Single people don't want to spend their weekends alone in a farmhouse, and 3+ person families don't want to live the bulk of their time in a studio apartment. Meanwhile, that 300-500k dollar farmhouse could put your kids through private school or good colleges.
USDA agricultural statistics service
https://quickstats.nass.usda.gov/results/E0F5EB36-3313-3D7B-...
Two hours is a long time! Sit around for the two hours doing nothing, you'll see.
http://www.indexmundi.com/facts/united-states/quick-facts/al...
As much as I like currently not having a commute, it was certainly not time that was "crumpled and thrown away".
I, like you probably, think that it's not "too bad", but once you're away from this practice, you'll realize that you were wasting so much valuable time.
It's much better to separate it out than try to combine it in one suburban house.
This is far less true in regions with snow. Assuming you drive the vehicle in the winter, a non-trivial contribution to "wear and tear" on the car is rust which occurs even if the car isn't driven a lot. (Cars are far better in this respect than they used to be but rotted out fluid lines etc. is still very much a thing.)
If you only drive 5,000 miles a year, sure, but that's not typical.
Newish used cars with ~200k on them are usually good buys because often times it's someone who used it for work (salesperson, etc.) and just ground out the highway miles (which are nearly free from a wear and tear perspective)
If we somehow manage to magically share a car, it's not going to last a lot longer than if we're wearing out our own cars at our respective rates (mine faster than yours).
But you reinforce the point that the car sitting in the parking lot or garage is not simply an over-provisioned resource by reason of being idle. If your usage patterns are so different than mine it's unrealistic to expect a configuration where we would be able to share a car.
Car-sharing has many benefits, but a car is still worth more than two half-cars.
most common things expat complain here about - 1) going out becomes a rare experience if you are not single - just too expensive compared to anywhere else in the world; 2) the need for adjustment to swiss ways of doing everything (ie strict rules of living in apartments, massive bureaucracy and so on) - you need to change, they won't; 3) finding accommodation is often as hard as landing a job (which is often super hard, too much global competition) - they just don't build new housing, so prices went through roof and your resume and salary and skin color and nationality and no-pets-no-small-kids and everything needs to be perfect, otherwise goodbye. since there are 100-200 other people applying for same place; 4) having kids is prohibitively expensive, international schools are either paid by your employer or you put your kid to (good) public ones. You need to be seriously well-off for kids, or compromise on couple of things.
I live in Geneva, I love it here, but I am not here for salary. You can get much more value for your salary elsewhere in Europe for doing same job as here. Munich, London and couple of other places would work better. But I am a mountain freak, having Chamonix as 45 minute drive from apartment is priceless for weekends and having France 2 kms away makes spending a bit more bearable.
Renting is, unfortunately and quite inaccurately, viewed as "throwing money away." The real estate industry does a great job brainwashing people that they should buy, buy, buy, that buying a house is a great investment and a very good way to build wealth. İt's probably one of the greatest lies perpetuated in modern times.
But most single family home landlords are small time operators who can't be counted on to provide long term occupancy. I would find such an arrangement untenable.
For those who want to be mobile I completely agree that renting makes sense, but for many folks being rooted leads to ownership, rather than ownership leading to being rooted.
How is renting wasting money? Are you not living in the unit? You're gaining 100% benefit by paying rent and receiving a roof over your head.
You must mean a waste by losing out on building equity?
That's a crap shoot in itself. A hot housing market and equity can go into the toilet at anytime due to very irrational market conditions. Look at the housing markets of Las Vegas or Miami for examples.
Consider, for brevity, a mortgage where the monthly or yearly payment, including taxes, is equal to the rent you would be paying for the same place.
Then live in the place and go about your life for several years, until the mortgage is paid for.
Option 1, you took the mortgage. Now you own a house and you are not due any more payments. You can keep living there and use the excess income for other purposes, or you can sell the house and upgrade, or whatever.
Option 2, you kept renting. You are still under a landlord, you are still due monthly payments, and you still don't own anything more that what you started with, after all those years.
In this very real sense, rent is wasted money.
Over the life of your average 20-25 year mortgage you should expect to have to replace numerous appliances, encounter a couple of catastrophic and unexpected issues (leaking roof, etc.), and after 10 years the decor will be outdated and shabby.
To get optimum resale value you will have to sink a lot of time/money into remodelling (the money you will likely recover, but not the time/effort), then you have the stress of trying to sell the place.
You are also bearing the risk of a downturn in the housing market, and could end up in negative equity.
As a renter you have greater flexibility, much greater certainty over your outgoings, etc.
Still, I think for most markets in the US anyway, buying does make economic sense if you plan to stay in it for several years and enjoy or don't mind taking care of a building, to use peer's phrase.
This calculator is excellent, btw: http://www.nytimes.com/interactive/2014/upshot/buy-rent-calc...
And besides finance you need to consider if you want the responsibility of owning a home. Cutting the grass, shoveling snow, cleaning gutters, fixing things, painting, etc. It's a lot of work.
Owning makes sense for some people but there are a lot of benefits to not having to spend your life taking care of a building.
In the Bay Area at least, a single-bedroom apartment is easily $2000 a month. If you play your cards right, a single-family home in a desirable neighborhood for tech workers or others can be had for under $1m with 4 reasonably-sized bedrooms, a garage, and a yard. You can then rent out 2 of the bedrooms at $1400/month each and end up with your mortgage payment from your tenants each month. There are still maintenance costs and very significant property taxes (~single-tens of thousands per year on such a property), but you also build equity, which you can later sell (minus the mortgage interest). Depending on the mortgage, you could also use this situation to over-pay mortgage payments in order to pay off the property faster and reduce the amount spent on interest if that works out to a better investment opportunity than anything else you could do with the same money (any early payoff penalties included).
