The End of Home Ownership and the Rise of Rents

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163 Responses

  1. LeeEsq says:

    The idea that housing was for life made a lot of sense when the idea of life long employment to one company or at least a bunch of different companies located in the same area was plausible. I think during the 1950s and 1960s people joked that IBM stood for “I’ve Been Moved” because they transferred employees to different offices with a frequency that was seen as weird for the time. Life long employment isn’t really that possible these days and more people have to move to find or for work reasons. When you have this type of economy, one with frequentish job changes, than the idea that housing is for life becomes dumb because it can tie you down.

    I also think that the idea of paying off a mortgage was more of a big deal at the time that MASH took place, the Korean War, because until the Truman administration getting a loan from a bank was tough. Most or at least a greater percentage people rented their homes in the United States before the mid-20th century even though we had a higher rate of home ownership than other countries. Federally backed mortgages made getting loans and mass home ownership possible. We might just be returning to historic norms with the increase in renters.Report

    • nevermoor in reply to LeeEsq says:

      Depends on your industry and preferred geography. In mine, it’s reasonable to expect that I won’t have to relocate and the only path to eventual retirement is to buy a place, slowly pay it off, and either save enough to pay property taxes or cash out to move somewhere inexpensive for retirement.

      Part, of that, of course is a reaction to the mortgage interest deduction making a house a uniquely good source of equity. But even without that it’s better to essentially “save” something like 25% of your monthly “rent” check by paying down loan equity.Report

  2. morat20 says:

    I think one aspect to note is that home ownership represents one of the few reliable inter-generational middle-class methods of wealth generation. My parents own a home. It is unlikely they will sell it before their death. I, or my brother, or both will likely inherit (and either sell it or keep it as need be).

    The rich have trust funds and large investments, but for the middle class? That big chunk of wealth you leave to your heirs is almost certainly your home. (I have fond hopes myself of leaving some of my 401k, my home, and perhaps a few other assets to my child. But of all of those, the home is the most likely to pass on).

    Leaving that aside — my home is my largest asset, next to my 401k. In terms of my personal wealth, my house is a large chunk of it.

    If I rented, where I live now, I would be paying…roughly the same as I do now, actually, but I wouldn’t be accumulating any wealth. And I don’t have a choice — rent or buy, I have to live SOMEWHERE. Owning a home means, at the moment, I am both fulfilling the absolute need for “roof over my head” and accumulating wealth.Report

    • Saul DeGraw in reply to morat20 says:


      Good point. Mom mom sold my grandmother’s house in 2000-2001 for a good deal of money even though we were well into upper-middle class at the time. The house had not been updated that much if it all.Report

    • Kazzy in reply to morat20 says:


      Ask your parents how much they paid in taxes during the 30+ years they own the home. Much of that could have been invested. Homes as investments is a silly notion. You’re not investing. You’re simply hiding money in one place instead of another.Report

      • morat20 in reply to Kazzy says:

        Well, first — you’d have to subtract the equivalent of rent. Strangely enough, property taxes get rolled into the rent prices!

        So, exactly as much as they’d pay if they rented? (The actual cost to rent around here runs about as much as my total home note. I’ve looked recently, because I thought my brother was getting shafted on HIS rent).

        So you know, I could pay 1200 a month for a house (property taxes, interest, equity) OR pay…1200 a month to rent a house. But I wouldn’t get equity, I wouldn’t get to deduct property taxes (because I officially didn’t pay them, my landlord did. using my rent money).

        Admittedly, once you’ve PAID off your house you are now living there like a renter, since your monthly payment no longer purchases equity. But since your monthly payment just drops to…property taxes and insurance, actually. Which is much, much, MUCH cheaper than renting.Report

        • Will Truman in reply to morat20 says:

          The dynamics vary quite a bit from area to area. It wouldn’t surprise me at all if New York (even suburban) were very different than Houston.

          For our part, we investigated every financial angle and found that buying was simply less expensive than renting in every scenario involving staying put for more than five years. But that’s here, with our savings and income and credit rating. Others’ calculations will be different.Report

          • Kazzy in reply to Will Truman says:

            This. The idea that there is a single answer to the “rent vs own” question is fallacious and people need to stop peddling it. Folks should work with a trusted financial advisor to run the numbers AND seriously considering their goals and expectations for what their life will look like in 1, 5, 10, and 20 years. That is really hard to do at 23… which is why it is generally advisable not to buy at that age absent strong reasons to the contrary.Report

          • Yep. And there can be some really peculiar local/state things. Colorado’s solution to old folks getting taxed out of the houses they’d owned since basically forever was different than California’s but has some similar effects. Since I moved here 27 years ago, the value of the house has more than doubled; the property taxes have increased about 15%. In a few years I’ll be old enough that in most years the “senior discount” on my property taxes will reduce the bill to less than it was when I moved in.Report

          • Mo in reply to Will Truman says:

            Actually, based on price to rent ratios, place like NYC and SF are places where it is better to rent than buy if you’re there for less than 7 years.Report

            • Will Truman in reply to Mo says:

              Right. That was sort of my implication. New Yorker says rent, Houstonian says buy. Both are probably assessing their situations correctly.Report

            • Saul Degraw in reply to Mo says:

              @mo @will-truman

              This is compounded by the fact that New York (and San Francisco) traditionally had many fewer options to own rather than rent. The concept of apartment ownership is relatively recent and condos are even more recent. The previous modes for ownership in NYC and SF were the Co-Op and Tenancy in Common respectively.

              The interesting thing about Co-Ops and Tenancy in Common is that you share entire ownership of the property. In a Co-Op, you basically own stock in the building and that stock translates to a unit. If someone defaults on their mortgage, the entire building has to pay off that person’s mortgage. So if you own a modest studio or one-bedroom in a co-op and the guy in the Penthouse defaults, you can be in for a nasty surprise.

              Condos are different but all three come with monthly fees as well for various amenities like the doorman (assuming your building has one).Report

            • nevermoor in reply to Mo says:

              Ummm… says who (re: SF)?Report

        • Kazzy in reply to morat20 says:


          But that isn’t always how it works. Depending on where you live, rent could be considerably cheaper than owning or not. If it is cheaper, you are still “pissing money away”. You need to look at the specifics. Most people just operate under various assumptions without looking at specifics.

          Right now, we pay $3100 a month all in. Over $1100 of that is taxes. We build about $700/month in equity. That means, currently, $2400/month is disappearing. If we can find a rental for that much or less (we can!) we are saving money. Yes, the amount of equity built each month will rise, but so will taxes. Again, our specific situation shows that renting is the better option for us. Others may vary. Which is why they need to do their homework.Report

          • morat20 in reply to Kazzy says:

            Well yes, of course rent can be cheaper!

            But you first referenced property taxes. It should be obvious that the bare minimum rent can POSSIBLY be is the amount owed onproperty taxes, even if you got rid of the homeowner’s deduction. Obviously your landlord can’t charge you less a month than he pays in taxes, right?

            A homeowner who owns his home is, effectively, paying just those taxes. (Well, and also insurance and repairs/upkeep, but your landlord charges you for repairs/upkeep and you pay your own insurance. And so does he).

            So your “Ask your parents how much they paid in taxes during the 30+ years they own the home. Much of that could have been invested. ” is fallacious. That money would have been paid as part of the rent. It had to be, unless the landlord was operating at a loss. It wasn’t available for investment.

            The amount available for investment is the difference between the rent costs and your costs) and THAT money could have been invested in, say, stocks. Instead it’s invested in real estate.

            Sharp divergence in rent and housing costs is usually a sign of a supply/demand issue. (The housing bubble, for instance, saw massive jumps in home prices but no corresponding jumps in rent prices).

