A great story with great pictures. Interestingly, the tenant agreement from the 1950's required the original three tenants to both pay rent and help tidy up the building.
This isn’t that uncommon. If I trust a tenant, I’ll give them a break on the rent if they act as a “property manager lite” for my larger (5+ units) properties. The cost savings is always worth catching a problem early compared to the rent you discount.
Someone who'll act like an agent and give tours of neighbouring flats is worth a lot.
They'll pick people they want to be their neighbours, and is a far more effective way of not renting to drug addicts and gangs than any background check.
i wound up living rent-free for a year or so in the mother in law apartment of an old multi-family home this way once. The new owner wasn’t going to move in until spring, and it was a cold very snowy winter.
Turns out, preventing ice dam damage in a lath and plaster house by keeping the roofs clean makes your landlord like you a lot. As in, we exchange christmas cards now.
I was paid to have a role like that. It was great while it lasted but wore thin after a year of dealing with reoccurring problems that seemed so obviously idiotic.
Pushing the automatic carpark gate open with the car because it wasn’t fast enough: a couple of times a month.
Putting clothes hangers up through sprinkler heads and setting off the sprinkler: quarterly.
Meth addicts smashing up washing machines: monthly.
Crazy people with crazy demands detailed in multipage letter: weekly.
This is really common in Italy. Some years ago there was also some politicians involved. They rent houses of public property for an epsilon of their price.
In the palace where I live, there are families paying 50 euros/month for their apartment (near 100 square meters)
I know the article says the landlord and actress were friendly, but if I were the police I'd look into connections between the driver of the car that killed the actress and the landlord. I'd also want video or eyewitness testimony of the accident.
Murdering someone in a car "accident" seems like a good method for not getting caught. "It was an accident! So sorry!". The financial benefit to the landlord seems 5,000 a month and people have likely been killed for less.
The current landlord took over in 2002 - that's 12 years. In that time he could have first tried asking her, second tried making her feel guilty and or befriending her to get her to leave. His financial situation could have degraded, he could have come up with the idea or needed connection, and he could have built up the resolve to actually do it.
I'm not saying I think it's certain, I don't even think it's more likely than not. However, I think it's suspicious enough that it would be worth it to look into and rule things out.
Had me curious if you could put the NYC rent-controlled apartment rate in a will. Apparently not. But, you can pass control to a family member if they live with you for 2 years. So, technically, it could go on forever.
Is a tenant allowed to add their own bathroom, paint and ‘modernise’, or more accurately de-slum the place?
If not, I’m not sure I see the appeal. It’s an interesting story but that is a terrible apartment.
Basically looks like "no", unless the landlord approves it. Though I suspect, in practice, you would get away with anything that didn't bother the neighbors or made the landlord notice. Like repainting, or new carpet, both being relatively quiet work. As you say, though, that particular apartment probably needs more work than that.
I understand cynicism in the current environment, but we're talking publicly about individual real people, with no evidence of criminal intent (the article suggests the opposite, if anything).
I’ve seen rent control utterly destroy people who end up “not being able to move” once their rent becomes severely under-market. It seems to freeze them in time, and they tie their identity to their apartments, removing any ability to grow as a person.
This quote from the article nearly makes me cry: “I'm not worthy of these repairs and these improvements.”
Hrm, I dunno. It seems like a pretty good deal for the person whose rent is controlled. I can hardly imagine that they'd (on average) be better off if they were forced to move elsewhere, or forced to pay more. It seems like what you might be observing is a correlated effect. That is, people who are so dependent on rent control must have a certain amount of fragility in their financial situation. Older people in financially tenuous positions are understandably reluctant to venture forth and take risks, both because we become less neuroplastic as we get older in general, and because poverty is not conducive to risk-taking.
Now, whether rent control is good for society as a whole, I think that's a very different question with quite the opposite answer.
I think that rent control can make you paralyzed. Unable/unwilling to pursue new and potentially better opportunities in new places. Having a rent controlled place makes it significantly less likely that you will take a job in another place, even if it's paying you more.
It's the classic case of economic myopia. Maybe that new job would put you on a career path to be a millionaire in 10 years, but you can't see anything except how you would be losing money (by giving up your rent controlled apartment) in the short-term.
On the other hand, rent control can make it possible for people to afford to live in areas of high opportunity when they otherwise might not.
I for one have stayed in one of the highest paying and costliest metro areas in the world in part because I found a great low rent (not controlled) apartment. Moving elsewhere would cost less but also mean moving to a much less dynamic job and startup market.
"Utterly destroy" is a little over the top, but I get your drift.
I don't pay much more for my flat now than I did when I first rented it here in Berlin over a decade ago, and I never will because of rent controls.
I should move. I'm getting too old for the current flat sharing setup. My street has become too popular and noisy and annoying. The building is in bad shape.
To stay in my neighborhood, which I love, my rent would double, at least. I could afford it. But every time I consider it, I ask myself if I'm really that annoyed. I decide I'm not, and then I feel queasily guilty about paying a miniscule rent while newcomers suffer, and then complaining about my suboptimal living situation.
I'm not proud, and it's a strange situation to be in.
The reasoning why it doesn’t work probably won’t surprise anyone here. But in it they talk about how the very wealthy Nat Sherman was able to pay $355/month for a rarely used 6br apartment. That’s quite an efficiency problem.
Remember that Freakonomics is first and foremost entertainment. They know what their audience wants to hear and create the narrative that's most entertaining and fits the story arc they know listeners expect.
It's the podcast version of Penn & Teller's Bullshit.
Oh, it’s not as one sided a piece as I and the title make it out to be. They do talk to several competent proponents of rent control. But I think the case against it pretty clear and compelling: it’s good for the people on the inside, and really bad for everyone else.
Edit: The opinions of Dubner et al are not anywhere near as clear as Penn and Teller. I’ve been listening for years and I don’t think I could tell you which way he votes usually.
Seems to be pretty much disinformation though. There is a section about Sweden at the end, but it is ignoring everything that has happened in the last 20 years. Of course rent control 'doesn't work' when you are converting government owned apartments to co-ops at below market rate, subsidizing co-ops and issuing 100 year mortgages. Rent control has to be combined with active building policies if you want more housing, in which case it actually keeps down the value of land. That is the big problem in most cities today, builders simply can't get land at a price to build affordable housing.
Why would you need rent control if you had active building policies that ensured supply kept up with demand? The price of housing wouldn’t change, so there would be no need to mandate a specific below market price.
You still want to even out the swings. Supply won't necessarily keep up in any given time or area.
You aren't necessarily going to be able to supply enough housing in the most popular spot were construction is hard and land expensive. Instead you want create equivalent areas fast enough. But without rent control all the affluent people quickly ends up in the same space, which is hard to make an equivalent of with affordable housing.
