Or you can buy studio in the city and huge farm house with land 1 hour drive away... Then weekends spend in your farm house and weekdays in your studio... It would be close enough to pop in in week days also. 1 hour drive aint bad.

I know a couple people in NYC who do something like this. It works fine for two smallish niche groups: well-off childless couples who prefer not to spend much time in their city, or very well-off couples with children.

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.

300-500k seems really high for a farmhouse unless it comes with a lot of land.

Within weekend distance of NYC?

EX: http://mls.catskill4sale.com/idx/details/homes/b253/34760/4-... 200k, 10br house ~2h from NYC depending on traffic. Basically as soon as you step past reasonable daily commutes prices really fall.

It has four bedrooms, not ten. You can't reasonably fit ten bedrooms in 2912 square feet of living space.

3,000 sq feet is 20.8 rooms at 12' by 12'. Sure larger rooms, walk in closets, or wasted hallways could eat that up. But the real issue is there are only 2 bathrooms.

Would anyone really consider that a farmhouse, when it has only 0.68 acres of land?

Because you only care about the farmhouse and not the land.

You can rent land to farmers. Depending on the land and location in NY, you can rent it for $20-$80 an acre.

USDA agricultural statistics service

https://quickstats.nass.usda.gov/results/E0F5EB36-3313-3D7B-...

forget YOU commuting to the city - with 10 bedrooms you can provide free rooms for YOUR employees to come to you :-) (assuming you own a startup and have employees)

A two hour daily commute is like 12% of your waking hours crumpled and thrown away. That sounds like hell.

Two hours is a long time! Sit around for the two hours doing nothing, you'll see.

A two hour commute (assuming one hour each way) is very very common. I did it for years when I lived in the suburbs and worked downtown. About an hour door-to-door each way, with the train ride being about 45 minutes of that.

I did that exact commute for 8 years. I've never been so happy as when I was finally able to ditch it. The new commute is 20 minutes (one way), with WFH days and hours flexible enough that I can usually avoid rush hour.

I did it for years too and I would never do it again, no matter what the pay is. I guess it is a matter of options and taste, but I find commute and working in an office every day quite close to living in hell.

Average US commute is 25 minutes (one-way).

http://www.indexmundi.com/facts/united-states/quick-facts/al...

2 hours typical for workers in NYC that live outside from neighboring burbs.

Two-hour weekly commute.

I have done hour each way commutes for many years, and while I don't miss it, it's not nearly that much of a waste. It's not "sit around doing nothing" (though, I wish I had two hours a day to sit around doing nothing - it'd be fantastic). It's time people spend listening to music, reading, napping, catching up on e-mail, playing games.

As much as I like currently not having a commute, it was certainly not time that was "crumpled and thrown away".

You obviously didn't drive if you were reading, napping, catching up on email, playing games (at least I certainly hope not). At least within the US, a typical commute (with the exception of very large cities such as NYC, Washington DC, Boston, Chicago, which have large public transportation systems) involves spending time driving their own car, which essentially prohibits any activity other than listening to music, and maybe talking on the phone. So yes, it's wasted time for most of us.

You can also get away with podcasts and audiobooks, which have really prevented me from seeing it as a simple waste of time.

+1 for Podcasts and Audiobooks. I get through ~2 books a month and a host of podcasts. It's not an ideal use of time, but if scheduled correctly it can at least be additive.

I'm not saying its the case in Switzerland, but I get a ton of work done on my occasional three hour train commute. Driving definitely sucks though.

I currently commute 2 hours each way. It's not as bad as it sounds. If you happen to be able to afford to live close to work, consider yourself lucky.

Do you do anything in particular to make use of the time during the commute besides just concentrating on driving, listening to music, or daydreaming? I struggle with long commutes since I inevitably feel like I'm wasting the time.

As someone who did this for some time. Get out.

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.

I work remote and my voluntary commute (could work from the house) is 7 minutes to an office in town where I work every day. My colleagues Live around the Bay area and pay exorbitant amounts and/or drive 1.5-2 hours each way into the office. My quality of life is much better on that front.

Music, NPR

The opportunity cost of a four hour commute is nuts though. That's half a fulltime work shift!

My commute is a little less than that - but I don't sit around doing nothing! It's time to work without interruptions.

That would be the best of city living (practical, all amenities in walking distance, low maintenance, social), and the best of rural living (bucolic, silent, spacious, reserved).

