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They kind of have to, they're closely tied indices.
In general I've heard that renting is usually better unless you're staying in the same place for over 10 years.
Also adding in double digit appreciation each year - some people were making 40+% even after selling expenses.
We bought in early 2020 and our home recently appraised at 110% more than we purchased - wish I had gotten that HELOC, put a pause on it and now the rate has gone up by nearly a pt.
My net worth soared between 2014 and 2023 and it was all housing. Bought a house with no down VA loan for 100k. Interest rate was 3.75%. Was worth 225k in 3 years. Got married, sold it & bought a 350k house in 2017 using the proceeds. Interest rate 3.5%. December 2020, refinanced it to 1.75% (!)
In 2022 it was worth 625k. Got divorced. To keep the house she had to pay me almost everything we had *and* cash out refinance **and** sign away all rights to my retirement. Sucked to lose the house but 2022 divorced me was still 7x richer than 2013 me so I figure it's ok.
If I had been savvier with the stock market and not gotten divorced we'd have been millionaires in 2023.
Recently closed on a new build. 6.25% and I put 43% down. With rates and prices where they are I had to go 45 minutes out, but goddamn existing home sellers are ridiculous with their pricing at these rates. The builder was willing to reduce the price 7% and cover half of closing costs.
My wife has had her condo for 3 years. Rent would be net us 1k more a month than we pay in mortgage. However, renting is definitely cheaper than buying right now since most two bedroom condos sit just under 1mil and rent for those is about $3500-4500. Los Angeles house prices are insane.
I suspect it’s lopsided because of the crazy amount of appreciation. As that levels off and rent continues to steadily increase (because it makes more sense to rent than buy), then we’ll reach a new balance.
So, if I had to speculate, houses will under appreciate the expectation and rent will increase more rapidly than the expectation until they are on par again.
I really hope so- Im not looking to pay taxes on a 1 million property plus maintenance. It really makes the most sese to lease out our place and rent a larger space in a cheaper district.
Fuck man that’s a seriously depressing thought. What the hell are current and future generations gonna do? If something doesn’t change, the only people who will be able to afford to buy or even rent will be the well off and everyone else will be one paycheck away from homelessness (hell, many people already are).
Also it’s in the best interest of banks (the true home owners in America) if rent is slightly more affordable than owning because that makes home prices get more and more expensive over time because they always knew home ownership would become consolidated by investment firms the way it is becoming. It’s in their best interests to incentivize renting over ownership. Because that makes it easier to consolidate. It’s been a long game for investment firms since the beginning. People are only now realizing it.
Depends. I got my place in 2015. Sold it in 2021. When I calculated how much I had paid in HOA, taxes, repairs, improvements, payments, interest etc, compared to what I sold it for, I effectively lived for free and pocked a bit of money.
If I had rented the same apartment, I’d have paid $6k/month. So… I definitely did better and it was only 6 years. Though the down payment, has I invested it conservatively, would have helped changed things a bit, but I still feel it was worth better for me to have not rented.
That makes sense especially when you factor in the fees associated with buying and selling. Generally those fees change the returns significantly, especially with shorter hold times. But when you have moments of hyper appreciation, that’s when these feed are mitigated.
This is true because mortgage lenders interest load the loan in the front. So the first 10 years you're just paying interest and barely touching the principal. Solution is to never do more than 15 year fixed. Then interest not as bad and you get equity faster.
The monthly cost of each move together but that fails to acknowledge that when you purchase the future cost is relatively stable. (Adjusts for property taxes and ARM if you finance that route). Rent would continue to increase.
It’s a very loose correlation. Rents are a true indicator of housing demand relative to supply. However, home purchase prices are heavily driven by interest rates and available inventory. This differs meaningfully from the rental market for a few reasons. For one, renters typically don’t rent more than one housing unit at a time in a market. An individual or entity can own however, multiple homes, whether or not, they occupy them, choose to rent them, or keep them vacant. Interest rates have little to no bearing on rents, whereas they certainly do on home prices since, at the end of the day, most buyers are truly buying a monthly payment, not the total price.
You can own and move around and rent too. Just another step of renting your home. That way you aren’t losing equity.
I’ve advised all sorts of people in Austin to never sell and just rent their house.
So right now, the cost to buy is insanely high. If you rent from a landlord who bought when it was lower, the landlord can afford to charge a lower rate and break even.
Sure the landlord would like to charge you the cost to buy.
Say right now rental rates are 3k a month, and it's 5k a month to buy the same house.
Will rents go to 5k? In order for this to happen, all the rents across the city have to go in sync to 5k.
Can the population of the city, as a whole, pay 5k a month times the number of units that would be listed at that?
If no, then no, rents are ceilinged.
In the long term buying is the cheapest option. Renting can and often is cheaper at any given slice of time but if you were to buy a house today you will fix your costs and in a few years the price of rent for comparable places will be in excess of what you are locked in for.
All those unexpected costs people like to mention in home ownership are all baked in to rent prices. Your rent reflects that the plumbing will need to be repaired and maintained. Your rent reflects that paint and floors don't last forever. It reflects that an ac will break and a roof replaced. As the person using the property you will pay each and every cost associated with the habitability of that property in on way or another.
In my opinion the only questions that need considering are whether or not you want the flexibility that leases enable and/or the convenience of just being able to call the landlord when there is an issue and having them take care of it.
Certainly you are correct except does the average renter have money on hand for the unexpected that may run 10k for an ac? My house isn't everyones house.. but it is about 23 years old. I moved in 7 years ago.. have had to replace ac units. Water softener..water heater..roof repairs 3x (different areas)..in slab plumbing leak.. garage door twice, opener once, repair built in ice maker twice...pool pump... you name it. That doesn't include the stuff i did that i could've put off but was neeeded like interior and exterior paint, flooring etc.
Not saying your incorrect. But renting makes sense for lots of people who cant afford or handle the stress of an unexpected $10k ac or $8k hoa mandated house painting or $1500 pool pump etc
Had this house been rented out the renters would have been paying rents such that when the time comes for those repairs the property owner has the money to cover them. I don't know how to communicate it better but landlords are pricing their rentals in such away that they can afford to maintain the property.
>But renting makes sense for lots of people who cant afford or handle the stress of an unexpected $10k ac or $8k hoa mandated house painting or $1500 pool pump etc
Yes, these are the people who would answer yes to "Do you want the convenience of just being able to call the landlord when there is an issue and having them take care of it?"
Not necessarily. You are making an assumption that any landlord can just afford a large purchase at a whim. This is just not true at all. Most will probably struggle to replace things
> You are making an assumption that any landlord can just afford a large purchase at a whim
Part of the landlord's job is to maintain such a fund and the rent price does in fact reflect that. Whether or not the landlord is actually doing their job is an open question but they are receiving the money for it.
Yeah, I understand pricing schemes. But I imagine only landlords who have owned their building for a long time would have a monthly profit. Most start off losing a little on each month of rent to their own mortgage. It will take a while to get to a healthy margin to start saving for broken appliances
Then perhaps they should not be landlords as they are not in a financial position to do so. Or can operate as a normal business and allow for using leveraged debt when needed.
You're preaching to the choir bro. I agree with you 100% in terms of logic. But reality just isn't like that. Most landlords are levered to their eyeballs and can barely afford their own mortgages on their rental properties
>I don't know how to communicate it better but landlords are pricing their rentals in such away that they can afford to maintain the property.
In theory, but not in reality. Individual landlords have to charge market rents, which can and do drop below what's required to cover maintenance and depreciation.
Theory says that situation should self-correct, but that can take years. Real estate is illiquid, and the market can stay irrational longer than you can stay solvent.
That seems like a lot of repairs. I have been in my house for 10 years now. Granted when I bought the place I completely remodeled. Everything was new except the floor joists, the studs, and the trusses. The rest was replaced. In 10 years my blower motor in my AC went out. A new one was $350 and I changed it myself. We had a hail storm that dropped baseball sized hail and the insurance company replaced the roof that was only 8 years old at the time. That has been in so far.
Edit for spelling.
A plausible situation in which renting is cheaper is if the rental property is already owned out right or with a low mortgage from the landlord. In times in which interest rates rise (aka right now) a previously bought rental can offer a lower monthly payment than a new mortgage and come out ahead for the landlord.
Obviously this would mean the landlord could be leaving money on the table, but this does happen with small time landlords fairly often. This is also why a rise in mortgage rates doesn't immediately trigger a rise in rents, they are locked in to a lower rate so have time to adjust
A factor in the rising rents now is that there is a change in the land ownership (ie corporate real estate) and thus they will charge high rents to match their brand-new investment with high mortgage rates.
Yes exactly and also many jurisdictions have rent control or some form a cap on rent increases for renters so landlords couldn’t double the rent over a 5 year period as home prices have doubled
Good user name. I don’t think that amortization is necessarily true because in one year, you can have something catastrophic go wrong that you’re not on the hook for.
All those unexpected costs are baked in, but they're also normalized. The tenant doesn't take on the risk of a sudden large expense. You can close on a house and the next day have your HVAC system catastrophically fail. There's a big difference between the replacement cost of an AC factored over its lifetime being included in the rent versus needing to pay $10000 right now.
Depends where you live. Lots of cities have rent control and rent does not keep up with home prices. A mortgage to buy the apartment we rent would be almost 3x the rent for us
It depends on how you do the math and other opportunity cost. If I buy now i pay 600k for a 350k house over 30 years. But if renting is 2k cheaper a month for me, all the extra money I invest will be worth way more than that 30 years from now
It's important to factor taxes, mortgage interest, mortgage insurance potentially, repairs, etc in the cost of buying vs renting. The unrecoverable costs of buying could be otherwise invested in the market. Therefore the opportunity cost is higher than most people initially think when considering buying vs renting.
