A conundrum
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See, it's the opposite here. In the nearby city (pop 90k), the downtown areas are hellaciously expensive because they're closest to amenities. The farther you get from grocery stores and bars, the cheaper it gets. It's so weird to me that there are places where living next to shopping is cheaper than living far from shopping. It doesn't help that the downtown apartments are being remodeled into luxe apartments and the suburbs and rural areas are where the affordable housing is being built.
The suburbs are cheaper, but you have to drive to do the shopping, and the rural areas are cheapest because everything smells like cow when it rains, and you have to drive to do the shopping.
Edit: My rural neighborhood is a combination of apartments, trailer homes, and detached housing, and it's more than a mile from groceries.
In my area it means you can rent something out thats had nothing but the bare minimums of renovations for the past 40-60 years and still get a decent market price for the unit. The stuff that is farther out is newer, more spacious, and often considered in a safer area, so they can ask for more. You are getting a better unit farther out but you gotta pay for it vs living in something run down but saving on rent and transportation.
There exceptions of course, it really depends on the age and desirability of the neighborhood
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Yeah, I'm living rural because living in the city is still more than twice as expensive. Some bad faith actors want to reclassify it as 'suburban' because it's doubled in size since covid, but I'm closer to cows than the grocery store, so that falls flat.
Some places literally build cookie cutter subdivisions on a chunk of land in the middle of farms they bought so the classification may not be that far fetched depending on the circumstances. My parents house is technically zoned as agricultural yet the recent sprawl of nearby cities means there is now a mcdonalds less than 1km away and suburbs creep closer each year.
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I've never paid a mortgage, but £500 seems pretty low. Do mortgage payments tend to be that much cheaper than rent prices?
I think most of the people disagreeing with the post are from the USA, which has completely different costs/taxes/prices etc.
In the UK (as the original post is), it depends where you live - our mortgage is about £350 per month (5 bed terrace), but if would have been almost £500 a month without the deposit. Rent in the area is about £600 - £1500 per month, for similar or smaller properties.
Note that this is in Northern UK, in the sort of town sometimes described as "a bit of a shithole". I could get a train to a town an hour away and the prices would literally double - but the ratio between mortgage and rent would be pretty much the same.
Even with the cost of repairs, and a tiny bit on insurance etc, it's a significant saving. Also, the repairs actually get done, which was not the experience I had in rented accommodation.
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In my area it means you can rent something out thats had nothing but the bare minimums of renovations for the past 40-60 years and still get a decent market price for the unit. The stuff that is farther out is newer, more spacious, and often considered in a safer area, so they can ask for more. You are getting a better unit farther out but you gotta pay for it vs living in something run down but saving on rent and transportation.
There exceptions of course, it really depends on the age and desirability of the neighborhood
The stuff that is farther out is newer
But built shoddier and rented out cheaper in my area, haha. You could get a newly remodeled apartment in a historic brick building for $$$ downtown or a new apartment in a building that went up in a couple months and is already leaking for $.
I think it depends enough on area that we really can't make blanket statements.
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To be the devil's advocate here. Rental payments vs mortgage payments is not an accurate comparison of the true financial burdens.
With many rentals some if not all utilities are included in the price of rent, whereas homeowners must pay the full cost of utilities. There is also the additional cost of home insurance and property taxes. Most rentals have the majority of their maintaince covered whereas the homeowner is responsible for lawn cutting, gutter cleanings etc. The cost of repairs and maintaince is not negligible. While renting if the heat quits or an appliance breaks, the landlord is supposed to cover the cost but owning means you must take that full cost.
In the posted example, having double the mortage payment in rent payment is probably adequate to cover the additonal costs but the comparison of renting vs owning is not black and white. Several financial managers have even studied that depending on your needs and income, you can actually be getting ahead financially by renting if you don't actually need the full benefits of owning and are able to maintain a store of wealth through other investments. This is especially true if you are in a rent controlled unit.
It seems like you are assuming an apartment rental and not a home rental. In my experience home rentals work very differently. Utilities are not included and you do end up paying quite a bit to maintain the home.
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I've never paid a mortgage, but £500 seems pretty low. Do mortgage payments tend to be that much cheaper than rent prices?
Anecdotally I pay over 200% the cost of my father's mortgage to rent a home in a lower cost of living area.
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Some places literally build cookie cutter subdivisions on a chunk of land in the middle of farms they bought so the classification may not be that far fetched depending on the circumstances. My parents house is technically zoned as agricultural yet the recent sprawl of nearby cities means there is now a mcdonalds less than 1km away and suburbs creep closer each year.
wrote last edited by [email protected]And I do think this is part of the rural angst that has taken root. The town started out as a farming town, with a vibrant community centered around agriculture, that is slowly getting replaced with boxes made of ticky-tacky. Combined with income stagnation being worse in outlying areas, there really is a sense of erasure that has no outlet.
