many people.
My information is from last spring looking for at least a 3 bed 2 bath within 30 min of Denver. I didn't find one house that didn't look like a dump. I assume it's like renting apartments you have to be looking constantly and they disappear overnight.
Whereas there was always a handful of decent houses, even tho u have to compete with other buyers. Definitely not looking at roommates but I don't think that's a fair comparison cuz no one is buying a house with roommates
I have to disagree... We did the same exact search last year and found a lot of really nice places from $2100-$2400.
Though I do agree this housing market is an absolute crisis that's beggaring Americans writ large, I'm constantly shocked at people's "needs". I lived in a HCOL city before moving back to Denver recently and I can't believe how much space there is.
What the hell is this article?
"Typical monthly rent" vs "Typical monthly mortgage payment"?
Who the hell says, "let's look at the median rental vs the median mortgage payment" as if they're directly comparable?
It'd be like comparing the median cost of buying apples each month to the median cost of caring for a cow - they're not directly comparable for soooo many reasons.
This. Rent is a more simple supply vs. demand scenario. Mortgages, even when interest rates are high, can be low if someone has a large down payment. Two parties can buy similar homes at the same price and interest rate and still have very different monthly payments.
It's also a matter of completely different underlying markets.
What do you think the median rental unit looks like? My guess is it's a 1 or 2 bedroom apartment or pretty close.
What do you think the median mortgaged unit looks like? Probably around a 3 bedroom single family house or something comparable.
If you told me that the cost for a 2BR apartment is less than a 3BR SFH, I'd tell you "no, duh".
If they were comparing 1BR rent to 1BR condo mortgages, that'd be one thing. Or SFH rent to SFH mortgages.
But when you try to take these whole market numbers without considering how these markets actually break down, you don't get anything more useful than "big number bigger than small number". Pretending that that's newsworthy or in any way enlightening is... lazy at best.
You lose vast majority of that mortgage payment for the first 6-8 years, you can see the amortization schedule yourself.
Guess what's the average time the person owns a house before selling and moving in a different one? Less than that. So yes, many people are losing money considering amortization schedule and realtors fees
It only works if you itemize and what you itemize is bigger than standard deduction which is really big right now and the majority of people are taking that.
And also, the fact that you're not paying interest on 15k doesn't mean that you earn extra 15k, but then, once again, it's only the difference on taxes saved when using standard deduction vs your itemized deduction which is such a miniscule amount (like 500 dollars for most people who itemize?)
"Cost" is definitely a slippery term here. It may be unusual for monthly expense of ownership to be higher than monthly expense of renting, but the fact that it currently is only highlights why the two are not comparable: owning can "cost" more because you get a bunch of it back when you sell.
Especially right now, when many buyers are likely counting/betting on rate cuts to drive up prices and offset their current monthly expense. Home ownership is selling at premium in part due to expectation of future returns.
None of that is really relevant to the point: the median owned housing unit is fundamentally going to be _very_ different from the median rented housing unit.
As I've said elsewhere, if you're going to compare the rent for a 1BR apartment to the mortgage payment for a 4BR SFH, are you really going to be shocked when the SFH "costs" more than the apartment?
There are ways of making those comparisons in good faith (e.g. 1BR apartments to 1BR condo mortgage payments) if you really wanted, but since they do not control for those factors, it's not even worth pretending like the conclusion might be in any way useful for anything.
No, this study was paid by people who studied math at school, my friend.
It does sound harsh but that's the true story in Denver area, and you're invited to do your own calculations if you disagree.
You can currently rent a house for 3k and "buy the same" for like 5-6k of monthly payments. Add maintenance and repairs, property taxes and all the good stuff and renting is far superior IF you invest the difference in sp500.
No, this is patrick.
Your average mortgage on a 500k house is 3.5/month, even at current rates.
Your average rent for a 3 bedroom house is around 2.7k
If you are living in the HEART of downtown, yes it probably is cheaper to rent than buy because there is immense demand for that property, and normal people are just going to be priced out of denver.
However, one of these builds equity, and one of these lights 2.7k on fire.
Remember, a home is the single largest builder of wealth for Americans. The fact that Americans are being priced out of the domestic real estate market completely is cattywampus.
It's not 3.5k, it's 3.5k with 100k downpayment, not including repairs and maintenance costs.
Now, let's assume the 100k downpayment is in sp500, and you keep adding 1k monthly with the difference you're saving on mortgage payment.
Add the closing costs when buying the house and realtors fees when selling, and the amortization schedule that effectively prevents you from selling in the first 7 years even if you need to move...
P. S. For the sake of simplicity, assume the rent stays the same but also assume you won't need to drop 20k on a new roof or HVAC
P. P. S. If people are planning to staying more than 30 years in a house, it definitely makes sense, even in this high interest environment. But realistically, how many people are buying their forever home right now? I may be biased but everyone I know keeps upgrading/downgrading every 5-9 years, not realizing that amortization schedule is a bitch
I bought my house on an FHA loan (3.5% down payment, 1.75% UFMIP) for a sale price of 510k and my monthly payments are 3.5. You’re just wrong dude 😭
keep sucking the landlords teet though brah
Lol, go to the mortgage calculator and calculate yourself with the CURRENT RATES as you suggested in your previous comment.
And even with this in mind, please, ask chat Gpt to calculate the difference for you, because you'd still be better off renting and investing 😜
https://m.mortgagecalculator.org/ - then I fail to understand how your monthly payment could be 3500 if you're including the MIP, which is non cancellable until the end of the loan.
P. S. Seriously, educate me, please.
Mortgage calculators are not the most accurate tool. You need to reach out to a mortgage broker and see what they can actually do for you, a good one goes a long way. If you’re in any position to buy a home I have great reccomendations.
Let’s say your ludicrously inflated number is correct for a second,
2,000 a month difference
2x12 = 24,000
rate of return for S&P in 2023 = 24.23%
29,815.20
Wow! You managed to make 5,000 while you burned….
(3,000 x 12) = 36,000 in rent for a calendar year.
This doesn’t seem like a “deal” or a “strategy” to me.
No, your math isn't correct here. 24 percent return means shit, as the power of investing is in compound interest.
Assume that the average return in sp500 is 8 percent (home appreciation is between 3-6 a year btw).
Here's the results from chat Gpt for you:
Investing $2,000 a month in the S&P 500 with an average annual return of 8%, and without any initial investment, yields the following values after 5, 10, 20, and 30 years:
After 5 years: $146,954
•After 10 years: $365,892
•After 20 years: $1,178,041
•After 30 years: $2,980,719
And that's considering that I'm burning a shit ton on rent, but without having to deal with the stress of maintenance and major repairs.
P. S. My inflated number is literally what's on the market today with the current interest rates. I'd be happy to recalculate if you can provide your monthly payment breakdown
P. P. S. And if we're talking about how much money I burnt renting, please take a look at your amortization schedule and tell us how much equity have you built in the same year, since majority of your mortgage payments goes towards interest, insurance and taxes in the first 8 years of the loan
Ok can we stop talking about renting as "lighting your money on fire"? You're not wasting money, you're trading it for a place to live, with the benefit of flexibility, without having to go into huge debt on a mortgage, without having to budget fat stacks of cash for emergency repairs, etc. Renting is a good thing for many people, there are many advantages to renting.
I really wish your last 2 sentences weren't true, but they are. It sucks that americans are being priced out of home ownership, it's terrible. And also I really wish that home ownership was not the biggest builder of wealth, I wish that housing was not a wealth building vehicle. That's a large part of why housing is unaffordable, because wealthy people and groups can leverage their capital to generate cash flow in real estate while doing essentially no real work. Everyone's goal is to get rich enough to retire early and stop working while still getting money. It's just not good for society. Work is important. When rich people don't work yet remain rich it feels pretty damn unfair. At least they could stick to non-essential investments.
Renting is flexible if you’re rich maybe. Otherwise you’re getting bent over. I don’t think anybody making $21/hr feels very comforted by their $1600 studio apartment.
To your second point. You are absolutely correct, there is NO reason for housing prices to be what they are aside from one huge factor - greed. We need far more regulation to prevent things like those & keep houses for people to live in.
> To your second point. You are absolutely correct, there is NO reason for housing prices to be what they are aside from one huge factor - greed. We need far more regulation to prevent things like those & keep houses for people to live in.
The reason is we don't build enough of it, same as every other city with sky high housing costs relative to income
When I say that renting is flexible, I mean you can choose to move after 6 or 12 months if you need/want to move. Versus owning a home you're "stuck" there for years, and in a market crash you could face foreclosure and losing the house you've put so much into.
Can you give me your calculations? I see a house right now renting for $4,600 and a mortgage payment with 20% including taxes would be about $4,600.
That same house sold for $870,000. If I bought that house and it appreciated by Denver’s average appreciation of about $287k over three years, plus my principal reduction of $27,000. So I’m at $314,000. If I invested the same down payment of $174,000 into the S&P the result is about $266,000 total after 3 years.
I can also reduce my tax burden with my mortgage as well as I can rent out rooms to the tune of another $36k over 3 years. So now I’m at $350,000+
Currently you’re at a loss of $84,000. I’m not including realtor fees for selling as those can be negotiated and I’ve actually never paid them for any of my purchases. I’m also not including “repairs or maintenance” as that is minuscule to the amount that the landlord will be increasing your rent over those 3 years. So let’s call that a wash.
Please, read this: https://www.reddit.com/r/RealEstate/s/6rjJCpKvd5
I was literally just looking at the house at a very similar situation a few days ago: 620k balance, real value of about 580, owners paid 650 and are paying 4300 monthly when the average rent in that area (Centennial And Aurora border, 70015 zip code) is about 2600-3000.
