Yes, so why are we ignoring that housing is multiple times more expensive? Even with 5 times the luxury expenses, you're not going to end up cheaper than boomers who paid $1000 on a mortgage in a high COL area. Telling people to penny pinch on buying Netflix subscriptions while rent is 70% of their budget is just political theater at this point.
Rent per square foot per person as a fraction of income has been relatively constant. Rent has gone from 13% of income in 1970 to 30% of income today, but average house size has doubled and average family size has halved.
Renting is not owning (no benefits accrue from asset appreciation). The same calc for ownership is very different. Also would love to know % of population in 1970 that rented versus today. My guess is it's much higher today.
But renting has no property taxes or maintenance costs and should cost a lot less, meaning you can take the money that would have gone to those other things and invest it to earn returns on it.
I pay 600/mo in rent, so 7200 a year. A basic house around me would easily be about 7200 in property tax + average annual maintenance costs + increased utility costs + increased insurance.
So how am I losing out on anything unless you think that a house value (minus loan rate) would appreciate more than I can earn with that money instead invested in the stock market or some other real-estate investment deal like multi-family units.
I guess it depends somewhat on where you live and what interest rates are doing when you buy. Where I live (and true of virtually everywhere else I've lived over the last 20+ years), monthly rent significantly exceeds what the monthly mortgage repayment would be for the property if bought. Rental prices also seem to increase in lock step with or even above house price increases. So as the underlying asset appreciates (benefitting the landlord), rental prices also go up, further compounding the "loss" of not owning. This is before we talk about the possibility of using the gains in your property's value as collateral, something obviously not available to renters (or the advantage of locking in a <3.5% 20+ year loan; or the tax advantages on capital gains from property versus stocks). Also, might be different in the US, but in the UK the tenant normally pays the annual taxes.
>Where I live (and true of virtually everywhere else I've lived over the last 20+ years), monthly rent significantly exceeds what the monthly mortgage repayment would be for the property if bought. Rental prices also seem to increase in lock step with or even above house price increases.
That just seems crazy to me as rental price here is like 1/3 of what a mortgage would be on a decent house I can find.
Also property taxes seem to go up just as fast or faster than rental increases.
I mean my rent increases like 2-3% a year over the last 15 years that I have been renting.
If I look back over my spreadsheets I have spent about 100K on rent in the last 15 years that I have been renting and that includes water and heat.
>If I look back over my spreadsheets I have spent about 100K on rent in the last 15 years that I have been renting and that includes water and heat.
Setups like that just sadly don't exist in my part of the world. But, in your case, totally agree. Keep renting and just smash your savings in to other investments. I'd be doing the same.