They probably didn’t talk my elderly aunt, who paid a similar sum with her $1,100/mo social security and was able to stay in her community, parish and close to loved ones.
If we conclude that people should have affordable and predictable rent it is hard to make rent control the problem. While not adjusting rent for inflation and upkeep seems counterproductive, someone occupying an apartment at a low margin is only really a problem if we can't produce more apartments, or more opportunities, at the same price. The housing market cannot increase forever. You either end up with massive inflation or massive inequality.
The few good ideas seem to essentially be to treat housing as infrastructure. Of course building infrastructure is a problem in itself for many countries.
Who should have affordable and predictable rent? Everybody? We're not getting that from rent control, because it only applies to a subset.
Those who need it? We're not getting that from rent control, either, because many people suffer from high rent who don't have a rent-controlled apartment. Some of this may be due to those who don't need it getting it, but I suspect the numbers of such cases aren't enough to account for all those who need it who don't get it.
> someone occupying an apartment at a low margin is only really a problem if we can't produce more apartments, or more opportunities, at the same price.
That's exactly the problem with rent control. Let's say that there are a shortage of apartments for $100/month in NYC. Who is going to try to build more apartments in NYC for $100/month? Anybody who tries is going to lose their shirt. We can't produce them at that price. Rent control doesn't make that problem go away.
So, $151,000 per 600-square-foot apartment. If the loan for the building costs was at 5%, the interest cost is $7500 a year, or $629/month. That's not counting paying back principle, or maintenance.
You might be able to do it for $800/month, though.
True -- vastly expanding public housing, with the goal of eventually eliminating private housing. Housing should be a public good, not a commodity. Until then, rent control is a good way of minimizing the extent to which landlords exploit their tenants.
The fundamentals of life in general should trend towards not being commodities - it should get easier over time for people to do things themselves, instead of there being more things someone has to pay for.
Pretty easy. Just tax the difference between market rate and actual rate, and apply a means test to it. The mostly mythical Rich folk collecting cheap apartments will go away quickly.
We tax normal people on a similar basis — if you settle a debt, you’ll get a 1099 for whatever was written off and must pay tax unless you are insolvent.
This is a great outcome for your aunt. I'm glad for her.
But my objection to rent control has always been that it is wealth distribution by lottery. The wealth is not redistributed based on need or any other principle. It is totally arbitrary. Did your apartment become rent controlled or were you born into a rent controlled apartment? Congratulations, you get to live in a highly desirable area at below market rates. Didn't get so lucky? Well, sucks to be you.
Most lower class people don't receive housing assistance of any kind. Why should a random selection of people (from all tax brackets) get rent control?
If your aunt had won the lottery, that would also be a good outcome for her. But I don't think it then follows that the lottery is a progressive social policy.
Read “The Death and Life of Great American Cities” — community is about people.
Everything is a lottery. My parents bought a house in a marginal neighborhood in NYC for $20k in the 70s and made a 100x return at retirement time. By accident of birth, I bought a beautiful house in a different place in the 2000s that hasn’t gained much value. Renters on the other hand always get screwed as capital concentrates and rent is pushed up. Even in my case where I’m not making money, my expenses are flat and equity growing. That’s not an option today for most people.
In my aunts case, she lived into her late 80s independently. If she had lived in a typical suburban environment, she would have almost certainly been in a nursing facility and would have incurred 10x higher taxpayer costs and a much lower quality of life.
You and your parents saved up a lot of money and made an explicit choice as to how to invest it. That's not the same as doing absolutely nothing and waking up to an email that your apartment is now rent controlled.
> Renters on the other hand always get screwed as capital concentrates and rent is pushed up.
You seem to have a very strong pro-housing bias. Here you imply that renters are people who cannot afford to buy a house. There are other ways to invest, right? Those investments can cover increasing rents and even beat real-estate investing.
Isn’t it actually true that the majority of renters in the US and globally are people who can’t afford to buy, and not people with spare wealth they’re investing some other way?
I’ve heard the argument on HN before that renting and investing might be better than buying a house, and while I’m certain it’s true for a few people, I’m still a bit puzzled by the argument that if you can afford a house that rent and investing might be better. Can you elaborate a bit on when that makes financial sense?
If you can afford a house, wouldn’t buying and investing be even better than renting and investing? The problem with rent is that it’s 100% money loss, while buying is under most normal circumstances returned, usually at a profit, sometimes at a small loss, and almost never a complete loss comparable to rent.
In order for renting to make more sense than buying, you have to be able to make returns on your investment that exceed your rent plus whatever returns you’d get investing while buying a house. What I think this means is that your down payment on your house needs to be the thing than enables investment returns of an extra $1k or more above investing while renting, in other words, offset whatever rent would have been. It’s not clear to me that starting with, say, $200k more to invest, could actually yield so much bigger returns that suddenly renting makes more sense.
Is my analysis way off somehow? If so, would you be willing to outline a renting & buying scenario where investing + renting makes more money? Does it require a narrow band of income where you can afford to buy but not invest any extra?
My point was that depending on local housing market conditions a smart stock/bond market investor can beat yoy rent increases and with enough capital actually cover their rent. Your statement of averages doesn't seem related to parents point, and does not contradict my point.
In terms of your first statement, it seems true. However, I also think it's true that most people are unreasonably scared of the stock market while being unreasonably comfortable with investing 500% of their life savings into one property. And I think that for many people owning a house is similar to having a child, is not up for debate. You can't tell them they can't afford it. They will go deep into debt because they want to experience that aspect of life. Unlike, say, buying S&P 500 which is usually done purely for investing reasons.
> buying is under most normal circumstances returned, usually at a profit, sometimes at a small loss, and almost never a complete loss comparable to rent.
I would like to see numbers to back it up. It's very easy to lose track of how much money you spent on your house that you wouldn't have spent if you were renting: buying fees, longer commute, repairs, bigger-than-otherwise utility bills, property tax, mortgage interest, PMI, possible HOA fees, etc. It's also easy to lose track of how much money you didn't make on the market by not investing. This is obviously cherry picking (even though this very often happens when people discuss their housing returns) but over the last 10 years S&P 500 nearly 4x-ed.
In terms of housing vs stock market as an investment, check out this calculator [1]. You might not be able to get a good mortgage for the duration of your home ownership. The housing growth rate can stall relative to market based on local conditions. Property taxes and home-ownership fees can add up. The cost of buying and selling your home can be high. There are many variables that can tilt things one way or another. And lastly, housing is a market just like the stock market and they are interconnected.
