A lot of ways! (Answer says it all)
It’s just a simple mathematical equation.
You build no equity. It’s just another expense. Buy if you can
Taxes, interest and maintenance also just expenses. You could build equity in something else. It’s all subjective.
in Bay , with new cap of 750k on mortgage interest deduction, high property tax, cap on state tax deduction...renting seems cheaper in short term
What do you mean by short term? How long do you think?
couple of factors to consider : with more apartments coming up, the rents are getting stabilized or not rising crazy, for the high housing prices the rental income does not cover the mortgage with a 20% down. If the housing prices gets a correction or the mortgage interest deduction goes up, buying will be better
You need to compare two specific properties that satisfy your needs. One of them you could rent, the other buy. Now calculate how much money you will pay to own the property (subtract annual principal payment from all other costs of owning the house: taxes, interest, insurance, maintenance, etc) and compare that with the rent payments. It may or may not make sense depending on the kind of mortgage you get. With ARM, it could be cheaper to “own” for a few years without building equity. It’s all subjective, but renting obviously offers you a lot more choices, so it’s easier to win by renting. You can argue that a house is an investment, but it’s important to diversify your investments and most people don’t have enough cash to do that while also owning a house. I would think you knew the basics being employed at Intuit. TC or GTFO.
All good points ^
It costs less in the short term but costs significantly more in the long term.
This.
Long term is extremely hard to predict and very location-specific. You cannot easily diversity your house investment to reduce risk. E.g. buying a house in Detroit in 1950s probably looked like a good idea.
If mortgage interest+HOA+property tax+maintenance <= rent, buy. Else wait. Don't add the principal portion of the mortgage.
Mortgage interest + HOA + property taxes + maintenance - tax deduction - mortgage_balance*0.02 (target inflation) <= rent
Facebook got it right
tax deduction parameter can be 0 if standard deduction is higher than qualified mortgage interest deduction
When you buy, your current mortgage rate is the highest you’ll ever have to pay for housing. (Mortgage isn’t inflation adjusted so in 25 years that mortgage is looking darn cheap. Plus you may get an opportunity to refi at a lower rate in the future) When you rent, your current rent is the cheapest you’ll have for housing. (Landlords will always raise your rent. At best the increase is just the rate of inflation but at worst, the market you live in explodes and your rent could double in just a few short years). There are all kinds of other things to add to it like deductions and rent control but the above fundamental argument will always hold true.
It costs less
This. Simple math.