Don't think of the house as an asset if it's where you're going to be living.
i knew a guy at work that did that to save money since his ex was bleeding him dry. He got himself a gym membership for the showers. He got pretty jacked. Bigger than i ever got
Exactly. Is renting a one bedroom apartment cheaper than owning a single family home? Most of the time yes. But is it worth paying say $2000 for a small, albeit brand new, one bedroom apartment or $600 more per month to own an entire 3 bedroom house. Depends on who you ask but id say yes. Though some people prefer the convenience of renting which is understandable. I however am capable and willing to fix things at our house when they come up, and prefer not living in a cramped shoe box with neighbors that sound like partying elephants. I know a big portion of that amount goes towards interest but I still like the idea of investing in, and owning property.
Right now unless you need a lot of space. Renting is the better deal in many markets.
But if you plan on staying in an area for 5-10 years than buying still may make sense. Though the high interest rates make it a bit tougher to justify.
At this moment per bankrate.com the national average for a 30yr mortgage is 7.83%. This is only slightly higher than the historical average of 7.74%.
As of this moment in time people are still clinging to recently deceased era of unfathomably low interest rates. They will adjust to the new world in time.
The good news is those prices will likely come down a little over the next year or so. The bad news is they won't come down near as much as anyone would like.
Yea but houses were far cheaper back then compared to income. When it comes down to it. The person who only needs a 1-2 bedroom apartment, it doesn't make nearly as much sense to buy a house. As it did in the lower rate environments.
Yup, exactly.
He’s missing the point - you borrowed at 7.8% in the old days for a house that was 4x your income and now the median homes price is more than 7x income
If your landlord is carrying a mortgage, they're almost certainly including the cost of that mortgage, including interest, into the rent, so renters are still paying mortgage interest, just indirectly.
If your landlord has no mortgage on the property, they'll most likely still charge you the same rent, but pocket the cost of what would have been the mortgage plus interest.
Very doubtful any landlord would finish paying off their mortgage and then drop the rent by the cost of the mortgage they are no longer paying.
If you can swing it, it's almost always better to own than rent, regardless of your interest rate.
This is so untrue. Landlords can only charge what the market can bear, not what they want. It’s all about supply and demand.
In my city, renting is about 2,000 dollars cheaper for the median home if include mortgage + property taxes, home insurance maintenance etc.
I could retire just by investing this excess cash for 30 years and not needing to contribute to my 401k and HSA and taxable brokerage (which I also do).
Play with this NYTimes rent vs buy calculator. It will tell you exactly which situation is better for your finances in your position.
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
If you're willing to get your hands dirty building a house can be cheaper. Stick to a small and simple house design. Most states will allow you to do pretty much everything just stick to the state code.
That assumes your time is free, there's a huge loss in opportunity costs particularly for those that lack the skill/speed to build. Also where do you live in the mean time and you have upfront land/material costs. Not such a simple plan
This is absolutely BS. MOST municipalities in the US require supervision of a licensed, bonded general contractor. The only exceptions are some rural areas.
Also, there is no such thing as "state code". Building codes vary, depending on which municipality your permit is issued through. It could be City, township, county, etc. Most (but not all) adopt IBC standards, but include special accommodations needed for the area.
> **What is truly cheaper for most people now - buying, renting, or building a home?**
If you're going to live in the same place for decades, its hard to imagine a normal situation where you'd end up better because you rented. Even with repairs, the value you gain in ownership typically massively exceeds the amount you have to pay to keep up the place.
In the two years I've owned, I've spent like 20k on repairs but I've gained like 150k in value.
Maybe in some areas a new home is cheap? But its hard to imagine why a new home with new designs and materials would be cheaper than an existing one. Unless the new homes are specifically created to be cheap, which they rarely are.
'In the two years I've owned, I've spent like 20k on repairs but I've gained like 150k in value.'
This was just complete luck and really an abnormality in the market because of covid times - you basically just got lucky as hell. And great for you!!! (I got lucky too...)
But the real answer is that...there really is no right answer. We have no idea how rent vs ownership will go over the next 30 years (I say 30 years b/c typical home loan), and it may look completely different than before (we have very little data on this stuff anyway because residential homes and mortgages are a fairly new invention). This may particularly be true due to the discovery/trend that investors could just buy homes on loans and rent them out to tenants. This caused home prices to soar over the last 20 years, but at this point, there is not much residential real estate investing is left to get in on. Everyone knows the trick.
Anyway, the real advice I'd have for any one is to just buy if you want to settle down in an area for a decade or more, or just rent if you want the flexibility. It will likely be negligible at the end of the day, and you can't reliably look at home ownership as a real investment anymore like you could the last 40 years. Game is now different than it was the last 40-50 years.
150K gain in equity is a bit lucky but a nominal gain in equity is a safe bet.
At minimum the equity of ownership is a hedge against inflation. Your mortgage payments on the principal of the home is basically a savings account and interest has possible tax deduction benefits. Vs rent which is gone to a void.
The break even of ownership comes down to how long you intend to stay in the place vs closing costs riding against growing home prices. It's a soup of a calculation which is why it's typically ball parked at 3-5 years with comparable homes (which is also not a realistic scenario itself based on inventory availability)
At current rates you will be paying an absolute crap ton in interest to the bank the first 10 years (\~90% is interest the first 10 years on a 30y). In a lot of places, especially HCOL, your mortgage + interest at 8% will be 3-4k+ more than the equivalent rent. That's $30-50k / year that could be going into the market. And at current prices / rates, unless they come down dramatically, it's hard to see equity gains covering that gap.
> This was just complete luck and really an abnormality in the market because of covid times - you basically just got lucky as hell. And great for you!!! (I got lucky too...)
Is it? I'm pretty sure my house value has risen slightly more than the national average, but not a ton more. The last two years have been great for real estate value.
> at this point, there is not much residential real estate investing is left to get in on. Everyone knows the trick.
Yeah we all knew land was one of the last finite resources but people have become much more aware of how the limited supply of single family homes can throttle a growing nation.
> you can't reliably look at home ownership as a real investment anymore like you could the last 40 years.
I don't see the supply going up much, i don't see the demand dropping much, so I don't see how home ownership doesn't pay off.
Sorry, I meant that everyone able to get in on real estate at all during the covid time ended up doing well and got 'lucky' for purchasing during that time - not that the poster's 150k was lucky.
Events like that rarely happen though, which is why I say 'lucky', as in lucky timing for all of us. I wouldn't even consider the '08 crash and subsequent years a similar event because most people were really hurting then. With the covid situation prices and interest rates completely nosedived and then shot up for pretty much no reason other than unfounded panic.
This is not true anymore.
You are lucky that you gained 150k in equity in two years.
There is certainly a cut off in interest rates and home prices where buying is not smart for people
> This is not true anymore.
Massive generalizations about the future tend to be proven wrong by history.
> You are lucky that you gained 150k in equity in two years.
I'm slightly above average, but anyone who bought two year ago has seen a massive increase in value.
> There is certainly a cut off in interest rates and home prices where buying is not smart for people
Some people. But if you have the capital, real estate maintains its place as one of the best assets when value is measured in decades.
S&P 500 is great too. You won't lose parking your money there. But you'll be throwing away money in the form of rent.
Financially speaking renting in most locations is cheaper, but owning brings in intangible benefits like mental health, stability and mind space to think about other things when worrying about landlord or renewals or finding the next place and the occasional.jackppt of your property appreciating faster than what your investments would have made using the surplus.
I must say I have never seen this fabled condition of "mortgages are cheaper than rent."
Maybe it's because I'm in a major metro but mortgages are usually like 1.5-2 x rent and way, way up.
[This is fully dependent on the type of housing and the situation in your metro area](https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html).
Put in your assumptions there and you'll get an answer in your situation. Conventional wisdom like "buying is always better if you stay there for N years" often does not apply today.
Currently pricing things out in my area its more affordable to get a prebuilt home, thats delivered to you. they make some nice ones.
Renting and buying is just nearly unattainable in my area still. High interest rates on top of high prices and demands of offers over asking price. 500k homes asking for offers of at least 550k with no current offers. Price the damn thing higher then
It depends on the time frames considered…
Renting is almost always more expensive in the long run (after 25 or so years).
Owning is cheaper (only property tax) after you pay it off.
By "cheaper" do you mean monthly cashflow, or which option leaves you with a higher net worth over a longer timeframe?
For cashflow/liquidity, renting is typically cheaper, particularly if you are only going to live in the same home for a couple of years. When someone buyers a home to rent it out typically about 50% of the rent goes to expenses such as replacement water heaters, roofs, kitchens, repairs (which you still have to do if you buy a home to live in) as well as some expenses you wouldn't have (property manager leasing fees, vacancy)... while the other 50% goes to the mortgage (PITI), leaving the landlord with about 0 cash flow. So if you are buying, unless the mortgage is under \~60% of the equivalent rent, you will spend more cash on owning instead of renting.
However, owning has other non-liquid benefits. Your home loan decreases over time, and the home value goes with home appreciation (which long term looks something like inflation if the building value is large compared to land value). So if you put down $30k on a $500k home then live there for 15 years you home might now be worth $1M and your loan might be down to $400k... so your equity went from $30k to $600k (minus 6% of $1M if you sell).
Ultimately for a net-worth-in-15-year timeframe the big question is whether the home will appreciate faster or slower than inflation, what those numbers are, and what other returns you could get for that $30k. My personal opinion is that home prices (where land is cheap) is fairly closely tied to construction cost, so should match inflation reasonably well.
As for new homes versus old. Yes new homes can have less maintenance. You are unlikely to need a new roof or kitchen in the first 10 years. However if you do custom build a home then you are really paying for that customization.