It does seem to me that renting is a mixture of paying for convenience and throwing money away, given the above scenario and considering how after 5 years, the home owner ends up with ~$150k in equity assuming the housing market stays flat (it doesn't in the Bay Area, e.g. http://www.paragon-re.com/3_Recessions_2_Bubbles_and_a_Baby ) , taxes, maintenance, and interest included, you should still come out ahead with the house. Once you also factor in that renting gets you 8-20%+ increases in rental price per year, while the house value appreciates on the low end of that range over the same amount of time (and also that you can raise the rent for your lodgers accordingly), you really start to see why houses in the Bay Area are attracting foreign investors and starting bidding wars above asking price for nothing-special properties.
Edit: lastly, the point I feel everyone neglects: unlike other investments, your first property has the additional advantage and value that you can live in it, so comparisons to other investments become quite different. Sure, you could take your down payment and put it into ETFs, and on paper the yearly average gains might look similar, but if you suddenly lose your job, the ETFs won't provide a place to sleep at night.
What happens when your renter quits paying rent and starts legal proceedings based on a grievance, real or perceived? Now you cannot sell the house nor are you collecting rents.
Lastly see my other comments. Any investment that pays dividends gives you a place to sleep. The fact that you live in your investment is uniformly a downside, as it hinders liquidity. The fact that you can rent is again not relevant. Most financial investments begin to return a percentage immediately. Renting rooms is just less liquid and more risky than investing in a balanced portfolio.
The Bay Area is but a single market and not representative of all markets. There are many more markets that haven't seen similar growth. The Bat Area is the exception.
If you are paying off a home and you lose your job, if you've leveraged yourself like many home buyers have then you might lose your home! Especially if you lose your job because the economy tanked and home prices have ranked leaving you underwater owing more than the home is worth. And then the bank takes the home back and your entire investment is wiped out. Look to 2009 for an example of this. And rents dropped significantly at that time.
The opportunity cost of tying up a solid down payment needs to be considered too. 200k down could be used in other places too.
I think most people who buy with 20% or less down don't understand how leveraged and dangerous their position is.
Lastly if buying a home was a good way to get rich then we'd have a whole lot more wealthy people.
It's not a bad thing at all and for certain people in certain positions it's a good thing. If you can buy with cash and have at least 40% of your bankroll left afterwards then yeah it makes sense. If you plan on staying in a place forever (laying down roots) and can afford 30% down and still have 2 years of mortgage payments in a cash savings account it makes sense.
I feel like a lot of people buy homes because they just think that's what you do. A home has meaning to a lot of people. But the opportunity costs and risks are large and the rewards are generally a wash with renting long term in most markets with the exception of places that get a 30 year boom or other rare real estate lottery scenarios.
There are ways to win but 10% down and a 30 year mortgage is rarely it.
Two very relevant examples of when the "amortization" argument won't apply:
- a rising market in which the landlord bought a long time ago. Their purchase price was way below the area's current market value. So they can cover their expenses while you still pay less in rent than what a modern-day mortgage would be.
- a home buying market that's expecting continued pricing appreciation. Homeowners can (and will) rent out property at a loss with the expectation it'll be made up in a higher sale value years down the line. Whether or not this actually happens, of course, depends on their ability to accurately predict the future.
There's also the inverse case of declining markets, when landlords can end up over the heads financially and simply can't charge the rates they need to cover their mortgages, because the entire area has turned south.
There are very real financial risks to landlords. They can't just charge whatever they want. It really depends on the state and future of their market.
In your first example, the landlord is amortizing expenses by charging rent above their ownership costs. It doesn't have to be at or higher than then current new mortgage rates.
The second example does happen. However, if the landlord's bet is wrong, and they have the runway to float the extra expenses for a while, they can simply wait for rents to rise and over decades make it back and begin amortizing then. Or they can sell and hope to make it back.
Property owners have many more financial options with their property than do renters.
Regardless, the point is that a lot of people see the mortgage repayments equalling the rent and don't think about the extra costs of ownership.
You are correct that rent != mortgage and shouldn't be compared too close. Renting is a 100% loss, while mortgage is <100% depending on where you are in your repayment plan -- allowing the owner to recoup some of their housing costs after time.
After the mortgage is paid off, the renter still continues to loose 100% of their housing costs while the owner has only care and maintenance (and taxes) of the property to account for.
Under normal market conditions, borrowing money becomes expensive as monetary supply decreases. However, very active central banking systems the last couple decades has changed the story on this.
If the mortgage is equal to the rent, then potential landlords are leaving money on the table. That rarely happens for long. Typically most landlords in competitive markets will leverage and take up interest-only mortgages to the extent were rent only barely covers interest and maintenance, and make most of their money on capital gains.
For most people a repayment mortgage and maintenance and appropriate insurance should end up more expensive than renting for that reason.
It is possible to come out financially on top by owning, not least if you're willing to do maintenance yourself etc., but it's not nearly as clear-cut.
I've done very well buying, basically out of luck because I happened to buy on a tracker mortgage briefly before the interest rates crashed after the financial crisis, but if I'd foreseen that change I'd have been filthy rich instead of just a bit better off on my mortgage. But a tracker mortgage adds risk, and it could just as well have gone the other way. I took that risk because I could afford it.