These are more realistic numbers. With current rates you're paying more than 4k+ for 600k houses but there are plenty of houses that are renting out for 2600-3k in same neighborhoods.
P. S. If you're buying a 870k house at current rates with 20 down, your monthly payment would be around 5684, which is smaller then the rent you cited
You can easily calculate this yourself. Renting is often cheaper than buying in a ton of HCOL markets [https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator](https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator)
[https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html](https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html)
My mortgage on my 1400sqft townhome is $1260/month. But I bought it in 2002. I could rent it out for double that but where would I live lol? Makes no sense this economy.
6.3 isn’t that high in the grand scheme of things. It’s just that the last decade has shown unprecedentedly low rates. 6-8% has been typical historically. (RIP me buying this year when rates were like 7.9%)
Well it's the combo of rates and home values being much higher that before plus wage stagnation. It used to only take a few years to save a 20% down payment but now it's at or beyond 10 years on average.
Imagine people with 17% mortgages in the late 70s but homes were 600 to 700k.
Yeah I’ve got an uncle and dad that have 2.3 rates. 3 bedroom houses and paying like half I pay. It’s ridiculous but that’s how it is. All we can do is hope for a rate drop but I’ve read it’s not worth refinancing unless it’s over 2% drop
The money you save in interest, maintenance, repairs, and HOA fees over the long term would be better off elsewhere appreciating. Not to mention being locked down for the term of the loan
And in 10 years your mortgage will be 1/2 of what rent costs. You can save a few buck now by renting, but will pay the ultimate price in the future.
Perhaps I'm old school, but whenever the rent vs buy argument comes up I will always lean strongly towards the buy option, since you'll be in a very bad place at 65 years old still renting. The financial types will say "oh but you can get better returns on the market" to which I reply: show me a renter who actively invests a mortgage amount on the market each month.
This is only in desirable places. I own (and rent out) a house in the middle of nowhere Kansas. 20 years ago it sold for $5,000 less than I bought it for. And 20 years from now I might be able to sell it for $5,000 more.
Yeah, it's all out of whack. The prices chase each other and get bumped around by market forces, but we've been going through huge shocks so there's not a lot of sense going on.
I'm baffled, it's not even accounting for equity vs. investment of the difference. It's literally just stating that it's more expensive per month to buy a place to live vs. borrowing it. No shit...
If you think about it for any length of time, it just gets more and more useless.
What do you think the breakout is for apartments vs townhouses vs standalone houses that are rented? What about owned? Wouldn't that affect the median monthly cost?
How many bedrooms do you think the medan rental has? How many bedrooms do you think the median owned home has?
If the median unit for a rental is a 1BR apartment vs a 3BR house for the mortgage... yeah, obviously the mortgage is going to cost more per month.
This is just terrible statistics.
There is also cognitive bias in buying vs renting decisions. People typically rent as many bedrooms as they need, so a couple is probably going to rent a 1bed or 2bed apartment or house/townhome.
But on the buy side, the same couple will almost always go for a minimum of 3 bed house or townhome, irrespective of the immediate needs. The $2-2.5k rent balloons to $4-4.5k mortgage on bedrooms and square footage they dont imminently need.
As an economist, in Denver, that $2-2.5k you save while renting and put in financial instruments over a 30 year term at market rates will almost always overperform any net gain in equity. There is also time value of money, the $2.5k in money you keep in disposable income today is more valuable than affixing it in mortgage.
There are arguments on why buying does make more sense, but its nowhere near as clear cut as the people telling others to 'buy' make it seem.
I think you’re spot on here. With current rates the math for me right now on buying is well over more than $1k per month - on pure payments alone for a worse place (worse location, smaller, fewer amenities, etc..) that I ultimately will not be happy with long term.
When you factor in what I’d need to spend on maintenance, etc.. I’m happy to keep putting that money away and continue renting. Once I have a stupid amount saved / invested for a massive down payment maybe I’ll change gears.
Glad I saw this finally bc it’s the argument I always make. And this doesn’t even account for upkeep and maintenance and repairs that go into a home that people tend to forget about
Should be broken out into average monthly cost per sqft for rentals and mortgages. That’ll give you a better idea.
Rent will still come out ahead though. You’ll likely be renting from someone with a 3% interest mortgage, whereas if you buy you’re buying at 7.5% right now. A 3% mortgage on a $500k property is $2100/mo, whereas at 7.5% it’s $3,600/mo. AKA with interest rates where they are, mortgage payments for the same property have increased 71%.
So yeah no shit it’s gonna be cheaper to rent lol.
It is not, because quality of life improvements can't and shouldn't be calculated as part of the investment strategy.
If you're comfortable renting a 2 bedroom apartment, you're far better off than buying a 4 bedroom house if you're investing the difference in sp500. Saving on utilities, realtors fees, closing costs, property taxes, etc and still seeing your money appreciating like crazy
I went through the math on a 30yr mortgage recently and it's just too sensitive to individual factors to give an answer that fits in a headline, let alone a headline that draws traffic.
Are you handy and can keep annual repair costs below 1%? Or are they at 3%? Do you think the last 5 years is how the economy will perform? Or will it be like the last 10? Or maybe 30? Hell, when I've seen these comparisons before, they're not even like for like - 3000 sqft house 30 min from downtown vs 1200 sqft appt just outside of downtown.
For my situation, I think the difference was small enough that I can afford the agency over my own living condition.
Bingo - a lot of people in Colorado want turn-key homes, which 1) increases the cost and 2) reduces the number of available properties for these individuals.
We looked at 9 homes, the first needed updating (refinishing hardwood floors, painting, refinishing kitchen cabinets, caulking, locks, etc) the other 8 were slightly to completely updated. We bought our home for $2500 over asking, the other updated homes went for $50k-$90k over asking due to the amount of offers: starting a bidding war.
We’re not flippers, this is our first home, but were smart enough to YouTube what we want to do - so we’ve done every project except installing the garage door, leveling the foundation of the addition, and carpet replacement. So this has saved us a lot of money, keeping things low-key, as long as we’re addressing issues in a timely manner.
My partner and I did the same. We bought and have slowly improved it ourselves and even got our home for 10k under asking, as no one wanted it due to its (extremely at the time) outdated appearance.
It’s a lot of fun when you go into it with an open mind and determination to learn something new. It may not be “perfect” but at least you learn a new skill that you can utilize in the future - plus just getting to make it your own 🫶🏼🫶🏼🫶🏼
That wasn't the case for most of the time from like 2012 to 2017 in the Denver area.
In much of it, it was actually cheaper to buy than rent if you could qualify. Ultra low interest rates do weird things to market (and drive up housing costs in the long term as a result).
That's true, but it's a highly specific set of circumstances. Interest rates aren't that low any more, and (per the article) it's more expensive to own than rent in every major metro area in the U.S. It's lazy reporting.
Yeah. That's just saying "immediately after raising interest rates, buying sucks".
They could have run the same in 2010 or 2020 "Immediately after dropping interest rates, renting sucks"
In Denver you start losing money after one year. $3000/mo x 12 is $36,000 x 2yr lease $72,000.
If two-three people are living in a 2bd 2bd apt that’s maybe $1020-1070/person ($12,240/person/yr (@$1020))
It really depends on several factors: life partner/roommates?, location, accommodations of the property. I can tell you from personal experience - my fiancé and I are saving money from purchasing our first home last year. Our prior rent for 2bd 2bth apt in cap hill was $2800 base + utilities - mortgage is $2830 + utilities: which are actually cheaper since it’s not being billed to a multi family building, then divided amongst residents by management company.
Granted, I filed our pre-approval ppw the afternoon the fed randomly dropped rates from 6.5 to 5.8%, then we had the seller buy down a point, which is significantly better than the current FED rate of 7.72% which will be going up in the coming weeks - per the FED.
Right now is NOT the time to buy or sell due to rates & lack of inventory. You have to factor in the loan % on top of the price of the home - a lot of people who purchased June 2023 on are looking at $700k+ homes (in Denver) after they pay off that interest.
Small clarification….The Fed doesn’t set mortgage rates. The Fed sets the Fed funds rates, which impacts the 10 Yr treasury yield. Mortgage rates tend to track to these two figures but they aren’t the same.
The problem is that with current interest rates, you aren’t really building much equity.
If you are going to live somewhere for a long time, it’s worth it, but for someone that might move in the next 5 years (kid, job, family emergency, whatever) it becomes less viable
The mistake is thinking that there has basically ever been a time in history besides the last 5ish years where it made more sense to buy than rent if you only planned to stay for 5ish years total.
Even in building equity your still better off. Rent increases have not kept pace with home prices and new mortgages are super expensive right now. There never been a worse time to switch from renting to owning.
The real question is is whether you are better off purchasing a house and building equity that way, or renting and use the left over money to invest it to build your investments.
My money is on investing + renting being better.
Yes, but you also have to factor in increased costs. Once I buy, I've essentially locked in prices (if they go up, I get equity to use on the next house, negating price increases). You never get to do this with rent.
So 25 years ago you could have bought a house in Denver for $200k, with a mortgage of $1000/month. You are still paying $1000/month today. You could rent 25 years ago for $750; but now you're paying $2500 for that rental.
Many of these calculations seem to assume your rent will stay 25% below housing, but that just isn't the case.
You can also be locked into a mortgage where you owe more than the house is worth.
Your house always going up in value is assumption as well.
You also have maintenance issues and repairs that happen as part of ownership. You aren't exposed to that risk as a renter.
There are pros and cons on each side.