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Definitely not as low as £500… but mortgages are generally cheaper, sometimes much cheaper than rent. Example: we own a 5-bedroom house with a mortgage of $1,900, my step-son just moved into a 2-bedroom apartment for $2,200 rent.
wrote last edited by [email protected]I was paying $3,300/mo rent back in 2020. Got a mortgage at the low rates of 2021 and got a $2,800 monthly rate. So it seems like it's cheaper. But once I add the property tax (~$1,000/mo), HOA ($500), home insurance (~$300), it's not at all cheaper to own than to rent. Plus paying for maintenance on our own (had to replace both the fridge and the washing machine in the time since we moved) adds up too. Not saying it was better to rent, but it was definitely cheaper.
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I was paying $3,300/mo rent back in 2020. Got a mortgage at the low rates of 2021 and got a $2,800 monthly rate. So it seems like it's cheaper. But once I add the property tax (~$1,000/mo), HOA ($500), home insurance (~$300), it's not at all cheaper to own than to rent. Plus paying for maintenance on our own (had to replace both the fridge and the washing machine in the time since we moved) adds up too. Not saying it was better to rent, but it was definitely cheaper.
Our home insurance and property tax are escrowed and included in the $1,900. And no HOA. But the maintenance is real, something is always breaking. Had to buy washer and dryer, replace the stove and the dishwasher. I would still much rather own than rent though.
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People don't want to twerk anymore!
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Actually i guess the bigger issue is that we're gonna be unemployed in 15 years due to a declining demand of human labor and then who pays back what?
Today you could afford the pay-back rate, but not in the future, and the banks are well aware of that.
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Not buy a house, inherit a house from our boomer parents.
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The deposit is to cover expenses/losses that arise out of defaults. Housing loans have been lile this forever. Not everything is a conspiracy.
the deposit is the keep young, inexperienced and glowy-eyes people from making commitments they don't have the stamina to handle.
it happens a lot that 20 year olds want to buy a house with their new partner that they think they're gonna be together with for the rest of their lives, only to have it all fall apart 5 years later. forcing to you save up a bit before actually buying the house means you go through a lot of experiences before you actually buy a house, which makes it more likely that you'll have the far-sightedness that's needed to actually buy a house.
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500 Vs 1000? What year is it?
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the deposit is the keep young, inexperienced and glowy-eyes people from making commitments they don't have the stamina to handle.
it happens a lot that 20 year olds want to buy a house with their new partner that they think they're gonna be together with for the rest of their lives, only to have it all fall apart 5 years later. forcing to you save up a bit before actually buying the house means you go through a lot of experiences before you actually buy a house, which makes it more likely that you'll have the far-sightedness that's needed to actually buy a house.
Not necessarily young but inexperienced yes
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They did this before it worked out really well around 2008
Lemmy: blames capitalism for making loans too hard to get.
Also Lemmy: blames capitalism for making loans too easy to get.
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I always find this to be such a poor argument.
Yes unexpected maintenance can sometimes be a huge problem, especially in the first couple of years, but after that you can tap into home equity and repair say a roof. Everything else while expensive is still cheaper than renting. Using the OP's example 1k vs 500, I can assure you you will never have consistent 500 repairs per month.
As for the taxes the people in my city nearly went ballistic when the city increased the rate by 5%. At the end of the year it costed me $200. Per month that's about $16. I've never lived in any apartment anywhere where rent didn't increase by at least $50 per month each year. Even if someone had a home twice as valuable that's still a very small monthly cost.
Additional once you get past the first 3ish years rent prices have greatly outpaced your mortgage and you will be saving a lot of money compared to of you were renting.
I'd like to wrap up with a question. If owning a home was such a sink of resources why do people become landlords?
Speaking to the post, I feel like there is a tipping point between OP and your points and the post is showing that. If you can convince the bank to loan you the money somehow you then start to build more capital which can pull you out of being “poor”. There are many variables and wildly varying degrees of this scenario, but once you start your ownership experience, some people can work it quite hard and build enough capital to own multiple residences and rent them out. (Those already in possession of capital are out of scope of OPs post.)
Rent is paying the landlord for everything every month. No repairs lately? Too bad, you’ll still pay for the possibility. The exchange is that you should never worry about repairs (or taxes) as the landlord handles everything. Once the landlord figures his margins are too tight, they raise the rent. Lots of variables here too and that makes blanket statements about which is better more difficult. I advocate home ownership, but I feel terrible for young people. Runaway greed by those that already had the capital has changed things. The young folks I know that are able to manage it all had help from relatives.
The act of convincing the bank and owning a home is getting more and more difficult. Impossible in many places and improbable in others without Herculean efforts. OPs post expresses this perspective.
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I can't believe someone watermarked their worthless reply to a post that said the same thing more subtly and smartly.
Covid was the wake up call I needed to realize that while I understand the nuance many others need the point made for them to understand the point of the scenario. We understand Eleanor. Some understand Callum.
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Lemmy: blames capitalism for making loans too hard to get.
Also Lemmy: blames capitalism for making loans too easy to get.
It's almost like capitalism is bullshit
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Lemmy: blames capitalism for making loans too hard to get.
Also Lemmy: blames capitalism for making loans too easy to get.
More like blaming capitalism for the fact that it's necessary to get a loan just to afford something as basic as shelter
