This varies a lot.

I don't actually care to own a house too much but we are going to buy one soon because the rental market in my area has gone in-fucking-sane in the last few years so its ao much cheaper to own in my neighborhood, I'm basically lighting dollar bills on fire every month with how inflated rents are.

Oh, and landlords are so stupid. We are model tenants, both very high income... but we have a cat so we are ineligible to rent 90% of properties, no exceptions.

That is because it is a landlord's market right now.

I don't think governments have any business promoting home ownership though and society shouldn't make you feel like you didn't "make it" until you are strapped with a mortgage you can't afford.

You are though, are you not? Ie the only thing that changes between renting and owning is who is maybe economies of scale. For sake of discussion, lets say you rent from someone who owns a spare house. You are paying everything you just mentioned, on average, as the renter. If you don't, then the owner is losing money - and that's not likely.

Now with a larger business owning your home/apartment/etc, i imagine there is room for economies of scale. They don't have to pay to have a plumber come out, they might already have one on staff or retainer. etc. Perhaps they get better deals on land taxes and whatnot too?

But lets not forget - you're paying for everything your landlord is, plus profit. Always. The only way it works out cheaper for you is if they are more efficient at it.

landlords aren't guaranteed to make money. it's true that monthly rent is almost always higher than the monthly mortgage payment on that property, but the landlord can only profit if, in the long run, the difference between the rent and the mortgage is greater than the overall cost of maintenance and possible devaluation of the property.

personally, I could afford to put a down payment on a mortgage if I really wanted a house where I live, but for now I am happy to pay extra for the ability to relocate at the end of the lease and to avoid the risk of actually owning a house.

I've noticed that over the long haul (in my area, anyway), it's neither cheaper nor more expensive to rent vs own. In the short term, one can be more expensive than the other, though.

But the big difference is that you're building equity if you're buying, and you're not if you're renting. So which is better, financially speaking, depends a lot on what you're trying to accomplish.

I assume you mean adjusted for inflation here? Even then that hasn't been true.

The problem with renting is that you're still paying the mortgage, only in the renting case you're also paying the middleman who then pays the mortgage. This is why rent per month is higher than mortgage per month for the same house. So the returns from that downpayment you instead invested need to make up for the monthly loss in rent, plus the lack of an asset at the end of the process.

It's not a small difference either. My current mortgage is $1250/month for a single family home. 13 years ago when I was renting the rates started at $1600/month for a tiny studio apartment unless you were willing to commute an hour each way. Rents have gone up in the meantime. You need to be making some baller returns on your downpayment if you're going to beat that.

This comparison isn't entirely fair because the rental unit also included maintenance and groundskeeping. In my house I have to do all that work myself or hire someone. However, in the rental unit I had to pay for the utilities. This is a problem because the landlord will never replace something like an AC unit or a refrigerator with anything but the absolute cheapest and most expensive to run model. In my house when I replace it I have the option of buying the high efficiency model and enjoying the cost savings over the life of the unit. Plus when something breaks in my home I just fix it or go out immediately and hire someone to fix it. In the apartment you have to contact the landlord who then sits on it for two weeks before contacting his maintenance guy who only comes by once every couple of weeks to look at it and then order the part so maybe he can fix it on his next visit. In the meantime I'm freezing my ass off with no heat for all of January. I don't miss renting at all.

In sane markets, yes. However, in markets experiencing property bubbles the opposite is often true.

I recently moved to a new city where prices have doubled in the last 10 years as a result of foreign buyers sending prices skyrocketing, and we currently rent a house worth $1.8m (valuations are public here). Assuming 20% down and a 30 year mortgage at 4% interest, we'd be looking at a monthly mortgage repayment of ~$6.9k with ~$4.8k of that being interest if we were to buy the house. Instead we rent it for $3.2k a month and happily save the $1.6k we'd otherwise be paying to the bank.

Friends look at me crazy when I tell them I have no interest in buying, but until the math is flipped and I start losing money by renting I'll happily let the landlord worry about maintenance and continue to enjoy my free time.

Isn't rent also remarkably high in any areas where there's decent levels of employment?

You can either rent a house, or rent the money to buy one. Usually the price of renting a house is the price of renting the money plus a margin for maintenance and profit.

But since homeownership is pretty much the only situation in which normal people can make a huge leveraged investment - you can't borrow $100k to invest in stocks, they won't let you - it's a very advantageous form of investment.

The only way I can see this changing is the forever renters starting to acquire enough political power to overrule anti-building NIMBYs. Birth rates aren't falling fast enough to reduce demand to meet supply.

That's the normal state of affairs. When you buy something to rent out, there's no profit unless the rent is higher than the time value of the money.

There's nothing inherently wrong with renting rather than owning. Fiscally it doesn't make sense to buy a home unless you plan on living in that location at least 3 years, and probably more. Heck, just selling the house will cost you 6%. Having the house sit empty between renters costs a fortune.

Um, a place to live? That’s something that obviously has huge value to people.

I rented 5 different places for a cumulative ~12 years post-college and each of them were in circumstances where I didn’t want the commitment and hassles of property ownership. One place I lived for 6 years and knowingly and happily paid more than the investor’s mortgage for that time. (He is a real estate agent/investor and we talked several times about the topic.) He got economic benefit; I got shelter without a long commitment and without tying up much money up-front.

If I need two years’ worth of shelter, it’s convenient to be able to buy that amount rather than buying a property that yields an infinite series of it and selling that two years later.

'Maybe' in the case of buying a new property now to rent. But it's clearly the case for many or there wouldn't be places to rent.

In my adult life I have lived in ten rental properties and have purchased two homes (currently living in one of them). In my cases of home ownership, my property values increased enough over the time I lived in those properties that you could theoretically view the monthly outlay of my mortgage and taxes as nearly a zero sum game. However rent was always an expense and the amount of investment income I made on a theoretical “down payment” amount across the terms of those leases would not come close to erasing the rent I paid.