I just don't believe in free money. I believe in the 'efficient-enough market hypothesis.' For a given amount of risk you should expect the same return. If you are looking at an unreasonably good investment you are likely just underestimating the risk. Gains are made via relative price differences. The better an investment seems the more pressure there is to buy it thus raising its absolute price thus reducing growth opportunities for subsequent buyers. When does the buying pressure stop? It stops when the investment doesn't seem better than others. Thus the markets settle on maximum uncertainty. To me housing is an investment, one of many. It's not automatically the best one in all circumstances.
> Your statement of averages doesn't seem related to parents point, and does not contradict my point.
FWIW, I'm not trying to contradict you, I'm trying to understand you. But, above you said "Here you imply that renters are people who cannot afford to buy a house." I was responding directly to that. Isn't is actually true that the majority of renters are not smart stock/bond market investors, and that the majority of renters cannot afford a down payment on a house, even if they want to, and that's why they're renting?
> I would like to see numbers to back it up. It's very easy to lose track of how much money you spent on your house that you wouldn't have spent if you were renting...
I was talking about the sale price of a house (getting your money back) compared to paying rent (not getting your money back). You want evidence that most housing sales aren't normally 0 and a total loss for the owner, is that what you mean?
It's fairly easy to Google average house return rates, I guess, but I honestly don't think my statement that housing returns aren't normally 0 needs any numbers to back it up. Here's the first hit I see: "Average annual returns in long-term real estate investing vary by the area of concentration in the sector. Average 20-year returns in the commercial real estate slightly outperform the S&P 500 Index, running at around 9.5%. Residential and diversified real estate investments do a bit better, averaging 10.6%. Real estate investment trusts (REITS) perform best, with an average annual return of 11.8%."
Thank you, this calculator does what I was asking for -- it compares buying and later selling a house to renting for that same duration.
To be honest, and just for the sake of discussion, my reaction is that I'm somewhat skeptical about it, and here's specifically why:
- It ends up calculating twice the recurring costs of buying vs renting. It's not immediately obvious that any of the variables are wrong, but the sum total doesn't seem very plausible, it doesn't really pass the smell test. A landlord is simply not going to rent for less than maintenance costs. Renting should be assumed by default to cost more than buying in the long term. All things being equal, the maintenance costs are the same, the difference is the landlord's markup.
- For everywhere I've ever lived (CA, NY & UT), the price that it calculates for rent as "equivalent" would not be able to get you an equivalent house, not even close. It's one thing to say an equivalent dollar amount exists, but it's another thing entirely to have such options. Generally speaking, the same monthly dollar amount spent on rent vs buy is going to net you a bigger space if you buy than if you rent.
- It assumes renters don't pay utilities, which is often not the case. But, again, it needs to be assumed that renters and buyers both pay the same utilities somehow, regardless of whether they're paying the landlord or the utility companies. It almost doesn't make sense to factor utilities into the comparison, especially only on one side of it.
Anyway, I totally buy that there's opportunity cost in a down payment, and that someone could use that money to invest in other ways that might outperform rent. I do not buy that there's any other savings possible when renting in a free market, generally speaking. (I'm specifically excluding rent control in my thinking here.)
Personally, I can easily say after having rented for a decade and owned two houses for a decade, that the houses were a far and away better deal financially than renting,...
To simplify the grand-parent said "all flowers are white", I said "no, some are yellow" and you said "isn't it true that most of them are white?" Your statement is probably true but is not related to my point that the grand-parent comment is overly simplistic and needs to be qualified.
> I was talking about the sale price of a house (getting your money back) compared to paying rent (not getting your money back).
This is biased framing that favors owning. In both cases you sign up for ongoing sunk costs and for an investment. You sell your investment then subtract the sunk costs, that is what we are comparing.
> You want evidence that most housing sales aren't normally 0 and a total loss for the owner, is that what you mean?
Even this is a bit biased. If you simply look at home sales you will miss all of the people who are not selling because their house value is too low for them. So they sit there making all kinds of sacrifices to avoid selling.
> It's fairly easy to Google average house return rates, I guess, but I honestly don't think my statement that housing returns aren't normally 0 needs any numbers to back it up.
It doesn't seem that easy and I think the fact that you don't think they need backing up tips your hand.
> "Average annual returns in long-term real estate investing vary by the area of concentration in the sector. Average 20-year returns in the commercial real estate slightly outperform the S&P 500 Index, running at around 9.5%. Residential and diversified real estate investments do a bit better, averaging 10.6%. Real estate investment trusts (REITS) perform best, with an average annual return of 11.8%."
I don't buy these un-sourced numbers for a second. For starters, averages are completely useless here. A few booming places can hide thousands of cities that are underwater. Zillow [1] has median data for the entire country for the last 10 years and it shows prices went from 170k to 230k. That is 3% yoy. And you can even lie with this number because it doesn't capture variance. 3% could be 6% in half the country and 0% in the other half. Unlike with the stock market you cannot fractionally diversify unless you are mega rich. This 3% is also not purely profit as it is missing local property taxes and other sunk costs. Also let's not forget inflation is 2-3% yoy...
In terms of renters taking on the owners costs, sure renting is more freeing so the renters pay a premium for a short contract and no down-payment and such. Sometimes that is done as a choice and not because its the only option. And some fees like repairs are amortized by landlords as they own many units. It's not the same as you hiring a third party to fix something in your house, it will cost more for you. And, again, to my point, this varies by locality and living situation.
That calculator is a great starting point to get you to realize all of the factors that go into making the decision. It's actually still missing a lot of them. Any diligent investor should make their own in spreadsheets before making that big decision.
We're being a bit sloppy about whether we're comparing rent to buy directly or rent+invest to buy.
There are great reasons to rent, you've mentioned some, but comparing them directly, not talking about external investments, buying has to be cheaper than renting for one simple reason: when I rent, I'm paying a buyer.
The overall costs are the same either way, they have to be. To rent is to pay extra to not have to pay a lump sum, not have to fix things, and be able to stop anytime. Renters pay for maintenance and improvements one way or another. Inflation and real-estate prices affect renters and buyers equally in the long run. Renting must cost more than buying, on average. The rent system cannot work unless that's true.
So for me, the only remaining question is whether a down payment invested elsewhere can yield a return that offsets rent reliably, and how.
> In both cases you sign up for ongoing sunk costs and for an investment.
That's a suggestive symmetry, but not comparing renting to buying directly, it's assuming an unspecified optional investment only for the renter. And rent is a known, fixed, high ongoing sunk cost. Buying might not be, considering the future sale. Whether costs are sunk when buying depends on many things. In my case, I put tens of thousands into a house, and it all came back when I sold.
> It doesn't seem that easy and I think the fact that you don't think they need backing up tips your hand.
Not sure what you mean, but I can see multiple sites saying the underwater mortgage rate is ~10% nationally, and an article about Chicago being highest in the nation at ~15%. So is it fair to say at least 85% of people are not under water? Foreclosure rate was just under 0.5% in the US in 2018. That's the number of people who experienced a total loss of a partially paid mortgage. I stand by my claim for now.