For me, the main economic benefit is that it is a hedge against unforeseen rapid changes in housing costs. If the area I live in suddenly gets drastically more popular than nearby areas, then I can still afford to live here. The cost is that I take a risk with respect to making it harder to move, but with a son in school locally that is not something I'd consider lightly anyway, and that if interest rates swings the wrong way I may still end up paying more overall.
1) mortgage the property you wish to rent out
2) rent it out
3) wait until rents increase and earn profit (mortgages do not increase while rental rates do)
The most popular kind of mortgage is one where the rate is "fixed" or locked at the then current market rate, and it won't change regardless of market forces. The great benefit of these kinds of mortgages is that the repayment terms operate without respect to any inflationary forces or changes in lending markets. Repayment is typically 15, 20 or 30 years.
Historically, and I intend this to mean for something like 99% of history where these types of mortgages have existed, this means that by the end of the loan period, the monetary amount per repayment period (say monthly) is the same, but it's actually cheaper per repayment period in then future real currency. In other words, in 30 years, you're paying for housing at nominal currency values from 30 years prior. Given historic inflation rates, at the end of a typical 30 year loan, this can be around 50% per payment period discount over then future real currency value.
My understanding is that in the U.K., a "fixed rate" mortgage is what we in the U.S. would probably call an "Adjustable Rate Mortgage" or ARM with a fixed 2 year rate (though I believe the closer approximation for an ARM in the U.K. is a discount rate mortgage).
There are also variable rate mortgages, in some markets those are the only types available, in others they exist to cover higher risk borrowers but in others they offer some kind of monetary benefit to the borrower. Depends.
While mortgage rates under such systems can increase, it's not generally normal for them to over decades. For example, in the U.K. over the last 30 years, it's been the general trend for the rates to decrease. (http://www.bankofengland.co.uk/boeapps/iadb/Repo.asp)
Even if the rates do increase at some slow rate, the average of the mortgage payment is still likely to become cheaper over decades than the then future rental price. Following general inflationary trends, rents in most markets have doubled in the past 30 years, while a person who took out a mortgage on a house 30 years ago will be paying much less or will have payed off the property by now and has no specific monthly housing costs.
That's hardly always true
I have better places for moneys(some investment, some wasteful) and I get to move whenever I please... although, I have had to move when it didn't please me, too.
And somewhere like London, renting a whole property is often just as expensive or more expensive that paying the equivalent mortgage would be. So you wouldn't even save any money by renting.
In the short term, the renter makes out, because the owner has to assume taxes and maintenance, but over the long term, the existing mortgage doesn't increase while rent does and the property owner starts to cover those costs and then starts to make money off of the property. Once the mortgage is paid off, the rental money is pure profit.
Unfortunately there are caveats. Last time I tried that, my landlord claimed that my rent was already lower than the market average for my area and thus I didn't qualify for the reduction.
A mortgage is a bit of a jail sentence. Saving money and purchasing a place to live is the right way to do it.
No one will tell you that because they dont make money from you putting your money in the market.
Saving money is the right thing to do---putting all of your savings into immovable property may not be.
There is no other investment offering that security. Ask Etrade if you can have a place to live and food to eat if all your trades go wrong :)
Most of these kinds of arguments seen to stem from some kind of fantasy that renting is a smart choice because look at how we're pulling one over on landlords with all that free stuff they have to give me.
But no rental market can survive when landlords are losing their shirt to paying for other people's expenses.
And yet rental markets are full and robust everywhere which means landlords make money on the exchange, otherwise the entire rental market would be controlled by rapidly impoverished idiots, which is obviously not the case.
Landlords make money in several ways simultaneously, but providing charity to renters is not one of them.
Rents also tend to go up with inflation, once you enter into a mortgage agreement, mortgages do not and thus you end up paying less over time (in real dollars) to live than if you rent. Since most people's income goes up, this means that renting tends to stay at about the same percent of income over a person's lifetime while it becomes less and less of a part of somebody's income who has purchased.
To compare correctly you must assume both people are starting the same
Another important reason homeownership pays off well for many is that the investment is leveraged.
Also, in the US, entities like Fannie Mae combined with tax deductions amount to a government subsidy for home buyers. You can borrow $400K to buy a house at a very attractive interest rate and, on top of that, claim a tax deduction for the interest payments. But what rate will you get if you want to borrow $400K to place a leveraged bet on the price of gold or oil or Apple stock?
My parents paid off a $200k mortgage in 15 years. When they sell the house and move, they will get $200k - breaking even.
Meanwhile, I've been renting for 15 years and will never get that money back. It's just a loss.
Think of the math this way. A $1mil condo in New York generates approximately 45k/yr income, or 4.5% return on investment per year in rents. Subtract taxes and amortization and ask yourself, can you get similar returns elsewhere? You could for example purchase an index fund with the same $1mil and contribute the gains towards rent. Either way you are living "for free."
It is however risky not to diversify. So if the $1mil is all you have and it is all in the house, you are in danger. Additionally, property is not very liquid. In the downturn it would be difficult to exit. For these reasons, I believe house ownership only makes sense as a portion of one's assets. Renting makes solid financial sense otherwise.
In the conversation of rent vs. own people often forget to take the opportunity costs into account.
The best plan here is to keep $800k in investments, move to rural nowhere and buy a huge house for $200k cash and live off the investment income entirely and not bother working. You can then rent off portions of the property (a bedroom, a basement, airbnb etc.) to surge your income if you need it.