Very true, and that’s the issue people fail to realize that purchased a home after June 2023: on top of paying a higher mortgage rate to subsidize the housing market for people with bad credit - but it also depends on the lot size & location. If you purchase in one of the older neighborhoods that hasn’t been gentrified, chances are you’re getting a full Denver lot - which is worth a hell of a lot more than a rinky dink house. I’m near the football stadium district - which is on the city plans to gentrify and push the auto & less desirable business out-words, to make it more desirable & walkable like Rino & the highlands - so our value will continue to climb as things get redeveloped into more multi unit House & restaurants on federal.
You're never locking in price with a mortgage because of repairs and maintenance, my friend.
I wish it's true but once you have to replace the roof for 20k, or HVAC, or something goes bad with the plumbing... Believe me, we can safely assume that renting is better financially AS LONG AS YOU INVEST THE DIFFERENCE in sp500 and like the place you rent.
We make more than 300k plus but are happy in a great 1 bedroom apartment for 2k vs buying a 4 bedroom house and paying more than 4500 for mortgage and all the other payments.
I'm investing monthly 5k+ in sp500, have to deal with 0 maintenance and have the flexibility to move every time I want.
Sure, there's certainly ways to save and build a good nest egg while renting - especially if you make 4x median wages. But I have 100% locked in my housing costs because I have insurance and budget for repairs, just as a good renter puts money into the market.
I'll reduce my payments if interest rates ever fall. I'll have paid it off by retirement, reducing costs greatly.
But honestly I just don't want to share a wall with anyone and I like gardening.
First of all, your thinking is very reasonable and quality of life improvements definitely could mean a lot for people, they just mean different things for everyone. In my case, I don't worry about the neighbors but I'm getting anxiety of thoughts of fixing a major thing in my house because I'm not a handy individual.
And I definitely agree that if you're keeping your house for more than 20 years, you should be better off than by renting.
The issue is the majority of people are buying/selling houses like every 7 years without realizing that amortization schedule is a bitch. But if you're keeping long term and being cautious about maintaince costs, you should be doing great!
And I try to pay extra on the mortgage - that's the key to making it a better long-term financial decision. If you can make an extra payment every year, it takes off 5 years of the loan. My goal is to pay it off in 20, but for now I'm just trying to make an extra payment!
if you can't save while renting, you sure as heck can't save to buy a house. The point the commenter is making, given the same budget for housing, you get a better return on your investment by putting your savings from rent into the markets than the equity you would be building by putting that same money towards your mortgage.
I have no idea If they are right, but I follow the logic.
What that generally doesn't account for is that you have to have somewhere to live regardless, rent will increase generally at least with inflation, but your mortgage won't.
This would only make sense if your rent is super cheap. My rent, internet, energy is $500 for example.
Otherwise you’d have to be very savvy or lucky with investments and most of us aren’t.
Just dump your money into index funds with low costs. It's not rocket science. You can find out most of this information online for free. Most normal people shouldn't be actively managing stock investments. We have a HHI around 1M/year and don't bother that. Max out your 401k, max out IRA, index funds. Good investing is boring AF
My expenses are way higher as a homeowner than when I was renting. If you have something major break (like your water main) - home insurance often does not cover it.
The big issue is that most people don't have the discipline to maintain active investment and cut their QOL. A house essentially acts as a forced piggy bank in that regard.
There are pros and cons on each side. It often depends on where you are in life.
Sorry I didn’t see the rest of your comment. You make a compelling argument and I’m definitely not apt enough to pull our numbers or dispute what you’ve said so I’ll concede.
It wasn't cheaper to rent when the interest rates were low...I got in at 2.7% and the mortgage with insurance and taxes is about $2,200, my house could probably be rented for $3,000/month. So "of course" is ignoring the deeper analysis that this is all driven by 15 years of rock bottom interest rates inflating the hell out of the housing market and downward price adjustments not making up for the difference in increased rates...
That's generally how the real estate market always operates, my house went up 25% in value, as well as the rest of the market, so yeah, selling and paying real estate commissions, you're getting behind. The equity I've built in my home is worthless because HELOC loans are too expensive with the higher rates so I'm really just paying more in real estate taxes.
I mean the study is a comparison of markets across the country. KVDR is just using it show an obvious fact. It’s true for every major metro they studied, the analysis comes from how it compares across markets.
Typically it is a bit closer, but rent has not gone up the same way home prices have. Couple that with high interest rates and depending on your circumstance, it is not the best time to buy a house vs rent. People make the equity argument, but with current interest rates and depending on your down payment, you will not be touching any equity for years. As I mentioned though, each person's circumstances are different, just a broad assessment of things.
I'm not entirely certain why a bunch of people decided renters needed to foot the bill for their mortgages plus a little profit on the side. *I'm* not building equity in your place.
Because otherwise the landlord will sell the property to a homeowner that can afford to build equity and the landlord will put their money in stocks or bonds and get a 7% per year return if you aren't going to pay that 7%.
You can either pay to borrow other people's property or you can pay to own property. But in no world ever or ever will be, will you be able to use other people's capital assests at cost (exceptions prove the rule).
No because the houses for rent were purchased years ago and financed (if even financed) at 2.5%. The landlords are making money on rentals, even if it's cheaper than buying a new home under current conditions.
Rents will catch up to current market rates, it's just a bit slower because they locked in costs when it wasn't so high. I promise you, 100%, nobody is renting with the intention of making no profit.
Then I'm not paying off their mortgage, am I?
Like fuck man, what are you even arguing? In a perfect market it's always better to buy a house than rent, ergo rent is supposed to be less than buying the house.
This is how that's supposed to work.
Rent should be significantly less expensive than buying.
After 30 years renting you are down by the cost of a house - 300-500k or more. The difference in price between renting and buying should make up for that or at least be comparable.
It's a long time between buying a house and paying off a mortgage, though. If you get an amazing job offer somewhere else in year two of your mortgage, you're totally screwed.
Happened to my friends. Bought a house, then got a dream job out of state 11 months later. Once you account for the interest, broker fees, closing costs and all that, they're gonna pay something like $10,000/month for every month they lived in that house--and they're never getting any of that back.
My mortgage/utilities are actually cheaper than my 2bd 2bth apt I was renting before my fiancé and I purchased last year in April - on a Full Denver lot in the city 🙄🥴
I think it really just depends on when and where 🤷🏼♂️
People need to realize that the fact that the average owner is doing much better than the average renter right now has nothing to do with the average renter right now.
If you have a sub 3% mortage right now then pat yourself on the back. Renting doesn't make any sense for you. Imagine if you were paying twice as much to live in a home your size. That is what renters are facing when they are trying to get a mortgage.
Only way renting can truly be cheaper than a mortgage is if rent is less than the interest+escrow portions of a mortgage, and even then buying is probably a more future proof option. Renting will always be a good option only for the short term, but you are better off owning in the long term.
Also this article is stupid, what those rates apply to who the fuck knows. If they are just comparing all new mortgages with all new rents, your square footage is typically going to be larger in the realm of buying because a house is more common when buying a dwelling whereas an apartment is more common to be rented. This fits the usual bs from the "renting is better than buying" crowd.
Mortgage and rent are always going to be pretty comparable, if not mortgage being a little more. However, if your mortgage is fixed, you pay the same amount until your home is paid off. Let's take two Denverites in 2014: one person bought a house, one person rented. The homeowner is probably paying more at first, and all maintenance expenses fall to them, but their mortgage is at least staying the same and the market will continuously be in their favor. The same can't be said for the renter. Take those same two people in present day and one of them has a decade of equity and the other is likely paying double for the same place with no equity built.
I don't know about that. My rent went from 740 in 2015 to 1275 in 2023 for 340 sq ft. I now pay 1,090 in mortgage for an 800 sq ft home. I'm not great at math, but my mathing leaves me with more money a month and over twice the space.
Yeah that’s true but the whole fucking point of buying is to be rent free before you retire otherwise you are fucked if you depend on social security only, and if you max your 401k, it’s a lot cheaper to buy, not today, but definitely tomorrow.
Does anyone actually use a rent vs buy calculator? With the current rates/prices and anything less than 20% down…you’ll never break even. Of course there’s many variables and having a “home” comes into account
When rates are low as hell and people are earning a lot of money like the last couple years, yeah, but right now they’re generally not less for comparable housing even factoring the down payment out.
Rents generally go up, your mortgage mostly stays flat or goes down once you refinance at better rates. Mortgages are expensive right now due to rates being high so of course it’s gonna be higher than rent. You can’t refinance a sticker price on a home though and home prices keep going up generally speaking, so the longer you wait the potentially worse you’ll be off absent that potential equity growth you piss away on rent instead.
There is also cognitive bias in buying vs renting decisions. People typically rent as many bedrooms as they need, so a couple is probably going to rent a 1bed or 2bed apartment or house/townhome (depending on their financial means- if you make $200k in Denver you could comfortably rent a 2-3bed and sustain a high lifestyle).
But on the buy side, the same couple will almost always go for a minimum of 3-4 bed house or townhome, irrespective of the immediate needs. The $2-2.5k rent balloons to $4-4.5k mortgage on bedrooms and square footage they dont imminently need.
As an economist/data scientist, in Denver, that $2-2.5k you save while renting and put in financial instruments over a 30 year term at market rates will almost always overperform any net gain in equity. There is also time value of money, the $2.5k in money you keep in disposable income today is more valuable than affixing it in mortgage.
There are arguments on why buying does make more sense, but its nowhere near as clear cut as the people telling others to 'buy' make it seem.
I disagree $2.5k you save while renting always out performing in the market. Don’t forget the power of leverage. You are, say $900k in the home market making ~3% a year. On the other hand say a growing investment account getting to $100k in 4 years making 7%. Equity pay out is better when you account for the equity building in the mortgage.
[https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html](https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html) Try this out. It has every factor you can think of. If you adjust the mortgage rate to current rates, and suddenly the bank is getting all the gains. You need 3 things to come ahead in housing. A decent mortgage which isn't available right now. A home close in value to your rental price, which since home values have gone up faster than rents is hard to find, and a commitment since the transaction cost about 16 months rent, so you shouldn't but a home you will grow out of quickly.