> If you simply look at home sales you will miss all of the people who are not selling
I don't think that's true. Today's home sales includes all the people who waited until now, and tomorrow's home sales will include the people who are waiting today. Anyway, I ran with the assumption made by the calculator you linked to, and that most people experience: that you sell your house after some time for a moderate positive return against the purchase price of the house.
> A few booming places can hide thousands of cities that are underwater.
Underwater means the house is, at some instant in time, worth less than the principal, not that you lose everything, right? And yes, sure, many people definitely hang on to avoid being underwater, perhaps sometimes just as unreasonably as they avoid investing in the stock market.
Underwater is different than rent, which is always sunk. Underwater might be a total -20% return post sale for some number of people, where rent is always a -100% return for all renters.
> We're being a bit sloppy about whether we're comparing rent to buy directly or rent+invest to buy.
Both the grand-parent that started this thread and you look to be using the former comparison and I have been consistently using the latter. It makes no sense to compare renting + no investments to owning with lots of money in equity. Obviously the person with money is better off. That was my initial point. 'Renters get screwed' is less fundamentally true than 'people with less money get screwed.' It seems obvious to me that the only debatable situation is the following
(1) How is a sum of money better spent? Buying a house and selling after X years, or buying other investments and selling after X years while renting?
My stance is that renting+investing comes out ahead more often than people think, especially for specific locations, durations, etc. You really should do your own math and figure it out. What is your stance? You seem to convey unrealistic, unqualified positivity towards owning. And don't take me disagreeing with you as me being anti-owning. I just don't think you've been making the good arguments in favor of owning. By far the best argument for owning is that you get access to non-callable 5x leverage. Every other factor can be hand-waved away except that one.
> The overall costs are the same either way, they have to be. To rent is to pay extra to not have to pay a lump sum, not have to fix things, and be able to stop anytime. Renters pay for maintenance and improvements one way or another.
I already pointed out a mistake in this line of reasoning, economies of scale keep rental unit maintenance fees lower.
> Inflation and real-estate prices affect renters and buyers equally in the long run. Renting must cost more than buying, on average. The rent system cannot work unless that's true.
That is a vague pro-point. Here is a vague counter-point: fully-paid-off owners only have upkeep costs. If the bulk of rental units are from fully-paid-off owners rent prices can asymptotically approach those upkeep costs while making money for the owners. And again, these upkeep costs can be lower than owning a single place due to economies of scale.
> That's a suggestive symmetry, but not comparing renting to buying directly, it's assuming an unspecified optional investment only for the renter.
Your definition of 'directly' does not make sense. (1) is 'directly,' where the renter is the potential owner. Obviously the alternative is to invest the money that was not spent on the house. Obviously that money is only available to the renter. Obviously if there are extra money it can be invested similarly in both cases so there is no point talking about it.
> And rent is a known, fixed, high ongoing sunk cost. Buying might not be, considering the future sale. Whether costs are sunk when buying depends on many things. In my case, I put tens of thousands into a house, and it all came back when I sold.
The shape of your argument seems to be that 'renting has high sunk costs but owning has none, so owning is better.' This argument is not logical.
> > It doesn't seem that easy and I think the fact that you don't think they need backing up tips your hand.
>
> Not sure what you mean, but I can see multiple sites saying the underwater mortgage rate is ~10% nationally, and an article about Chicago being highest in the nation at ~15%. So is it fair to say at least 85% of people are not under water? Foreclosure rate was just under 0.5% in the US in 2018. That's the number of people who experienced a total loss of a partially paid mortgage. I stand by my claim for now.
What I meant was that you were being overly optimistic and tried to sway mine (and other readers) opinions about a key debate metric without using any data. You just said "housing returns aren't normally 0." This has a thousand interpretations. Inflation adjusted? Cost adjusted? Over what duration of ho...
It seems like I'm making you upset rather than answer my question about how to invest a down payment. I'd like to see a scenario that's believable, and the calculator didn't do that. Otherwise, with this last comment, I'm not really seeing a single argument here that contradicts me with facts, it's turned into only opinion, FUD and attack. So, I don't feel I have much I need to respond to.
Thank you for the discussion, though! I do think I learned a few things. If you have one and feel like it, I'd still love to see a detailed scenario that is easy for a normal person to achieve where renting exceeds buying over a 10 or 20 year term. Is there anything else you'd like to discuss?
> It makes no sense to compare renting + no investments to owning with lots of money in equity.
So, just curious, why did you share and defend the calculator that does exactly this?
> economies of scale keep rental unit maintenance fees lower.
FWIW, that's not what the calculator claims - it states explicitly calculating house rentals comparable to purchases, where there is no economy of scale. I guess the whole point is to make the comparison as fair as possible by keeping everything equal except the method of payment.
I feel like all of your statements contain errors and all these errors happen to benefit the pro-owning view. So I primarily spent my time addressing the errors. I think you kept waiting for me to explain why housing is a bad investment but that was never my point of view. I think people are way too confident on their housing investment. Some FUD is good.
> If you have one and feel like it, I'd still love to see a detailed scenario that is easy for a normal person to achieve where renting exceeds buying over a 10 or 20 year term.
I recommend that you understand what that NYT calculator does exactly then punch in the numbers for your area and see if you can find rent for the given amount. It really seems to come down to how bullish you are on your local housing market vs your stock portfolio. Plus the premium you are willing to pay for mobility vs the premium for extra space and a yard.
As a side not, according to [1] only 37% of Americans live in their house for more than 10 years. The median is 8.7 years.
>> It makes no sense to compare renting + no investments to owning with lots of money in equity.
> So, just curious, why did you share and defend the calculator that does exactly this?
I think you are mistaken about the NYT calculator, it does exactly (1).
>> economies of scale keep rental unit maintenance fees lower.
> FWIW, that's not what the calculator claims - it states explicitly calculating house rentals comparable to purchases, where there is no economy of scale. I guess the whole point is to make the comparison as fair as possible by keeping everything equal except the method of payment.
The NYT calculator sets up a hypothetical situation where you are buying a property. Then as an alternative, it takes the down-payment money and invests it and calculates a monthly sunk-cost such that you still break-even during the given time period. As far as I know it makes no distinction as to how you spend that monthly budget. The question it poses is whether you can locally find rental units within that budget that are 'good enough' for you to live in. The extent to which you can come under-budget is the extent by which you are better off renting vs owning.
> There's a lot of luck in how wealth is distributed already.
I totally agree (all of your examples are good). But how do we improve the situation by also making regulatory policy luck based?