            Where I live, I could rent the same effective house for — at best — 100 bucks less than a pay for mortgage now. Honestly, last I checked, it was about 100 more. So that’s 100 bucks a month I could be investing in, say, stocks. But my monthly principle payment is considerably more than a hundred bucks, so I’m actually investing quite a bit more in real estate .

            Now, that doesn’t factor in the costs or purchasing — which, if you check with any halfway honest realtor, means you’re better off renting if you plan to move in the first three to five years (or plan to buy a bigger house) — maybe a bit more in some places. (That’s if you’re not speculating on prices surging).Report

      • Richard Hershberger in reply to Kazzy says:

        “Ask your parents how much they paid in taxes during the 30+ years they own the home.”

        Renters pay property taxes. Just not as a separate line item.Report

        • Kazzy in reply to Richard Hershberger says:


          But it is rolled in the amount of money “pissed away” on rent.

          Again, look at my example above.

          $2400/month currently not benefiting me versus less than that if I rent.Report

          • Richard Hershberger in reply to Kazzy says:

            I think that what we actually here is the startling conclusion that whether buying or renting makes better financial sense depends on a bunch of stuff, and that the answer is not the same for everyone.Report

          • morat20 in reply to Kazzy says:

            If my property taxes are 10k a year, I pay…10k a year in property taxes whether I own or rent my house. It’s not available to invest.

            What is available is the difference between my rent and my total mortgage note. (Interest too). THAT makes a sizable difference, especially if you don’t plan to own the house long.

            However, that difference (except the interest payment) is actually invested. That interest on your note is the key factor for whether or not renting versus owning makes sense, and that’s contingent on (among other things) how long you plan to live there, what your rate is, etc.

            It’s worth noting that a fully owned house can be occupied for FAR less than renting a home can possibly be, since you pay only taxes and the upkeep requirements. No landlord can charge you “just costs”, you know? Which is money that can then be invested.Report

            • Kim in reply to morat20 says:

              apparently you’ve never lived in aplace managed by a slumlord.
              Of course you can be charged less than “costs for maintenance and upkeep”
              if you like black widows for company. And yes, I’ve seen.Report

              • morat20 in reply to Kim says:

                You can’t be charged less than the taxes. Just covering the property tax (or your share of via floorspace) constitutes a no-profit arrangement.

                You can skimp on maintenance, but you can’t skimp on the taxes.Report

              • Kim in reply to morat20 says:

                No, you bribe people to get out of paying taxes.
                Sources shall be cited if you need ’em.Report

              • morat20 in reply to Kim says:

                Okay, I will amend my statement: In 99.9% of the country, the cost of rent can’t be below the cost of property taxes.

                In 0.01% of the country, the cost of rent can’t be below the lesser of “bribing the county and state officials’ and ‘property taxes’ whichever is lesser.

                Was their any reason for this tangent? Was there something complicated about the fact that your landlord won’t charge you LESS in rent than he PAYS for the place in question?Report

            • Kazzy in reply to morat20 says:


              I pay more in taxes than my dad pays for his apartment. Cuz he is sharing the tax burden with other tenants. I foot the whole bill.

              I pay $3100/month in rent and accrue roughly $700/month in equity (it has ticked up from about $630 in month 1). He pays $1100/month in rent, accrues no equity, but has $2000/month extra to save/invest.Report

              • morat20 in reply to Kazzy says:

                Yes, but that’s apples to oranges.

                Sublet your house to two other people and you’ve suddenly got 2k more a month to save too.

                A smaller apartment costs less to rent than a bigger one. A smaller house costs less a month than a big one. A big house in a ritzy, high-value neighborhood costs more than one out in the boonies.

                Apartment complexes can actually save you a bit more money, because they can rise vertically (ie, you can shove more people into the same property) but property taxes scale with value.

                Really it’s more like you’re paying for square foot. Locally, apartments about half the size of my house go for…about half what I pay a month. Ones with the same square footage might go for 80% of what I pay. (Houses tend to go for 10% more than what I pay).

                So if my mortgage is 1000 dollars, I’ll put roughly 400 in equity a month. Or I could get the same apartment and pay 800 a month, that leaves me 200 to invest. (Which is less than my equity payment).

                Of course, if I got an efficiency I could drop that to 500. I’d have MORE to invest, but more space.

                Other cities, of course, houses might be in such low supply that you can’t possibly compare the two — but then I suspect condo’s would be the house’s position.Report

              • Jaybird in reply to morat20 says:

                Condo observation:

                Friend who bought a condo fresh outta college (for CHEAP!) told me that it appreciated approximately $1000/year for the 6-7 years he lived there.

                That said, it was cheap enough when he bought it that he was the only one of us fresh out of college who owned instead of rented.Report

      • nevermoor in reply to Kazzy says:

        Again, a wise man might say:

        The idea that there is a single answer to the “rent vs own” question is fallacious and people need to stop peddling it.

        Buying a home allows you to (1) bank part of your monthly housing payment; (2) reduce income taxes; and (3) participate in increasing real estate values. All three are characteristics of an investment. Doesn’t mean it’s always better to buy than to rent, but it definitely means it’s wrong to discount the investment value of a house.Report

        • Kim in reply to nevermoor says:

          On the main, a house is an exceedingly poor investment — one generally does not break even, but one does do better than renting.
          Nonetheless, it is the only investment most people make, which might explain the current sense of impoverishment of America.Report

          • Will Truman in reply to Kim says:

            On the main, a house is an exceedingly poor investment — one generally does not break even, but one does do better than renting.

            As opposed to what third option? Homelessness?Report

            • Kim in reply to Will Truman says:

              Stocks — or even commodities. Because we are talking investment alternatives, not living arrangements.Report

              • Troublesome Frog in reply to Kim says:

                You’re writing as though taking your housing money and investing it in something other than housing is a reasonable option. It’s generally not. If you need housing, you choose one of the options that includes a roof over your head and then compare the payoffs of those options.Report

              • Kim in reply to Troublesome Frog says:

                Of course you’re absolutely correct.Report

              • I assume the comparison is the difference between the cost of owning vs renting. Which is to say that if rent would be $1000 a month but a mortgage is $1600, then it’s the $600 we’re talking about.

                This assumes a difference in that direction, which may or may not be the case.Report

              • nevermoor in reply to Will Truman says:

                Yep. Around here rent is significantly higher because most people don’t have the 20% downpayment in savings to allow them to even consider the choice.

                That said, other factors we haven’t mentioned are rent control and property tax limits (here we have Prop 13) which both privilege long-term occupiers. In a state without a Prop 13 analogy, but with rent control, it’s a counterbalance to some of the benefit of buying/staying put.Report

          • nevermoor in reply to Kim says:

            There’s no such thing as on-the-main here. For example, around me one generally makes a lot of money on increased property value if one stays put and isn’t forced to sell at the peak of a recession. That’s less true in areas where supply isn’t consistently below demand.

            That doesn’t mean everyone should do it, of course.Report

            • Kim in reply to nevermoor says:

              Yes, there is such a thing as “on the main”. It is the average increase of houses’ value. As houses take up so much of people’s income, it shouldn’t surprise anyone that their value rises concommittant to people’s income, barring wall street shenanigans.

              (As to why they might be temporarily high right now? Rich boomers be buying, poor millenials be rentin).Report

              • nevermoor in reply to Kim says:

                So you think people in the far suburbs of Miami should just use the same “average increase” numbers as people in Manhattan?Report

              • Kim in reply to nevermoor says:

                No, my bet is on the far suburbs of Miami being a lost cause and far fucking sooner than you think.
                I’ve read the studies, dykes can’t fix whats wrong with Miami.