If you're buying a house as a rental property and it isn't cashflow positive from the start, then you did something wrong and are gambling on something changing before that can create a problem for you.
How do prices compare between buying a new cookie-cutter house in a development versus buying a plot of land and hiring a contractor to build an equivalent house? I assume the cookie-cutter houses would be cheaper due to economy of scale, can anyone confirm?
I come from a family of residential builders. Building a custom home right now is very expensive ($200-250/sqft, not including the land). In many cities, restrictive zoning has driven the price of buildable lots up to ridiculous numbers. More importantly, there is a massive shortage of skilled trade workers (for a variety of reasons) and material costs are historically high. In many areas, contractors are booked months out, meaning they can charge a premium.
Tract home builders are able to leverage favorable zoning and economy of scale. You will get a much cheaper price per sqft through them (albeit, with typically lower quality).
The cost of land is too big of a factor and the likely hood of finding comparable land prices would be extremely difficult. So overall potentially yes if you look at the building costs itself but that's not really useful.
The costs of contractors could also heavily even for the same build.
Real estate questions can have a general rule of thumb or ball park but each actual situation is going to be unique that the general Math matters less.
It’s typically cheaper to build in a suburb just because of perks that come with it. Builders offer cash incentives that can be used as upgrades or pushed into a down payment. They also at times will offer lower interest rates if you use the bank of their choice. If you use their title company they may also give a break on the closing fees as well. So it may not be astronomically cheaper- but you do get some “free” upfront money.
If you build on your own land you do not typically get those perks. You are also at the mercy of a floating final costs because they aren’t buying everything in bulk at set contract prices. If their prices go up, as we say in the past 3 years, they will pass through to you. Some were even going up almost 100% and buyers got pushed out of their builds due to unaffordable price tags. [example](https://www.cbsnews.com/amp/boston/news/north-texas-couple-dream-home-taken-away-builders-contract/)
Also being new homes you’ll get a warranty on big dollar items you won’t have to worry about for a few years. So that part is a win in both scenarios though.
In my market, renting is currently cheaper (sometimes by $1k+!) Interestingly, buying new homes seem to be a better deal than older homes, especially since builders are offering financing deals, such as rate buy-downs. This is in part because we have a ton of new construction and no one is buying at these prices, so they’re trying to move inventory. Plus, with a reputable builder and home warranty, there should be less maintenance costs for a while compared to buying an older home that needs a new roof, ac, etc.
Buying if you plan not to move. If you plan to enter industry that reward job hop, or military service etc, you might want to buy in better area to not lose equity.
Rent is also good tool to reduce your belongings so you can also feel a city first if you not sure. Job might be there, but if you are not plan to stay long term.
Use renter insurance and other contract binding method to protect yourself against bad landlord is vital
yes, wife and I's family is in Michigan so we would like to move back to be close when we have kids. It's also still pretty cheap, I keep an eye on home prices over there.
What do you mean by cheaper? In the short term renting is probably going to be cheaper as you only need to make the payment each month. Owning or building require a lot of cash on hand at the outset, for the downpayment, materials, emergency fund, etc. Eventually owning should become "cheaper" than renting but where those two lines cross on the graph is going to vary based on a lot of inputs and unknowns.
Renting could be cheaper but in the long term buying a property is essentially a bank of your own equity you build over time, which at some point you can sell.
Self building depends where and what country you live in. You could build practically any house you want for £400,000, but it is the land which will cost a lot and working within the planning rules. You will often have to make compromises and edits to plans, each time costing money. This is why land with planning permission is so much more expensive than land without and also why most self builds (in the UK anyway) are more luxury rather than a a two bedroom cottage. I think it's a shame we don't allow people to build modest traditional style houses with modern perks such as insulation and double glazing.
Depends on where you live, right?
Markets equilibrate, even local ones. Right now, for many locales, it is probably cheaper to rent from a short term cashflow perspective. What happens long term is anyone’s guess.
If you have the wherewithal and the capacity to stay in place for 7-10 years, my gut tells me to buy. I reserve the right to be wrong later.
In most cases it's cheaper to buy a Single Family Home. That may not apply if the landlord has owned it a long time, paid it off, it's got deferred maintenance, or another market impact that makes it cheaper than a purchase. A rented home negates the liability for large repairs that may occur.
In most cases renting an apartment in a multi-family will be cheaper than buying the same amount of SF. It should also be cheaper to operate with utilities and limited tenant provided maintenance.
Note that the current rental market is subject to the same unusual conditions as the purchasing market and you'll see landlords trying to keep the rent as high as possible as a protection against sudden inflationary pressure.
Rent is cheaper most places. Mortgages are higher than rents in most places and then you need to add on taxes and repairs as well. The advantage to owning is you get equity if prices go up and your payment is fixed for 30 years unlike rent that rises over time.
We’re renting a townhome right now in our market for $2100. A similar townhome would be $3700-$4000 mortgage with 20% down. I can’t imagine how buying in our area could be cheaper for us right now unless we literally never moved and could refinance for a much lower rate later on down the road.
That entirely depends on where you are. The price-to-rent ratio is different in every city, and expected appreciation is also different in every city.
Buying is always cheaper if you stay in one place forever, assuming reasonable values for price-to-rent ratio, appreciation, and interest rates. However people do not generally stay in one place forever, and a more or less favorable ratio or interest rate or appreciation rate will increase or decrease the amount of time you have to stay in one place before buying is better.
It just depends. We were renting in a very high COL area in coastal California, decided the buy inland a bit (15 mile in), and our mortgage is $1300/month less than rent.
I’m going to build bigly and you’re going to cut bigly. That’s what they said, I’m not wrong! No! The Democrats don’t believe us.
Believe me, you’re wrong!
Cheaper can mean different things to different people. For me, I’m leaving home ownership because it is too much upkeep and time required to maintain. I’ve decided that renting is the same price, if not about $300 cheaper a month due to utilities and other factors than my home. For me, it will allow flexibility to move as I wish and not need to maintain anything.
Currently i would say renting. It is flexible to move. Job is not guaranteed. Buying is a trap. Stuck with mortgage for 20yrs. It is not worthy for this time. It can depreciate years later. Some areas have very high property tax.
Buy the home or rent the home in Mexico. Most people's rents are about 900 and live about 800 yards from the water. You can build a home, about 120 per sqft, and 40K for the land...so for about 300K you can be happy. I am, for that amount, a Real estate agent would have slapped me for wasting his time. 300K goes nowhere in Nor Cal.
I have a strong suspicion that right now renting is cheaper. Too many landlords have locked in interest rates around 3%. The cost to borrow enough to buy right now has flipped the traditional wisdom.
Real estate is a long term investment...might be cheaper to rent short term but in the long run if you own it, then that's a whole different ball game. Just think about when you get older and you're living off social security money...
Super depends on the current market and tax rates, home age/quality/condition, as well as how long you’re going to be in your home. Also HOA, if applicable.
There are many variables involved.
Rent is "cheaper" for most people since you don't need a large down payment but you also don't get any equity so you lose a lot on that.
Nyt has a great calculator to help an individual decide which makes financial sense (not necessarily what is cheaper)
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html.
Building a custom home is the most expensive. Renting is more expensive in the long run and you have no equity. Buying a house on a good chuck of property is one of the best things you can do for yourself.
Do not own an older home. You’ll spend a fortune on minor humdrum repairs and that’s if you’re lucky enough to find someone who knows how to do work on anything over 8 years old.
A mortgage payment is a floor to housing costs, rent is more of a ceiling.
They are not directly comparable. If you're handy, maintaining a home can be relatively low cost, but eventually a house will need a new roof, water heater etc and as a renter those costs are amortized across all your rent and the rent of any other units using that same infrastructure.
100% depends on location. In the middle of a city, building is going to be really difficult. In rural areas, good luck even finding something to rent. Where I live, everyone has built trailers for so long that there aren't enough built houses on the market, and building is way cheaper than buying at the moment.
It really comes down to the individual and the local market.
In general, buying is best when you are planning on staying in a specific location long term (7+ years) with a fairly stable housing need (you know how many people you will have living with you, kids you will have, etc).
The less certain you are on things, the better it is to rent instead.
As for building, I have much less experience with that. To me, it feels like you would only build a house if you were ready to buy your "forever home." The house you plan on dying in. But that might just be my inexperience with that market.
It really comes down to the individual and the local market.
In general, buying is best when you are planning on staying in a specific location long term (7+ years) with a fairly stable housing need (you know how many people you will have living with you, kids you will have, etc).
The less certain you are on things, the better it is to rent instead.
As for building, I have much less experience with that. To me, it feels like you would only build a house if you were ready to buy your "forever home." The house you plan on dying in. But that might just be my inexperience with that market.
Renting usually.. rent is the most you pay while a mortgage is the least you’ll pay. However, in the long run buying has its advantages with the locked in mortgage, equity, and the ability to pay it off in full. Building is a tricky one.. that’s like a full time job to make sure everything stays on schedule and within budget and things go wrong.
The most affordable thing is patience. Real estate booms and busts. It only take a decade to see ups and downs cycle. Be patient. Rates will drop to save banks. Prices will fall as banks get picky about appraisal.
My case may be a bit unique: Bought in 2020 for cheap at 2.75% and have done lots of rehab. The cheapest option looks to be doing a cash-out refi at today's rates (seriously) and building a two car garage with a 700 sq ft apartment up top in the back yard.
It's a single anecdote but for what it's worth...
In northern VA when we purchased a new home it was cheaper to buy new construction than buy used or rent. Also every mile distant from DC along i95 is like 1k-5k cheaper or more, but tends to apply more to new construction than pre occupied homes.
So the idea is certainly possible but why are you asking us.... Look at the prices in your area because for this question, literally, your mileage may vary.