If Social Security worked by giving large pensions randomly to 1 out of every 100 enrollees, and leaving the other 99 with nothing, that might better reflect how wealth is already distributed, but I would argue it is a horrible idea.
I would argue that regulatory policy should attempt to smooth out the distribution of wealth, not make it more erratic.
They also concluded that getting rid of rent control makes it worse. The conclusion was “instituting tent control doesn’t work, but if you already have rent control getting rid of it doesn’t work either”. It’s almost like a supply and demand problem again.
"Doesn't work either" is a subjective opinion. It "won't work" as prices would likely skyrocket the day after such controls were abolished, but I'm not so sure it would be the same after 5 years. In the long-run people are likely better off.
This woman in the article wasn't wealthy, and the apartment wasn't really "habitable" (no head, for example) if they turned it over. She wasn't "getting away" with anything.
Rent control is a scourge on our cities and people. It hurts everything around it: the people (both rich and poor), the city, the developers, sometimes even the people who are living in the rent controlled apartment. I don't think you could find a single reputable economist who thinks it's anything except a terrible idea.
What about segregation? In Sweden most people are in favor of rent control. They don't want the rich being the only ones who can afford living in nice areas and let the poor be lumped together in bad areas.
This should be solved using public sector housing. Which you can think of as similar to rent control as discussed in the article, except the subsidy is made visible and direct through the tax payer funding, rather than through being obscured.
This also gives better public control of who receives the subsidised housing, usually a combination of needs assessment to qualify and then a queue system.
The important thing we have learned from the 70s/80s (different timing in different countries) is to spread the public housing throughout the community, rather than concentrate it into a single location. That is, rather than have a large apartment building that is purely public housing, have a requirement that a certain percentage of properties of every new development will be made available as government subsidised public housing.
Rent control hurts tenants, landlords and cities but in this particular case, rent control was a benefit to this lady - letting her rent be subsidizes by various property owners over the years - who were kind enough to roll with it and not kick up a fuss.
6 years ago I used to live in a rent-controlled studio apartment on the Upper East Side. There was a very old woman who lived alone in the apartment above me and one night I saw her eating out of the trash. New York is a tough place to be.
this means nothing. The lady can simply have dementia or something like this and even having a loving family and a nurse taking care of her, she still could have eaten from trash.
She had no tub, no shower and no heater. She heated it with the stove and a fireplace. Eventually, the landlord insisted on providing her a heater. She never used it and showered every day at the Y because she had no tub or shower.
I have very mixed feelings about this.
On the one hand, it casts some light on housing standards from decades ago. The amenities we expect for any and all housing were simply not expected for all housing types.
On the other hand, by some definitions, this woman was "homeless" or at least "inadequately housed." Her two bedroom apartment sounds a bit like a glorified shed.
I'm stunned that this seems to not be making anyone's radar. It's the kind of accommodations that winds up making headlines as illegal and run by an abusive landlord taking advantage of people.
But it was presumably legal when she moved in, so people are fine with this? While decrying SROs as unacceptable housing these days for some reason.
I think my cognitive dissonance is pretty maxed out at the moment.
> abusive landlord taking advantage of people
from the article: The landlord offered her to install a heater and she refused. From my point of view, it says more about her character ("I do not deserve this") than about the landlord. Moreover, he did install one! and she never used it!
When she moved in, it was not probably a standard feature to have one; and after all, she did live w/o using one for her whole life (despite even having one installed at the end).
Again, it feels it was HER choice rather than a one forced down her throat.
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[ 0.18 ms ] story [ 53.6 ms ] threadThey'll pick people they want to be their neighbours, and is a far more effective way of not renting to drug addicts and gangs than any background check.
Turns out, preventing ice dam damage in a lath and plaster house by keeping the roofs clean makes your landlord like you a lot. As in, we exchange christmas cards now.
Pushing the automatic carpark gate open with the car because it wasn’t fast enough: a couple of times a month.
Putting clothes hangers up through sprinkler heads and setting off the sprinkler: quarterly.
Meth addicts smashing up washing machines: monthly.
Crazy people with crazy demands detailed in multipage letter: weekly.
EDIT: if you sell/rent something much below value it can be considered a gift. And tax authorities regularly do so.
Murdering someone in a car "accident" seems like a good method for not getting caught. "It was an accident! So sorry!". The financial benefit to the landlord seems 5,000 a month and people have likely been killed for less.
Maybe it just tipped over his threshold.
I'm not saying I think it's certain, I don't even think it's more likely than not. However, I think it's suspicious enough that it would be worth it to look into and rule things out.
https://www1.nyc.gov/site/rentguidelinesboard/resources/succ...
Basically looks like "no", unless the landlord approves it. Though I suspect, in practice, you would get away with anything that didn't bother the neighbors or made the landlord notice. Like repainting, or new carpet, both being relatively quiet work. As you say, though, that particular apartment probably needs more work than that.
This quote from the article nearly makes me cry: “I'm not worthy of these repairs and these improvements.”
Now, whether rent control is good for society as a whole, I think that's a very different question with quite the opposite answer.
It's the classic case of economic myopia. Maybe that new job would put you on a career path to be a millionaire in 10 years, but you can't see anything except how you would be losing money (by giving up your rent controlled apartment) in the short-term.
I for one have stayed in one of the highest paying and costliest metro areas in the world in part because I found a great low rent (not controlled) apartment. Moving elsewhere would cost less but also mean moving to a much less dynamic job and startup market.
It so really depends on the actual people. The ones who really want to pursue new opportunities seldom look at the favorable rent in my opinion.
I don't pay much more for my flat now than I did when I first rented it here in Berlin over a decade ago, and I never will because of rent controls.
I should move. I'm getting too old for the current flat sharing setup. My street has become too popular and noisy and annoying. The building is in bad shape.
To stay in my neighborhood, which I love, my rent would double, at least. I could afford it. But every time I consider it, I ask myself if I'm really that annoyed. I decide I'm not, and then I feel queasily guilty about paying a miniscule rent while newcomers suffer, and then complaining about my suboptimal living situation.
I'm not proud, and it's a strange situation to be in.
The reasoning why it doesn’t work probably won’t surprise anyone here. But in it they talk about how the very wealthy Nat Sherman was able to pay $355/month for a rarely used 6br apartment. That’s quite an efficiency problem.
It's the podcast version of Penn & Teller's Bullshit.
Edit: The opinions of Dubner et al are not anywhere near as clear as Penn and Teller. I’ve been listening for years and I don’t think I could tell you which way he votes usually.
You aren't necessarily going to be able to supply enough housing in the most popular spot were construction is hard and land expensive. Instead you want create equivalent areas fast enough. But without rent control all the affluent people quickly ends up in the same space, which is hard to make an equivalent of with affordable housing.
Without rent control you just have the market force people into musical chairs for highest bidders, for the benefits of the landlords.