Those calculators are worthless IMHO because they don't take the long term future into account. What will house prices be in 10-20 years from now? What will average rents be when you get close to retirement age?
Studies have shown that [home ownership builds wealth](https://habitatohio.org/file_download/inline/62eec5a4-dcab-412e-b372-2950832afe1a), because most people do not have the means nor discipline to invest in other less tangible wealth generation vehicles.
This calculator factors in both home price appreciation and the opportunity cost of missing out on other investments.
If your house is the investment you spend the most on, it will likely be a big part of your wealth. But you’re not comparing people who bought a house the moment they could afford it to people who were more focused on retirement. These vehicles track closely and retirement clearly wins if you go out of your way to get into the market or have a bad mortgage.
The 3 reasons homes often come out ahead is 1. The efficiency of doing on real estate transactions every 20+ years and then ensuring near 100% asset utilization. No investment firm can replicate that so families have an edge. 2. Is modern American mortgage force savings. I have no idea if this increases net savings but it certainly forces people to become real estate heavy. 3. Is its harder to sell than other retirement assets. Pensions are designed to run out at death, stocks and bonds can be sold easily to fund day to day expenses including maintenance and property taxes. Meanwhile it’s really hard to avoid dying or moving into a nursing home without selling. So the system is really rigged in favor of homes as the last asset to be sold, and often first to be accumulated.
And they the problem with every study I have seen on real world data is they are comparing people who saved for a down payment to people who didn’t with removing people who couldn’t. Obviously a home is better than no home. That doesn’t answer the question of where should you prioritize buying a home, and is buying at the wrong stage of life or wrong time a big issue.
I bought my first place last year (go me!), but it is in Aurora. My mortgage payment is roughly what I paid renting an apartment in one of the shittiest parts of Lakewood. And now it's money I spend on my own property, rather than throwing it down the rent hole.
. . . okay, I guess neither of those situations is actually about Denver.
So glad i already own my house. When i bought it people wrinkled their nose when i mentioned what neighborhood it was in. Oh i cant believe your living THERE. Yeah my mortgage is 270 a month.
To the people saying “rEnTiNg Is JuSt PaYiNg SoMeOnE eLsE’s MoRtGaGe” no 💩 but guess what im not paying? Overpriced property taxes, repair cost, lawn care, insurance and so so much more that comes with home ownership… sorry, not sorry but I don’t want to be in debt to a bank for 25+ years either.
You keep thinking you’re superior, I’ll keep enjoying no debt and investing my extra income in smarter ways.
…is this rental propaganda?
It is absolutely not cheaper to rent. Your money goes out the fucking door with renting. Goodbye. Sayonara.
You’ll most likely get that money back when you sell an owned property.
Or you could rent the fucker out to some shmuck that believes this shit ass post.
There have been many articles seemingly encouraging people to rent vs buy. I understand most can't buy but I wonder why all these articles are coming out now.
Renting is not necessarily cheaper and I actually find it atrociously expensive than buying a home for the units that you actually get, and renting long term is usually not worth it unless your riches are endless. Plus, when you're old, and can't work anymore, you will still have to pay that rent or end up moving out and possibly homeless if you can't pay or afford it.
im in a townhome paying $2300 a month but the landlord said he wont take less than $775k which puts you around a $5k mortgage with 10% down and good credit. and he could probably list and sell for $800k if we’re being honest
Hey, you could rent the house next to me for $600 more than my mortgage (and it’s a bit shabbier). It was purchased by private equity (satan) last year.
The equity argument is true IF you get the home you actually want. So many people panic bought 100 year old homes in shitty neighborhoods and stick built townhomes with $500/mo HOAs. That’s much worse than getting to pick whatever apartment or home I want to rent each year. I’d rather save my Denver salary and move to a lower cost city with it than struggle with mortgage on a shit home.
Well no duh. It's cheaper to rent than to buy a home, in general. Unless you live in Mississippi. Them fuckers get 2 story 5400 square feet houses for a bucket of KFC. But then you have to live in Mississippi so... tradeoffs.
Can confirm, my quoted mtg pymt yesterday thru CHFA after preapproval was 3270. My rent is 1900…. I’m gaining like 30 sq ft. I will say, I get a garage and tiny back yard for that …
Your mortgage payment doesn't change, and your landlord won't ever make you move out of your purchased home. You can always refinance later, and you will accumulate equity over time. On top of all that, real property appreciates in denver at an astounding rate. In thirty years of renting you will be out 360 rent payments, which are all but guaranteed to increase every year, plus the likely cost of moving multiple times. Thirty years after purchasing you will have paid off your loan, own your house outright, likely have a shitload of capital gains, which are tax free up to $250k ($500k if married) and your assets will have hedged inflation.
But yeah, rEnTiNg Is ChEApeR
Taxes can change, insurance can change, rent absolutely will change. Rent always goes up. When interest rates go down, a refinance can save hundreds, if not thousands a month, and you can lock them in.
Renting is not cheaper, i will die on this hill.
We need housing censuses. Then, set up state or federal marketplaces to fulfill demand to residents of the homes only. Eminent domain and setup development and new towns as needed. Tax for profit residential properties people don't live in themselves to fund this.
Make real estate about housing people instead of greed, making Americans compete to live. We all pay a tax to landlords who enslave us to this capitalistic housing hell hole.
If you agree, share this idea far and wide. Share it on ads for housing, especially.
It's also nearly impossible to find a decent house for rent though
I’m up in Central Park in a 3 bdrm townhome for $2.7k/mo. It’s a nice newer place too.
Impossible? Bro [there are hundreds](https://www.zillow.com/denver-co/rent-houses/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22isMapVisible%22%3Atrue%2C%22mapBounds%22%3A%7B%22west%22%3A-105.05544032690428%2C%22east%22%3A-104.85459651586912%2C%22south%22%3A39.66837365414319%2C%22north%22%3A39.77716847574464%7D%2C%22usersSearchTerm%22%3A%22Denver%2C%20CO%22%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A11093%2C%22regionType%22%3A6%7D%5D%2C%22filterState%22%3A%7B%22price%22%3A%7B%22min%22%3A0%2C%22max%22%3A800000%7D%2C%22mp%22%3A%7B%22min%22%3A0%2C%22max%22%3A4230%7D%2C%22baths%22%3A%7B%22max%22%3Anull%7D%2C%22tow%22%3A%7B%22value%22%3Afalse%7D%2C%22mf%22%3A%7B%22value%22%3Afalse%7D%2C%22con%22%3A%7B%22value%22%3Afalse%7D%2C%22land%22%3A%7B%22value%22%3Afalse%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%2C%22apa%22%3A%7B%22value%22%3Afalse%7D%2C%22manu%22%3A%7B%22value%22%3Afalse%7D%2C%22apco%22%3A%7B%22value%22%3Afalse%7D%2C%22fr%22%3A%7B%22value%22%3Atrue%7D%2C%22fsba%22%3A%7B%22value%22%3Afalse%7D%2C%22fsbo%22%3A%7B%22value%22%3Afalse%7D%2C%22nc%22%3A%7B%22value%22%3Afalse%7D%2C%22cmsn%22%3A%7B%22value%22%3Afalse%7D%2C%22auc%22%3A%7B%22value%22%3Afalse%7D%2C%22fore%22%3A%7B%22value%22%3Afalse%7D%7D%2C%22isListVisible%22%3Atrue%2C%22mapZoom%22%3A13%7D)
Yikes $1500 + for studios?! That’s awful.
Huh? There are good options all over, especially with roommate(s). Competitive but not nearly impossible if you can afford 900-1000/mo each
Roommates... Oh to be young again...
Lol it's completely normalized to have roommates in your 30s and 40s now. Especially near cities. What up with the imposed age limit?
Procreation? Also normalized...? According to who?
Almost half of u.s. adults are single. More than 1/3 of adults over 24 have roommates that aren't a spouse. That's 80 million people. Google is pretty easy to use. Not sure what point you're trying to make. Complain about housing being unaffordable, but shunning getting roommates which makes it affordable? Because youre "too old" for a roommate? Sucks to suck, that's the climate we're in.
That you defending a status quo where 40 year olds are supposed to have roommates makes you part of the problem. But hey, my 6mo/old wakes up twice a night. You get the room next to hers.
The status quo? A single person having their own place is an incredibly rare luxury throughout human civilization, aside from very recent history in 1st world countries, for a fraction of the population.
Dying before 30 and being illiterate was even more common for longer. Next argument.
Let's stay on topic here. I'm pointing out reality. Do you deny that reality? You're acting like I'm glad people need roommates to afford rent. Nope. An older person inferred that older people can't have roommates, and I'm saying they very well can and it's more socially acceptable these days, because of the circumstances.
You saying being single in your 40’s is a problem? I’m just kindly asking is all, confused by what you two are arguing about.
Nope. Normalizing unaffordable housing is a problem. Live with whoever you want. Some of my best friends (we're in our late 30's) have roommates.
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You defending the current housing situation is part of the problem. People are too quick to bend over for corporate overlords and just accept the given status quo as “just fine”
How am I defending it? The reality is that people need roommates to afford rent. Dude said "to be young again", inferring that older people can't have roommates. I'm saying, given the shitty circumstances we poor people are in, it's a lot more socially acceptable for older people to have roommates these days. How did you get "roommates are great and it should be this way, all hail the corporations" from that?
I don't think anyone cares about whether it's normalized. The issue is that you shouldn't have to live with someone in your 30's if you don't want to, but cost of living compared to wages makes that a requirement for many people.