                Any money spent in Miami is “Greater Fool” money, from this point forward, and you can bloody quote me on it.

                But in the main, if you had to ask me, talk Burlington, or Cincy, or Franklin Tennessee, I’d talk averages, because to do otherwise is to operate out of extreme ignorance (as I haven’t done research on much more than “how much humidity will kill people”). Hell, I can tell you the various and diverse ideas for Pittsburgh, and I’m still ignorant as fuck (you think I pay to get into high-level real estate meetings??).Report

              • nevermoor in reply to Kim says:

                Where in the following recap do you disagree:

                1. I say there’s no “on the main” analysis for whether housing is a good investment.
                2. You say there is.
                3. I raise very divergent scenarios.
                4. You concede one is shitty (presumably unlike the other). You then pick three other examples and conclude you don’t know anything about them so would use a national average for your own analysis.

                Unless that recap is wrong, it’s hard for me to see why you disagree with my initial point.Report

              • Kim in reply to nevermoor says:

                You should look at the “on the main” evaluation of whether owning a house is a good investment. It’s a handy guide. An index, if you will. Isn’t “value investing” all about buying below the index?Report

              • nevermoor in reply to Kim says:

                I may understand the disconnect: are you talking about purely investment homes?

                I’ve been talking only about primary homes.Report

              • Kim in reply to nevermoor says:

                Who does purely investment homes? (Most rent or board).
                Nah, I’ve been thinking same as you…Report

              • nevermoor in reply to Kim says:

                Then I don’t understand the “buying below the index” point. Doesn’t it assume a complete geographical flexibility?

                I think it’s much more likely that people are where they are (jobs, family, whatever) and need to decide whether to rent or buy. Maybe that’s just my bias though.Report

              • Kim in reply to nevermoor says:

                The buying below the index was a wry comment on when I bought my house, nothing more. (I rented for a long time before I bought, because houses were running high. Of course, I couldn’t buy from any of the fools who had bought when the houses were higher than the index, and not just because they were fools).Report

        • Kazzy in reply to nevermoor says:

          That assumes real estate values increase.

          You are right that a house is an investment of sorts. The problem is people conflate “investment” with “more money in the future”. That isn’t what investments are nor is it what a house is. You might very well lose money on your house. How many people really take this into account when purchasing?Report

          • nevermoor in reply to Kazzy says:

            Not as many as should! Just don’t discount that some who do conclude the house is a good investment.

            After all, the people we bought from a few years ago tripled their money in the 35 years they lived in the house. No way that amount was washed out by taxes/transaction costs.Report

            • Kim in reply to nevermoor says:

              Tripled their money? Holy, that’s considered a good thing? Double your money in ten years is considered standard sauce for investments. (For any with a poor math facility, that’s at least 8 times the investment by 30 years time)

              Good investments? 15 years later, 700 times the investment. [I don’t claim to be good, but I do know some very talented investors.]Report

              • nevermoor in reply to Kim says:

                Do those investments come with free housing? If not, you’re getting deeply (and snarkily) invested in a very bad position.Report

              • morat20 in reply to nevermoor says:

                Yeah, you have to actually factor in that you live there. I *must* pay property taxes no matter where I live, whether it’s direct to the state or factored into my rent. That’s not money free to invest.Report

              • Kim in reply to nevermoor says:

                You have two choices, as I see it:
                1) Invest in house, and invest in stocks
                2) rent apartment and invest in stocks.

                Since renting costs less than investing in housing (okay, except in Pittsburgh I know we’re weird!)… you’re dollar for dollar getting a better deal out of renting, if the differential works out (if you’re anything like a decent hand at picking stocks, say)Report

              • morat20 in reply to Kim says:

                Renting doesn’t always cost less than housing. In fact, it can cost more.

                Depends on a lot of things, including interest rates, your credit, and a whole host of factors.Report

              • Tod Kelly in reply to morat20 says:

                Actually, it rarely does regardless of circumstances — at least for the lower to upper-middle classes.

                Unless you are independently wealthy, you budget out monthly housing expenses, whether you are signing a lease or a mortgage. If you are limiting yourself to, say, a $1,500 a month rent, you aren’t going to sign up for a $2,500 a month mortgage. You can’t magically afford a bunch more money for monthly housing expenses just because you’re a home owner.Report

              • Will Truman in reply to Kim says:

                Since renting costs less than investing in housing

                That’s not always the case at all. Even outside of Pittsburgh. We paid $1000/mo for the house we rented before we moved here. A 30-yr mortgage would have cost significantly less per month. A 15-yr would have only been marginally more once you account for maintenance costs, insurance, and taxes.Report

              • Kim in reply to Will Truman says:

                Most people don’t actually need to rent a house, and a 1 bedroom apartment, rented, is going to be cheaper than a house in nearly every place.Report

              • nevermoor in reply to Kim says:

                Then compare renting a small apartment to buying a condo. The math is a bit trickier with HOA fees, but the argument can’t stop at “buying a family-sized home is dumb because you only need a 1BR apartment”Report

              • Kim in reply to nevermoor says:

                Yeah, I gotta admit I’m playing at least a little dirty with the whole 1BR versus house thing.

                Then again, most people don’t use all the room in their houses (yes, people do usage studies!), and the spare is spent just looking pretty.Report

              • nevermoor in reply to Kim says:

                It is fair to say that buying locks you into more house than you might want after peak-children. But that’s generally far-enough off, and predictable enough, that it isn’t really a lock in in the way that people (fairly) mentioning the benefit of moving from a rental mean.

                And bigness-of-house seems to me like a society-wide problem that has little to do with renting vs. owning. Mrs. N comes from a much less expensive part of the country and her family generally has a lot of rooms like that because the marginal cost is low. Here, we don’t at all.Report

              • Will Truman in reply to nevermoor says:

                One of the interesting things moving to the east [1] is that there are smaller-housing options out here than I am used to seeing, even though we do not live in a high-cost or particularly crowded area[2].

                It’s kind of weird to drive along the highway and see a development of townhouses sitting in a rather uncrowded area. Townhouses in most places I’ve lived in have tended to be surrounded.

                Definitely a cultural aspect to this. I think a different set of expectations about what a house “should” look like.

                1. 60-90 minutes from DC and Baltimore, excluding traffic.

                2. Our house cost $80/sqft, city density is 900/sqmi though this was outside the city in a county with a density of 200/sqmi.Report

              • Troublesome Frog in reply to Kim says:

                When you’re investing in stocks using your saved-by-renting money, are you able to leverage your money 4:1 with a fixed low-rate loan and write off the interest on your taxes?

                I think the “rent costs less than a mortgage, so it’s better” analysis is missing more than a few variables.Report

              • Kim in reply to Troublesome Frog says:

                Security is the opposite of good investing, which is better understood as good risk taking.

                My house is a hedge against inflation, and a damn good one.Report

              • Kim in reply to Kim says:

                It’s not that buying a house is a bad idea, it’s a bad investment. It’s a very good hedge against inflation (or at least mine was).Report

              • Troublesome Frog in reply to Kim says:

                I think you’re missing my point. Anybody on Wall Street will tell you that if you can leverage the crap out of yourself and put the lion’s share of the risk on somebody else, you can do well investing in assets with relatively modest growth.

