I ran the numbers, buying a home makes zero sense in 2019.

New / Mgmt
xsAS42

New Mgmt

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xsAS42more
Aug 31, 2019 96 Comments

So thanks to a long bull run in TC I have been seriously looking to move into a house in the range of $1.2mm - $2mm in NY/NJ region. After crunching numbers and looking at all the data it's obvious to me that I would be throwing money away. These are the top reasons I would rather rent a home or luxury apartment of a similar value instead of buying it:

1. Taxes
Even in NJ were taxes are about half as in NY it still doesn't make sense to pay this on top of your 30 year mortgage with interest. Based on my numbers this is akin to paying a 30% monthly premium as compared to a renting a similar space.

2. Downpayment
This is a huge opportunity cost. This combined with the first point is like giving a landlord 2-3 years of rent up front to pay a 30% premium every month and owe a 30 year debt. Why the FUCK would I ever do that?!?!!!!?!

3. Maintenance& Repair
Now everything is on you. That roof leaks, you have to fix it. Sink hole... fix it. Pool got fucked... too bad. Maintenance for a home is an additional $1,000 a month in my scenario.

Pros:

Seriously I only see two reasons to buy right now:

1. You absolutely need more space(sqft). Most available house are for sale and not rent because everyone is trying to get rid of this new toxic asset class. So if you really really need more square footage and are willing to give up 2-3 years of savings and pay 30% more than you were every month, then yeah buy.

2. You are moving away from a growing bustling city. You went to retire or just don't care anymore, so you're moving away from a high TC metro area. You would be crazy to rent from your local yokel. Buy in this case.

All other claims of home appreciation, and owning where you live or "paying yourself" are totally dumb made up and burn a hole in your bank account. There probably was a time in the US we're buying a home made sense... that's definitely not now.

Or am I wrong?

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TOP 96 Comments
  • SolarWinds AnEngineer
    When you rent, you're paying the same amount for zero equity.
    Aug 31, 2019 9
    • SoFi pingus
      When the tide rises all boats rise, we are likely near the top of the RE cycle. RE is very specific to local markets though so it all depends on your market. I think OP is right about the NYC market, same goes with SF. Better to rent in those markets and buy investment properties in other areas.
      Aug 31, 2019
    • Google focusonthe
      When you rent, you put the entire down payment into the market.
      Aug 31, 2019
  • Amazon LwEF67
    Your math is bad and you’re an idiot. Ok summed that up.
    Aug 31, 2019 3
    • Salesforce barnacles
      Could you clarify as to why their math is bad?
      Aug 31, 2019
    • Amazon JJill
      Because they spent too much 💰 on buying a house and are trying to justify 😝
      Aug 31, 2019
  • Microsoft KNKM64
    You’re missing a major pro - you get to do what you want with the place. You can paint, landscape, remodel, etc to your exact tastes. I think there is an incredible amount of freedom in that. With renting you’re stuck with the owner’s tastes.

    That kind of work is not free - far from it, but if you enjoy DIY’ing then it can be a big part of deciding to buy.
    Aug 31, 2019 2
    • Salesforce srackme
      There's also an incredible amount of freedom in renting anywhere you want year after year
      Aug 31, 2019
    • Depends on what your family situation is. You definitely don’t want to be moving your spouse and 2 kids year after year, but if you’re single or just have one SO, could make more sense.
      Aug 31, 2019
  • New / IT
    spartan90

    New IT

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    Sopra Steria
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    Blah blah tech blah
    spartan90more
    Aug 31, 2019 0
  • Intuit sxersogrrt
    glad people like you exists for me to benefit from.. DM me if you want to rent out my luxury condo in Manhattan
    Aug 31, 2019 4
    • New / Mgmt
      xsAS42