If you don't have $1mil up front to start, like most people, building equity in the place you live makes far more financial sense over time than does renting because you both get to live there and because it doubles as an investment. Starting from the same lack of a million dollars, renting only covers cost of living and does not provide for any investment opportunity.
Your last point ignores the significant costs associated with 1. amortization and 2. the liquidity problem. First, given a neutral market, the house decays in value: appliances need fixing, floors, heaters, boilers etc. We are just used to rising prices due to speculation, but nothing guarantees the upward trend. Second, consider the cost of converting cash into house and the other way around: mortgage fees, interest, buying and selling fees, plus real estate taxes.
The New York Times has an excellent calculator on buying vs. renting. The math just does not support your conclusions. Buying wins out after 10-15 years GIVEN an upward real estate market. With any downturns, renting wins out indefinitely. Include the risk of investing into a single instrument (all you money is in the house) plus the stresses of ownership (shit goes wrong all the time and costs you money) and the picture is not so clear at all.
You are right that property ownership is more illiquid, but supposing I had a million dollars invested making me a better than 4.5% return, why would I pay rent when I could just buy a house with that money instead? At the end of the mortgage period I'd have my original investment plus ownership of real property, while the renter would only have their investment dollars and would have to continue the investment-for-housing scheme for the rest of their life.
> First, given a neutral market,
This is a false assumption as markets are almost never neutral. It's impossible to be a market oracle, but historic trends show a general upwards movement in most well functioning economies. It's a better than chance bet that most markets are thus net positive. You are correct though that nothing guarantees this upward trend.
The New York Times calculator is pretty good, but misses the simple fact that you need to live somewhere forever and not just for the period of a mortgage. Thus any comparison should be made with how long you expect to live.
The picture is very clear, you will likely need housing longer than 10-15 years, and if that's true, then buying property nearly always wins over renting.
Fortunately, at least for homes it's also a solved problem. Take your data to the below calculator, and get on with your life.
http://www.nytimes.com/interactive/2014/upshot/buy-rent-calc...
Also, the burden of being rooted, and of having to maintain a house, could be such a significant detraction to quality of life that it totally makes up the difference.
Also, at least in my case as a relatively young American, living in a house is pretty much to opposite of the lifestyle I see myself wanting for at least the next decade.
Yea, so I'm renting a house where my agreement states that I am not allowed to fix or improve the flat myself. All changes must be agreed and made by agency. Current faults in the flat include: leaking water from toilet flush since seal is broken, reported 2 weeks ago, reminded 3 times. Water bill is on me. I would be happy if I could fix it myself, I would save money on water, calls made to the agency and not have the noise of leaking water, it's annoying. Aver salary in my city is ~£22k, and average rent just hit £720 per month, if we add bills and council tax, it's ~£850 which is more than halt of average salary. Hopefully I work in IT-financial sector and my salary is higher. I would be much happier to buy a house and be rooted to this city than to depend on renting agencies and increasing population which pushes renting prices a lot.
I'm making savings now to save for a house, if I get a mortgage for 20 years, my average cost of it will be £440 which is 2/3 of my rent...
That's the beauty of renting: if you don't like your current agreement, you can find another place with more preferable terms. Plenty of landlords allow tenants to change/improve the property.
Whereas when you buy a house, you are stuck with the same neighbors (and sometimes the same HOA) for a much longer period of time.
As an owner you get whatever agreement you wish to make with yourself.
However, you are right, it's slightly harder to move from owned property to owned property, so in many jurisdictions, property owners have significantly more rights about neighboring land usage than do renters.
For example, I once had a neighbor who was running an illegal business out of their house and causing all kinds of chaos. I presented evidence to the courts that their business was causing real estate market depreciation and was "damaging" the value of my property. The judge ordered them to cease immediately or pay me $50k in assessed depreciation. They shut down their business, put their property up for sale and were gone within a month, they paid my court costs as well. I had on my side, the HOA, local Sheriffs, county zoning inspectors, county ordinances, state ordinances and the agency responsible for handling business registrations. The actual time in court was less than 1 hour. My property value rebounded the full amount and my new neighbors were great.
On the other hand, when I was renting, I once had a neighbor with a serious drug addiction problem, who was stabbed once by a homeless man he let into his apartment so they could do heroin together. Even though he presented a clear danger to the entire community, it took 90 days to have a community hearing to evict him from the property. I could have left sooner, but would have had to pay a penalty to break the lease early and by this point local rents had gone up about 10%. So I would end up paying more to live, and be out the penalty of two months rent. I had on my side approximately nobody. When he was finally evicted, he was replaced by another recovering drug addict who occasionally lapsed and we'd find high in the stairwell. This was in a very nice area I might add -- and the county had selected our building as a pilot "integration program" for people coming out of non-violent criminal and drug rehabilitation programs. They had hoped that being around a nice environment might help them out.
Not where I live. Rental market is WAY too tight.
The interesting question being posed in these threads is a lifestyle choice: ownership or flexibility, lay your roots down or remain agile.
If you have enough money to pick and choose that's great. Otherwise home ownership may be the only route out of a precarious and unstable existence.
Owning a house outright is great (I'm 1/3 of the way there) but for most, a 30-year mortgage is no more of a wise decision than a rental. You're just swapping landlord for bank.
And even if you pay off your mortgage you still don't technically own it due to yearly property taxes.
The bank on the other hand doesn't care what you do with your alarms or anything else as long as their payments keep showing up.
Seriously though, renting sucks compared with owning, for all those nonfinancial reasons you mention.
