Hacker News Reader

Comment by MuffinFlavored | Hacker News Reader

Property taxes + HOA fees + homeowner's insurance aren't cheap. On top of that, a average run of the mill 3/2 home worth living in is about $350k-$400k in my area (South Florida)

If you can rent one out for $2.4k/mo - $2.75k/mo and not worry about the headache + not put 20% down... I'm sure that's a way to "stay poor" in some circles but... it works for me shrug

Also, last time I checked, if you file taxes as "single", I don't think the benefits of owning a home are even tax deductible. Meaning, the deductions for mortgage interest + property taxes combined aren't more than the $12k standard. I could be wrong.

View on HN

You can apply the same math in SF. Why own a house for $8k/mo (mortgage + insurance + hoa + taxes + upkeep + real estate agent fee, etc) when you can rent it for $6k/mo?

Home owners are expecting to get their ROI on appreciation, so the rental deals are just too good.

30year fixed mortgage rate of say 3.5% is only ~1-2% higher than the rate of inflation.

The cost of owning the house is really just interest + hoa + taxes + upkeep. You'll get your principal back out when you sell.

Over a long enough time period, the yearly home ownership costs will be less than renting.

Owning even in SF can still be a better financial decision than renting. There's a lot of tax advantages that you get by owning a home as well.

E.g take this place: https://www.redfin.com/CA/San-Francisco/201-Sansome-St-94104.... Costs about 5.4k/month. Removing principal & tax rebate its likely costing you ~4-4.5K/month.

Somewhat equivalent rental is 3.3k/month. https://sfbay.craigslist.org/sfc/apa/d/san-francisco-916-pac...

Cost of owning is ~1k/month more expensive. However you've locked in your mortgage for 30 years. Likely after 7-10 years the place you were owning will end up cheaper than renting on a monthly cost basis.

> There's a lot of tax advantages that you get by owning a home as well.

If adding together mortgage interest paid for 12 months + property taxes paid for the year together is less than the $12k single filer standard deduction, are there any tax benefits to owning a home?

If the interest + itemized deductions are > 12k, then yes. E.g. do you give to charity...etc.

Of course SF doesn't compare to most of America. I live in an area closer to MCOL. Median houses are ~375k (and the median house is fairly spacious, 2 stories), while a median 1BR apartment rental is ~1.1k/mo.

When you add the fact that mortgage rates are low and house prices went up +50% last year, home ownership sounds pretty nice. People that bought a house a couple years ago have already broke even when you count equity.

Well the $6k is gone at the end of the month but some portion of the $8k becomes equity.

The apt comparison is between 8k cash and 6k cash + 2k opportunity cost (this is captured pretty well by the NY Times calculator)

At a certain ratio it doesn't make sense to buy (eg. imagine 1k rent vs 8k mortgage) This ratio depends on the growth rate of house prices vs opportunity cost (usually the stock market). Both markets have experienced recent instability, and their historical returns are pretty similar so it's a bit of a wash, but you do get much better liquidity with the stock market.

Personally I'm renting for 3k an apartment that would otherwise mortgage for 7k, which seems like a pretty good deal.

Reply on news.ycombinator.com