2 HN users recommended this explainer2 months2018–2019score 2
Years with an HN recommendation, 2007–2026
HN commenters cite it as a clear, numbers-based rent-vs-buy comparison when housing-as-investment debates come up.
A short Globe and Mail animated explainer on why renting can leave you as well off as buying a home. It walks through a rent-versus-buy comparison using Toronto numbers and the opportunity cost of a down payment. The video notes it dates from 2015 and the housing market has changed since.
“The TL;DW is that if you compare a renter & a buyer from day 1 to the end of a 25 year mortgage, both the renter and owner will have roughly the same net worth.” (HN, 2018)
The Globe and Mail also has a great comparison of rent vs buy using numbers from Toronto (includes closing costs, taxes, maintenance, inflation, etc): [this video] (buying comes out slightly ahead assuming you don't move for 25 years, and the renter averages 7.5%/year returns on their investments, and, and, and etc.) TL;DR buying is probably better if you don't move very often, but there are so many variables that you can't know beforehand -- that you need to be able calculate whether renting vs buying is more profitable -- that it's probably not worth worrying about. EDIT: The NYT also has a nice visual calculator for this: [link] You need to know about 21 variables (that can change over time during the lifetime of your mortgage).
> you very well might come ahead There's a wonderful video[1] explaining just that. The TL;DW is that if you compare a renter & a buyer from day 1 to the end of a 25 year mortgage, both the renter and owner will have roughly the same net worth. My folks always talked about how renting just pissed away money, but never mentioned how mortgages piss away an obscene amount of money on interest payments. (And repairs/tax/insurance/HOA/etc.) [1] [this video]
Renter and buyer end up with similar net worth over 25 years.
You’re forgetting about the opportunity cost of locking up all of that capital in an asset that has a high carrying cost (maintenance, taxes). The initial downpayment could have been used for other investments, so you have to compare how much you could have earned if you’d invested and rented instead of bought the house. [this video]
Renting versus buying and investment opportunity cost.
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