      New Mgmt

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      xsAS42more
      OP
      Sure, glad you gave up 4 years of savings so I can live like a baller while you had to move out and find someone who could stop you from going into foreclosure. You're welcome.
      Aug 31, 2019
    • Bloomberg / Eng F.U. money
      Intuit you’re likely broke AF and will stay that way because you’re clearly not teachable too.
      Aug 31, 2019
  • Amazon / Mgmt dodo dodo
    If you pay down 20% on a 1 mil home and it appreciates 10% in two years, you almost got 50% return on the deposit money due to “leverage”. Plus you avoided throwing away rent money and built equity. If you cannot understand this only God can help ya
    Aug 31, 2019 9
    • Amazon / Mgmt dodo dodo
      You lost me when you started with “all assets work the same way”. There are too many assumptions in your thought process. Read it when you are rested
      Aug 31, 2019
    • Twitch / Eng Rbg04h2kd
      You need to pull your head out of your ass and come back with a reply that's constructive. If you don't understand what I'm saying, I suggest you go take a basic econ course in college before wasting our time with low level rhetorics
      Aug 31, 2019
  • Zocdoc Bankrot
    5 reasons why home buying makes sense:

    1) You can buy a bigger and better home for a monthly mortgage payment equivalent to your rent.

    2) Part of your mortgage payment also goes towards your equity. You build zero equity while renting.

    3) Tax deductions: You get a significant part of your mortgage and property taxes back in form of a tax refund.

    4) Your monthly mortgage payment will stay the same for 30 years, rent goes up every year. Landlords in NY/NJ are notorious for raising rent by as much as 10 to 20% every year. The apartment I rented for $1,900 six years ago, now rents for $2,800. Imagine how much it would be 10 years down the line.

    5) Your mortgage payments will stop after 30 years, and you would’ve built up millions in equity. But you will always keep paying rent.
    Aug 31, 2019 7
    • Zocdoc Bankrot
      @focusonthe

      “To qualify for rent control, a tenant must have been continuously living in an apartment since July 1, 1971, or be a qualifying family member who succeeded to such tenancy. When vacant, a rent-controlled unit becomes "rent stabilized", except in buildings with fewer than six units, where it is usually decontrolled. In units within single and two-family homes, the tenant must have resided in the unit continuously since March 31, 1953, to qualify for rent control. Once the unit becomes vacant, it is decontrolled. Rent control does not generally apply to units built after 1947.”
      Aug 31, 2019
    • Google focusonthe
      Interesting. I have a rent controlled place in sf, and itd make no sense for me to move and buy!

      What's rent stabilized?
      Aug 31, 2019
  • Alteryx / Product SIxE21
    Given all of the costs you mentioned in the OP. Are landlords renting at a loss? Realistically the rent you pay includes all the costs you mentioned + "profit". My mortgage (incl. Taxes and insurance but not maintenance) is probably 2/3rds what rent would be for a comparable house.
    Aug 31, 2019 8
    • ON Semiconductor blinder77
      That's why you work at Amazon, not OP ;)
      Aug 31, 2019
    • The landlords who bought 7-8 years ago are cash flow positive now because of appreciation. If you buy now, you won't cash flow now. Maybe if it keeps appreciating you will eventually cash flow, but rent will cover only cover 50-60% of mortgage/property taxes/maintenance.
      Aug 31, 2019
  • Amazon JustQuit
    I make $85k a year and bought a $200k house a few years ago. 2,300 sq feet 4 bed 2 bath. I’ll be done paying it off next year.

    Move out of the big city. Much happier life and much cheaper too.
    Aug 31, 2019 7
    • Bloomberg / Eng F.U. money
      I don’t see a difference.
      Aug 31, 2019
    • Amazon JustQuit
      You city folk wouldn’t know happiness if it hit you in the face. A big city like New York isn’t exciting or fulfilling. Just loud. I live in an area where there is ample outdoor activities. I jet ski on a beautiful lake on the weekends and paddle board down a calming river every morning. Not a single person in sight unless I bring a friend.

      Enjoy your smog though.
      Sep 1, 2019
  • Google focusonthe
    A home rarely makes sense from an investment perspective. It's a lifestyle choice, and needs to put a value on happiness derived from it to come out ahead.
    Aug 31, 2019 2
    • New / Mgmt
      xsAS42

      New Mgmt

      PRE
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      xsAS42more
      OP
      So what if you could rent that lifestyle for how ever long YOU want at a 20% - 30% discount every month and not give up 3 years of savings to do it?
      Aug 31, 2019
    • Google focusonthe
      I mean, that's exactly what I do. But if you like the homeowners lifestyle, adding a garden, making changes in the house, wanting to pull down a wall etc, then it's much harder to rent.
      Aug 31, 2019

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