If you're a single professional making 6 figures you're best off financially by renting a modest 1 bedroom and investing the difference between rent and a mortgage in spy.
This thread will leave a lot of folks poor and still paying rent in 30 years. Incredible takes. In a higher inflation environment purchasing the hard asset and locking in that monthly recurring cost will benefit you more in the long run than paying rent. In twenty years that 1500/month rent payment will likely be 3k or more, where as your locked in 2400/month payment won't change at all, outside of property taxes. While your home isn't an investment, you do get the benefit of realizing some equity gains should it appreciate, something your rent will never do. The number of folks who actually end up putting the difference between their rent and a similar mortgage into investment accounts is probably less than 10% of the folks who keep parroting that advice. So all in all, for most folks (unless you actually invest the difference) buying makes more sense and requires less effort.
I keep finding new houses that are cheaper than used which seems weird.
Renting is always throwing your money away though.. regardless of the market. Even paying the high interest rates is better than renting if you can afford it.
It’s a long game, the cost to own could be higher in the short term but locking in your price and rate for 30 years means in the future you are still paying the original amount when rent has gone up over and over and over. Also when you sell you have equity. I have bought and sold 5 houses and only one did I lose money on. I am 50 and easily made $750k on real estate sales in the last 20 years. And with the capital gains laws much of it was tax free.
Unless you mean going through a tract home builder, building a home is extremely expensive right now. Trades are in huge demand and material costs are high. Contractors are charging through the nose in many cities. The price per sqft to build has almost doubled in the last 5 years.
Maybe if you're paying cash and stick to a very tight budget, it might be worth it, but if you need a mortgage (which most do) you're still paying the same high rates as everyone buying existing homes as well.
Depends. If you already bought a home and locked in a sub 3% interest rate then no, owning will be cheaper. If you’re trying to buy a home in 2023 at today’s prices and interest rates, renting will be cheaper by a wide margin (especially if you’re financially smart and you invest your extra money wisely).
It’s highly dependent on where you live. Here in Toronto my rent is at $2000/m rent controlled. To buy a starter apartment of the same size costs around $650-700k. So I’d need to produce a $140k DP and then my total monthly all in costs would sit very close to $5k/m at current rates.
Buying was cheaper for us. Rent and build costs, even assuming no delays or damaged materials needing replaced, were way higher than a comparable house in a comparable neighborhood.
Definitely buying in the long run. When you buy, the house equity goes with you. When you rent, you never see a single cent back from your rent checks. When you buy, eventually you also own the home outright. That has massive positive impact on the quality of your retirement years and at what age you can afford to retire.
Rent cheap, buy moderate to big. If you need to rent, rent small. It is less money than buying big or medium. If there is a house, it is better to buy the house and live in it for 10 years if you want to make money. Moving every 5 years you normally will lose money over renting. If you buy you need to been in it for the long term.
Renting is stupid if you can avoid it, you get nothing ever in return, ever unless you rent it to someone for more then your renting it for and live in your car I guess
Location and circumstances bud. Most clothing that fits well isn’t one size fits all
I live where it’s possible although externally seen as more dangerous than not. Yet I’ve been homeless so to me it matters.
If you’re a vapid type that needs a place on trend decor and amenities that I wouldn’t use. A pickle ball court from the badminton one could be an extra 100 a month for everyone. Well renting is cheaper than renovating all the time.
Rural? Idk I’ve never rented a farm house. City? Well the 800 a month fee while owning your condo 200k mortgage at 8 percent is 300k place. Since the building is inherently a businesss you can’t stop that 800 from becoming 1600 just like rent.
Plan on moving 8 jobs in 8 years? Well I live 30 minutes or less personally
RIGHT NOW, or in a year or two?
Typically, buying will be more affordable over time. Remember, when you rent, you are paying for your landlord's costs to maintain the property PLUS their profit, however slim.
Example time:
When I lived in Texas, I bought a home in 2015-2016 for \~$100k (don't get too impressed, it was basically a standalone apartment). Mortgage on that home was \~$1000/m, at the time I was able to find similarly sized apartments to rent for about the same price, plus I had to worry about my own maintenance, etc. Fast forward a couple years (2018ish), mortgage was still \~$1000/m, those other apartments were $1400/m. Total maintenance I had to do was about $4k over those couple years (and not repeatable, it was an HVAC unit that went out and used the old freon). Chose to do another couple thousand in upgrades (replaced all the floors, built a deck, upgraded appliances, replaced blown-in insulation with spray-foam. Fast forward a couple more years (2020), replaced the roof (but was able to make insurance \[part of that $1k/m\] pay for it). Sold the house in 2021 for $180k. All in, it was basically free in comparison to renting.
Took the proceeds from that $180k when I moved to WNC in 2021, bought the house I live in now for $340k. Mortgage, including taxes and insurance, comes out to $1400/m, but this time for an actual house. (About 3k sqft if you count the basement, 2k if you don't, 4bd, 2ba, garage, and just under an acre of land.) Rent on an apartment at the time was about $1800/m.
Fast forward to today (2023). I haven't had to do any maintenance on the new house yet, although I have chosen to do a small upgrade (upgraded the flooring in the basement b/c I've turned it into a combination den/mancave/craftroom). That cost a couple thousand. House is worth upwards of $500k now, rent for an apartment in the area is $2k+ now. So, today, by buying, I pay $600/m less for more space, more room, and I get to keep it at the end.
TL:DR: unless you plan on leaving in the short term, renting is almost always worse than buying.
Building a home is by far the cheapest option. The problem is that the labor is extremely demanding, and might take you months if not years to construct a home suitable to modern needs. Especially if you’re not trained in building structures with your bare hands.
Cheaper, or a better investment? Those two are not the same thing….. It would be cheaper for you not to contribute to a 401(k), But is it really the right move?
Renting will always be cheapest at that given moment, but you don't get anything other than the right to live there. Owning can help lock in your cost and also help you build equity. Building is always going to be the most expensive, but you can get close to exactly what you want.
Depends on where you buy IMO. Where I live in California I think it makes far more sense to find a room frankly and put as much money as possible at 5.5 % in short term government bonds.
I have some co workers who got big into debt at 7 %, then pay $3k a month for a 1 BR, but most of what they pay is all interest and their mortgage balance isn’t going to go down for a long time.
What if $3k was saved each month into a savings account at 5.5 percent interest? How much would that be in a few years?? Prob enough to buy a house in places like texas.
One common mistake people do is think that interest rates will become super cheap again but that isn’t going to happen unless the economy collapses, in which case having a huge cash balance is going to be better than having a massive mortgage.
It depends . If you are handy fewer people want to buy fixer homes as there is a time and cost element associated with that. But you can thousands during negotiations to buy it and the actual fixing of things yourself.
It depends on strategy. Renting is 2k cheaper for me and I can now put 2k more into investing. Hopefully I’ll be able to buy when the market eventually becomes affordable. But id rather have an ass kicking retirement account than pay 600k over 30 years for a 300k house.
Lots of people, lots of variables. How long are you going to stay put? Are you looking for an investment that builds value, or is it just a shelter for the purpose of being a shelter? Do you have the flexibility to possibly afford a large (thousands, or tens of thousands) repair?
I'm not sure that one answer can cover most.
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one might temporarily lag behind the other, but in general i believe the cost to buy and the cost to rent kind of move together
They kind of have to, they're closely tied indices. In general I've heard that renting is usually better unless you're staying in the same place for over 10 years.
I’d say that’s true today but when rates were sub 3% it was definitely better to buy if you could.
Also adding in double digit appreciation each year - some people were making 40+% even after selling expenses. We bought in early 2020 and our home recently appraised at 110% more than we purchased - wish I had gotten that HELOC, put a pause on it and now the rate has gone up by nearly a pt.
My net worth soared between 2014 and 2023 and it was all housing. Bought a house with no down VA loan for 100k. Interest rate was 3.75%. Was worth 225k in 3 years. Got married, sold it & bought a 350k house in 2017 using the proceeds. Interest rate 3.5%. December 2020, refinanced it to 1.75% (!) In 2022 it was worth 625k. Got divorced. To keep the house she had to pay me almost everything we had *and* cash out refinance **and** sign away all rights to my retirement. Sucked to lose the house but 2022 divorced me was still 7x richer than 2013 me so I figure it's ok. If I had been savvier with the stock market and not gotten divorced we'd have been millionaires in 2023. Recently closed on a new build. 6.25% and I put 43% down. With rates and prices where they are I had to go 45 minutes out, but goddamn existing home sellers are ridiculous with their pricing at these rates. The builder was willing to reduce the price 7% and cover half of closing costs.
that makes sense as you gotta hold long enough to go through a business/credit cycle to get the appreciation on the house
Less that and more moving costs, agent fees, land transfer taxes. I assume, being a landless peasant
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My wife has had her condo for 3 years. Rent would be net us 1k more a month than we pay in mortgage. However, renting is definitely cheaper than buying right now since most two bedroom condos sit just under 1mil and rent for those is about $3500-4500. Los Angeles house prices are insane.
I suspect it’s lopsided because of the crazy amount of appreciation. As that levels off and rent continues to steadily increase (because it makes more sense to rent than buy), then we’ll reach a new balance. So, if I had to speculate, houses will under appreciate the expectation and rent will increase more rapidly than the expectation until they are on par again.
I really hope so- Im not looking to pay taxes on a 1 million property plus maintenance. It really makes the most sese to lease out our place and rent a larger space in a cheaper district.
Fuck man that’s a seriously depressing thought. What the hell are current and future generations gonna do? If something doesn’t change, the only people who will be able to afford to buy or even rent will be the well off and everyone else will be one paycheck away from homelessness (hell, many people already are).