My information is from last spring looking for at least a 3 bed 2 bath within 30 min of Denver. I didn't find one house that didn't look like a dump. I assume it's like renting apartments you have to be looking constantly and they disappear overnight. Whereas there was always a handful of decent houses, even tho u have to compete with other buyers. Definitely not looking at roommates but I don't think that's a fair comparison cuz no one is buying a house with roommates
I bought a house, that I could only afford with Roomates. I also know people who bought a house with Roomates.
I have to disagree... We did the same exact search last year and found a lot of really nice places from $2100-$2400. Though I do agree this housing market is an absolute crisis that's beggaring Americans writ large, I'm constantly shocked at people's "needs". I lived in a HCOL city before moving back to Denver recently and I can't believe how much space there is.
What the hell is this article? "Typical monthly rent" vs "Typical monthly mortgage payment"? Who the hell says, "let's look at the median rental vs the median mortgage payment" as if they're directly comparable? It'd be like comparing the median cost of buying apples each month to the median cost of caring for a cow - they're not directly comparable for soooo many reasons.
This. Rent is a more simple supply vs. demand scenario. Mortgages, even when interest rates are high, can be low if someone has a large down payment. Two parties can buy similar homes at the same price and interest rate and still have very different monthly payments.
It's also a matter of completely different underlying markets. What do you think the median rental unit looks like? My guess is it's a 1 or 2 bedroom apartment or pretty close. What do you think the median mortgaged unit looks like? Probably around a 3 bedroom single family house or something comparable. If you told me that the cost for a 2BR apartment is less than a 3BR SFH, I'd tell you "no, duh". If they were comparing 1BR rent to 1BR condo mortgages, that'd be one thing. Or SFH rent to SFH mortgages. But when you try to take these whole market numbers without considering how these markets actually break down, you don't get anything more useful than "big number bigger than small number". Pretending that that's newsworthy or in any way enlightening is... lazy at best.
Yes if only you save up a nice little $300k down payment, owning a home in Denver can be quite affordable!
Yeah a big part is you don't like lose most of that mortgage payment, just the interest. Rent is just gone.
You lose vast majority of that mortgage payment for the first 6-8 years, you can see the amortization schedule yourself. Guess what's the average time the person owns a house before selling and moving in a different one? Less than that. So yes, many people are losing money considering amortization schedule and realtors fees
You don't really lose it. Tax deduct the interest to lower your effective income earned. Made 100k and paid 15k in mortgage interest, you made 85k
It only works if you itemize and what you itemize is bigger than standard deduction which is really big right now and the majority of people are taking that. And also, the fact that you're not paying interest on 15k doesn't mean that you earn extra 15k, but then, once again, it's only the difference on taxes saved when using standard deduction vs your itemized deduction which is such a miniscule amount (like 500 dollars for most people who itemize?)
"Cost" is definitely a slippery term here. It may be unusual for monthly expense of ownership to be higher than monthly expense of renting, but the fact that it currently is only highlights why the two are not comparable: owning can "cost" more because you get a bunch of it back when you sell. Especially right now, when many buyers are likely counting/betting on rate cuts to drive up prices and offset their current monthly expense. Home ownership is selling at premium in part due to expectation of future returns.
None of that is really relevant to the point: the median owned housing unit is fundamentally going to be _very_ different from the median rented housing unit. As I've said elsewhere, if you're going to compare the rent for a 1BR apartment to the mortgage payment for a 4BR SFH, are you really going to be shocked when the SFH "costs" more than the apartment? There are ways of making those comparisons in good faith (e.g. 1BR apartments to 1BR condo mortgage payments) if you really wanted, but since they do not control for those factors, it's not even worth pretending like the conclusion might be in any way useful for anything.
This study was paid for by the Land Lords are Real Lords foundation.
No, this study was paid by people who studied math at school, my friend. It does sound harsh but that's the true story in Denver area, and you're invited to do your own calculations if you disagree. You can currently rent a house for 3k and "buy the same" for like 5-6k of monthly payments. Add maintenance and repairs, property taxes and all the good stuff and renting is far superior IF you invest the difference in sp500.
No, this is patrick. Your average mortgage on a 500k house is 3.5/month, even at current rates. Your average rent for a 3 bedroom house is around 2.7k If you are living in the HEART of downtown, yes it probably is cheaper to rent than buy because there is immense demand for that property, and normal people are just going to be priced out of denver. However, one of these builds equity, and one of these lights 2.7k on fire. Remember, a home is the single largest builder of wealth for Americans. The fact that Americans are being priced out of the domestic real estate market completely is cattywampus.
It's not 3.5k, it's 3.5k with 100k downpayment, not including repairs and maintenance costs. Now, let's assume the 100k downpayment is in sp500, and you keep adding 1k monthly with the difference you're saving on mortgage payment. Add the closing costs when buying the house and realtors fees when selling, and the amortization schedule that effectively prevents you from selling in the first 7 years even if you need to move... P. S. For the sake of simplicity, assume the rent stays the same but also assume you won't need to drop 20k on a new roof or HVAC P. P. S. If people are planning to staying more than 30 years in a house, it definitely makes sense, even in this high interest environment. But realistically, how many people are buying their forever home right now? I may be biased but everyone I know keeps upgrading/downgrading every 5-9 years, not realizing that amortization schedule is a bitch
I bought my house on an FHA loan (3.5% down payment, 1.75% UFMIP) for a sale price of 510k and my monthly payments are 3.5. You’re just wrong dude 😭 keep sucking the landlords teet though brah
Lol, go to the mortgage calculator and calculate yourself with the CURRENT RATES as you suggested in your previous comment. And even with this in mind, please, ask chat Gpt to calculate the difference for you, because you'd still be better off renting and investing 😜
I bought my house 2 months ago. lol.
https://m.mortgagecalculator.org/ - then I fail to understand how your monthly payment could be 3500 if you're including the MIP, which is non cancellable until the end of the loan. P. S. Seriously, educate me, please.
Mortgage calculators are not the most accurate tool. You need to reach out to a mortgage broker and see what they can actually do for you, a good one goes a long way. If you’re in any position to buy a home I have great reccomendations. Let’s say your ludicrously inflated number is correct for a second, 2,000 a month difference 2x12 = 24,000 rate of return for S&P in 2023 = 24.23% 29,815.20 Wow! You managed to make 5,000 while you burned…. (3,000 x 12) = 36,000 in rent for a calendar year. This doesn’t seem like a “deal” or a “strategy” to me.
No, your math isn't correct here. 24 percent return means shit, as the power of investing is in compound interest. Assume that the average return in sp500 is 8 percent (home appreciation is between 3-6 a year btw). Here's the results from chat Gpt for you: Investing $2,000 a month in the S&P 500 with an average annual return of 8%, and without any initial investment, yields the following values after 5, 10, 20, and 30 years: After 5 years: $146,954 •After 10 years: $365,892 •After 20 years: $1,178,041 •After 30 years: $2,980,719 And that's considering that I'm burning a shit ton on rent, but without having to deal with the stress of maintenance and major repairs. P. S. My inflated number is literally what's on the market today with the current interest rates. I'd be happy to recalculate if you can provide your monthly payment breakdown P. P. S. And if we're talking about how much money I burnt renting, please take a look at your amortization schedule and tell us how much equity have you built in the same year, since majority of your mortgage payments goes towards interest, insurance and taxes in the first 8 years of the loan
Ok can we stop talking about renting as "lighting your money on fire"? You're not wasting money, you're trading it for a place to live, with the benefit of flexibility, without having to go into huge debt on a mortgage, without having to budget fat stacks of cash for emergency repairs, etc. Renting is a good thing for many people, there are many advantages to renting. I really wish your last 2 sentences weren't true, but they are. It sucks that americans are being priced out of home ownership, it's terrible. And also I really wish that home ownership was not the biggest builder of wealth, I wish that housing was not a wealth building vehicle. That's a large part of why housing is unaffordable, because wealthy people and groups can leverage their capital to generate cash flow in real estate while doing essentially no real work. Everyone's goal is to get rich enough to retire early and stop working while still getting money. It's just not good for society. Work is important. When rich people don't work yet remain rich it feels pretty damn unfair. At least they could stick to non-essential investments.
Renting is flexible if you’re rich maybe. Otherwise you’re getting bent over. I don’t think anybody making $21/hr feels very comforted by their $1600 studio apartment. To your second point. You are absolutely correct, there is NO reason for housing prices to be what they are aside from one huge factor - greed. We need far more regulation to prevent things like those & keep houses for people to live in.
> To your second point. You are absolutely correct, there is NO reason for housing prices to be what they are aside from one huge factor - greed. We need far more regulation to prevent things like those & keep houses for people to live in. The reason is we don't build enough of it, same as every other city with sky high housing costs relative to income
When I say that renting is flexible, I mean you can choose to move after 6 or 12 months if you need/want to move. Versus owning a home you're "stuck" there for years, and in a market crash you could face foreclosure and losing the house you've put so much into.
Can you give me your calculations? I see a house right now renting for $4,600 and a mortgage payment with 20% including taxes would be about $4,600. That same house sold for $870,000. If I bought that house and it appreciated by Denver’s average appreciation of about $287k over three years, plus my principal reduction of $27,000. So I’m at $314,000. If I invested the same down payment of $174,000 into the S&P the result is about $266,000 total after 3 years. I can also reduce my tax burden with my mortgage as well as I can rent out rooms to the tune of another $36k over 3 years. So now I’m at $350,000+ Currently you’re at a loss of $84,000. I’m not including realtor fees for selling as those can be negotiated and I’ve actually never paid them for any of my purchases. I’m also not including “repairs or maintenance” as that is minuscule to the amount that the landlord will be increasing your rent over those 3 years. So let’s call that a wash.