The few good ideas seem to essentially be to treat housing as infrastructure. Of course building infrastructure is a problem in itself for many countries.
Those who need it? We're not getting that from rent control, either, because many people suffer from high rent who don't have a rent-controlled apartment. Some of this may be due to those who don't need it getting it, but I suspect the numbers of such cases aren't enough to account for all those who need it who don't get it.
> someone occupying an apartment at a low margin is only really a problem if we can't produce more apartments, or more opportunities, at the same price.
That's exactly the problem with rent control. Let's say that there are a shortage of apartments for $100/month in NYC. Who is going to try to build more apartments in NYC for $100/month? Anybody who tries is going to lose their shirt. We can't produce them at that price. Rent control doesn't make that problem go away.
$100 per month isn't realistic, $500 might be. While construction costs do rise, you are mostly paying for the exclusivity.
"High-rise apartment buildings cost an average $302 per square foot."
https://therealdeal.com/2018/05/15/surprise-nyc-remains-most...
You might be able to do it for $800/month, though.
We tax normal people on a similar basis — if you settle a debt, you’ll get a 1099 for whatever was written off and must pay tax unless you are insolvent.
But that doesn't really change things, does it? Prices completely out of wack with market.
But my objection to rent control has always been that it is wealth distribution by lottery. The wealth is not redistributed based on need or any other principle. It is totally arbitrary. Did your apartment become rent controlled or were you born into a rent controlled apartment? Congratulations, you get to live in a highly desirable area at below market rates. Didn't get so lucky? Well, sucks to be you.
Most lower class people don't receive housing assistance of any kind. Why should a random selection of people (from all tax brackets) get rent control?
If your aunt had won the lottery, that would also be a good outcome for her. But I don't think it then follows that the lottery is a progressive social policy.
Everything is a lottery. My parents bought a house in a marginal neighborhood in NYC for $20k in the 70s and made a 100x return at retirement time. By accident of birth, I bought a beautiful house in a different place in the 2000s that hasn’t gained much value. Renters on the other hand always get screwed as capital concentrates and rent is pushed up. Even in my case where I’m not making money, my expenses are flat and equity growing. That’s not an option today for most people.
In my aunts case, she lived into her late 80s independently. If she had lived in a typical suburban environment, she would have almost certainly been in a nursing facility and would have incurred 10x higher taxpayer costs and a much lower quality of life.
> Renters on the other hand always get screwed as capital concentrates and rent is pushed up.
You seem to have a very strong pro-housing bias. Here you imply that renters are people who cannot afford to buy a house. There are other ways to invest, right? Those investments can cover increasing rents and even beat real-estate investing.
Keeping children in school, keeping jobs, etc all are far more difficult for folks in society that have the least ability to cope with change.
I’ve heard the argument on HN before that renting and investing might be better than buying a house, and while I’m certain it’s true for a few people, I’m still a bit puzzled by the argument that if you can afford a house that rent and investing might be better. Can you elaborate a bit on when that makes financial sense?
If you can afford a house, wouldn’t buying and investing be even better than renting and investing? The problem with rent is that it’s 100% money loss, while buying is under most normal circumstances returned, usually at a profit, sometimes at a small loss, and almost never a complete loss comparable to rent.
In order for renting to make more sense than buying, you have to be able to make returns on your investment that exceed your rent plus whatever returns you’d get investing while buying a house. What I think this means is that your down payment on your house needs to be the thing than enables investment returns of an extra $1k or more above investing while renting, in other words, offset whatever rent would have been. It’s not clear to me that starting with, say, $200k more to invest, could actually yield so much bigger returns that suddenly renting makes more sense.
Is my analysis way off somehow? If so, would you be willing to outline a renting & buying scenario where investing + renting makes more money? Does it require a narrow band of income where you can afford to buy but not invest any extra?
In terms of your first statement, it seems true. However, I also think it's true that most people are unreasonably scared of the stock market while being unreasonably comfortable with investing 500% of their life savings into one property. And I think that for many people owning a house is similar to having a child, is not up for debate. You can't tell them they can't afford it. They will go deep into debt because they want to experience that aspect of life. Unlike, say, buying S&P 500 which is usually done purely for investing reasons.
> buying is under most normal circumstances returned, usually at a profit, sometimes at a small loss, and almost never a complete loss comparable to rent.
I would like to see numbers to back it up. It's very easy to lose track of how much money you spent on your house that you wouldn't have spent if you were renting: buying fees, longer commute, repairs, bigger-than-otherwise utility bills, property tax, mortgage interest, PMI, possible HOA fees, etc. It's also easy to lose track of how much money you didn't make on the market by not investing. This is obviously cherry picking (even though this very often happens when people discuss their housing returns) but over the last 10 years S&P 500 nearly 4x-ed.
In terms of housing vs stock market as an investment, check out this calculator [1]. You might not be able to get a good mortgage for the duration of your home ownership. The housing growth rate can stall relative to market based on local conditions. Property taxes and home-ownership fees can add up. The cost of buying and selling your home can be high. There are many variables that can tilt things one way or another. And lastly, housing is a market just like the stock market and they are interconnected.
I just don't believe in free money. I believe in the 'efficient-enough market hypothesis.' For a given amount of risk you should expect the same return. If you are looking at an unreasonably good investment you are likely just underestimating the risk. Gains are made via relative price differences. The better an investment seems the more pressure there is to buy it thus raising its absolute price thus reducing growth opportunities for subsequent buyers. When does the buying pressure stop? It stops when the investment doesn't seem better than others. Thus the markets settle on maximum uncertainty. To me housing is an investment, one of many. It's not automatically the best one in all circumstances.
[1] https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...
FWIW, I'm not trying to contradict you, I'm trying to understand you. But, above you said "Here you imply that renters are people who cannot afford to buy a house." I was responding directly to that. Isn't is actually true that the majority of renters are not smart stock/bond market investors, and that the majority of renters cannot afford a down payment on a house, even if they want to, and that's why they're renting?
> I would like to see numbers to back it up. It's very easy to lose track of how much money you spent on your house that you wouldn't have spent if you were renting...
I was talking about the sale price of a house (getting your money back) compared to paying rent (not getting your money back). You want evidence that most housing sales aren't normally 0 and a total loss for the owner, is that what you mean?
It's fairly easy to Google average house return rates, I guess, but I honestly don't think my statement that housing returns aren't normally 0 needs any numbers to back it up. Here's the first hit I see: "Average annual returns in long-term real estate investing vary by the area of concentration in the sector. Average 20-year returns in the commercial real estate slightly outperform the S&P 500 Index, running at around 9.5%. Residential and diversified real estate investments do a bit better, averaging 10.6%. Real estate investment trusts (REITS) perform best, with an average annual return of 11.8%."
https://www.investopedia.com/ask/answers/060415/what-average...