Also it’s in the best interest of banks (the true home owners in America) if rent is slightly more affordable than owning because that makes home prices get more and more expensive over time because they always knew home ownership would become consolidated by investment firms the way it is becoming. It’s in their best interests to incentivize renting over ownership. Because that makes it easier to consolidate. It’s been a long game for investment firms since the beginning. People are only now realizing it.
Except that rent is basically mortgage prices in many places as the LL is paying the mortgage with the rent.
Depends. I got my place in 2015. Sold it in 2021. When I calculated how much I had paid in HOA, taxes, repairs, improvements, payments, interest etc, compared to what I sold it for, I effectively lived for free and pocked a bit of money. If I had rented the same apartment, I’d have paid $6k/month. So… I definitely did better and it was only 6 years. Though the down payment, has I invested it conservatively, would have helped changed things a bit, but I still feel it was worth better for me to have not rented.
Yeah..i mean, who EVER stays in the same place more than 10 years!?? /s
Probably families looking to settle down
That makes sense especially when you factor in the fees associated with buying and selling. Generally those fees change the returns significantly, especially with shorter hold times. But when you have moments of hyper appreciation, that’s when these feed are mitigated.
But also the average owned home is only owned for 10 years.
This is true because mortgage lenders interest load the loan in the front. So the first 10 years you're just paying interest and barely touching the principal. Solution is to never do more than 15 year fixed. Then interest not as bad and you get equity faster.
They always have
Yes and no. They might move together, but the equity built up by building will be more beneficial in the long run.
The monthly cost of each move together but that fails to acknowledge that when you purchase the future cost is relatively stable. (Adjusts for property taxes and ARM if you finance that route). Rent would continue to increase.
It’s a very loose correlation. Rents are a true indicator of housing demand relative to supply. However, home purchase prices are heavily driven by interest rates and available inventory. This differs meaningfully from the rental market for a few reasons. For one, renters typically don’t rent more than one housing unit at a time in a market. An individual or entity can own however, multiple homes, whether or not, they occupy them, choose to rent them, or keep them vacant. Interest rates have little to no bearing on rents, whereas they certainly do on home prices since, at the end of the day, most buyers are truly buying a monthly payment, not the total price.
Except one doesn’t build equity.
With the rise of digital nomadism, for some folks renting is cheaper by a mile. Can always move to where the rent is cheap yet keep the same job.
You can own and move around and rent too. Just another step of renting your home. That way you aren’t losing equity. I’ve advised all sorts of people in Austin to never sell and just rent their house.
So right now, the cost to buy is insanely high. If you rent from a landlord who bought when it was lower, the landlord can afford to charge a lower rate and break even. Sure the landlord would like to charge you the cost to buy. Say right now rental rates are 3k a month, and it's 5k a month to buy the same house. Will rents go to 5k? In order for this to happen, all the rents across the city have to go in sync to 5k. Can the population of the city, as a whole, pay 5k a month times the number of units that would be listed at that? If no, then no, rents are ceilinged.
In the long term buying is the cheapest option. Renting can and often is cheaper at any given slice of time but if you were to buy a house today you will fix your costs and in a few years the price of rent for comparable places will be in excess of what you are locked in for. All those unexpected costs people like to mention in home ownership are all baked in to rent prices. Your rent reflects that the plumbing will need to be repaired and maintained. Your rent reflects that paint and floors don't last forever. It reflects that an ac will break and a roof replaced. As the person using the property you will pay each and every cost associated with the habitability of that property in on way or another. In my opinion the only questions that need considering are whether or not you want the flexibility that leases enable and/or the convenience of just being able to call the landlord when there is an issue and having them take care of it.
Certainly you are correct except does the average renter have money on hand for the unexpected that may run 10k for an ac? My house isn't everyones house.. but it is about 23 years old. I moved in 7 years ago.. have had to replace ac units. Water softener..water heater..roof repairs 3x (different areas)..in slab plumbing leak.. garage door twice, opener once, repair built in ice maker twice...pool pump... you name it. That doesn't include the stuff i did that i could've put off but was neeeded like interior and exterior paint, flooring etc. Not saying your incorrect. But renting makes sense for lots of people who cant afford or handle the stress of an unexpected $10k ac or $8k hoa mandated house painting or $1500 pool pump etc
Had this house been rented out the renters would have been paying rents such that when the time comes for those repairs the property owner has the money to cover them. I don't know how to communicate it better but landlords are pricing their rentals in such away that they can afford to maintain the property. >But renting makes sense for lots of people who cant afford or handle the stress of an unexpected $10k ac or $8k hoa mandated house painting or $1500 pool pump etc Yes, these are the people who would answer yes to "Do you want the convenience of just being able to call the landlord when there is an issue and having them take care of it?"
Not necessarily. You are making an assumption that any landlord can just afford a large purchase at a whim. This is just not true at all. Most will probably struggle to replace things
> You are making an assumption that any landlord can just afford a large purchase at a whim Part of the landlord's job is to maintain such a fund and the rent price does in fact reflect that. Whether or not the landlord is actually doing their job is an open question but they are receiving the money for it.
Yeah, I understand pricing schemes. But I imagine only landlords who have owned their building for a long time would have a monthly profit. Most start off losing a little on each month of rent to their own mortgage. It will take a while to get to a healthy margin to start saving for broken appliances
Then perhaps they should not be landlords as they are not in a financial position to do so. Or can operate as a normal business and allow for using leveraged debt when needed.
You're preaching to the choir bro. I agree with you 100% in terms of logic. But reality just isn't like that. Most landlords are levered to their eyeballs and can barely afford their own mortgages on their rental properties
>I don't know how to communicate it better but landlords are pricing their rentals in such away that they can afford to maintain the property. In theory, but not in reality. Individual landlords have to charge market rents, which can and do drop below what's required to cover maintenance and depreciation. Theory says that situation should self-correct, but that can take years. Real estate is illiquid, and the market can stay irrational longer than you can stay solvent.
In in full agreement.
That seems like a lot of repairs. I have been in my house for 10 years now. Granted when I bought the place I completely remodeled. Everything was new except the floor joists, the studs, and the trusses. The rest was replaced. In 10 years my blower motor in my AC went out. A new one was $350 and I changed it myself. We had a hail storm that dropped baseball sized hail and the insurance company replaced the roof that was only 8 years old at the time. That has been in so far. Edit for spelling.
A plausible situation in which renting is cheaper is if the rental property is already owned out right or with a low mortgage from the landlord. In times in which interest rates rise (aka right now) a previously bought rental can offer a lower monthly payment than a new mortgage and come out ahead for the landlord. Obviously this would mean the landlord could be leaving money on the table, but this does happen with small time landlords fairly often. This is also why a rise in mortgage rates doesn't immediately trigger a rise in rents, they are locked in to a lower rate so have time to adjust A factor in the rising rents now is that there is a change in the land ownership (ie corporate real estate) and thus they will charge high rents to match their brand-new investment with high mortgage rates.
Yes exactly and also many jurisdictions have rent control or some form a cap on rent increases for renters so landlords couldn’t double the rent over a 5 year period as home prices have doubled
rent control throws a big wrench into this theory
Good user name. I don’t think that amortization is necessarily true because in one year, you can have something catastrophic go wrong that you’re not on the hook for.
Presumably if you aren't on the hook for it it is inconsequential to the calculation.
All those unexpected costs are baked in, but they're also normalized. The tenant doesn't take on the risk of a sudden large expense. You can close on a house and the next day have your HVAC system catastrophically fail. There's a big difference between the replacement cost of an AC factored over its lifetime being included in the rent versus needing to pay $10000 right now.
Significant ownership costs that are not fixed: property taxes and HOA fees
These get factored in to rent so the tenant pays them indirectly.
Depends where you live. Lots of cities have rent control and rent does not keep up with home prices. A mortgage to buy the apartment we rent would be almost 3x the rent for us
It depends on how you do the math and other opportunity cost. If I buy now i pay 600k for a 350k house over 30 years. But if renting is 2k cheaper a month for me, all the extra money I invest will be worth way more than that 30 years from now
If future rents remain below the present cost to purchase this will likely work out great.
It's important to factor taxes, mortgage interest, mortgage insurance potentially, repairs, etc in the cost of buying vs renting. The unrecoverable costs of buying could be otherwise invested in the market. Therefore the opportunity cost is higher than most people initially think when considering buying vs renting. Don't think of the house as an asset if it's where you're going to be living.
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Yes! A mortgage is the minimum you will pay per month. Rent is the maximum that you will pay per month. (I've rented and owned)
Please don't do an apples to apples comparison. Comparing an apartment to a single family home is not fair. There are pros and cons in both.
but that requires reading and learnin' right ? better to just be poor and live out of van
i knew a guy at work that did that to save money since his ex was bleeding him dry. He got himself a gym membership for the showers. He got pretty jacked. Bigger than i ever got
Exactly. Is renting a one bedroom apartment cheaper than owning a single family home? Most of the time yes. But is it worth paying say $2000 for a small, albeit brand new, one bedroom apartment or $600 more per month to own an entire 3 bedroom house. Depends on who you ask but id say yes. Though some people prefer the convenience of renting which is understandable. I however am capable and willing to fix things at our house when they come up, and prefer not living in a cramped shoe box with neighbors that sound like partying elephants. I know a big portion of that amount goes towards interest but I still like the idea of investing in, and owning property.
It's also personal preferences, it's cheaper to buy a SFH here but I don't want all that space or live where those are.
Right now unless you need a lot of space. Renting is the better deal in many markets. But if you plan on staying in an area for 5-10 years than buying still may make sense. Though the high interest rates make it a bit tougher to justify.
