The white picket fence. Space for entertaining. Acres of land to call your own. These were characteristics of the American
dream home. But is it still a dream worth chasing? Should you buy a home or rent? We're here at the White House at 6 Woods Lane
in Easthampton Long Island. You could own this place for the list price
of $12.5 million. With a 30-year fixed rate mortgage 3.991%
interest, you'd pay nearly $47000 a month, and that's not including closing costs, home
ownership insurance, or property taxes. Now, this kind of place might be a little
pricey for you, but the same principles apply at much lower levels when you're considering
whether to rent or buy a home. Now, before I break something in here, let's
get back to the studio. To buy or not to buy? That is the question. We polled our YouTube audience, and they had
a lot to say. One person said owning a house should not
be thought of as an investment. More like something between an asset and a
liability. Someone else shared a pretty common sentiment
these days that student loans would prevent them from ever buying a home. Another said abolish private property altogether. But, okay. A majority of you think ownership is the way
to go, and who can blame them? People think of buying a home as part of the
American dream. The driver of middle class wealth. A sound investment vehicle. Renting a place is less romantic. Throwing money away every month on a place
to rest your head and keep your stuff, but that calculus is changing. To help us run down the reasons why you may
want to rent and not buy, I spoke to financial planner Roger Ma. Let's talk about renting versus buying. Sure. So, can you tell me why renting is not throwing
your money away? Well, I think the flip side is why is buying
not wasting money? And I think that's a myth that when you buy,
a lot of your money is building equity, but that's just not the case. Your monthly payment, and the upfront, and
the backend cost of buying are wasted money as well. You've got mortgage interest, homeowners insurance,
property taxes, potentially homeowners association fees. Not to mention the huge closing cost on the
front end and the back end. If you don't plan to stay in the same area
for at least five years, it probably makes more sense to rent, and that's because of
those large closing costs. You need to give your home a sufficient amount
of time to potentially increase in value. I feel like the generation now growing is
maybe more likely to be on the move. Definitely. Between the ages of 22 and 40, the average
person changes jobs every one to two years, so they're changing a fair amount. So, I think having the flexibility to change
jobs could be reasons to rent instead of buy. And that's okay. There's no shame in renting, and if you look
around the United States, depending on where you live, it might actually be more affordable. ATTOM Data Solutions publishes a yearly affordability
index of buying verse renting, and in most places, 59% to be exact, real estate prices
are outpacing rentals. In fact, in all 18 of the most populous counties
in America, it's more affordable to rent than buy. Lets be real. For a lot of people, the choice of renting
verse buying may not even be yours, especially if you're young. I talked to Bloomberg reporter Patrick Clark
about the unique problems facing potential home buyers. Let's talk about the unique hindrances that
maybe new home buyers might face. There's not enough homes they can afford. Right? Sure. That would be a big problem. At the very most basic, there's an affordability
gap. A decade after the foreclosure crisis, we're
still building homes. Not just of where they were at the peak bubble
madness, but still below the number of new homes that we were adding in the mid '90s. The construction that is happening has skewed towards the high end. That is sort of pressured on the other side
by maybe age, people growing older and maybe not moving out of their homes. There's two different ways you can get listings,
right? You could build new homes or you can have
homes that were already occupied hit the market. There's some question of whether people want
to stay in their own homes and "age in place". Older people staying in their homes longer
is an issue, so there's some gridlock in the housing market. This generation is now saddled with more burdens
than previously was the case. Like way more. There's more than $1.5 trillion of student
loan debt outstanding. Yikes. The deck is certainly stacked against this
generation. But that long standing elusive goal of home
ownership seems so tempting. All in all, I'd have to put it this way: If
you have your heart set on home ownership, nobody's going to stand in your way. But you probably don't need to sweat it too
much either if you don't. That was probably expensive.
There's a lot of math involved depending on one's circumstances.
Every case is completely different. Sit with a reputable financial planner and crunch the numbers to see how it works out. "Reddit said it was cheaper, so I listened."
The best case for buying is that for people that are not fiscally controlled, it is a forced saving plan. They have to make the payment or they lose the house. So in 30 years they have a paid for asset instead of a lot of memories of all the money they spent.
My mortgage plus HOA fee (which includes water, trash, landscaping, exterior insurance, taxes) is less than what my rent was going to get jacked up to.
But mostly I bought control. I like having control. (And a garage.)
What I'm not a fan of (even though totally pro rent if the numbers add up) is renters are treated like second class citizens everywhere but DC, SF& NYC
I live in a high COL area. I rent a house for $2300, the house directly in front of mine sold for $750k.
It's an older house, 1200-1300sqft. Buying is pretty much out of question for me, at least in the foreseeable future.
Here is the best renting vs. buying calculator that I have found: https://michaelbluejay.com/house/rentvsbuy.html
The answer depends on a lot of factors.
What in the hell is happening with that blazer?
This is an argument I had years ago with my wife.
We were renting for $900 a month and looking at buying a house for $1600 a month. I'm saying it's too expensive. She says "What about the equity?" I say "Let's put the $700 a month in savings and have an extremely liquid asset". We can go on vacations with cash but not with a house.
I eventually gave in then the 2009 housing crash happened. Our equity was suddenly -$100,000. I let her have the house in the divorce because fuck that house.
BTW, I think we're headed for another downturn in the housing market. If you're gonna buy, save your $ now and when the downturn hits try to buy at the bottom with a solid down payment.