> check out this calculator
Thank you, this calculator does what I was asking for -- it compares buying and later selling a house to renting for that same duration.
To be honest, and just for the sake of discussion, my reaction is that I'm somewhat skeptical about it, and here's specifically why:
- It ends up calculating twice the recurring costs of buying vs renting. It's not immediately obvious that any of the variables are wrong, but the sum total doesn't seem very plausible, it doesn't really pass the smell test. A landlord is simply not going to rent for less than maintenance costs. Renting should be assumed by default to cost more than buying in the long term. All things being equal, the maintenance costs are the same, the difference is the landlord's markup.
- For everywhere I've ever lived (CA, NY & UT), the price that it calculates for rent as "equivalent" would not be able to get you an equivalent house, not even close. It's one thing to say an equivalent dollar amount exists, but it's another thing entirely to have such options. Generally speaking, the same monthly dollar amount spent on rent vs buy is going to net you a bigger space if you buy than if you rent.
- It assumes renters don't pay utilities, which is often not the case. But, again, it needs to be assumed that renters and buyers both pay the same utilities somehow, regardless of whether they're paying the landlord or the utility companies. It almost doesn't make sense to factor utilities into the comparison, especially only on one side of it.
Anyway, I totally buy that there's opportunity cost in a down payment, and that someone could use that money to invest in other ways that might outperform rent. I do not buy that there's any other savings possible when renting in a free market, generally speaking. (I'm specifically excluding rent control in my thinking here.)
Personally, I can easily say after having rented for a decade and owned two houses for a decade, that the houses were a far and away better deal financially than renting,...
> I was talking about the sale price of a house (getting your money back) compared to paying rent (not getting your money back).
This is biased framing that favors owning. In both cases you sign up for ongoing sunk costs and for an investment. You sell your investment then subtract the sunk costs, that is what we are comparing.
> You want evidence that most housing sales aren't normally 0 and a total loss for the owner, is that what you mean?
Even this is a bit biased. If you simply look at home sales you will miss all of the people who are not selling because their house value is too low for them. So they sit there making all kinds of sacrifices to avoid selling.
> It's fairly easy to Google average house return rates, I guess, but I honestly don't think my statement that housing returns aren't normally 0 needs any numbers to back it up.
It doesn't seem that easy and I think the fact that you don't think they need backing up tips your hand.
> "Average annual returns in long-term real estate investing vary by the area of concentration in the sector. Average 20-year returns in the commercial real estate slightly outperform the S&P 500 Index, running at around 9.5%. Residential and diversified real estate investments do a bit better, averaging 10.6%. Real estate investment trusts (REITS) perform best, with an average annual return of 11.8%."
I don't buy these un-sourced numbers for a second. For starters, averages are completely useless here. A few booming places can hide thousands of cities that are underwater. Zillow [1] has median data for the entire country for the last 10 years and it shows prices went from 170k to 230k. That is 3% yoy. And you can even lie with this number because it doesn't capture variance. 3% could be 6% in half the country and 0% in the other half. Unlike with the stock market you cannot fractionally diversify unless you are mega rich. This 3% is also not purely profit as it is missing local property taxes and other sunk costs. Also let's not forget inflation is 2-3% yoy...
In terms of renters taking on the owners costs, sure renting is more freeing so the renters pay a premium for a short contract and no down-payment and such. Sometimes that is done as a choice and not because its the only option. And some fees like repairs are amortized by landlords as they own many units. It's not the same as you hiring a third party to fix something in your house, it will cost more for you. And, again, to my point, this varies by locality and living situation.
That calculator is a great starting point to get you to realize all of the factors that go into making the decision. It's actually still missing a lot of them. Any diligent investor should make their own in spreadsheets before making that big decision.
[1] https://www.zillow.com/home-values/
There are great reasons to rent, you've mentioned some, but comparing them directly, not talking about external investments, buying has to be cheaper than renting for one simple reason: when I rent, I'm paying a buyer.
The overall costs are the same either way, they have to be. To rent is to pay extra to not have to pay a lump sum, not have to fix things, and be able to stop anytime. Renters pay for maintenance and improvements one way or another. Inflation and real-estate prices affect renters and buyers equally in the long run. Renting must cost more than buying, on average. The rent system cannot work unless that's true.
So for me, the only remaining question is whether a down payment invested elsewhere can yield a return that offsets rent reliably, and how.
> In both cases you sign up for ongoing sunk costs and for an investment.
That's a suggestive symmetry, but not comparing renting to buying directly, it's assuming an unspecified optional investment only for the renter. And rent is a known, fixed, high ongoing sunk cost. Buying might not be, considering the future sale. Whether costs are sunk when buying depends on many things. In my case, I put tens of thousands into a house, and it all came back when I sold.
> It doesn't seem that easy and I think the fact that you don't think they need backing up tips your hand.
Not sure what you mean, but I can see multiple sites saying the underwater mortgage rate is ~10% nationally, and an article about Chicago being highest in the nation at ~15%. So is it fair to say at least 85% of people are not under water? Foreclosure rate was just under 0.5% in the US in 2018. That's the number of people who experienced a total loss of a partially paid mortgage. I stand by my claim for now.
> If you simply look at home sales you will miss all of the people who are not selling
I don't think that's true. Today's home sales includes all the people who waited until now, and tomorrow's home sales will include the people who are waiting today. Anyway, I ran with the assumption made by the calculator you linked to, and that most people experience: that you sell your house after some time for a moderate positive return against the purchase price of the house.
> A few booming places can hide thousands of cities that are underwater.
Underwater means the house is, at some instant in time, worth less than the principal, not that you lose everything, right? And yes, sure, many people definitely hang on to avoid being underwater, perhaps sometimes just as unreasonably as they avoid investing in the stock market.
Underwater is different than rent, which is always sunk. Underwater might be a total -20% return post sale for some number of people, where rent is always a -100% return for all renters.
Both the grand-parent that started this thread and you look to be using the former comparison and I have been consistently using the latter. It makes no sense to compare renting + no investments to owning with lots of money in equity. Obviously the person with money is better off. That was my initial point. 'Renters get screwed' is less fundamentally true than 'people with less money get screwed.' It seems obvious to me that the only debatable situation is the following
(1) How is a sum of money better spent? Buying a house and selling after X years, or buying other investments and selling after X years while renting?
My stance is that renting+investing comes out ahead more often than people think, especially for specific locations, durations, etc. You really should do your own math and figure it out. What is your stance? You seem to convey unrealistic, unqualified positivity towards owning. And don't take me disagreeing with you as me being anti-owning. I just don't think you've been making the good arguments in favor of owning. By far the best argument for owning is that you get access to non-callable 5x leverage. Every other factor can be hand-waved away except that one.