It's much better to separate it out than try to combine it in one suburban house.

How do you account for all the wasted space when the houses aren't in use? The extra costs?

Same way you account for the time your car is not being driven - you consider the total cost of ownership vs benefits and your ability to afford it.

This is a bad analogy missing the point that ZeroFries was making. A car's lifespan is mostly determined by mileage. When a car is not being driven its condition and value is largely unchanged. It is not analogous to a vacant house. If you drive a car twice as much of the time it will have to be replaced nearly twice as soon.

>A car's lifespan is mostly determined by mileage.

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.)

I'm in the snowbelt and well aware of this. Mileage (at a given city/highway mix) is still the biggest factor presuming the car is getting some minimum duty cycle. I said "mostly," not that the number of winters is nontrivial.

If you only drive 5,000 miles a year, sure, but that's not typical.

Beyond using 10k/yr as a rule of thumb for average duty cycle mileage is a horrible indicator of vehicle wear. Engines are worn by cold start cycles, transmissions are worn by shifting, brakes get worn by stopping and suspension components get worn by potholes, etc.

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)

Except I never made the claim that nominal mileage objectively indicates vehicle wear. All I'm claiming, is that mileage is the largest factor. It doesn't matter if your driving wears out a car in 300,000 miles and my driving burns out a car at 80,000 miles. Your miles are your miles and my miles are my miles.

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.

It's accounted for in the value of the land and the farmhouse, which the owner has paid for.

Airbnb

Or that a Doner Kebab in Zurich is 20 dollars and up. That's US salary alright bit US price of living? Hell no

As a regular Zürich Döner eater, I'd be curious to see these fabled 20$ equivalent Döners. Mine are always in the 10/11CHF range (~$11).

those were a bit higher prices mentioned, but generally prepared food in Suisse is super pricey (especially if you pay bills for more than yourself only), and in the same time food leaves much to be desired when compared to some neighbors (France, Italy).

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.

In Munich you pay 4.00 - 4.50 EUR. That pretty much erases any advantage of Zurich vs German salaries.

It's more like 5.50 EUR

I've never understood why people believe/feel that buying land and/or a house is the pinnacle of... something. Sure, it gives the person a feeling of control and stability. But rooting oneself in one labor market (vs. being mobile) decreases one's employment options and therefore their salary. It's also very risky, as it's the equivalent of putting one's eggs in one basket and leaves their financial wellbeing in the hands of the real estate market.

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.

People don't necessarily buy then suffer the consequences of being rooted. Rather, one may be rooted because of family, preference, or because their job market is one place. Then they want to buy because if you are rooted, you might as well have greater control over your dwelling. If I rented my occupancy would be at the whim of my landlord, which is OK for apartments in the US, as apartment landlords generally have no reason to kick out tenants summarily (except in unstable markets, like perhaps the Bay Area.)

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.

And on the opposite, I never understood how people can not own a house and waste money on renting for decades. Where market for houses in western countries is very limited due to stupid regulations and every year a few millions of people move to that country causing renting prices to increase by XX% each year. It decreases my financial stability. Losing a job for less than a month is a financial disaster, I still to have to pay for car-fuel, insurance, life insurance, pay bills. On the other hand, having a house without mortgage, yes, keeps me in one place, but value of my house due to the same reasons is increasing for my benefit, not for my landlords benefits.

> waste money on renting

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.

It's very simple actually.

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.

You do incur a lot more costs as a property owner than as a renter, which you should bear in mind.

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.

This cannot be overstated. I think many of us see the mortgage, taxes, and insurance are less than rent and call it a win. We are vaguely aware of the money pit and getting out issues but they are hard to predict and easier to sweep under the rug. This conversation should always be accompanied with, "Assume $5k per year for maintenance," or some related concrete number based on condition and size, so we force ourselves to deal with a number instead of brushing it off. Also, real numbers for seller's closing costs.

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...

I was waiting for someone to mention that. Home ownership is expensive and makes you inflexible. Also, consider property taxes (which will scale with inflation) and the fact home owners insurance is more expensive than renters.

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.

Another counter-point: when you buy a house, even while the mortgage isn't paid off, you can immediately start renting parts of it and end up in a situation where your mortgage payments are equaled or exceeded by your rental income. I also believe that this is taxed differently from normal income, especially so if you're renting rooms in a house you live in vs. owning rental property.