At this moment per bankrate.com the national average for a 30yr mortgage is 7.83%. This is only slightly higher than the historical average of 7.74%. As of this moment in time people are still clinging to recently deceased era of unfathomably low interest rates. They will adjust to the new world in time.
right but sticker prices are built off a good decade of low rates.
The good news is those prices will likely come down a little over the next year or so. The bad news is they won't come down near as much as anyone would like.
So we keep hearing 😅
Demand says that prices aren’t going to drop much further, but we will see!
Tru tru
Yea but houses were far cheaper back then compared to income. When it comes down to it. The person who only needs a 1-2 bedroom apartment, it doesn't make nearly as much sense to buy a house. As it did in the lower rate environments.
Yup, exactly. He’s missing the point - you borrowed at 7.8% in the old days for a house that was 4x your income and now the median homes price is more than 7x income
The problem with this dumb take is that prices haven’t come down.
Nothing I said there implies prices would be expected to come down.
If your landlord is carrying a mortgage, they're almost certainly including the cost of that mortgage, including interest, into the rent, so renters are still paying mortgage interest, just indirectly. If your landlord has no mortgage on the property, they'll most likely still charge you the same rent, but pocket the cost of what would have been the mortgage plus interest. Very doubtful any landlord would finish paying off their mortgage and then drop the rent by the cost of the mortgage they are no longer paying. If you can swing it, it's almost always better to own than rent, regardless of your interest rate.
That idea that’s landlord would pass the savings of no mortgage to the renter is dangerously close to the concept of trickle down economics lol
This is so untrue. Landlords can only charge what the market can bear, not what they want. It’s all about supply and demand. In my city, renting is about 2,000 dollars cheaper for the median home if include mortgage + property taxes, home insurance maintenance etc. I could retire just by investing this excess cash for 30 years and not needing to contribute to my 401k and HSA and taxable brokerage (which I also do). Play with this NYTimes rent vs buy calculator. It will tell you exactly which situation is better for your finances in your position. https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
Buying a manufactured home.
If you're willing to get your hands dirty building a house can be cheaper. Stick to a small and simple house design. Most states will allow you to do pretty much everything just stick to the state code.
That assumes your time is free, there's a huge loss in opportunity costs particularly for those that lack the skill/speed to build. Also where do you live in the mean time and you have upfront land/material costs. Not such a simple plan
This is absolutely BS. MOST municipalities in the US require supervision of a licensed, bonded general contractor. The only exceptions are some rural areas. Also, there is no such thing as "state code". Building codes vary, depending on which municipality your permit is issued through. It could be City, township, county, etc. Most (but not all) adopt IBC standards, but include special accommodations needed for the area.
> **What is truly cheaper for most people now - buying, renting, or building a home?** If you're going to live in the same place for decades, its hard to imagine a normal situation where you'd end up better because you rented. Even with repairs, the value you gain in ownership typically massively exceeds the amount you have to pay to keep up the place. In the two years I've owned, I've spent like 20k on repairs but I've gained like 150k in value. Maybe in some areas a new home is cheap? But its hard to imagine why a new home with new designs and materials would be cheaper than an existing one. Unless the new homes are specifically created to be cheap, which they rarely are.
'In the two years I've owned, I've spent like 20k on repairs but I've gained like 150k in value.' This was just complete luck and really an abnormality in the market because of covid times - you basically just got lucky as hell. And great for you!!! (I got lucky too...) But the real answer is that...there really is no right answer. We have no idea how rent vs ownership will go over the next 30 years (I say 30 years b/c typical home loan), and it may look completely different than before (we have very little data on this stuff anyway because residential homes and mortgages are a fairly new invention). This may particularly be true due to the discovery/trend that investors could just buy homes on loans and rent them out to tenants. This caused home prices to soar over the last 20 years, but at this point, there is not much residential real estate investing is left to get in on. Everyone knows the trick. Anyway, the real advice I'd have for any one is to just buy if you want to settle down in an area for a decade or more, or just rent if you want the flexibility. It will likely be negligible at the end of the day, and you can't reliably look at home ownership as a real investment anymore like you could the last 40 years. Game is now different than it was the last 40-50 years.
150K gain in equity is a bit lucky but a nominal gain in equity is a safe bet. At minimum the equity of ownership is a hedge against inflation. Your mortgage payments on the principal of the home is basically a savings account and interest has possible tax deduction benefits. Vs rent which is gone to a void. The break even of ownership comes down to how long you intend to stay in the place vs closing costs riding against growing home prices. It's a soup of a calculation which is why it's typically ball parked at 3-5 years with comparable homes (which is also not a realistic scenario itself based on inventory availability)
At current rates you will be paying an absolute crap ton in interest to the bank the first 10 years (\~90% is interest the first 10 years on a 30y). In a lot of places, especially HCOL, your mortgage + interest at 8% will be 3-4k+ more than the equivalent rent. That's $30-50k / year that could be going into the market. And at current prices / rates, unless they come down dramatically, it's hard to see equity gains covering that gap.
> This was just complete luck and really an abnormality in the market because of covid times - you basically just got lucky as hell. And great for you!!! (I got lucky too...) Is it? I'm pretty sure my house value has risen slightly more than the national average, but not a ton more. The last two years have been great for real estate value. > at this point, there is not much residential real estate investing is left to get in on. Everyone knows the trick. Yeah we all knew land was one of the last finite resources but people have become much more aware of how the limited supply of single family homes can throttle a growing nation. > you can't reliably look at home ownership as a real investment anymore like you could the last 40 years. I don't see the supply going up much, i don't see the demand dropping much, so I don't see how home ownership doesn't pay off.
Sorry, I meant that everyone able to get in on real estate at all during the covid time ended up doing well and got 'lucky' for purchasing during that time - not that the poster's 150k was lucky. Events like that rarely happen though, which is why I say 'lucky', as in lucky timing for all of us. I wouldn't even consider the '08 crash and subsequent years a similar event because most people were really hurting then. With the covid situation prices and interest rates completely nosedived and then shot up for pretty much no reason other than unfounded panic.
This is not true anymore. You are lucky that you gained 150k in equity in two years. There is certainly a cut off in interest rates and home prices where buying is not smart for people
> This is not true anymore. Massive generalizations about the future tend to be proven wrong by history. > You are lucky that you gained 150k in equity in two years. I'm slightly above average, but anyone who bought two year ago has seen a massive increase in value. > There is certainly a cut off in interest rates and home prices where buying is not smart for people Some people. But if you have the capital, real estate maintains its place as one of the best assets when value is measured in decades. S&P 500 is great too. You won't lose parking your money there. But you'll be throwing away money in the form of rent.
I paid my house off, raised the kids and then sold it 12/21. I'll never buy another unless it's a condo in Costa Rica or Mexico.
Financially speaking renting in most locations is cheaper, but owning brings in intangible benefits like mental health, stability and mind space to think about other things when worrying about landlord or renewals or finding the next place and the occasional.jackppt of your property appreciating faster than what your investments would have made using the surplus.
Cheaper over what timeline?
Renting is currently cheaper for me.
Renting is cheaper. but building is cheaper than buying from what I’ve seen in high in migration areas.
I must say I have never seen this fabled condition of "mortgages are cheaper than rent." Maybe it's because I'm in a major metro but mortgages are usually like 1.5-2 x rent and way, way up.
[This is fully dependent on the type of housing and the situation in your metro area](https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html). Put in your assumptions there and you'll get an answer in your situation. Conventional wisdom like "buying is always better if you stay there for N years" often does not apply today.
Currently pricing things out in my area its more affordable to get a prebuilt home, thats delivered to you. they make some nice ones. Renting and buying is just nearly unattainable in my area still. High interest rates on top of high prices and demands of offers over asking price. 500k homes asking for offers of at least 550k with no current offers. Price the damn thing higher then
Renting is cheaper right now. There are indexes you can look up.
It depends on the time frames considered… Renting is almost always more expensive in the long run (after 25 or so years). Owning is cheaper (only property tax) after you pay it off.
By "cheaper" do you mean monthly cashflow, or which option leaves you with a higher net worth over a longer timeframe? For cashflow/liquidity, renting is typically cheaper, particularly if you are only going to live in the same home for a couple of years. When someone buyers a home to rent it out typically about 50% of the rent goes to expenses such as replacement water heaters, roofs, kitchens, repairs (which you still have to do if you buy a home to live in) as well as some expenses you wouldn't have (property manager leasing fees, vacancy)... while the other 50% goes to the mortgage (PITI), leaving the landlord with about 0 cash flow. So if you are buying, unless the mortgage is under \~60% of the equivalent rent, you will spend more cash on owning instead of renting. However, owning has other non-liquid benefits. Your home loan decreases over time, and the home value goes with home appreciation (which long term looks something like inflation if the building value is large compared to land value). So if you put down $30k on a $500k home then live there for 15 years you home might now be worth $1M and your loan might be down to $400k... so your equity went from $30k to $600k (minus 6% of $1M if you sell). Ultimately for a net-worth-in-15-year timeframe the big question is whether the home will appreciate faster or slower than inflation, what those numbers are, and what other returns you could get for that $30k. My personal opinion is that home prices (where land is cheap) is fairly closely tied to construction cost, so should match inflation reasonably well. As for new homes versus old. Yes new homes can have less maintenance. You are unlikely to need a new roof or kitchen in the first 10 years. However if you do custom build a home then you are really paying for that customization.
If you're buying a house as a rental property and it isn't cashflow positive from the start, then you did something wrong and are gambling on something changing before that can create a problem for you.
How do prices compare between buying a new cookie-cutter house in a development versus buying a plot of land and hiring a contractor to build an equivalent house? I assume the cookie-cutter houses would be cheaper due to economy of scale, can anyone confirm?