                Borrowing money to make a leveraged investment in property is how the average person pulls that trick. If somebody would have loaned me a half million dollars at 4% (tax deductible) for 30 years to invest something other than a house, I’d have done it in a heartbeat.Report

              • Kim in reply to Troublesome Frog says:

                That’s the thing, though. Housing doesn’t have “relatively modest growth”. It’s indexed to the inflation of salaries, and tends to ride along with it. It is the ultimate in “I put money in, I get the same amount back” — except, of course, for repairs.Report

              • Troublesome Frog in reply to Kim says:

                That’s just a rule you made up, though. It’s not actually how it works. You could make the claim about any commodity or finished good that it should only appreciate with average buying power using the same faulty reasoning. But it’s clearly not true. You yourself suggested “commodities” earlier in the thread as a “better investment” than housing. So something other than buying power must factor in to prices, and those somethings will often be significant.

                Even assuming increases in wages are the real fundamental driving factor, that number isn’t just inflation. It’s inflation + the real buying power increase that comes over time as productivity grows. If you really have an asset that just tracks inflation, it should hold its value relative to dollars, but it should generally go down in value relative to an hour of an American worker’s labor time because on average (and especially among the people who buy property) the value of that hour goes up faster than inflation.Report

    • Richard Hershberger in reply to morat20 says:

      “If I rented, where I live now, I would be paying…roughly the same as I do now…”

      This. My wife and I moved out of our one bedroom apartment eight years ago. She was pregnant with our first, and the apartment clearly wasn’t going to cut it. We decided to buy, even though the market was just past its peak. In other words, I knew perfectly well that we were paying too much, but I also figured that we weren’t planning on moving any time soon (preferably never) so we would ride out the trough. The price hasn’t yet come all the way back up, but I still expect it will in time.

      What I didn’t figure on was how crazy the rental market would become. Had we rented, we would be paying more per month in rent than we do on our mortgage and property tax and homeowner’s insurance, for considerably less space. Yes, there are more costs to homeownership than that, and yes, this doesn’t take the down payment into account, but still… It turns out that even buying at the peak of the market, I did better than renting. At least in the middle term. I expect the market will correct itself eventually. But eventually can be a long time.Report

  3. Will Truman says:

    I’ve never felt particularly self-conscious about renting. Mostly, I felt it was a pain in the posterior.

    I think there is a place for renting and for buying, and that our current system tilts way too much towards purchasing. Among other things, it cuts into mobility when people are dealing with a mortgage. Especially if you’re underwater, but even if you’re not it makes an already arduous task even more so. And the market for rented housing above a certain size tends to be pretty poor, and that’s a result of people buying. This is especially true outside the major cities, but not just there. It creates a self-reinforcing loop.

    On the other hand, I am ideologically and viscerally uncomfortable with the notion of pushing ownership specifically to the upper classes and reasserting an ownership vs non-ownership class. This is something that has historically been far more prevalent elsewhere and I think it’s been to our credit. But it’s not something we can break the system over, and in some ways might be papering over differences that exist anyway.Report

    • Saul DeGraw in reply to Will Truman says:

      I largely agree even though I think mobility is a lot less harder than people make it out to be.

      There is the family aspect. People generally like being close to their families especially when they have small children or children. My mom stresses this a lot because I am the person in the family who keeps dreaming of returning to New York. She talks about how when I was small (and before I could remember anything really), her parents were godsends for living in the next town over. This was for when the babysitter cancelled at the last minute and both my parents had to go to work. Now that my friends are young parents, I see them making similar comments on social media.

      Moving is also expensive unless one is willing not to own much of anything including furniture or discard things. If I were to get a job that required me to move, I think even Uhauling would cost a few thousand dollars. It should be cheaper to move furniture than need to replace it with every move. I find it kind of disturbing when it is cheaper just to replace everything than to move it for environmental and waste reasons.

      I also agree with your second paragraph. I don’t like the idea of ownership being something done only by a certain class. There are plenty of wealthy professionals in big cities who are life-long renters. Most San Franciscans still rent and this includes people making 6 or 7 figure salaries.

      Like you, I don’t feel a stigma from renting. What is interesting to me is that a lot of wonky types get angry at renters for making tenant friendly laws where they are in the majority. So renters are seemingly told to give everything to landlords and take no protections of their own.Report

      • Kazzy in reply to Saul DeGraw says:

        “I think mobility is a lot less harder than people make it out to be.”

        What makes you think this?

        Zazzy and I have been trying to move for two years now and only can do so this summer because someone made an offer that worked for us. That would not have been the case in a rental.Report

        • Saul Degraw in reply to Kazzy says:

          I just wrote out my reasons above….

          Theoretically you are right, it is a lot easier to move when renting except:

          1. It takes a very brave person to move to an area where they don’t have support structures to look for work. I’ve never been willing to move to an area unless I had a reason like work or school.

          2. Landlords often demand paystubs and security deposits. This makes moving harder for people who don’t have rent co-signers.

          3. Moving is expensive.

          4. How much do you or your wife depend on your parents or her parents for help during emergencies? What if both of you had to be at work and the babysitter cancelled because she had a family emergency? What if you had to work but day care wouldn’t take your kids because they were sick?Report

      • You can take all of your reasons on why “moving is hard” and add a huge financial reason and stressor.

        It cost more to close on our house than it costed to hire movers to pack and move everything across the whole continent. And closing costs are sunk costs, and when we sell we’re going to have to pay another set of costs. In addition to that, you’re looking at thousands of dollars in paying dual rent or taking a financial hit by selling quickly, which itself can easily run into the thousands of dollars. You may also be looking at repairs and fixer-upper items to try to get maximum value for your house. You may get more than you sold it for… but then, if you’re buying another house, you’re probably paying more than the seller paid for it, and you’re probably paying closing costs again.

        (And heaven forbid you buy before a crash, in which case you may be entirely unable to move. This was one of the big arguments in bailing homeowners out, and I don’t remember if it sold me on it but it certainly resonated with me.)Report

    • LeeEsq in reply to Will Truman says:

      I can’t really remember where I read this but until the 1940s, the percentage of renters and owners in the United States seems to have been about the same as it was in smaller European countries.Report

      • Will Truman in reply to LeeEsq says:

        That’s interesting. I would guess that true for urban areas, but I figured ours would be different due to homesteading if nothing else.Report

        • LeeEsq in reply to Will Truman says:

          There were lots of people in states that were never subject to homesteading. A lot of farmers in the South East rented their land as tenant farmers or sharecroppers. I wouldn’t be surprised if the same was true in the North and Midwest. Even in states and territories that were subject to the Homestead Acts, a lot of farmers ended up as renters because banks and corporations brought a lot of the land during bad times from them and latter rented it out. American agricultural was also getting very industrialized in the late 19th century.Report

  4. Kazzy says:

    A few thoughts…

    1. Phase out the mortgage tax deduction. You can’t do away with it over night because folks made long term budgetary decisions with it in mind and while that doesn’t entitle them to it, it is the decent thing to do. But stop incentivizing home ownership through the tax code.
    2. Starter homes are stupid. Whoever has pushed that idea is stupid. This isn’t to say that folks shouldn’t upgrade if/when they can, but that it makes no sense to say, “I’m going to pay a whole bunch of upfront costs and sign a 30-year-deal on a home that won’t work for me within 5 years.” Foolish. Plain and simple.
    3. The numbers on owning vs renting sway with the breeze. Too many variables. As such, buying vs renting should be scene primarily as a lifestyle choice as opposed to a financial one.

    We are in the process of selling our home and will go back to renting. If I ever buy again, it will be with a very different mindset given what I learned in almost 4 years of home ownership. I think a big problem is that people buy a house with no real idea when it entails. “But I lived in a house that my family owned my whole upbringing!” Sure. But you were a child and were likely not privy to everything that went into making it work. Renting carries with it hidden costs and downsides, but many folks experience this directly during their late teens/early 20s.Report

    • nevermoor in reply to Kazzy says:

      As a wise man might say:

      The idea that there is a single answer to the “rent vs own” question is fallacious and people need to stop peddling it.