Over time this changes, assuming the renter and the owner have incomes that increase, rent also increases on the same property over time (usually on about par with inflation, but sometimes faster), while the owner's mortgage stays fixed. As a percentage of income, it's the owner who's more likely to have excess income they can be investing elsewhere.
After 30 years (or repayment of their mortgage if sooner), the owner's property is as close to free as you can get and they can invest all of the money the renter is now spending.
On the other hand, it's really hard to raise a family of four in a mutual fund.
Why do you feel that you need a mortgage in order to raise a family of four? Why not rent?
Huh? Landlords prefer stability as much as tenants. Very rarely will they say no to a multi-year lease. They may want to add the option of rent re-evaluation after the first year, but from a landlord's perspective it is very difficult to find good tenants, therefore the longer those tenants stay the better.
I hate this mentality, and it seems pervasive worldwide. As I said in another comment in this thread, I like to see rent as paying for a housing service: I pay a monthly amount in exchange for a roof plus a lot of annoying things I'd have to take care of myself (and spend money on) if I were a homeowner: broken appliances, water heater issues, heating issues, etc. It's quite a list.
"Service" is sort of key in the way I see it, and is the reason why I only rent from apartment companies and not from landlords. There are so many stories about downright insane landlords out there that I don't want to take my chances dealing having to deal with those.
If the economy is growing faster than your interest rate and the population is increasing as well and its really hard to build new housing, then by all means buy your house and maybe even take out a loan to do so! If not, maybe still buy, but there is little urgency.
Also, when you own, you can do what you want without having to ask permission. on top of that - no noisy neighbors that are too close!
Let's say you save $100k. You can either buy a house, or put the money in the stock market. If you put it in the stock market, you get a return but that return ends up going to your landlord's profit. If you but the house you get no return but don't pay the landlord's profit.
In other words, it's an investment. If you believe that the RE market has better ROI, and don't mind being rooted, then go for it. If you believe the stock market has better ROI and you prefer to be mobile, do the stock market.
OTOH, as you say, the easy mobility associated with renting can be quite valuable to some workers. It's like, "what opportunities and profits am I foregoing by being tethered to a house here in this job market?" etc.
I think it's all very complicated and situation-dependent, as you point out. We need to predict the housing market, interest rates, the job market for our particular specialty, changes in tax laws etc in order to make an optimal decision. We're all forced into the role of economic forecaster just to make the most fundamental decisions about life.
I chose to buy because:
1. It's significantly cheaper after tax deductions compared to renting in my area.
2. This is the highest paying area for the software labor market in the world, and I've looked compared to last 10 years. I don't really see anywhere else that would get better than the SF bay area.
3. It solidifies your housing costs. When prices are rising relatively rapidly, it can be a money saver, and over the long term, it's definitely a very large money saver because it locks your price in. That is a risky bet to make for sure.
You can end up with a housing bubble and being underwater for 5 years, or you could end up in somewhere like london or vancouver, where it goes up and stays up and by the time that 'bubble' pops, your 50 years old. But that is the same risk you take when you chose whatever profession you have as a career or by leaving your down payment savings in stock & bonds.
4. You have to compare against what your down payment would make in the stock market comparatively.
5. When you move away to better opportunities, you can just rent it, especially if rental prices have gone up a %5-%10+ since you bought and would cover the management fees. Maybe life will bring you back again, especially if you left from a pretty good market already.
6. If you save a lot of money, trading a fraction of your savings in down payment for a discounted housing cost for the rest of your life can be a good one time investment.
I guess people have different aspirations in life.
I own a house worth about £300k with a mortgage of £140k. The mortgage repayments are £500 per month.
I wanted to upgrade my house to somewhere larger in a nicer area but didn't want to wipe out my savings to raise a deposit. So I made the decision to rent somewhere instead.
It feels like the best of both worlds. I get all the upside of a big house without any liability for something going wrong (boilers, high end kitchen equipment, etc). I've rented the house I own to some tenants and the profit from the rent I make goes towards my rented house.
Best case scenario - one day I'll own my old house outright and continue to rent. I might even buy another house to rent out at some point. Worst case - the market goes tits up I stop renting and return to the house I own where my mortgage is very affordable.
True, but in most places outside the US (at least certainly in mainland Europe) moving great distances for a better job opportunity is unusual.
The main appeal of owning real estate vs. renting is the long-term and intergenerational perspective. At some point it'll be paid off and the housing cost will be extremely low - and the children will inherit something of value.
I dont get it ether, this sounds like the worst deal not even including the fact that i might do not want to live there in 30 years.
As American hegemony spun the globe so did the "own your acres".
Here in Europe we have been taking mortgages to buy property long before the USA was born, in fact since the Renaissance.
It certainly is a long-term contract, but nobody really considers it a "yolk." After a number of years your debt is paid and you can keep living in your place without paying anything else.
The alternative is to keep paying rent forever, well into retirement. Which one do you think is smarter?
You know when I mention this to my co-workers they grimace. We call mortgages and a family the 15-30 year jail sentence.
Edit: Parent was posting about buying a house in Switzerland - and that is really expensive in the surroundings of Zurich. Buying a condo is cheaper in any case - I just made a statement that you can't compare oranges to apples.
Imagine a city with everyone living in a small house with land, it’d be impossible to live in, as the distances would be far too large.
Chicago has between 1.1-1.3 million people (twice as many) living at that density or higher: https://lh6.googleusercontent.com/-Z3ai_T6K_40/T4I6B9akQDI/A.... It's actually more than that, because this data excludes satellite cities, which the Amsterdam figure above includes.