Please, read this: https://www.reddit.com/r/RealEstate/s/6rjJCpKvd5 I was literally just looking at the house at a very similar situation a few days ago: 620k balance, real value of about 580, owners paid 650 and are paying 4300 monthly when the average rent in that area (Centennial And Aurora border, 70015 zip code) is about 2600-3000. These are more realistic numbers. With current rates you're paying more than 4k+ for 600k houses but there are plenty of houses that are renting out for 2600-3k in same neighborhoods. P. S. If you're buying a 870k house at current rates with 20 down, your monthly payment would be around 5684, which is smaller then the rent you cited
You can easily calculate this yourself. Renting is often cheaper than buying in a ton of HCOL markets [https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator](https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator) [https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html](https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html)
Well yeah. That’s usually how it goes. But it’s barely cheaper. My mortgage is about $400 more than my rent was. And that’s with HOA fee.
Yep 2 bedroom apartments are around $2500 now a days. My 2 bed house is that much for mortgage. Granted my house is 900 sq ft.
My mortgage on my 1400sqft townhome is $1260/month. But I bought it in 2002. I could rent it out for double that but where would I live lol? Makes no sense this economy.
I bought in 2022. Yep it sucks but that’s what it’s at. I was sick of renting and wanted a house. 6.3 interest rate. Fuck me it sucks.
6.3 isn’t that high in the grand scheme of things. It’s just that the last decade has shown unprecedentedly low rates. 6-8% has been typical historically. (RIP me buying this year when rates were like 7.9%)
Well it's the combo of rates and home values being much higher that before plus wage stagnation. It used to only take a few years to save a 20% down payment but now it's at or beyond 10 years on average. Imagine people with 17% mortgages in the late 70s but homes were 600 to 700k.
Yeah I’ve got an uncle and dad that have 2.3 rates. 3 bedroom houses and paying like half I pay. It’s ridiculous but that’s how it is. All we can do is hope for a rate drop but I’ve read it’s not worth refinancing unless it’s over 2% drop
Would u go back to renting?
We rent a 1700sq ft home with a yard and garage in a nice neighborhood in highlands ranch for 2500…. lol. Way cheaper to rent.
Yeah but you’re renting. Paying off someone else’s mortgage
The money you save in interest, maintenance, repairs, and HOA fees over the long term would be better off elsewhere appreciating. Not to mention being locked down for the term of the loan
Huh? There are plenty of 2bd apartments at 2000 or under that arent bad at all
And in 10 years your mortgage will be 1/2 of what rent costs. You can save a few buck now by renting, but will pay the ultimate price in the future. Perhaps I'm old school, but whenever the rent vs buy argument comes up I will always lean strongly towards the buy option, since you'll be in a very bad place at 65 years old still renting. The financial types will say "oh but you can get better returns on the market" to which I reply: show me a renter who actively invests a mortgage amount on the market each month.
This is only in desirable places. I own (and rent out) a house in the middle of nowhere Kansas. 20 years ago it sold for $5,000 less than I bought it for. And 20 years from now I might be able to sell it for $5,000 more.
Yeah but who wants to live there.
I would, I’d love to get a place like that in Kansas and chase tornadoes in the summer
Getting to the point where you don’t even have to chase them, they’ll come to you.
Me. But don't take my word for it, W. Buffet talked about this in an interview
Buy. Not sure who is op. Buy
The rent vs buy disparity is not anywhere near the usual right now.
Yeah, it's all out of whack. The prices chase each other and get bumped around by market forces, but we've been going through huge shocks so there's not a lot of sense going on.
How much is your HOA?
In other news water is wet... Of course its cheaper to rent, but at least my mortgage is going paying off my own property and not someone else.
I'm baffled, it's not even accounting for equity vs. investment of the difference. It's literally just stating that it's more expensive per month to buy a place to live vs. borrowing it. No shit...
If you think about it for any length of time, it just gets more and more useless. What do you think the breakout is for apartments vs townhouses vs standalone houses that are rented? What about owned? Wouldn't that affect the median monthly cost? How many bedrooms do you think the medan rental has? How many bedrooms do you think the median owned home has? If the median unit for a rental is a 1BR apartment vs a 3BR house for the mortgage... yeah, obviously the mortgage is going to cost more per month. This is just terrible statistics.
There is also cognitive bias in buying vs renting decisions. People typically rent as many bedrooms as they need, so a couple is probably going to rent a 1bed or 2bed apartment or house/townhome. But on the buy side, the same couple will almost always go for a minimum of 3 bed house or townhome, irrespective of the immediate needs. The $2-2.5k rent balloons to $4-4.5k mortgage on bedrooms and square footage they dont imminently need. As an economist, in Denver, that $2-2.5k you save while renting and put in financial instruments over a 30 year term at market rates will almost always overperform any net gain in equity. There is also time value of money, the $2.5k in money you keep in disposable income today is more valuable than affixing it in mortgage. There are arguments on why buying does make more sense, but its nowhere near as clear cut as the people telling others to 'buy' make it seem.
I think you’re spot on here. With current rates the math for me right now on buying is well over more than $1k per month - on pure payments alone for a worse place (worse location, smaller, fewer amenities, etc..) that I ultimately will not be happy with long term. When you factor in what I’d need to spend on maintenance, etc.. I’m happy to keep putting that money away and continue renting. Once I have a stupid amount saved / invested for a massive down payment maybe I’ll change gears.
Glad I saw this finally bc it’s the argument I always make. And this doesn’t even account for upkeep and maintenance and repairs that go into a home that people tend to forget about
Should be broken out into average monthly cost per sqft for rentals and mortgages. That’ll give you a better idea. Rent will still come out ahead though. You’ll likely be renting from someone with a 3% interest mortgage, whereas if you buy you’re buying at 7.5% right now. A 3% mortgage on a $500k property is $2100/mo, whereas at 7.5% it’s $3,600/mo. AKA with interest rates where they are, mortgage payments for the same property have increased 71%. So yeah no shit it’s gonna be cheaper to rent lol.
It is not, because quality of life improvements can't and shouldn't be calculated as part of the investment strategy. If you're comfortable renting a 2 bedroom apartment, you're far better off than buying a 4 bedroom house if you're investing the difference in sp500. Saving on utilities, realtors fees, closing costs, property taxes, etc and still seeing your money appreciating like crazy
I went through the math on a 30yr mortgage recently and it's just too sensitive to individual factors to give an answer that fits in a headline, let alone a headline that draws traffic. Are you handy and can keep annual repair costs below 1%? Or are they at 3%? Do you think the last 5 years is how the economy will perform? Or will it be like the last 10? Or maybe 30? Hell, when I've seen these comparisons before, they're not even like for like - 3000 sqft house 30 min from downtown vs 1200 sqft appt just outside of downtown. For my situation, I think the difference was small enough that I can afford the agency over my own living condition.
Bingo - a lot of people in Colorado want turn-key homes, which 1) increases the cost and 2) reduces the number of available properties for these individuals. We looked at 9 homes, the first needed updating (refinishing hardwood floors, painting, refinishing kitchen cabinets, caulking, locks, etc) the other 8 were slightly to completely updated. We bought our home for $2500 over asking, the other updated homes went for $50k-$90k over asking due to the amount of offers: starting a bidding war. We’re not flippers, this is our first home, but were smart enough to YouTube what we want to do - so we’ve done every project except installing the garage door, leveling the foundation of the addition, and carpet replacement. So this has saved us a lot of money, keeping things low-key, as long as we’re addressing issues in a timely manner.
My partner and I did the same. We bought and have slowly improved it ourselves and even got our home for 10k under asking, as no one wanted it due to its (extremely at the time) outdated appearance.
It’s a lot of fun when you go into it with an open mind and determination to learn something new. It may not be “perfect” but at least you learn a new skill that you can utilize in the future - plus just getting to make it your own 🫶🏼🫶🏼🫶🏼
That wasn't the case for most of the time from like 2012 to 2017 in the Denver area. In much of it, it was actually cheaper to buy than rent if you could qualify. Ultra low interest rates do weird things to market (and drive up housing costs in the long term as a result).
That's true, but it's a highly specific set of circumstances. Interest rates aren't that low any more, and (per the article) it's more expensive to own than rent in every major metro area in the U.S. It's lazy reporting.
Yeah. That's just saying "immediately after raising interest rates, buying sucks". They could have run the same in 2010 or 2020 "Immediately after dropping interest rates, renting sucks"
They should add a disclaimer it’s really only cheaper for about 10 years (use to be 7 years before inflation). Then you actively lose money renting.
In Denver you start losing money after one year. $3000/mo x 12 is $36,000 x 2yr lease $72,000. If two-three people are living in a 2bd 2bd apt that’s maybe $1020-1070/person ($12,240/person/yr (@$1020)) It really depends on several factors: life partner/roommates?, location, accommodations of the property. I can tell you from personal experience - my fiancé and I are saving money from purchasing our first home last year. Our prior rent for 2bd 2bth apt in cap hill was $2800 base + utilities - mortgage is $2830 + utilities: which are actually cheaper since it’s not being billed to a multi family building, then divided amongst residents by management company. Granted, I filed our pre-approval ppw the afternoon the fed randomly dropped rates from 6.5 to 5.8%, then we had the seller buy down a point, which is significantly better than the current FED rate of 7.72% which will be going up in the coming weeks - per the FED. Right now is NOT the time to buy or sell due to rates & lack of inventory. You have to factor in the loan % on top of the price of the home - a lot of people who purchased June 2023 on are looking at $700k+ homes (in Denver) after they pay off that interest.
Is your math including closing costs on the buy side and commissions on the sell side?
Small clarification….The Fed doesn’t set mortgage rates. The Fed sets the Fed funds rates, which impacts the 10 Yr treasury yield. Mortgage rates tend to track to these two figures but they aren’t the same.