      In other words, the statement that “Starter homes are stupid” is fallacious and people need to stop peddling it. For me, for example, we live in a house today we would NEVER have been able to get into without first buying into a condo. Different markets, financial situations, etc. are going to point in different directions. Including towards starter homes.Report

      • Kazzy in reply to nevermoor says:


        Touche. Though I’m not writing advice pieces. I’m a curmudegeony dude ranting in the comments section.Report

        • nevermoor in reply to Kazzy says:

          Sure, just jarring to hear you (correctly) say that homebuying is a complex and hugely important decision one should make carefully and then also make some blanket statements in strong language that are clearly untrue in at least some circumstances.Report

      • Will Truman in reply to nevermoor says:

        The main reasons to buy a “starter home”:
        1) If plan on moving but are still going to be there for a sufficient time to break ahead of even.
        2) If it’s your only ticket into the house you want.

        #2 has been a bigger allure for us, in large part because places we’ve lived have had really restricted rental markets. Given that we were always going to be relocating within a couple of years until our current place (and even then, who knows?) we resisted the urge, but boy was it frustrating to be choosing between two or three lackluster options against dozens and dozens of better options for sale.

        #1 may have sealed the deal for us where we currently are, but as it happened we could afford a house great enough that we’ll live here as long as we’re in the area.Report

        • nevermoor in reply to Will Truman says:

          3) If you are willing to bet on increases in your real estate market.

          Here’s an illustration from personal experience. Mrs. N and I were in a rental apartment when we had saved enough to put 20% down on a bottom-of-the-market condo which was less-nice than our apartment in a lot of ways (ugly kitchen, further from work) and nicer in others (a touch more square footage, nice neighborhood). After putting 20% down, our monthly payments stayed roughly flat but we added a property tax payment while collecting the tax benefit on mortgage interest and the partial equity from mortgage payments. Three years later, including a significant kitchen remodel, we sold for roughly 20% more than our purchase price (net of construction costs). Oh, I should mention, we bought right after the crash.

          That equity, plus the equity we earned by making mortgage payments and paying the remodel costs, was the only reason we could put 20% down on a 3BR home. Otherwise, we’d likely still be paying rent in an apartment and watching as increases in property value (reflected both in increased down-payment size and increased rent) outstripped our monthly savings.

          I’m definitely not saying that’s how it works for everyone by any stretch, but I am saying that all of this stuff is individual and complicated.Report

          • Will Truman in reply to nevermoor says:

            4) This. You definitely have more freedom to do on your own property than you do someone else’s. (Not that Bloomberg/diBlassio will stop there.)Report

            • Troublesome Frog in reply to Will Truman says:

              Is Bill de Blasio a crazy person?

              That being said, I bought my current home from a smoker. Having done the house rehab required to make it habitable, I’m pretty sure I’d have a no smoking policy on any property I rented out. Or at least something like, “If you’re going to smoke, make sure you leave one burning on your way out so I can collect the insurance.” Everything was sticky. Every. Thing.Report

              • I can’t remember the last time I rented a place that didn’t have a “No smoking indoors” clause. Since I’m fine going outside it’s not a problem. Of course, outside is a no-no, too, in New York. And some landlords prohibit that, too.

                Any individual ban can be justified. The problem is the all of them together. (And then applied to ecigarettes, where most of the justifications don’t apply nearly so much.)

                But that’s a bit tangential. Point here is that if you rent, someone else has a lot if authority over what you can do in “your” house. Pets are another issue.Report

    • Tod Kelly in reply to Kazzy says:

      @kazzy: “We are in the process of selling our home and will go back to renting. If I ever buy again, it will be with a very different mindset given what I learned in almost 4 years of home ownership. I think a big problem is that people buy a house with no real idea when it entails. “But I lived in a house that my family owned my whole upbringing!” Sure. But you were a child and were likely not privy to everything that went into making it work. Renting carries with it hidden costs and downsides, but many folks experience this directly during their late teens/early 20s.”

      There is a lot — a LOT — of wisdom packed into this paragraph.Report

      • Oscar Gordon in reply to Tod Kelly says:

        Tod Kelly: Sure. But you were a child and were likely not privy to everything that went into making it work.

        Oh man but I was. Plumbing, electrical, carpentry, siding, landscaping…

        Dad was a cheap bastard & I was free labor.Report

      • Kazzy in reply to Tod Kelly says:

        Thanks, @tod-kelly . We were one of the first to buy and I’ve tried to advise my friends accordingly. You need to cut the grass or pay someone to. Same with leaves. And snow removal. More cleaning. If something breaks, you’re on the hook. Even if you can pay someone to fix, you’ll need time to find the right person and might need to take off work to be present for it. You’ll look differently and listen differently at anything that seems atypical.
        There are benefits, too. Want a purple room? Cookouts? Housing security? Up to you!

        Everyone will value these differently but you can’t do the math if you don’t even know the variables or how you REALLY feel about them.Report

        • Gabriel Conroy in reply to Kazzy says:


          You’ve pretty much hit on the head the main reason my wife and I choose to rent. We don’t want the extra costs and worry (and worry is a cost). In my idle moments (which I have a lot of, because I don’t have maintain things like a homeowner) 🙂 ) I do sometimes worry about the loss of equity that we could be accruing. But….in Big City, our rent is lower than a housing payment would be, and we are required to live in the city.Report

          • Kazzy in reply to Gabriel Conroy says:


            I am *so excited* to go back to renting. In part because I’ll be in a much better area (downtown of a small “city” versus the sticks) and in part because I will gain the gift of time! Time to be with my boys, reconnect with friends, and enjoy my little city (Yonkers) and the big city just to my south (NYC).

            I, personally, put much more value in relationships than I do in things. So a small, simple residence that meets my needs and allows me to maintain those relationships is preferable to the alternative. Our house is great for hosting — and the two or three times a year we really have a bunch of people over are some of my favorite days… but they’re two or three times a year because we’re so isolated where we are. That isn’t JUST a function of owning… but we couldn’t own a good hosting house on our salaries closer to the city because the costs are prohibitive.

            It is also peace of mind. I pay one rent check, a couple utilities, and that’s that. Something breaks, I call maintenance (we’re paying a bit more to live in a concierge building because, again, the gift of time and peace of mind is really valuable to me).Report

    • Jaybird in reply to Kazzy says:

      I think that the mortgage deduction is one of the lynchpins that allows for there to be other deductions. (The charitable donation deduction being the other lynchpin.)

      Get rid of that one (and maybe the other one) and, suddenly, you will find a very, very large movement indeed to get rid of any and all deductions.

      As such, I think that there is too much money tied up in the mortgage deduction for it to go away.

      Then again, I think that politicians are greedy and they’ll say “Imagine how much money we’ll make!” not taking into account what is already baked into the cake and what will be baked into the cake once the new recipe is made public… so maybe it will go away after all.Report

      • Kazzy in reply to Jaybird says:


        Well, I’m on board with eliminating just about all tax deductions. Without thinking TOO much about it, I’d prefer a tax code that allowed deductions for dependents (not to encourage people taking on dependents but to recognize the increased cost of living that comes with having them) and probably just medical expenses above a certain amount. The idea would be that the dependent deduction would give you room for cover basic living expenses for those you are responsible for and the medical expenses one to help make sure everyone stays alive and healthy.