Another point of comparison. Chicago the city has 2.7 million people at about the same weighted density (19k/sq-mi) as the Amsterdam metro, which has 1.7 million people.
EDIT: these are not my charts. They're from this thread: http://forum.skyscraperpage.com/showthread.php?t=198004.
Chicago quickly drops off past the 20k/sq-mi range too, which is basically typical rowhouse density. It only has 88,000 people living in >50k/sq-mi census tracts, mostly stretched out along the northern waterfront. Amsterdam has almost twice as many at 162,330.
Amsterdam isn't even that dense by European standards, although Swiss cities are probably similar. The densest cities are in southern Europe, ex Valencia has about 800,000 residents over 20k/sq-mi, and 400,000 residents living at 50k/sq-mi densities and it's not even a big city. https://chartingtransport.com/2015/11/26/comparing-the-densi...
But back to the original point... Chicago has fairly dense areas within a short commute of downtown - but those mostly have 2-3 flats and bigger apartments, and the few single family homes are quite expensive. For more affordable SFHs with a decent school and crime situation, I think you'd have to go to neighbourhoods that would be considered "suburbs" by European standards even if they're within city limits.
San Francisco is even more expense, the better neighbourhoods have SFHs at $2m+. More far flung areas like Sunset would be more like $1m which is still not exactly cheap and it's getting to be a long commute (40-50min each way by transit).
I'm getting the impression that Europeans would "call them suburbs" because they have affordable single-family houses in them, which makes this debate pretty disingenuous.
Chicago neighborhoods like Edgewater are in the 30-35k/square mile range, and are full of little single family homes with yards. That's well into walkable territory.
Almost every neighborhood in the city has a mix of freestanding single family homes, townhouses and 3-flats, and dense apartment buildings.
Some places like downtown Dallas are even more empty.
If you go outside in the downtown of most 200k+ cities, on any normal day, you’ll find lots of people there.
On the other hand, the residential suburbs will be dead.
But I’m gonna assume the relaxed zoning in the EU, and the resulting mix of commercial, residential, and offices, often even in the same building, leads to the people having a reason to go downtown.
These leads to a pretty common pattern where just outside of the financial/governmental centers of US cities there exist neighborhoods that are mixes of residential, cafe's, nightlife, "creative businesses" or retail. For instance, the Chicago loop is literally surrounded by such places.
But the lack of activity in a financial district has very little correlation to the density of the city. Manhattan is obviously a walkable and dense place to live but lower manhattan (wall street) can feel down right empty after hours.
I have much less experience in European cities, but my experience in Dublin, Amsterdam and Frankfort are not much different than this.
In Toronto the Financial District doesn't go completely dead, but the 4million square foot underground mall shuts down, and it's just a few ground level businesses that stay open. It's still more lively at night than the typical suburb, but not as bustling as the adjacent neighbourhoods or as the Financial District during the day when there 200,000 office workers there (vs just a few thousand tourists and residents within walking distance at night). From what I heard it's not as dead at night as the Chicago loop.
I only visited cities which don’t really have high-margin businesses, so that’s maybe why I never noticed that.
The St. Louis region, where I live, has nearly 3 million people (about half of which are inside the I-270/255 loop, for some context on a map), but only around 3000 residents in its primary Downtown neighborhood (and another 4000 or so in the adjacent Downtown West). These two neighborhoods have a population density that's lower than the city average (and much lower than in the most dense neighborhoods).
By the way, this actually represents a bit of a comeback for the neighborhood. There were only 800 residents Downtown in 2000. Warehouse-to-loft conversions became popular about 15 years ago, which has reversed the trend, at least for now.
That's my fault.
That being said, yeah, Chicago real-estate is still affordable for the middle class. I think Toronto is in a bubble (or somehow experiencing severely constricted supply) simply looking at the price of housing versus salaries in the region.
I'd buy there too if I wasn't planning on leaving this city in the next year or so. Housing prices are not what make me want to leave here, the climate and congestion are.
Obviously, if you're looking to buy in Lakeview or Logan Square or Lincoln Square, the numbers change. But I don't know why you'd want to do that.
Congratulations! I'm aware Oak Park has some affordable homes (but higher taxes) since much of my family lives there. But Oak Park is not Chicago and I was talking about Chicago. If I were going to live in one of the more remote Chicago neighborhoods that had $200k houses, I'd probably opt to live in Oak Park or Evanston since you'd get more for your money (sane school systems, etc.) without much more commute to the city center.
I don't think you can legitimately call Jefferson Park "remote" while saying you'd like to live in Evanston, which is much farther from the center of the city.
Jefferson Park is a straight shot down Milwaukee from the center of the city, and a pretty good chunk of every restaurant or bar you'd want to go to is along that shot. It's also got a Blue Line station, with better service than the Purple Line. For that matter, Jefferson Park is bisected by I-90. Have you ever had to commute between downtown (or anywhere else) and Evanston? It's a nightmare: you're a 20 minute drive from any major commuter road.
(I was born and raised on the south side of Chicago and moved to Evanston, and then Lakeview, when I was 18).
Bringing this all back to the point of the thread: a decent house in a nice neighborhood in Chicago will cost you $200, maybe $250 if you're optimizing. Well within reach of anyone in our industry. You can spend more. You can spend $500, or even a million. But it would be weird to do that. The fact that there are family-oriented neighborhoods in Chicago that people have barely heard of with all the conveniences of (say) Jefferson Park is the reason you can get such good deals on houses here. Chicago is just a well-designed city.
http://www.trulia.com/home_prices/Illinois/Chicago-heat_map/
For what it's worth: I paid nothing close to 500k in Oak Park, 5 minutes on foot from the Green Line, in one of the best school systems in the area.
http://www.zillow.com/homes/for_sale/house_type/3-_beds/0-25...