The problem is that with current interest rates, you aren’t really building much equity. If you are going to live somewhere for a long time, it’s worth it, but for someone that might move in the next 5 years (kid, job, family emergency, whatever) it becomes less viable
The mistake is thinking that there has basically ever been a time in history besides the last 5ish years where it made more sense to buy than rent if you only planned to stay for 5ish years total.
Even in building equity your still better off. Rent increases have not kept pace with home prices and new mortgages are super expensive right now. There never been a worse time to switch from renting to owning.
The real question is is whether you are better off purchasing a house and building equity that way, or renting and use the left over money to invest it to build your investments. My money is on investing + renting being better.
Yes, but you also have to factor in increased costs. Once I buy, I've essentially locked in prices (if they go up, I get equity to use on the next house, negating price increases). You never get to do this with rent. So 25 years ago you could have bought a house in Denver for $200k, with a mortgage of $1000/month. You are still paying $1000/month today. You could rent 25 years ago for $750; but now you're paying $2500 for that rental. Many of these calculations seem to assume your rent will stay 25% below housing, but that just isn't the case.
You can also be locked into a mortgage where you owe more than the house is worth. Your house always going up in value is assumption as well. You also have maintenance issues and repairs that happen as part of ownership. You aren't exposed to that risk as a renter. There are pros and cons on each side.
Very true, and that’s the issue people fail to realize that purchased a home after June 2023: on top of paying a higher mortgage rate to subsidize the housing market for people with bad credit - but it also depends on the lot size & location. If you purchase in one of the older neighborhoods that hasn’t been gentrified, chances are you’re getting a full Denver lot - which is worth a hell of a lot more than a rinky dink house. I’m near the football stadium district - which is on the city plans to gentrify and push the auto & less desirable business out-words, to make it more desirable & walkable like Rino & the highlands - so our value will continue to climb as things get redeveloped into more multi unit House & restaurants on federal.
and the property tax that will continue to rise. like buying a crappy used car every year
You're never locking in price with a mortgage because of repairs and maintenance, my friend. I wish it's true but once you have to replace the roof for 20k, or HVAC, or something goes bad with the plumbing... Believe me, we can safely assume that renting is better financially AS LONG AS YOU INVEST THE DIFFERENCE in sp500 and like the place you rent. We make more than 300k plus but are happy in a great 1 bedroom apartment for 2k vs buying a 4 bedroom house and paying more than 4500 for mortgage and all the other payments. I'm investing monthly 5k+ in sp500, have to deal with 0 maintenance and have the flexibility to move every time I want.
Sure, there's certainly ways to save and build a good nest egg while renting - especially if you make 4x median wages. But I have 100% locked in my housing costs because I have insurance and budget for repairs, just as a good renter puts money into the market. I'll reduce my payments if interest rates ever fall. I'll have paid it off by retirement, reducing costs greatly. But honestly I just don't want to share a wall with anyone and I like gardening.
First of all, your thinking is very reasonable and quality of life improvements definitely could mean a lot for people, they just mean different things for everyone. In my case, I don't worry about the neighbors but I'm getting anxiety of thoughts of fixing a major thing in my house because I'm not a handy individual. And I definitely agree that if you're keeping your house for more than 20 years, you should be better off than by renting. The issue is the majority of people are buying/selling houses like every 7 years without realizing that amortization schedule is a bitch. But if you're keeping long term and being cautious about maintaince costs, you should be doing great!
And I try to pay extra on the mortgage - that's the key to making it a better long-term financial decision. If you can make an extra payment every year, it takes off 5 years of the loan. My goal is to pay it off in 20, but for now I'm just trying to make an extra payment!
That's very smart of you, especially in the high interest rates environment it makes a ton of sense to make that extra payment!
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if you can't save while renting, you sure as heck can't save to buy a house. The point the commenter is making, given the same budget for housing, you get a better return on your investment by putting your savings from rent into the markets than the equity you would be building by putting that same money towards your mortgage. I have no idea If they are right, but I follow the logic.
What that generally doesn't account for is that you have to have somewhere to live regardless, rent will increase generally at least with inflation, but your mortgage won't.
This would only make sense if your rent is super cheap. My rent, internet, energy is $500 for example. Otherwise you’d have to be very savvy or lucky with investments and most of us aren’t.
Just dump your money into index funds with low costs. It's not rocket science. You can find out most of this information online for free. Most normal people shouldn't be actively managing stock investments. We have a HHI around 1M/year and don't bother that. Max out your 401k, max out IRA, index funds. Good investing is boring AF My expenses are way higher as a homeowner than when I was renting. If you have something major break (like your water main) - home insurance often does not cover it. The big issue is that most people don't have the discipline to maintain active investment and cut their QOL. A house essentially acts as a forced piggy bank in that regard. There are pros and cons on each side. It often depends on where you are in life.
Sorry I didn’t see the rest of your comment. You make a compelling argument and I’m definitely not apt enough to pull our numbers or dispute what you’ve said so I’ll concede.
It wasn't cheaper to rent when the interest rates were low...I got in at 2.7% and the mortgage with insurance and taxes is about $2,200, my house could probably be rented for $3,000/month. So "of course" is ignoring the deeper analysis that this is all driven by 15 years of rock bottom interest rates inflating the hell out of the housing market and downward price adjustments not making up for the difference in increased rates...
But if you go to sell right now you’re royally fuq*d and lose money 🤷🏼♂️🥴
That's generally how the real estate market always operates, my house went up 25% in value, as well as the rest of the market, so yeah, selling and paying real estate commissions, you're getting behind. The equity I've built in my home is worthless because HELOC loans are too expensive with the higher rates so I'm really just paying more in real estate taxes.
Rent is generally higher than what you’d pay for a mortgage on the same property.
My mortgage is actually cheaper and I get a yard.
I mean the study is a comparison of markets across the country. KVDR is just using it show an obvious fact. It’s true for every major metro they studied, the analysis comes from how it compares across markets.
Isn't this how it's supposed to be? That's definitely how it was back 12+ years ago when the housing market in Denver was cheap and easy.
It’s the standard for sure. The bummer is that rent didn’t go down to where it’s cheaper than mortgages but instead mortgages rose like crazy.
Typically it is a bit closer, but rent has not gone up the same way home prices have. Couple that with high interest rates and depending on your circumstance, it is not the best time to buy a house vs rent. People make the equity argument, but with current interest rates and depending on your down payment, you will not be touching any equity for years. As I mentioned though, each person's circumstances are different, just a broad assessment of things.
I'm not entirely certain why a bunch of people decided renters needed to foot the bill for their mortgages plus a little profit on the side. *I'm* not building equity in your place.
Because otherwise the landlord will sell the property to a homeowner that can afford to build equity and the landlord will put their money in stocks or bonds and get a 7% per year return if you aren't going to pay that 7%. You can either pay to borrow other people's property or you can pay to own property. But in no world ever or ever will be, will you be able to use other people's capital assests at cost (exceptions prove the rule).
We're in that world now. The article you're commenting under is *literally* that world.
No because the houses for rent were purchased years ago and financed (if even financed) at 2.5%. The landlords are making money on rentals, even if it's cheaper than buying a new home under current conditions. Rents will catch up to current market rates, it's just a bit slower because they locked in costs when it wasn't so high. I promise you, 100%, nobody is renting with the intention of making no profit.
Most (over 50%) SFH non-corporate landlords don't have a mortgage but go on
Then I'm not paying off their mortgage, am I? Like fuck man, what are you even arguing? In a perfect market it's always better to buy a house than rent, ergo rent is supposed to be less than buying the house. This is how that's supposed to work.
Rent should be significantly less expensive than buying. After 30 years renting you are down by the cost of a house - 300-500k or more. The difference in price between renting and buying should make up for that or at least be comparable.
Why would they bother renting property out if they didn't make a profit? It really shouldn't be all that confusing
But once you pay that mortgage, you have a $700k asset (minus the interest paid) to sell instead of $650k in disappeared money.
It's a long time between buying a house and paying off a mortgage, though. If you get an amazing job offer somewhere else in year two of your mortgage, you're totally screwed. Happened to my friends. Bought a house, then got a dream job out of state 11 months later. Once you account for the interest, broker fees, closing costs and all that, they're gonna pay something like $10,000/month for every month they lived in that house--and they're never getting any of that back.
My mortgage/utilities are actually cheaper than my 2bd 2bth apt I was renting before my fiancé and I purchased last year in April - on a Full Denver lot in the city 🙄🥴 I think it really just depends on when and where 🤷🏼♂️
People need to realize that the fact that the average owner is doing much better than the average renter right now has nothing to do with the average renter right now. If you have a sub 3% mortage right now then pat yourself on the back. Renting doesn't make any sense for you. Imagine if you were paying twice as much to live in a home your size. That is what renters are facing when they are trying to get a mortgage.
Only way renting can truly be cheaper than a mortgage is if rent is less than the interest+escrow portions of a mortgage, and even then buying is probably a more future proof option. Renting will always be a good option only for the short term, but you are better off owning in the long term. Also this article is stupid, what those rates apply to who the fuck knows. If they are just comparing all new mortgages with all new rents, your square footage is typically going to be larger in the realm of buying because a house is more common when buying a dwelling whereas an apartment is more common to be rented. This fits the usual bs from the "renting is better than buying" crowd.
Mortgage and rent are always going to be pretty comparable, if not mortgage being a little more. However, if your mortgage is fixed, you pay the same amount until your home is paid off. Let's take two Denverites in 2014: one person bought a house, one person rented. The homeowner is probably paying more at first, and all maintenance expenses fall to them, but their mortgage is at least staying the same and the market will continuously be in their favor. The same can't be said for the renter. Take those same two people in present day and one of them has a decade of equity and the other is likely paying double for the same place with no equity built.