I realize this is anecdotal and specific to my location and frankly luck, but for me it makes having a mortgage make sense financially.

> In most cases, that's not true.

In most cases, that's not true initially.

Over time, rents rise substantially but mortgages are fixed and can go lower by refinancing.

When I bought a house, the monthly cost was a bit over 200% of my rent at the time (of a roughly similar-sized rental unit). Yes it was painful in that first year.

It only took ~3 years for the rents in the area to become similar to my then already lowered mortgage via refinance.

Fast forward a couple decades and my housing costs are ~20% of rental rates in the area.

By the time I retire the mortgage will be long gone. It is heartbreaking to watch older people on fixed income having to deal with ever-rising rents.

I can't see how that's possible.

Rent is pissing away money, and from the rates I've seen, the monthly rent on a house is often very close to the monthly mortgage payment, so the "investing the difference ins S&P500" ends up being moot.

For my house, Zillow estimates the monthly rent value at $2,400/month, which is almost exactly what my mortgage payment (including property tax) is. And in 10 years, that payment will become ~$570 once the mortgage is paid off and all that's left is property tax. Meanwhile, if I chose to rent instead, after 10 years, my rent would probably be well $3,500/month.

Yeah, owning means I'm paying maintenance and repair costs, but those certainly don't add up to anywhere near what the rental payment would be.

I fully reject any claims that in the long term, renting could ever possibly be better than buying from a purely financial perspective. A mortgage is constant (Unless you fell for the scam that is an ARM) and eventually goes away. Rents perpetually go up and don't leave you with an asset.

This is not a malfunction of the market. Economically renting is always expected to cost more than buying. Renting has advantages over buying:

* No need to have a significant amount of cash to deposit

* Flexibility to move out into a larger or smaller house that better fits your needs

* No exposure to the risk of changing housing prices (which don't always go up, and can be hugely impacted by policy)

* Less headaches over maintenance, etc. This is (typically) your landlords responsibility.

So, just like a flexible airfare is more expensive than a 'no changes allowed' fare, it makes perfect sense that a rental house on average is more expensive than owning a house. Also, if rental prices are lower than the mortgage cost, the owner should probably do something different with that house.

TL;DR: rental prices are expected to be higher than owning, because renters are willing to pay a premium, and because landlords otherwise have no incentive to let out a property in the first place.

Parent's comment still stands, but you have to take the regulation into account: * people can live in a bigger house than they could otherwise afford, e.g. if they can't make the deposit * people can live in a bigger house than they could have the mortgage for. (e.g. Dutch regulation you can mortgage 4.5x your yearly salary. If you make 40.000 Eur that is 180k, which perhaps buys you a small studio in Amsterdam). Renting you could probably live in a 250k valued house, because those restrictions don't apply.

This is nearly never true. Tell that to all the people who say if they'd only bought a house X years ago but now they are priced out of the market.

The only scenario where what you say is true is if you bought at the peak of a decaying city, which can happen but isn't the normal scenario.

> Yet I could rent it out at a profit.

You seem to be assuming that you can find a place to rent for a price that is substantially under market rent, just because the landlord has a low cost basis on it and can make a profit even at such low rent.

Which is totally not how landlords price their rent. They'll charge what the market can bear even if their effective cost basis is zero (say, they inherited the property).

You're just trading the stream of money that goes into rent for the stream of money that goes into taxes and interest on your loan.

You can't say "owning is better than renting" or vice versa without crunching the numbers for your particular situation.

When I bought my first house I was paying out more every month (by quite a bit) than I did as a renter. Then I rented for awhile and bought my current place, in which I come out ahead vs renting.

This is not always true. Often, the price of real estate outpaces rent. I.e. renting is cheaper than buying.

As a renter, you're not paying property tax, insurance, repairs, maintenance, and maybe utilities.

As a renter, you have no risk. Remember 2008 when housing prices tanked?

Making money off your house often depends on how good a negotiator you are.

Most people neglect to consider transaction costs. For example, you have to pay your real estate agent 6% of the sale price of the house. The house also may sit vacant for many months waiting for a deal, this is all dead weight cost.

The first few years of your mortgage, you aren't gaining much of any equity. It's nearly all interest payments.

A renter can walk away any time. This is why renting is better if you're going to stay less than 5 years.

What's your source for this? I've rented in and around the Boston area for 10 years now, and my husband and I just purchased a home last week. Our rent for a 975 sqft 2br apartment on the seventh floor of a large complex out in the suburbs was $2,100/month. No balcony, no yard, no storage, although utilities are included. We definitely weren't getting a good deal, but our rent had increased from $1800 over the last 3 years.

Our house is in a better location (more convenient to public transportation, better schools, "cooler" restaurants), much bigger (1410 sqft, 3br/1.5 bath, office, plus unfinished basement with 6'6" ceilings, attic, front and back decks, backyard, 2 car detached garage), and our monthly costs -- INCLUDING taxes and estimated utilities are $3,200/month. Renting a house like this would run you $2400-$3400 month, if Craigslist is any indication (searched for 3br full houses in the same neighborhood as ours -- near a college, lots of rentals).

So, yes, we're on the higher end of rent, and we have to do our own repairs, but the costs of rent are paying for far more than just interest on a mortgage. The tax benefit is nice icing on the cake, but it barely factored into our decision to buy, rather than rent.

If you're not hung up on owning, this is a great spot to be in. I can already rent a luxury condo here in Toronto for less than (mortgage interest + property tax + maintenance) would cost me if I had purchased it. Rich landlords are effectively subsidizing our rents (which are very, very cheap compared to SF or NYC).