For retirees, this should be a simple choice between:
Paying taxes and insurance on your current McMansion
Downsizing to pay less taxes and insurance
Renting
For someone who owns their home, I can't imagine that renting is the most cost effective option. The only way renting might be better/cheaper is if you're stuck with a sizeable mortgage that won't be paid off any time soon. But even in this case, moving to something more affordable would still likely beat renting. You'll still have to move in either case.
For a while I thought owning a home wasn’t a great idea. Take on massive debt and sink massive amounts of time and money into home projects? No thanks.
But the trick I missed was we just don’t build housing in this country. Especially not affordable housing.
As long as this continues, and I don’t see any credible signs of abatement, owning a home is a good idea.
Renting only makes sense on a fixed income if you can ensure your rent does not increase. If in 15 years your rent is double what it once was, you will probably not be able to afford it.
There are some good rent vs own calculators out there. One thing that each person has to weigh is how much they value their time. Owning a home requires a certain amount of time that renters don’t commit. Not counting the considerable time in seeking out and buying a home or the preparation and process of selling a home, there’s an enormous amount time spent on maintenance, repair, renovation, etc. I’ve owned and rented and, for me, renting is a far superior lifestyle.
One reason to own a house in many countries is that there are often large tax and inheritance benefits to doing so. E.g. old age pension benefits related to capital excluding your primary residence.
Owning a home wouldn't make much sense if we were building tons of affordable housing. However, with the constant artificial shortage created by cities, the rents and prices continue to rise ad infinitum.
This means, as a homeowner, I have a huge advantage over my friends who are renting and paying twice as much for a single bedroom apartment, even including maintenance costs. This will only get worse over time.
Is renting stable in the United States? In the UK it's very precarious. The landlord can throw you out after a year with a couple of months' notice[1], so you might have to move every year. You don't want to be kicked out of your house and have to move when you're in your 70s or 80s. Plus the usual stuff like you cannot make any modifications, even paint a wall.
I'm an atheist, but if there's a God then I am grateful to her for granting me the wisdom to pay off my house before retiring instead of investing that money in some horseshit.
Its a shelter from storms, both physically and metaphorically.
WSJ is shilling for companies like Blackrock and other private equity that wants to rent you housing at a markup compared to the ownership costs.
Of course they'll be pushing a narrative in which you shouldn't own your own home, the main source of financial security and peace of mind for when you are no longer able or willing to work a grueling 9-5 schedule.
Believe it or not, ownership costs aren't scary and, in most cases (unless you get fleeced by contractors) are very predictable and still cheaper than rent (especially in light of recent rent increases).
Personally, I wouldn't just treat this article with a grain of salt, I would disregard it entirely.
In their example case of someone with a 5 bedroom house, its obvious: sell it and move to a 1 or 2 bedroom condo. Renting isn't going to be optimal if her rent doubles every 10 years and she lives to 100.
The other option that boomer generation doesn't seem to be using as much is multi-generational homes. Give the house to your kid, you play grandma/grandpa and give them child care. The kid gets a cheap house and cheap childcare. You build multi-generational equity.
I don’t buy what this article is selling. For the average person in the US you are not “free” from having to work until you have a 100% paid off home.
Older Americans are not leaving their paid off 3/2bed in the burbs in exchange for a condo that has rent costs go up 10% every year. Every single older person I know with a paid off house won’t move because it will be dramatically more expensive than what they pay now for way less housing.
How are we on buy vs rent for like the third time this month?
There are a million calculators out there and I've linked 4 in a previous post (https://news.ycombinator.com/item?id=44794529). The math just works out in favor of renting because real estate doesn't appreciate as fast as other stuff.
There are of course no-monetary reasons to own a house.
As well as if you plug in an interest rate of say 2% it starts to look like owning is better than renting. But we're not in that environment for the next year or so.
I do buy it. There are a significant number of well-off retirees in my apartment complex. From the ones I've talked with, they love it. There's more to life than money, and many of them found their single family homes isolating and the stuff in them burdensome. There's a lot of mental energy that goes into taking care of a home, organizing all of the upkeep etc. They don't have to deal with any of that in an apartment. They don't have to vet repair companies or gardners or compare quotes. Living in our apartment complex they get to talk with a mix of people which keeps life interesting and alleviates loneliness, they get to walk to amenities like pools/gyms that their single family homes did not have, also they're closer to a major airport which makes those bucket list trips less burdensome AND they're closer to top hospitals for treatments. It's more expensive yes, but they're getting a value out of it that is worth the cost to them.
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[ 2.3 ms ] story [ 31.3 ms ] threadBut the trick I missed was we just don’t build housing in this country. Especially not affordable housing.
As long as this continues, and I don’t see any credible signs of abatement, owning a home is a good idea.
This means, as a homeowner, I have a huge advantage over my friends who are renting and paying twice as much for a single bedroom apartment, even including maintenance costs. This will only get worse over time.
[1] This might change to 4 months: https://en.wikipedia.org/wiki/Renters'_Rights_Bill
Its a shelter from storms, both physically and metaphorically.
Of course they'll be pushing a narrative in which you shouldn't own your own home, the main source of financial security and peace of mind for when you are no longer able or willing to work a grueling 9-5 schedule.
Believe it or not, ownership costs aren't scary and, in most cases (unless you get fleeced by contractors) are very predictable and still cheaper than rent (especially in light of recent rent increases).
Personally, I wouldn't just treat this article with a grain of salt, I would disregard it entirely.
The other option that boomer generation doesn't seem to be using as much is multi-generational homes. Give the house to your kid, you play grandma/grandpa and give them child care. The kid gets a cheap house and cheap childcare. You build multi-generational equity.
Older Americans are not leaving their paid off 3/2bed in the burbs in exchange for a condo that has rent costs go up 10% every year. Every single older person I know with a paid off house won’t move because it will be dramatically more expensive than what they pay now for way less housing.
There are a million calculators out there and I've linked 4 in a previous post (https://news.ycombinator.com/item?id=44794529). The math just works out in favor of renting because real estate doesn't appreciate as fast as other stuff.
There are of course no-monetary reasons to own a house.
As well as if you plug in an interest rate of say 2% it starts to look like owning is better than renting. But we're not in that environment for the next year or so.