> The overall costs are the same either way, they have to be. To rent is to pay extra to not have to pay a lump sum, not have to fix things, and be able to stop anytime. Renters pay for maintenance and improvements one way or another.
I already pointed out a mistake in this line of reasoning, economies of scale keep rental unit maintenance fees lower.
> Inflation and real-estate prices affect renters and buyers equally in the long run. Renting must cost more than buying, on average. The rent system cannot work unless that's true.
That is a vague pro-point. Here is a vague counter-point: fully-paid-off owners only have upkeep costs. If the bulk of rental units are from fully-paid-off owners rent prices can asymptotically approach those upkeep costs while making money for the owners. And again, these upkeep costs can be lower than owning a single place due to economies of scale.
> That's a suggestive symmetry, but not comparing renting to buying directly, it's assuming an unspecified optional investment only for the renter.
Your definition of 'directly' does not make sense. (1) is 'directly,' where the renter is the potential owner. Obviously the alternative is to invest the money that was not spent on the house. Obviously that money is only available to the renter. Obviously if there are extra money it can be invested similarly in both cases so there is no point talking about it.
> And rent is a known, fixed, high ongoing sunk cost. Buying might not be, considering the future sale. Whether costs are sunk when buying depends on many things. In my case, I put tens of thousands into a house, and it all came back when I sold.
The shape of your argument seems to be that 'renting has high sunk costs but owning has none, so owning is better.' This argument is not logical.
> > It doesn't seem that easy and I think the fact that you don't think they need backing up tips your hand. > > Not sure what you mean, but I can see multiple sites saying the underwater mortgage rate is ~10% nationally, and an article about Chicago being highest in the nation at ~15%. So is it fair to say at least 85% of people are not under water? Foreclosure rate was just under 0.5% in the US in 2018. That's the number of people who experienced a total loss of a partially paid mortgage. I stand by my claim for now.
What I meant was that you were being overly optimistic and tried to sway mine (and other readers) opinions about a key debate metric without using any data. You just said "housing returns aren't normally 0." This has a thousand interpretations. Inflation adjusted? Cost adjusted? Over what duration of ho...
Thank you for the discussion, though! I do think I learned a few things. If you have one and feel like it, I'd still love to see a detailed scenario that is easy for a normal person to achieve where renting exceeds buying over a 10 or 20 year term. Is there anything else you'd like to discuss?
> It makes no sense to compare renting + no investments to owning with lots of money in equity.
So, just curious, why did you share and defend the calculator that does exactly this?
> economies of scale keep rental unit maintenance fees lower.
FWIW, that's not what the calculator claims - it states explicitly calculating house rentals comparable to purchases, where there is no economy of scale. I guess the whole point is to make the comparison as fair as possible by keeping everything equal except the method of payment.
> If you have one and feel like it, I'd still love to see a detailed scenario that is easy for a normal person to achieve where renting exceeds buying over a 10 or 20 year term.
I recommend that you understand what that NYT calculator does exactly then punch in the numbers for your area and see if you can find rent for the given amount. It really seems to come down to how bullish you are on your local housing market vs your stock portfolio. Plus the premium you are willing to pay for mobility vs the premium for extra space and a yard.
As a side not, according to [1] only 37% of Americans live in their house for more than 10 years. The median is 8.7 years.
>> It makes no sense to compare renting + no investments to owning with lots of money in equity.
> So, just curious, why did you share and defend the calculator that does exactly this?
I think you are mistaken about the NYT calculator, it does exactly (1).
>> economies of scale keep rental unit maintenance fees lower.
> FWIW, that's not what the calculator claims - it states explicitly calculating house rentals comparable to purchases, where there is no economy of scale. I guess the whole point is to make the comparison as fair as possible by keeping everything equal except the method of payment.
The NYT calculator sets up a hypothetical situation where you are buying a property. Then as an alternative, it takes the down-payment money and invests it and calculates a monthly sunk-cost such that you still break-even during the given time period. As far as I know it makes no distinction as to how you spend that monthly budget. The question it poses is whether you can locally find rental units within that budget that are 'good enough' for you to live in. The extent to which you can come under-budget is the extent by which you are better off renting vs owning.
[1] https://www.financialsamurai.com/the-median-homeownership-du...
You are right. I goofed. Sorry. I remember seeing the investment variables the first time and then I forgot two comments up.
> I think people are way too confident on their housing investment. Some FUD is good.
You might be right about the first part.
There's a lot of luck in how wealth is distributed already.
1. Being born into a wealthy family.
2. Being born into an area with good schools.
3. Being born with good genes that kept you healthy (lower cost of health care)
4. Winning the lottery (powerball or say immigration)
5. Starting 10 startups in the hope that 1 of them will make it big.
6. Funding 10 startups in the hope that 1 of them will be the next unicorn.
I totally agree (all of your examples are good). But how do we improve the situation by also making regulatory policy luck based?
If Social Security worked by giving large pensions randomly to 1 out of every 100 enrollees, and leaving the other 99 with nothing, that might better reflect how wealth is already distributed, but I would argue it is a horrible idea.
I would argue that regulatory policy should attempt to smooth out the distribution of wealth, not make it more erratic.
This also gives better public control of who receives the subsidised housing, usually a combination of needs assessment to qualify and then a queue system.
The important thing we have learned from the 70s/80s (different timing in different countries) is to spread the public housing throughout the community, rather than concentrate it into a single location. That is, rather than have a large apartment building that is purely public housing, have a requirement that a certain percentage of properties of every new development will be made available as government subsidised public housing.
Rent control hurts tenants, landlords and cities but in this particular case, rent control was a benefit to this lady - letting her rent be subsidizes by various property owners over the years - who were kind enough to roll with it and not kick up a fuss.
this means nothing. The lady can simply have dementia or something like this and even having a loving family and a nurse taking care of her, she still could have eaten from trash.
This is the nature of the disease, unfortunately.
I have very mixed feelings about this.
On the one hand, it casts some light on housing standards from decades ago. The amenities we expect for any and all housing were simply not expected for all housing types.
On the other hand, by some definitions, this woman was "homeless" or at least "inadequately housed." Her two bedroom apartment sounds a bit like a glorified shed.
I'm stunned that this seems to not be making anyone's radar. It's the kind of accommodations that winds up making headlines as illegal and run by an abusive landlord taking advantage of people.
But it was presumably legal when she moved in, so people are fine with this? While decrying SROs as unacceptable housing these days for some reason.
I think my cognitive dissonance is pretty maxed out at the moment.
When she moved in, it was not probably a standard feature to have one; and after all, she did live w/o using one for her whole life (despite even having one installed at the end).
Again, it feels it was HER choice rather than a one forced down her throat.