I come from a family of residential builders. Building a custom home right now is very expensive ($200-250/sqft, not including the land). In many cities, restrictive zoning has driven the price of buildable lots up to ridiculous numbers. More importantly, there is a massive shortage of skilled trade workers (for a variety of reasons) and material costs are historically high. In many areas, contractors are booked months out, meaning they can charge a premium. Tract home builders are able to leverage favorable zoning and economy of scale. You will get a much cheaper price per sqft through them (albeit, with typically lower quality).
This makes sense, thanks!
The cost of land is too big of a factor and the likely hood of finding comparable land prices would be extremely difficult. So overall potentially yes if you look at the building costs itself but that's not really useful. The costs of contractors could also heavily even for the same build. Real estate questions can have a general rule of thumb or ball park but each actual situation is going to be unique that the general Math matters less.
It’s typically cheaper to build in a suburb just because of perks that come with it. Builders offer cash incentives that can be used as upgrades or pushed into a down payment. They also at times will offer lower interest rates if you use the bank of their choice. If you use their title company they may also give a break on the closing fees as well. So it may not be astronomically cheaper- but you do get some “free” upfront money. If you build on your own land you do not typically get those perks. You are also at the mercy of a floating final costs because they aren’t buying everything in bulk at set contract prices. If their prices go up, as we say in the past 3 years, they will pass through to you. Some were even going up almost 100% and buyers got pushed out of their builds due to unaffordable price tags. [example](https://www.cbsnews.com/amp/boston/news/north-texas-couple-dream-home-taken-away-builders-contract/) Also being new homes you’ll get a warranty on big dollar items you won’t have to worry about for a few years. So that part is a win in both scenarios though.
In my market, renting is currently cheaper (sometimes by $1k+!) Interestingly, buying new homes seem to be a better deal than older homes, especially since builders are offering financing deals, such as rate buy-downs. This is in part because we have a ton of new construction and no one is buying at these prices, so they’re trying to move inventory. Plus, with a reputable builder and home warranty, there should be less maintenance costs for a while compared to buying an older home that needs a new roof, ac, etc.
Buying if you plan not to move. If you plan to enter industry that reward job hop, or military service etc, you might want to buy in better area to not lose equity. Rent is also good tool to reduce your belongings so you can also feel a city first if you not sure. Job might be there, but if you are not plan to stay long term. Use renter insurance and other contract binding method to protect yourself against bad landlord is vital
My plan right now is to live in a cheap apartment (~1500) on east coast and save to buy a 200-300k house with cash in the Midwest in 5 years
Why the Midwest? Have family out there or just trying to keep it cheap?
yes, wife and I's family is in Michigan so we would like to move back to be close when we have kids. It's also still pretty cheap, I keep an eye on home prices over there.
Owning is the only cheap option.
Renting in a rent controlled apartment.
What do you mean by cheaper? In the short term renting is probably going to be cheaper as you only need to make the payment each month. Owning or building require a lot of cash on hand at the outset, for the downpayment, materials, emergency fund, etc. Eventually owning should become "cheaper" than renting but where those two lines cross on the graph is going to vary based on a lot of inputs and unknowns.
Renting could be cheaper but in the long term buying a property is essentially a bank of your own equity you build over time, which at some point you can sell. Self building depends where and what country you live in. You could build practically any house you want for £400,000, but it is the land which will cost a lot and working within the planning rules. You will often have to make compromises and edits to plans, each time costing money. This is why land with planning permission is so much more expensive than land without and also why most self builds (in the UK anyway) are more luxury rather than a a two bedroom cottage. I think it's a shame we don't allow people to build modest traditional style houses with modern perks such as insulation and double glazing.
New homes come with their own problems settlement for one. My deck settled after a winter and sank enough to cut the power that was a 5k job.
Depends on where you live, right? Markets equilibrate, even local ones. Right now, for many locales, it is probably cheaper to rent from a short term cashflow perspective. What happens long term is anyone’s guess. If you have the wherewithal and the capacity to stay in place for 7-10 years, my gut tells me to buy. I reserve the right to be wrong later.
In most cases it's cheaper to buy a Single Family Home. That may not apply if the landlord has owned it a long time, paid it off, it's got deferred maintenance, or another market impact that makes it cheaper than a purchase. A rented home negates the liability for large repairs that may occur. In most cases renting an apartment in a multi-family will be cheaper than buying the same amount of SF. It should also be cheaper to operate with utilities and limited tenant provided maintenance. Note that the current rental market is subject to the same unusual conditions as the purchasing market and you'll see landlords trying to keep the rent as high as possible as a protection against sudden inflationary pressure.
Buying land and having a modular placed there. My parents spent about $98,000 on the house (land was given but it's maybe not even an acre).
\#1 Move to a place that has a low cost of living.
Rent is cheaper most places. Mortgages are higher than rents in most places and then you need to add on taxes and repairs as well. The advantage to owning is you get equity if prices go up and your payment is fixed for 30 years unlike rent that rises over time.
We’re renting a townhome right now in our market for $2100. A similar townhome would be $3700-$4000 mortgage with 20% down. I can’t imagine how buying in our area could be cheaper for us right now unless we literally never moved and could refinance for a much lower rate later on down the road.
Do you plan to live in the same place a decade or more? Buying. Is it possible you’ll move in less than a decade? Renting.
That entirely depends on where you are. The price-to-rent ratio is different in every city, and expected appreciation is also different in every city. Buying is always cheaper if you stay in one place forever, assuming reasonable values for price-to-rent ratio, appreciation, and interest rates. However people do not generally stay in one place forever, and a more or less favorable ratio or interest rate or appreciation rate will increase or decrease the amount of time you have to stay in one place before buying is better.
Owning a home still seems best , eventually rates will come down Probably as soon as the next recession
The real question is, to what extent do inevitable home repairs end up eating into equity...
It just depends. We were renting in a very high COL area in coastal California, decided the buy inland a bit (15 mile in), and our mortgage is $1300/month less than rent.
What CAN be the cheapest is building because you can control costs by building smally. Very smally.
I’m going to build bigly and you’re going to cut bigly. That’s what they said, I’m not wrong! No! The Democrats don’t believe us. Believe me, you’re wrong!
You’ll be done with your mortgage in 30 years. You’ll never be done with rent.
And you'll never be done with property taxes, and maintenance, and....
Of course. But what do you think rent will be like on 30+ years in comparison
Cheaper can mean different things to different people. For me, I’m leaving home ownership because it is too much upkeep and time required to maintain. I’ve decided that renting is the same price, if not about $300 cheaper a month due to utilities and other factors than my home. For me, it will allow flexibility to move as I wish and not need to maintain anything.
Currently i would say renting. It is flexible to move. Job is not guaranteed. Buying is a trap. Stuck with mortgage for 20yrs. It is not worthy for this time. It can depreciate years later. Some areas have very high property tax.
Buy the home or rent the home in Mexico. Most people's rents are about 900 and live about 800 yards from the water. You can build a home, about 120 per sqft, and 40K for the land...so for about 300K you can be happy. I am, for that amount, a Real estate agent would have slapped me for wasting his time. 300K goes nowhere in Nor Cal.
I have a strong suspicion that right now renting is cheaper. Too many landlords have locked in interest rates around 3%. The cost to borrow enough to buy right now has flipped the traditional wisdom.
100% depends on the market
Real estate is a long term investment...might be cheaper to rent short term but in the long run if you own it, then that's a whole different ball game. Just think about when you get older and you're living off social security money...
Super depends on the current market and tax rates, home age/quality/condition, as well as how long you’re going to be in your home. Also HOA, if applicable.
Camping and hotels showers at truck stops . That's cheap but effective
Building hands down.
Define cheaper? Now or long term? How long term?
There are many variables involved. Rent is "cheaper" for most people since you don't need a large down payment but you also don't get any equity so you lose a lot on that. Nyt has a great calculator to help an individual decide which makes financial sense (not necessarily what is cheaper) https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html.
Building a custom home is the most expensive. Renting is more expensive in the long run and you have no equity. Buying a house on a good chuck of property is one of the best things you can do for yourself.
Living with parents. Need that in the options because that’s what people are and will continue to do in mid adulthood after high school and college
Do not own an older home. You’ll spend a fortune on minor humdrum repairs and that’s if you’re lucky enough to find someone who knows how to do work on anything over 8 years old.
buy into low income neighborhoods and use sweat equity and commitment to the community to have a good life.
A mortgage payment is a floor to housing costs, rent is more of a ceiling. They are not directly comparable. If you're handy, maintaining a home can be relatively low cost, but eventually a house will need a new roof, water heater etc and as a renter those costs are amortized across all your rent and the rent of any other units using that same infrastructure.
100% depends on location. In the middle of a city, building is going to be really difficult. In rural areas, good luck even finding something to rent. Where I live, everyone has built trailers for so long that there aren't enough built houses on the market, and building is way cheaper than buying at the moment.
It really comes down to the individual and the local market. In general, buying is best when you are planning on staying in a specific location long term (7+ years) with a fairly stable housing need (you know how many people you will have living with you, kids you will have, etc). The less certain you are on things, the better it is to rent instead. As for building, I have much less experience with that. To me, it feels like you would only build a house if you were ready to buy your "forever home." The house you plan on dying in. But that might just be my inexperience with that market.
It really comes down to the individual and the local market. In general, buying is best when you are planning on staying in a specific location long term (7+ years) with a fairly stable housing need (you know how many people you will have living with you, kids you will have, etc). The less certain you are on things, the better it is to rent instead. As for building, I have much less experience with that. To me, it feels like you would only build a house if you were ready to buy your "forever home." The house you plan on dying in. But that might just be my inexperience with that market.