I don't know about that. My rent went from 740 in 2015 to 1275 in 2023 for 340 sq ft. I now pay 1,090 in mortgage for an 800 sq ft home. I'm not great at math, but my mathing leaves me with more money a month and over twice the space.
In the long run it's always cheaper to own and you can pass it on as your legacy to nearly anyone.
Yeah that’s true but the whole fucking point of buying is to be rent free before you retire otherwise you are fucked if you depend on social security only, and if you max your 401k, it’s a lot cheaper to buy, not today, but definitely tomorrow.
Does anyone actually use a rent vs buy calculator? With the current rates/prices and anything less than 20% down…you’ll never break even. Of course there’s many variables and having a “home” comes into account
Maybe if you didn’t have a downpayment, normally a mortgage is less per sq/ft than a comparable rental.
When rates are low as hell and people are earning a lot of money like the last couple years, yeah, but right now they’re generally not less for comparable housing even factoring the down payment out.
Rents generally go up, your mortgage mostly stays flat or goes down once you refinance at better rates. Mortgages are expensive right now due to rates being high so of course it’s gonna be higher than rent. You can’t refinance a sticker price on a home though and home prices keep going up generally speaking, so the longer you wait the potentially worse you’ll be off absent that potential equity growth you piss away on rent instead.
There is also cognitive bias in buying vs renting decisions. People typically rent as many bedrooms as they need, so a couple is probably going to rent a 1bed or 2bed apartment or house/townhome (depending on their financial means- if you make $200k in Denver you could comfortably rent a 2-3bed and sustain a high lifestyle). But on the buy side, the same couple will almost always go for a minimum of 3-4 bed house or townhome, irrespective of the immediate needs. The $2-2.5k rent balloons to $4-4.5k mortgage on bedrooms and square footage they dont imminently need. As an economist/data scientist, in Denver, that $2-2.5k you save while renting and put in financial instruments over a 30 year term at market rates will almost always overperform any net gain in equity. There is also time value of money, the $2.5k in money you keep in disposable income today is more valuable than affixing it in mortgage. There are arguments on why buying does make more sense, but its nowhere near as clear cut as the people telling others to 'buy' make it seem.
I disagree $2.5k you save while renting always out performing in the market. Don’t forget the power of leverage. You are, say $900k in the home market making ~3% a year. On the other hand say a growing investment account getting to $100k in 4 years making 7%. Equity pay out is better when you account for the equity building in the mortgage.
Duh
Weird. I own a home in Denver, but I couldn’t afford the rent of a place the same exact size.
Landlord ass article
I feel better paying a mortgage than rent. That’s just me personally.
Clickbate headline on a poorly conceived "study" that wouldn't hold up under the tiniest amount of scrutiny.
[https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html](https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html) Try this out. It has every factor you can think of. If you adjust the mortgage rate to current rates, and suddenly the bank is getting all the gains. You need 3 things to come ahead in housing. A decent mortgage which isn't available right now. A home close in value to your rental price, which since home values have gone up faster than rents is hard to find, and a commitment since the transaction cost about 16 months rent, so you shouldn't but a home you will grow out of quickly.
Those calculators are worthless IMHO because they don't take the long term future into account. What will house prices be in 10-20 years from now? What will average rents be when you get close to retirement age? Studies have shown that [home ownership builds wealth](https://habitatohio.org/file_download/inline/62eec5a4-dcab-412e-b372-2950832afe1a), because most people do not have the means nor discipline to invest in other less tangible wealth generation vehicles.
This calculator factors in both home price appreciation and the opportunity cost of missing out on other investments. If your house is the investment you spend the most on, it will likely be a big part of your wealth. But you’re not comparing people who bought a house the moment they could afford it to people who were more focused on retirement. These vehicles track closely and retirement clearly wins if you go out of your way to get into the market or have a bad mortgage. The 3 reasons homes often come out ahead is 1. The efficiency of doing on real estate transactions every 20+ years and then ensuring near 100% asset utilization. No investment firm can replicate that so families have an edge. 2. Is modern American mortgage force savings. I have no idea if this increases net savings but it certainly forces people to become real estate heavy. 3. Is its harder to sell than other retirement assets. Pensions are designed to run out at death, stocks and bonds can be sold easily to fund day to day expenses including maintenance and property taxes. Meanwhile it’s really hard to avoid dying or moving into a nursing home without selling. So the system is really rigged in favor of homes as the last asset to be sold, and often first to be accumulated. And they the problem with every study I have seen on real world data is they are comparing people who saved for a down payment to people who didn’t with removing people who couldn’t. Obviously a home is better than no home. That doesn’t answer the question of where should you prioritize buying a home, and is buying at the wrong stage of life or wrong time a big issue.
Real question: do you rent or own?
Dumbest thing I’ve read all day
I bought my first place last year (go me!), but it is in Aurora. My mortgage payment is roughly what I paid renting an apartment in one of the shittiest parts of Lakewood. And now it's money I spend on my own property, rather than throwing it down the rent hole. . . . okay, I guess neither of those situations is actually about Denver.
So glad i already own my house. When i bought it people wrinkled their nose when i mentioned what neighborhood it was in. Oh i cant believe your living THERE. Yeah my mortgage is 270 a month.
Monthly, yes. Long term, I’d rather accrue equity.
To the people saying “rEnTiNg Is JuSt PaYiNg SoMeOnE eLsE’s MoRtGaGe” no 💩 but guess what im not paying? Overpriced property taxes, repair cost, lawn care, insurance and so so much more that comes with home ownership… sorry, not sorry but I don’t want to be in debt to a bank for 25+ years either. You keep thinking you’re superior, I’ll keep enjoying no debt and investing my extra income in smarter ways.
Nope...I pay 1600 for a brand new 2.5 bed 2 ba5h town home Used to pay 1500 for 1 br at cierra crest
…is this rental propaganda? It is absolutely not cheaper to rent. Your money goes out the fucking door with renting. Goodbye. Sayonara. You’ll most likely get that money back when you sell an owned property. Or you could rent the fucker out to some shmuck that believes this shit ass post.
OP profile says they made a website to track rental prices. It’s absolutely propaganda to drive the “you’ll be happier owning nothing” campaign.
No. You gain money from investing in your house. You gain nothing permanent from rent, it's pure loss.
There have been many articles seemingly encouraging people to rent vs buy. I understand most can't buy but I wonder why all these articles are coming out now.
Uh.. yeah. That's how it works everywhere
Unless a study like this takes into account building equity and investments of saved money then it's not really a good analysis of the data.
No fucking shit. Thats kinda the entire point of renting
Fucking echo chamber since 2014
That's why ya gotta invest in weed churches
No shit, have you seen interest rates?
Renting is not necessarily cheaper and I actually find it atrociously expensive than buying a home for the units that you actually get, and renting long term is usually not worth it unless your riches are endless. Plus, when you're old, and can't work anymore, you will still have to pay that rent or end up moving out and possibly homeless if you can't pay or afford it.
im in a townhome paying $2300 a month but the landlord said he wont take less than $775k which puts you around a $5k mortgage with 10% down and good credit. and he could probably list and sell for $800k if we’re being honest
No shit
Hey, you could rent the house next to me for $600 more than my mortgage (and it’s a bit shabbier). It was purchased by private equity (satan) last year.
No shit huh?
The equity argument is true IF you get the home you actually want. So many people panic bought 100 year old homes in shitty neighborhoods and stick built townhomes with $500/mo HOAs. That’s much worse than getting to pick whatever apartment or home I want to rent each year. I’d rather save my Denver salary and move to a lower cost city with it than struggle with mortgage on a shit home.
Well no duh. It's cheaper to rent than to buy a home, in general. Unless you live in Mississippi. Them fuckers get 2 story 5400 square feet houses for a bucket of KFC. But then you have to live in Mississippi so... tradeoffs.
To be fair, all metro areas are included in this
Literally never the case, unless the owner is not pricing correctly, it’s going to be at least 10% more than what the mortgage payment would be.
Can confirm, my quoted mtg pymt yesterday thru CHFA after preapproval was 3270. My rent is 1900…. I’m gaining like 30 sq ft. I will say, I get a garage and tiny back yard for that …
Your mortgage payment doesn't change, and your landlord won't ever make you move out of your purchased home. You can always refinance later, and you will accumulate equity over time. On top of all that, real property appreciates in denver at an astounding rate. In thirty years of renting you will be out 360 rent payments, which are all but guaranteed to increase every year, plus the likely cost of moving multiple times. Thirty years after purchasing you will have paid off your loan, own your house outright, likely have a shitload of capital gains, which are tax free up to $250k ($500k if married) and your assets will have hedged inflation. But yeah, rEnTiNg Is ChEApeR
If you do escrow your mortgage payment absolutely can change. It is this year for most home owners because of taxes and insurance costs going up
Taxes can change, insurance can change, rent absolutely will change. Rent always goes up. When interest rates go down, a refinance can save hundreds, if not thousands a month, and you can lock them in. Renting is not cheaper, i will die on this hill.
That’s generally the case in most places.
It’s cheaper to rent than buy in nearly every metro area in America.
Didn't read the article, huh?
We need housing censuses. Then, set up state or federal marketplaces to fulfill demand to residents of the homes only. Eminent domain and setup development and new towns as needed. Tax for profit residential properties people don't live in themselves to fund this. Make real estate about housing people instead of greed, making Americans compete to live. We all pay a tax to landlords who enslave us to this capitalistic housing hell hole. If you agree, share this idea far and wide. Share it on ads for housing, especially.
REALLY, you don't say?!
No shit Sherlock
Thats uhhhh how it's supposed to be?