News
Welcome to the News community!
Rules:
1. Be civil
Attack the argument, not the person. No racism/sexism/bigotry. Good faith argumentation only. This includes accusing another user of being a bot or paid actor. Trolling is uncivil and is grounds for removal and/or a community ban. Do not respond to rule-breaking content; report it and move on.
2. All posts should contain a source (url) that is as reliable and unbiased as possible and must only contain one link.
Obvious right or left wing sources will be removed at the mods discretion. We have an actively updated blocklist, which you can see here: https://lemmy.world/post/2246130 if you feel like any website is missing, contact the mods. Supporting links can be added in comments or posted seperately but not to the post body.
3. No bots, spam or self-promotion.
Only approved bots, which follow the guidelines for bots set by the instance, are allowed.
4. Post titles should be the same as the article used as source.
Posts which titles don’t match the source won’t be removed, but the autoMod will notify you, and if your title misrepresents the original article, the post will be deleted. If the site changed their headline, the bot might still contact you, just ignore it, we won’t delete your post.
5. Only recent news is allowed.
Posts must be news from the most recent 30 days.
6. All posts must be news articles.
No opinion pieces, Listicles, editorials or celebrity gossip is allowed. All posts will be judged on a case-by-case basis.
7. No duplicate posts.
If a source you used was already posted by someone else, the autoMod will leave a message. Please remove your post if the autoMod is correct. If the post that matches your post is very old, we refer you to rule 5.
8. Misinformation is prohibited.
Misinformation / propaganda is strictly prohibited. Any comment or post containing or linking to misinformation will be removed. If you feel that your post has been removed in error, credible sources must be provided.
9. No link shorteners.
The auto mod will contact you if a link shortener is detected, please delete your post if they are right.
10. Don't copy entire article in your post body
For copyright reasons, you are not allowed to copy an entire article into your post body. This is an instance wide rule, that is strictly enforced in this community.
view the rest of the comments
The difference is those "costs" are going towards buying equity that you then get to keep. Maintaining a house is expensive but it is an asset that maintains value. This article really doesn't seem to understand that which shows a very basic misunderstanding of the wealth math that goes into home ownership.
Renting may be cheaper month to month but you're literally pouring that money down a black hole never to be seen in your hands again.
Granted, building equity doesn't matter when you're already have no cash paycheck-to-paycheck for either.
No, not all of them. Insurance, property tax, and maintenance do not go to equity.
Not to mention mortgage interest.
For me, insurance and property tax work out to about 1/3 of my former rent (which was a smaller place than my current home). My mortgage by itself is about the same as my former rent. Based on what another commenter said about the typical percentage of payment toward interest (69% after 1 year, 55% after 10 years, 33% after 20) after a year my money-in-the-black-hole is roughly even to renting with about 1/4 of my total payment going straight to equity. After 10 years that goes up to 1/3 into equity, after 20 it's about 1/2.
Yes, my total payment is higher, but the home is larger; if I'd made a more horizontal move, the equity building rate would be more favorable. Additionally, I rented that space for 4 years and the rent went up 30%. The main thing to increase my payments now would be an increase in property taxes, which reflect an increase in property value. Personally, I felt very different about a 30% increase in rent than I'd feel about a property value increase that would bump taxes enough to raise my current payment 30%.
All I really did was convert some of what I'd save normally into the form of real estate. Home values typically increase about 3-5% annually, which is pretty comparable to most investment instruments. And I get the material benefit of a neat house to enjoy in the meantime, instead of some holdings with zero non-monetary value.
It's not necessarily the right move for everyone. I am particularly handy, so my maintenance costs are lower than they might be for others. But so far as money-in-the-black-hole and equity are concerned, I'd imagine most people who can shoulder the up-front costs would break even pretty quickly, interest included.
And the apartments we rented in the past had shitty inefficient heating systems (gas converted oil burners and baseboard heat that cost us a fortune every winter (7-8 months a year).
Now I’m looking at installing solar and a heat pump. Not something I could have done in a rental. The asshole landlord wouldn’t even fix the sink drain.
Property taxes are still partly tax deductible. Also even at my low mortgage rate of 3%, I get about $450/mo. back via the mortgage interest tax deduction, worth about $300/mo. over the standard deduction IIRC. I am not sure if they factor these things into the 14% number.
It's not common for people to itemize any longer after Trump's tax updates a few years ago
Those tax updates screwed me. Yes, it temporarily raised the tax deduction, but it also capped the tax deductions if you were above the standard. His changes cost me a couple grand a year.
The Tax Cuts and Jobs Act (TCJA) of 2017 Trump passed put in place permanent tax cuts for corporations and temporary tax cuts for individuals. The individuals tax cuts expire next year in 2025 so in 2026 the current standard deduction for single filers of $14,600 drops to $8,300. For joint filers is currently $29,000 and dropping to $16,600. source
Unless these tax cuts for individuals are renewed, we might see many more folks itemizing again because the standard deduction is too small again.
The part of that which REALLY hurt me was the cap on how much you could deduct. I itemized even with the increase in higher standard deduction, so capping my deduction hurt me a lot.
This is more of a case where the article doesn't take the time to explain the nuance. Everyone knows home ownership increases equity. Which is why it costs more.
I rent a house for $4600/mo. To buy this same house in the same neighborhood, it would be roughly $1.6m, tho prices are starting to fall a little on these higher cost neighborhoods, so let's say $1.5m for a deal.
With a 20% down-payment on a 30 year fixed rate loan, it would be close to $10000/mo (including insurance and property taxes).
Also, the lions share of your mortgage goes to paying down interest for the first decade or so.
So let's say $1k goes to principle per month. You're still burning twice as much money owning as renting.
The only financial upside is that you may be able to sell for more than you paid. Minus Realtor fees, whatever renovations / maintenance you made over the years, etc.
The current market is insane.
Edit - so I'm not talking in complete generalities, I glanced at the interest/principal ratio. No idea how accurate this is.
https://www.americanfinancing.net/mortgage-basics/mortgage-payment-explained
I don't know what the ratio is in the first year, maybe 100% interest?
So at a monthly payment of $9800, $7864 of which is towards mortgage, that's $2437 / mo towards principal from years 2-9.
So essentially you're burning $7363 instead of $4600 for the hope that your house increases in value when you sell it.
Fiscally speaking. There are a lot of other pros and cons to owning.
That is the state of the buy v rent trade-off on that house TODAY. In 10 years, the rent on that house will go up but the mortgage will stay the same. Regardless of the equity you build in owning (which can be leveraged for other things even if you don't sell), your "rent" stays fixed while renting goes up every year.
Companies are able to take longer term stances and can sustain short term losses. They buy a house and keep it for 10 years, long enough that those losses transition to profits.
That's making done huge assumptions that you have no way of knowing will be reality.
Rent may go up. It may go down.
Housing prices may go up. It may go down.
Locking yourself into a mortgage for "fixed rent" may end up closing you hundreds of thousands more than apples to apples rent. Taking the above scenario, you're paying about $360k more in the first 10 years than you would renting, if rent prices don't go up over that time period.
Yes, both rent and housing tend to go up over time. But who knows what the immediate future holds anymore. Housing prices are starting to contract. There's more push for high density housing, which people generally think will lower rent (I disagree, but I'm against the grain here).
One thing I've learned from economists is that despite all their expertise, they're very bad at predicting big events that have huge impacts on the economy. And we've been getting a lot of those the last few decades.