This is dominated by auctions and homes in very rough west-side neighborhoods. Yes, there are a small handful of exceptions which are typically very old homes that have not been updated in decades, but to act like above $250k is "weird" or out of the norm is just not in line with reality.
I think, taken as a whole, the greater LA area is still sort of like that.
Some people think it is impossible to live in.
What does that have to do with s3nny's post? I can't afford to buy a house in the area I work.
I think young people realize that the suburban dream was just that.
We like the mobility renting affords us. We can switch jobs and move closer to work. Plus, we can switch school districts if we want or feel the need to.
Also, we like not having the stress of being homeowners. A lot of people see renting as throwing money away. We see it as paying for a housing service where a lot of annoying stuff is taken care for us.
Was mildly annoyed at having my time wasted.
>If you look for a coding job in Europe
May I ask why?
The only questions you can decide by referendum is things that either have no budgetary consequences or things that set a long term political direction (join the EU, basic income, ...).
Anything that has a shorter horizon needs to be tightly coupled to the budget and you can only adopt a complete budget, not decide on individual questions. Once you accept that you only choose between budgetA and budgetB for the next year/term - you also accept that those who write those budgets as propositions are "parties" and you have arrived at parliamentary, not direct, democracy. Most democracies already have referendums on things like this, but still aren't "direct democracies".
In short - the Swiss have just slightly more referendums than the rest, but they too have a parliament with parties that propose complete, coherent budgets. I like the idea of slightly more referendums but no country that has a budget with thousands of expenses and thousands of different taxes could be governed only direct votes on each of them (perhaps most importantly because no one is interested in voting on thousands of issues).
If you vote for "2% raised taxes" or "expand railway network" only the combination (yes, yes) and (no, no) can balance the budget. People would likely vote against the tax increase but for the infrastructure investment.
And even if you could afford it - how do you prioritize it against something else that was also accepted through referendum?
Whereas the Australians say: “Look what those bastards have done now …”
Processed food like frozen pizza is expensive as a substantial amount of (manual?), well-paid labour goes into convenience food.
I must be misunderstanding something, because these two sentences seem to contradict. In Germany itself, "unprocessed food" is more expensive than in most of the rest of the world.
Sure, in most of the rest of the world food is pcheaper but that compares to even lower income levels.
It's definitely an easier move for an EU citizen to do than the USA although from a family and immigration standpoint. But immigration wise it isn't hard to get an H1B or L1 visa since the hiring company will handle all of it. From there applying for a green card is pretty automatic. For canadian's and australians, it's even easier to immigrate, almost the same amount of work as moving to switzerland for an EU citizen.
Indian and Chinese people have a hard time with green cards in the USA because there is per country lineups. The immigration 'lines' for those 2 countries are much longer than any other nationality because of their population sizes. Switzerland or somewhere else in the EU might be more attractive from that standpoint, although I don't know if they implemented something similar there.
Cost of living wise CH is definitely more expensive. Housing costs are also close in SF and CH.
I have worked at Universities and IT in the US, Switzerland, and Austria. Austria has almost free kindergardens, schools, and higher education. In CH (basel area) I paid 70USD/day/child kindergarden fee. In the US it's quite normal to start saving for your kids education when they are born.
US health care is a mess. Even after paying tons of money you have to set money aside for all the times you get screwed over by insurgence companies refusing to pay certain parts of a procedure. If you are honest with yourself you have to subtract this all from your pay check and/or add this when you live in an area that has fail-proof health insurance for under 400 USD/month/family.
CH's living expenses are generally very high and most people starting a job there underestimate this. If you think a 40 USD pizza at a normal looking place is insane, you are one of them.
Just throwing some pointers out that salaries must be compared in context ...
However being from some part of this planet I googled a few keywords and came across this: https://www.vice.com/read/guide-to-european-racist-leagues
The website features a lot in HN so but I don't know about the quality of their journalism. Anyway, you never know till you try...
Germany:
The Evidence At the time of going to press, a comprehensive reading of the past hundred years of German history showed no documented incidents of any racial bias.
Racism Rating 0/5
ehh???
Sometimes I wonder how people can be so oblivious to satire and sarcasm.
I'm starting a coding internship in Geneva in about two months and I was wondering whether you would have any advice about renting apartments in the area. For example, should I be trying to find apartments in France, or am I better off sticking with Switzerland. Should I be getting in touch with estate agents in the area via phone? Are there any good sites which contain apartment listings? I will be staying there for 12 months so any advice would be much appreciated.
* I wouldn't bother with France unless you're willing to drive and waste a lot of time in traffic jams. Annemasse is the exception, but it's pretty sketchy imho.
* On the other hand, living in the countryside can be a good option. Public transportation works better than if you cross the border, and biking to work can be reasonably doable.
* Living a bit further in Vaud, near a train station, is a good option too.
* Most apartments belong to estate companies (régies immobilières), not individual landlords. Contacting them directly is definitely the way to go.
* https://www.scrapeo.com (disclaimer: it's run by friends of mine, you can scroll down and see the websites they're scraping if you prefer).
I will look into those places and that website, thank you very much!
I find that rather odd, any ideas why it is that way? Is there really so few flats on the market? I would think that estate agents would be happy to help anyone find a home...