        Sure, some wealthy guy might game the system by deducting a nose job, but that seems like an acceptable downside from here. Otherwise, deductions always seemed more about conducting social policy through the tax code. And I’m not opposed to the government conducting social policy! I just don’t think it should be done via the tax code.Report

  5. Hoosegow Flask says:

    Having recently gone through a rental search with schools being a major consideration (BTW, why do none of the websites offer school ratings as a search criteria?!), I found it amazing how often an apartment complex near a highly rated school was literally just outside the district boundary. Purely coincidental, I’m sure.Report

    • Back home, the local school district spent years and years trying to get my middle school to flow to a different high school. And years and years. They finally did succeed a few years ago when they built a new school for them to flow to.

      (It is kind of funny in that we were on the upper end of the SES demographics for our middle school. People wouldn’t realize that said middle school wasn’t our middle school, so people would come around saying “We’re signing a petition to send the kids from [our middle school] to [different high school]” not realizing that we, too, were being targeted.

      This was the nineties, and somebody ignorant of where the boundaries were would stop by after every single school shooting.Report

    • Saul Degraw in reply to Hoosegow Flask says:


      Where do you live?

      My only experience is in cities where most people live in apartments. When I was looking for an apartment in Brooklyn, I really wanted to live in a specific neighborhood. The neighborhood was part of two school districts. One was considered vastly superior to the other (NYC has dozens if not hundreds of school districts as opposed to San Francisco which is one unified school district). The real estate agent always told me which apartments were in the good school district. I found this odd considering I was a 26 year old single male grad student.

      Though NYC seems to make it much more common for renters to use real estate agents for apartment hunting. The apartments on Craigslist were not great. The better deals and apartments were found via real estate agents, renter paid the agent’s commission. This was Summer-Autumn 2006.Report

      • Hoosegow Flask in reply to Saul Degraw says:

        Northern Virginia. It hadn’t even occurred to me to go through an agent. I don’t think it’s as common here.Report

        • Saul Degraw in reply to Hoosegow Flask says:


          I imagine that using real estate agents to find rental properties is unique to large cities where there are a large number of renters.Report

          • Interestingly enough, the only place we’ve used one was Arapaho. In Deseret, Estacado, Cascadia, and here, it was Craigslist or classifieds.

            Scary is renting a house you’ve never seen from across the continent. We’ve gone 2-0 from that route, though. (Clancy might say 1-and-1 or that our rental here was a wash. I think the house was suboptimal, but to this day I haven’t run across a better value.)Report

  6. Tod Kelly says:

    As I have since the early 1980s whenever this topic is raised (which is all the time), I think this is all much to do about nothing.

    Almost by definition, the housing market is always in flux; various parts of it rise as other parts fall. And always there is someone looking at one of these pieces and attaching a slippery slope argument to it that predicts the coming end of X. (Or conversely, as in the early to mid oughts, that suddenly you could buy as many luxury homes as you wanted home regardless of your financial status because somehow the New Economy was magic.) It always corrects itself.

    Twenty years from now it will be as it was twenty years prior: People will still be buying and selling houses, and almost everyone of those that holds on to them for long periods of time (without borrowing against them) will not lose money; those that don’t might or might not. Other people will rent, for reasons of finance, credit, mobility, or preference. And places like the Atlantic will still be writing about how whatever is happening at that moment means that the end is nigh. (Or that we are in a New Economy, and no one will ever lose money again.)

    Finally, this…

    “There is still too much of a market for luxury housing.”

    … is an odd thing to say — so much so that I wonder if you meant to say something else.

    I understand how there can be a market for a type of housing you don’t particularly care for and wished we had less of; I don’t understand how there can simply be too much of a market of a particular type of housing period. It’s like me saying that there’s too much of a market for ranch style homes, and not enough market for craftsman style. The market is what the market is.Report

    • Kazzy in reply to Tod Kelly says:

      “…those that hold on to them for long periods of time will not lose money…”

      Unless you bought in Detroit. Or other depressed areas. And saying, “Just hold onto it longer,” isn’t really a counter.Report

      • Kim in reply to Kazzy says:

        Detroit’s not what you think, if you listen to … The Wizards!
        At least now that they’re done bearbaiting.Report

      • Tod Kelly in reply to Kazzy says:

        @kazzy I actually went back and corrected before you commented to read:

        “and almost everyone of those that holds on to them for long periods of time (without borrowing against them) will not lose money”

        But even so, just because an area is economically depressed doesn’t mean that if you have a house for 20-30 years that you will lose money. In fact, if you hold on to a house for 30 years and don’t borrow against it, you will have money pocketed if you sell it — even if you live in Detroit — because by definition you will not be under water.Report

        • Kazzy in reply to Tod Kelly says:


          Money pocketed does not mean you didn’t lose money. You have to figure out the total amount spent (principal, interest, taxes, repairs, etc.), which is going to be much more than the purchase price. You then have to figure out what it would have cost you to have rented during that time (you have to live somewhere!). From there you can figure out whether or not you made money. But if you buy a house for $400K in 2015 and sell it for $600K in 2045 and walk away with all that money in your pocket doesn’t mean you made $600K or even $400K. Odds are in that scenario you are out lots of money.Report

          • nevermoor in reply to Kazzy says:

            This isn’t quite right. There are two sides of the ledger. You don’t have to count principal payments as a cost, since you’re just paying them to yourself. You have to balance the interest you pay, the property taxes you pay, and the amount of repairs, part of your home insurance, and the costs of closing the purchase and sale against the rent you would have paid and the extra income taxes you would have paid. That will tell you the cost of living in the house, and I suspect it’s usually a fairly negative number, though it depends on the market you’re in. Then you compare that to the difference between the purchase price and sale price to see how you did overall.Report

          • Tod Kelly in reply to Kazzy says:

            No, you still didn’t lose money — because what you’re describing assumes that you having no housing expenses during that same period of time, which isn’t the way it works.

            If I pay $1000 a month in mortgage a month for 30 years and then sell my house (because I live in Detroit!) for a measly $25,000, that’s still $25,000 more than I would have had if I paid an average of $1000 in rent over that same period of time.

            (Unless you’re assuming that you would have lived with your parents/sibling/friends rent free for that same 30 year period, in which case, yeah, you are obviously going to be down at the end.)Report

            • Tod Kelly in reply to Tod Kelly says:

              Or to use a real world example…

              We bought our first home at $125,000 and change at a time when interest rates were still far higher than they were today — 7%, in fact. Had we stayed in if for 30 years and not borrowed against it or refinanced, the total amount we would have paid (according to my mortgage company) would have been about $360,000. Our mortgage payment was a little over $1,200 a month.

              Let’s say we rented for that same period of time, and that rent averaged about that same $1,200. (I would argue that the rent by 10 years out would have surpassed — and by 20 would have far surpassed — that mortgage payment amount, but just for kicks and giggles lets say it didn’t.) If that were the case, my calculator says that we would have paid $432,000.

              Now, that doesn’t include all kinds of things on the balance sheet on either side (property taxes and repair, interest and property tax write offs, etc.). But still, that’s a pretty good indication of the difference.

              And we haven’t even gotten to the point where I’m selling the house with no debtors on hand to take part of that money.Report

              • Richard Hershberger in reply to Tod Kelly says:

                “(I would argue that the rent by 10 years out would have surpassed — and by 20 would have far surpassed — that mortgage payment amount, but just for kicks and giggles lets say it didn’t.)”

                This is an important point, for those planning on staying in one place over the long haul. Your mortgage payments stay the same, regardless of inflation. Talk to someone twenty years into their mortgage and they monthly payments often are comically low by present-day standards.Report

              • Kim in reply to Richard Hershberger says:

                Inflation hedge Yes, Investment No.
                How complicated is this to understand?
                Houses are horrid investments, but decent ideas.
                (staying in a single apartment long-term is a bad idea, but if you’re willing to move every three years, you’re much less likely to get taken advantage of).Report

            • DensityDuck in reply to Tod Kelly says:

              “If I pay $1000 a month in mortgage a month for 30 years and then sell my house (because I live in Detroit!) for a measly $25,000, that’s still $25,000 more than I would have had if I paid an average of $1000 in rent over that same period of time.”