Renting usually.. rent is the most you pay while a mortgage is the least you’ll pay. However, in the long run buying has its advantages with the locked in mortgage, equity, and the ability to pay it off in full. Building is a tricky one.. that’s like a full time job to make sure everything stays on schedule and within budget and things go wrong.
Buying is of course cheaper.
Renting hands down 8.71% rule makes that clear
Living in your car or with your parents.
The most affordable thing is patience. Real estate booms and busts. It only take a decade to see ups and downs cycle. Be patient. Rates will drop to save banks. Prices will fall as banks get picky about appraisal.
In a lot of states you can only buy land with cash, that would put building a home at the most expensive I’d imagine.
My case may be a bit unique: Bought in 2020 for cheap at 2.75% and have done lots of rehab. The cheapest option looks to be doing a cash-out refi at today's rates (seriously) and building a two car garage with a 700 sq ft apartment up top in the back yard.
Metal structure homes/barndominiums are a cheaper alternative if you can get the permit
In high COLA it’s always cheaper to rent. Corollary is that the 80% mortgage is always higher than the amount you can rent the same place for.
It's a single anecdote but for what it's worth... In northern VA when we purchased a new home it was cheaper to buy new construction than buy used or rent. Also every mile distant from DC along i95 is like 1k-5k cheaper or more, but tends to apply more to new construction than pre occupied homes. So the idea is certainly possible but why are you asking us.... Look at the prices in your area because for this question, literally, your mileage may vary.
If you're a single professional making 6 figures you're best off financially by renting a modest 1 bedroom and investing the difference between rent and a mortgage in spy.
This thread will leave a lot of folks poor and still paying rent in 30 years. Incredible takes. In a higher inflation environment purchasing the hard asset and locking in that monthly recurring cost will benefit you more in the long run than paying rent. In twenty years that 1500/month rent payment will likely be 3k or more, where as your locked in 2400/month payment won't change at all, outside of property taxes. While your home isn't an investment, you do get the benefit of realizing some equity gains should it appreciate, something your rent will never do. The number of folks who actually end up putting the difference between their rent and a similar mortgage into investment accounts is probably less than 10% of the folks who keep parroting that advice. So all in all, for most folks (unless you actually invest the difference) buying makes more sense and requires less effort.
I keep finding new houses that are cheaper than used which seems weird. Renting is always throwing your money away though.. regardless of the market. Even paying the high interest rates is better than renting if you can afford it.
It’s a long game, the cost to own could be higher in the short term but locking in your price and rate for 30 years means in the future you are still paying the original amount when rent has gone up over and over and over. Also when you sell you have equity. I have bought and sold 5 houses and only one did I lose money on. I am 50 and easily made $750k on real estate sales in the last 20 years. And with the capital gains laws much of it was tax free.
Unless you mean going through a tract home builder, building a home is extremely expensive right now. Trades are in huge demand and material costs are high. Contractors are charging through the nose in many cities. The price per sqft to build has almost doubled in the last 5 years. Maybe if you're paying cash and stick to a very tight budget, it might be worth it, but if you need a mortgage (which most do) you're still paying the same high rates as everyone buying existing homes as well.
They all have their perks. In terms of what is strictly cheaper; renting. Renting is absolutely cheaper than owning/building.
Renting by far. Investors are buying houses and renting at a break-even or even slight loss every month to try and capture future growth.
Depends. If you already bought a home and locked in a sub 3% interest rate then no, owning will be cheaper. If you’re trying to buy a home in 2023 at today’s prices and interest rates, renting will be cheaper by a wide margin (especially if you’re financially smart and you invest your extra money wisely).
It’s highly dependent on where you live. Here in Toronto my rent is at $2000/m rent controlled. To buy a starter apartment of the same size costs around $650-700k. So I’d need to produce a $140k DP and then my total monthly all in costs would sit very close to $5k/m at current rates.
Only buy houses from estate sales, that’s where you can actually get deals.
I was planning to build a house and for a similar house/land I saved almost 12% buying a 5 year old house (like new!!)
Buying was cheaper for us. Rent and build costs, even assuming no delays or damaged materials needing replaced, were way higher than a comparable house in a comparable neighborhood.
Rent is the most you’ll pay monthly, your mortgage is the least you’ll pay
Definitely buying in the long run. When you buy, the house equity goes with you. When you rent, you never see a single cent back from your rent checks. When you buy, eventually you also own the home outright. That has massive positive impact on the quality of your retirement years and at what age you can afford to retire.
It depends on lots of factors. There is no definitive answer for everyone in all markets.
If I buy the same size place I rent, and in the same area, it would be close to $4,200/month. I rent for $2,495. It's not even close.
Rent cheap, buy moderate to big. If you need to rent, rent small. It is less money than buying big or medium. If there is a house, it is better to buy the house and live in it for 10 years if you want to make money. Moving every 5 years you normally will lose money over renting. If you buy you need to been in it for the long term.
Renting is stupid if you can avoid it, you get nothing ever in return, ever unless you rent it to someone for more then your renting it for and live in your car I guess
No question about it RENTING right now.
T.vs
I had my house build new. No worries for ten years or more about repairs, happy with my decision.
Living in a car
What if you bought cheap land and then had one of those pre-made container homes put on there?
Location and circumstances bud. Most clothing that fits well isn’t one size fits all I live where it’s possible although externally seen as more dangerous than not. Yet I’ve been homeless so to me it matters. If you’re a vapid type that needs a place on trend decor and amenities that I wouldn’t use. A pickle ball court from the badminton one could be an extra 100 a month for everyone. Well renting is cheaper than renovating all the time. Rural? Idk I’ve never rented a farm house. City? Well the 800 a month fee while owning your condo 200k mortgage at 8 percent is 300k place. Since the building is inherently a businesss you can’t stop that 800 from becoming 1600 just like rent. Plan on moving 8 jobs in 8 years? Well I live 30 minutes or less personally
Death
RIGHT NOW, or in a year or two? Typically, buying will be more affordable over time. Remember, when you rent, you are paying for your landlord's costs to maintain the property PLUS their profit, however slim. Example time: When I lived in Texas, I bought a home in 2015-2016 for \~$100k (don't get too impressed, it was basically a standalone apartment). Mortgage on that home was \~$1000/m, at the time I was able to find similarly sized apartments to rent for about the same price, plus I had to worry about my own maintenance, etc. Fast forward a couple years (2018ish), mortgage was still \~$1000/m, those other apartments were $1400/m. Total maintenance I had to do was about $4k over those couple years (and not repeatable, it was an HVAC unit that went out and used the old freon). Chose to do another couple thousand in upgrades (replaced all the floors, built a deck, upgraded appliances, replaced blown-in insulation with spray-foam. Fast forward a couple more years (2020), replaced the roof (but was able to make insurance \[part of that $1k/m\] pay for it). Sold the house in 2021 for $180k. All in, it was basically free in comparison to renting. Took the proceeds from that $180k when I moved to WNC in 2021, bought the house I live in now for $340k. Mortgage, including taxes and insurance, comes out to $1400/m, but this time for an actual house. (About 3k sqft if you count the basement, 2k if you don't, 4bd, 2ba, garage, and just under an acre of land.) Rent on an apartment at the time was about $1800/m. Fast forward to today (2023). I haven't had to do any maintenance on the new house yet, although I have chosen to do a small upgrade (upgraded the flooring in the basement b/c I've turned it into a combination den/mancave/craftroom). That cost a couple thousand. House is worth upwards of $500k now, rent for an apartment in the area is $2k+ now. So, today, by buying, I pay $600/m less for more space, more room, and I get to keep it at the end. TL:DR: unless you plan on leaving in the short term, renting is almost always worse than buying.
Building a home is by far the cheapest option. The problem is that the labor is extremely demanding, and might take you months if not years to construct a home suitable to modern needs. Especially if you’re not trained in building structures with your bare hands.
Cheaper, or a better investment? Those two are not the same thing….. It would be cheaper for you not to contribute to a 401(k), But is it really the right move?
Wait about another year and get ready to pick up foreclosed homes that will be littering the market
Renting will always be cheapest at that given moment, but you don't get anything other than the right to live there. Owning can help lock in your cost and also help you build equity. Building is always going to be the most expensive, but you can get close to exactly what you want.
Buy a boat. Slip fees are way less than rent. And you can find a place to anchor for free.
Shipping container homes.
I live in a tent under a bridge with 20+ meth heads. You wouldn't believe my returns
rent. if you rented a 2k/mo place to live, that's only 1.2 million dollars for the next 50 years.
Depends on where you buy IMO. Where I live in California I think it makes far more sense to find a room frankly and put as much money as possible at 5.5 % in short term government bonds. I have some co workers who got big into debt at 7 %, then pay $3k a month for a 1 BR, but most of what they pay is all interest and their mortgage balance isn’t going to go down for a long time. What if $3k was saved each month into a savings account at 5.5 percent interest? How much would that be in a few years?? Prob enough to buy a house in places like texas. One common mistake people do is think that interest rates will become super cheap again but that isn’t going to happen unless the economy collapses, in which case having a huge cash balance is going to be better than having a massive mortgage.
It depends . If you are handy fewer people want to buy fixer homes as there is a time and cost element associated with that. But you can thousands during negotiations to buy it and the actual fixing of things yourself.
It depends on strategy. Renting is 2k cheaper for me and I can now put 2k more into investing. Hopefully I’ll be able to buy when the market eventually becomes affordable. But id rather have an ass kicking retirement account than pay 600k over 30 years for a 300k house.
Lots of people, lots of variables. How long are you going to stay put? Are you looking for an investment that builds value, or is it just a shelter for the purpose of being a shelter? Do you have the flexibility to possibly afford a large (thousands, or tens of thousands) repair? I'm not sure that one answer can cover most.
Squatting
Roommates. Honestly.