I have tried to email a number of estate agents and all I got was automated responses. Some in French, despite the fact that I wrote the email in English. They all mostly said the same thing: "Our website has many listings, please look there".
> Bizarrely it can be just as cheap getting an air b&b for a few months at a time.
While that may work, I would much rather stay in the same place.
> Also it is absolutely worth looking in to a place across the border in France, it's cheaper, not that far away, and public transport is pretty good.
Hrm, France is looking very nice too. I guess it all depends on where I find a place first.
> I've been here for 6 months or so, but leaving soon... its really not the city for me.
May I ask why it's not the city for you?
Vacancy rate in Geneva proper is about 0.4%. As usual in such situations, why bother with a foreigner who isn't going to stay long when you likely know friends/acquaintances (Geneva is a small world :) looking for a place?
I get barely 6000 after taxes after working here for almost three years. I'm not Zürich area, but still. Out of curiosity, in which branch are you?
The list goes on and on and on, so from this Bay Area like salery there is only something left if you're young, without children and healthy.
If there is anything you can not afford there is a huge social infrastructure to help you out. There is no reason your kids should miss one something.
Also dont forget that these salaries include 4 weeks and more paid holidays.
All of these things are not included in american health care & social plans ether so i dont know why i even write that comment right now.
However, it looks like the numbers are pretty comparable. In Germany a software engineer will average 47,500[0] euros a year. judging by this answer[1] I'm guessing your take home is going to be about 28,000 euros (2,333 euros a month), meaning about a 40% tax rate.
According to the same website a software engineer in Zurich will make 96,500[2] CHF. Using a swiss salary calculator, your take home in euros is 71,436[3] (5,953 euros a month).
Finally, comparing the cost of living, is clear to see that Germany is 50% cheaper[4], but you're making 150% more in Zurich. While my numbers may be the wrong averages to compare, it looks like Zurich is at least pretty comparable.
[0] http://www.payscale.com/research/DE/Job=Software_Engineer/Sa...
[1] https://www.quora.com/Is-45000-euros-per-year-considered-a-g...
[2] http://www.payscale.com/research/CH/Job=Software_Engineer/Sa...
[3] http://www.lohncomputer.ch/en/home.html
[4] http://www.numbeo.com/cost-of-living/compare_cities.jsp?coun...
96,500CHF is also a fairly conservative estimate. If you work at e.g. Google, you can reasonably expect twice that amount after 2-3 years working there (factoring in bonuses and stock). The tax rate is also lower compared to Germany, especially when you reach larger sums of money.
In Zurich you're netting three times what a German software engineer makes, but everything is only twice as expensive.
The landlady did keep my deposit (sorry, "had a professional cleaning done for the exact amount of the deposit", and sent me the detailed list as proof in German which I do not speak), bringing that to 2,250 CHF/month. A quick back of the envelope on real estate inflation since then brings me to around 2,500 CHF/month (1,700 CHF/month if you ignore the deposit trick).
That's not as cheap as a small town in Europe but it's quite cheap, I think, for a major international city and definitely when you take into account the starting salaries. Vaguely remembering, a graduate from a good university starting in strategy consulting could expect 90-110,000 CHF/year in Zurich vs 35,000 GBP (49,000 CHF) in London despite higher COL and higher taxes (same companies, which may or may not start with M or B). I have no idea about the numbers in San Francisco but I bet they are not so good either.
There's other issues with working in Switzerland if you come from Anglo-Saxon big cities, but COL isn't it if you are paid locally, unless you are dealing with an employer exploiting the unemployment rate in your home country to underpay you substantially (which is definitely the case with some French speaking companies in Geneva).
A friend of mine tried to keep their deposit by cleaning it themselves ("took two days and was spotless"). Because the landlady had not got a note from a cleaning firm saying it was clean, she literally could not rent it out again. And so charged my friend for the cleaning firm to come in. They did do a better job :-)
If the landlord fails to protect your deposit, and does so in what might be considered bad faith, a court will often order them to pay you 3x the deposit as compensation - so they all end up actually doing it.
I think something similar exists in Switzerland, but the (German) landlady correctly guessed that as a non-German-speaking foreigner, I would not take the time and expense to attempt it. Imagine attempting to contest the necessity of "dusting the sides of books on bookshelves" to an arbitrator in a foreign language...
[1] "For a tourist claim, the Tribunals may fix both the consultation/mediation and the hearing within 24 hours of filing of the claim." - https://www.statecourts.gov.sg/SmallClaims/Pages/GeneralInfo...
The city itself is tiny and the "city center" is even tinier. This leads to the variance of the rent being very high: In the very center of town you might have to pay 1500 CHF for a 1-bedroom apartment, but if you can live also 5 km from the city center, you can have it way cheaper.
I am renting a 4-bedroom apartment for 1600 CHF (https://flatfox.ch/de/wohnung/8051-zurich-grosswiesenstrasse...) and I need around 12 minutes to get to Zurich main train station.
To downvoters: please see my comment below. I am not against foreigners.
That's cheap compared to London (zone 1).
https://en.m.wikipedia.org/wiki/Direct_democracy
But essentially a direct democracy is one where the people effect policy instead of electing representatives to do so on their behalf
If you look for a coding job in Europe, Zurich is a great place to live and is the only place where net-salaries are on par with the Bay Area: You can expect to get 7000 - 12000 CHF / month after taxes. If you are from the EU and thinking to move, you find my email address in my Hacknews profile. Also you can read here why I moved to Switzerland to work in IT: https://medium.com/@iwaninzurich/eight-reasons-why-i-moved-t...