              You assume, of course, that the rent *was* the same. It’s been my experience that the absolute craziest rents were still about twenty percent below the equivalent mortgage, and often closer to forty.Report

              • Kim in reply to DensityDuck says:

                Not around here. Rent can be double what the mortgage is, and I can cite equivalents to prove it. Pittsburgh is a strange, strange place to live.Report

              • morat20 in reply to DensityDuck says:

                Depends on the area and your personal credit, as well as your down payment and a bunch of other things.

                Even then, to make it work you’d have to religiously invest the difference. Most people won’t. Home ownership also works as a forced savings vehicle, which is another benefit.

                Honestly you probably don’t need the tax deduction for owning a home, but it does help people get over the hump of a real down payment.Report

              • Jaybird in reply to DensityDuck says:

                For What It Is Worth:

                Coworker (back in 2003? Ish?) was building a house in order to rent it out. He told me that the bank insisted that the rent payments exceed the mortgage payment.

                None of this “Mortgage Payment is $1000, so Rent can be $800 and I’ll pay $200 and thus someone else will pay the interest and I’ll only pay the principal!” kinda deals.

                They refused to pony up the cash unless the rent covered, entirely, the mortgage payment.Report

              • Tod Kelly in reply to DensityDuck says:

                Yes, but that’s not the way people purchase housing.Report

            • Kazzy in reply to Tod Kelly says:


              I noted that you had to account for alternate universe rent. If rent was less than mortgage, you could have saved the difference.

              As I said above, I pay more in taxes than my dad does in rent. He is saving tons by renting. That won’t always be the case but it can be. The problem is most people have low rents not because they are saving but because it is all they can afford. So they accrue no equity and no savings.Report

              • Tod Kelly in reply to Kazzy says:

                Well, sure. On the other hand you could just as easily have rented a nice place, and gone with a modest starter home and paid more in rent. If you’re going to do that kind of comparison, it only makes sense if you use comparable numbers at the beginning. Which really, is the way almost everyone starts out when they buy their first home. Housing is generally something that you budget for what you can afford. If you are not paying $2500 a month in rent because you can’t afford it, you can’t afford $2500 in mortgage either.Report

              • Kazzy in reply to Tod Kelly says:

                Perhaps that is just how the market works where I live. We took on a $3100/month mortgage (all in) but would never have rented at that price. Maybe that was faulty logic on our part.Report

    • LeeEsq in reply to Tod Kelly says:

      It seems that builders can make so much money selling to the wealthy and very wealthy that there isn’t any real need for them to build housing for working and middle class people let alone people in property. This effects certain real estate markets more than others but wealthy people need a lot of services from less well off people who need housing but can’t find it. According to articles Saul linked, its becoming depressingly common for even well off people, like people earning more than $75000 a year, on rent.Report

      • Tod Kelly in reply to LeeEsq says:

        @leeesq This is not remotely true.

        The world of residential builders is not one group of homogenous companies that builds whatever anyone who walks in the door wants. They almost all cater to different types, styles, and economic capabilities of clients.

        What happens is that those companies that cater to the very rich have ore revenue for a while (and probably more companies doing the same popping up). Those companies that build lower or middle income homes continue doing what they do, and are controlled by their own micro-economic forces.Report

        • Oscar Gordon in reply to Tod Kelly says:

          The luxury home narrative doesn’t jive with what I see either. I see lots of places building townhomes and small homes that are all 3 bedrooms or less, 2000 sq ft or less, with small lots.

          Of course, the prices, because the market is hot, are high (I recently paid $400+K for a 1500 sq ft 3 bedroom in a very desirable community), which, if you are just looking at price data, can give the impression that luxury homes are the thing. Heck, I recently stayed in an AirBNB guest house that was part of a home that just recently sold for $1.2M. House was smaller than mine, an older craftsman, on a small lot, but located in Burlingame, CA.

          I think before we can complain about luxury, high end homes, we need a solid definition of what that is.Report

          • I still can’t find that link about the low end of new houses being built, but there does seem to be a floor of about $200-250k or so, even in low cost areas. But in low cost areas, you can get previously-owned houses for less. And at a certain pricepoint, you’re competing against mobile homes and you’re unlikely to win that battle.

            That’s for houses. Might be different for condos. And it’s worth pointing out that those mobile homes are a housing option. An underutilized one, IMHO, in most of the country. (Probably not Sea-Tac.)Report

            • Oscar Gordon in reply to Will Truman says:

              Wasn’t that the link about how it was just near impossible to build for less than that, thanks to land prices being high, material costs going up, and regulatory compliance costs?Report

              • Maybe? Sounds about right in any event.Report

              • morat20 in reply to Oscar Gordon says:

                Eh, most regulatory compliance (speaking of my area at least) is “Build it competently” followed by “And it gets inspected”.

                The inspection costs aren’t all that much, compared to the overall price of the house.

                In short, regulatory compliance seems to be basic building codes + verification by a third party, and honestly most builders build entire divisions and so probably get a pretty hefty discount on inspections.Report

              • Oscar Gordon in reply to morat20 says:


                IIRC, regulatory compliance was not trivial to the cost for a development. Preparing a development invokes costs above & beyond what you would need for a single house on a single lot. And this should not be taken as a judgement upon the regulations themselves, only that slapping 100 houses down is going to involve additional costs that will get rolled into the final asking prices.Report

              • morat20 in reply to Oscar Gordon says:

                Well yeah, but honestly I got the impression most of those regulatory requirements were fairly solidly based. HOA’s are the ones that go insane on that.

                Development regulation and compliance, speaking for say Houston, generally involves things like “drainage” and “storm compliance” as well as rather detailed building codes meant to deal with hurricanes. And the usual raft of stuff like insulation levels, things like that.

                It’s expensive, yes, but it’s a necessary expense. If the developers (and later purchasers) didn’t pay it up front, they’d pay for it later as it was redone or repaired.Report

              • Oscar Gordon in reply to morat20 says:

                Again, not questioning the regs*, just saying they add cost to the whole, and that cost can exceed, per unit, what would be required for a single home on a single lot detached from a development.

                *And I think this also includes any HOA requirements, so if the HOA requires that half an acre be set aside for a park/playground, the cost of that is also rolled into the unit price.Report

              • morat20 in reply to Oscar Gordon says:

                HOA’s are crazy, man.

                I mean seriously. SO glad I don’t have one. 🙂Report

              • Oscar Gordon in reply to morat20 says:

                They certainly can be. We have one right now & it is pretty laid back, probably because it covers a community with more than 10K people in it, so it has to be.Report

              • Richard Hershberger in reply to Oscar Gordon says:

                I think most HoAs are pretty laid back. The problem is that they are ticking time bombs. Most people lack either the time or desire to serve on the board or as an officer, so it is pretty easy for someone with latent fascist urges to get elected. That laid-back HoA suddenly becomes a Fanatical Enforcer of Trivia.Report

              • zic in reply to Richard Hershberger says:

                HOA’s are a serious problem for renewable energy. Many have density rules, for starters. Then there are the no solar panel rules, the no clothes line rules.

                Codifying the 1900’s suburb as the standard for how a neighborhood should look is, at best, problematic. At worst, it’s a local-planning nightmare.Report

              • Kim in reply to Richard Hershberger says:

                Suburbs do tend to drive people a bit batty.Report

              • Oscar Gordon in reply to Richard Hershberger says:


                I guess that depends somewhat on the HOA & how it is structured. Ours is large and is not a volunteer effort, we have full time, paid staff. They have jobs to do that keep them from focusing on the little crap that make HOA horror stories. The large concern is, given the density we live in, making sure codes are followed & that you don’t have “that one house”, you know the one, where they paint the exterior a shocking pink, with violent purple trim, or who has 6 cars up on blocks in the yard, or the guy who is an enthusiastic do-it-yourselfer with poor attention to detail, etc.

                The rules mostly focus on making sure changes to the homes follow size & noise guidelines (my heat pump had to stay below a certain dB level), or that additions take into consideration the neighbors to a degree (my new patio had to have appropriate drainage, etc.).


                Or they can be great, and offer incentives to install Solar. I can step out my front door and easily see 6 roofs with solar panels on them. If I follow the trail up the ridge, I can see a whole lot more, including a couple of condo developments with solar across the entire roof.Report

              • zic in reply to Oscar Gordon says:

                That’s true; it’s the older associations that commonly create these problem in this neck of the woods.Report

          • Kim in reply to Oscar Gordon says:

            A forever home is a luxury, highend home. The type of house they used to build, way back when. The type that simply wont’ fall over in 30 years, and need repairs in 10.Report

    • Saul Degraw in reply to Tod Kelly says:


      Maybe my prospective is skewed because of geography but there is a lot of angst and stress about how a lot of the new building being done in SF and NYC is for luxury condo buildings. I am not as anti-condo as others. Housing needs to be built. A lot of people feel (correctly or not) that housing is not being built for them but for the upper-middle class and above.

      There is also a sentiment I hear in the media that we live in a time that is cash rich but investment poor especially because interest rates are at historic and seemingly perpetual lows. There is no money to made in bonds and savings. This is why companies which never made a profit are given huge valuations and why the wealthy are purchasing multiple homes. These are the only areas where there is a hope for a ROI.Report

      • Tod Kelly in reply to Saul Degraw says:

        I think you are confusing “housing market” with “housing market where I really, really want to live.” These are two very different things.

        It’s like saying that there are no affordable motels in the country, and then pointing to the cost of the L.A. Four Seasons because that’s where you really wanted to spend the week as proof.Report

        • Troublesome Frog in reply to Tod Kelly says:

          I think this is a huge part of it. San Francisco is one of the most desirable cities in one of the most desirable states in one of the most desirable countries. If I applied that type of description to just about any other scarce resource, you’d immediately assume that only rich people would ever buy it and you’d almost certainly be right.Report

          • Saul Degraw in reply to Troublesome Frog says:

            The desirabilty of San Francisco is relatively recent. Before Tech 1.0, it attracted people mainly for socio-cultural and not economic reasons.Report

            • Kolohe in reply to Saul Degraw says:

              In 2002 the San Francisco Miltary housing allowance was greater than the Honolulu one.Report

            • Troublesome Frog in reply to Saul Degraw says:

              Recent or not, it is what it is. The SF Bay area is a major economic center and San Francisco is some of the most prized real estate in that economic center. Property there comes at a premium, so I don’t really ever expect to see cheap housing there absent a crash in the regional economy.

              The good news is that we’re talking about San Francisco, not the moon. It’s a small city with housing options outside the city limits and a public transit system into it. Most of the people I know who work in a city in the Bay Area don’t live in that same city. If you do, you’re extremely lucky. Most people commute, and that’s another thing I don’t see changing any time soon.Report

    • Kim in reply to Tod Kelly says:

      “Twenty years from now it will be as it was twenty years prior: People will still be buying and selling houses, and almost everyone of those that holds on to them for long periods of time (without borrowing against them) will not lose money; those that don’t might or might not”

      I’ll take that bet. Floods, Hurricanes and Fire are on my side.Report

  7. Jaybird says:

    My First Apartment cost $330/month and had free heat.

    I couldn’t believe my good fortune at finding such an apartment!

    As it turns out, the apartment was nice but all of the drug dealers who were unable to scrape $330/month together and make rent made the apartment complex less than pleasant.

    When we bought a house, we paid more due to how we were buying a house where we were surrounded by people who had no problem paying a mortgage.Report

    • Will Truman in reply to Jaybird says:

      That was kind of my experience with a $300/mo apartment. It was a great deal for me at the time, and even included utilities and “high speed Internet” (quotes not superfluous). The problem with it was that you were living with a bunch of people who could only afford $300/mo.Report

  8. Brandon Berg says:

    Couple of fallacies here, but I only have time to point out the big one: “Fair market rent” is defined for purposes of this report as the 40th percentile for “typical, non-substandard rental units.” Which is to say, even if we ignore the units deemed atypical or substandard, 40% of units are cheaper than the price they’re using here.

    Something like 5% of workers earn the minimum wage. Fewer still are the sole source of income for their households. Only about 10% of that 5% are single parents.

    “Able to afford” to rent a unit means it’s less than 30% of your income.

    So the actual claim here is that the bottom 2-3% of households do not earn more than 3.33 times 40th-percentile rent.

    The comparison to two-bedroom rent is especially silly. Again, only about 10% of workers earning near-minimum wage are single parents. The ones who aren’t? They can cut their rent in half by getting roommates. Or at the very least, not renting two-bedroom apartments.Report

  9. Damon says:

    @will-truman @kazzy @morat20

    Rent vs buy. I’m working this issue right now. Currently, I’m paying 41% of my income in rent-and I’m BELOW the median income for my county. I negotiated this down from @ 50% from the owner. I’m a good risk and a long time renter of his property. Nevertheless, I could, theoretically get a mortgage for several hundred dollars less than rent, all in, a month. I proposed this to my financial adviser and he reminded me that you need to factor in upkeep, “typically 1-4% of a month”. I think a lot of people don’t consider this.

    Other factors are the time factor. If I have an issue, I call the owner and they get the problem fixed. Not if you own the place. Theoretically I could have kept the “marital estate” during the divorce, but I’d be house poor and I’d spend all my free time, at least in the summer, cutting the grass and trimming bushes. Not a good trade off if you’re looking to date.Report

    • morat20 in reply to Damon says:

      It’s pretty relative, but….I’m paying less a month in mortgage than renting the same sized house would cost. I could live more cheaply in an apartment, but to the tune of perhaps 10% for the same square footage in the same school district. (I live in a very modest house for the area, in fact. 40 years old now, which is old for this area, and about half the size of new build homes in the area. This particular neighborhood is all roughly the same though).

      That 10% I’d save by moving to apartment (all rental homes are more expensive than my note) would be eclipsed by the 40% of my monthly payment that goes straight to equity. In 2021 (I bought in 2002. I make an extra principle payment monthly, and when I say ‘it’s more to rent a house’ I mean ‘more than my note PLUS my extra payment’) I’ll own it free in clear, in which case my monthly ‘roof over my head’ costs drop roughly 60%. (Taxes and insurance only).

      Which no apartment can beat. The note is down to less than a third of the value of the house at this point, so if I were to trade up to a house double the cost I’d still be putting down 40% or more. (Which impacts my monthly costs, which makes it cheaper than renting the same house if not generally as cheap as an apartment of the same square footage).

      Now if I lived downtown? The calculus would be different. In the end, though, it boils down to monthly-cost-per-square foot, your interest rates, your down payment, and ESPECIALLY the minimum length of time you plan to live there.

      And, of course, whether you’d really invest the money saved. If you wouldn’t? Equity in your home is savings. If you’re disciplined, you might indeed take that X dollars a month saved, invest it, and end up richer in the end. If you’re not that disciplined, there’s no point in running the ‘projected investment returns over 30 years’ numbers. That number will be zero.Report