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.

Landlording poses significant risks which you also must take into account. Thus if your net worth is 500k and all of it is in a rental unit, what happens if your renter floods the house or damages it in some other way?

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.

I think it's important to not conflate being a landlord (investment and business) with buying a home to live in.

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.

Taking care of the building is actually a lot of fun for some people!

No doubt and didn't mean that as a slight to people who take pleasure in maintaining their property. In fact I admire lovely landscaping and can see myself wanting to do that one day perhaps.

All of those costs are simply amortized over the rental agreement. I'm not sure why people who rent seem to think landlords are appliance/maintenance charities.

Rental prices are what the market will bear. These may or may not be strongly correlated to the landlord's ownership.

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.

Correct. When rents get too far ahead of mortgages, people simply buy property instead.

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.

Not necessarily. When the capital gains from simply sitting on a property are so great, I'm sure a lot of landlords are actually making a net loss on a renting operation, and don't care all that much.

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.

Landlords don't have infinite cash reserves. They still need to cover costs or minimize losses if they're betting on capital gains from property sale at some later date. Most renters pay for the maintenance and taxes of the property they live in, it's just not itemized for them and the costs are generally amortized and distributed among multiple tenants. Landlords are generally not charities, if you got lucky enough to find one who is, be very thankful.

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.

Not at all. Rental costs are most strongly influenced by supply-and-demand of housing, whereas sale costs are mostly influenced by supply-and-demand of credit.

Not true, rental costs will go as high as possible until buying becomes more attractive. Buying costs are based on supply and demand of housing and credit. That's why it's more expensive to buy a house in San Francisco than in Kansas City, Missouri even if the credit markets are effectively the same in both cases.

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.

The maths rarely work out the way you outlined:

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.

The algorithm to make money as a landlord is pretty simple.

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)

Not sure about point 3. Normally mortgage costs do increase - in line with interest rates. Even with a fixed-rate mortgage, there is usually a term for that rate, which is generally substantially less than the lifetime of the mortgage, often as little as two years, and rarely more than five. This is certainly the situation in the UK, do things work differently in the US?

In a great many housing markets, there are several kinds of mortgages. But basically the fall into two types, fixed and variable (go up and down with then current market rates) -- there's some hybrid loan products and some non ursury types, but this is basically how they break down.

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.

Yes they do. The most popular mortgage here is a 30 year fixed rate.

>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.

That's hardly always true

And if it is, you should do the maths and consider if you can afford becoming a landlord, because it means there's potentially room for yields well above normal (but beware the likely incoming flood of other landlords once people realise).

The difference in costs are several factors between rent & mortgage+taxes+insurance+maintenance+appliances.

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.

In European cities like London, Paris or Zurich, the supply of housing is so constrained that, barring something catastrophic like a war or a global financial crisis, prices will never drop that much for that long. In fact, it's quite a big economic problem — there's little reason for the majority of people to put their savings into anything other than property, because it tends to be so reliable.

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 a great many places, the rental rates are set to be about the same as if somebody just purchased the property and were about to pay mortgage payments.

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.

I've lived in Switzerland for a decade. My rents have never gone up. They have gone down once though, because the law here mandates tying of rent to interest rates and when they are lowered, you can write to your landlord and demand a reduction.

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.

If you look at a place to live as an investment vehicle you are simply looking at it wrong. A home which is paid for is a place you can live without fear of not being able to make the next rent payment.

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.

But the same could be said about money in the bank: it is insurance against not being able to make the next rent payment.

Saving money is the right thing to do---putting all of your savings into immovable property may not be.

A place to live where you can grow food without someone taking it away eliminates the homeless situation.

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 :)

Do not forget maintenance, insurance & taxes that go along with that monthly nut. People used to always tell me I was throwing my money away on rent(until the "Great Recovery"), but I've never had to pony up thousands of $$$ for a new a/c unit or replacement appliances. As always, YMMV.

Why do you think your rent isn't simply amortizing those costs? The landlord isn't a utility/maintenance charity.

Many cities place artificial constraints on rent increases, for example which prevents full amortization.

Doesn't matter. Landlords who are in the business of renting aren't a charity. Somebody will be paying for those expenses and it's the goal of the landlord to make it not them.

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.

Strawman much? I never said nor intimated I was pulling anything over anyone. Property owners assume the burden of maintenance & costs of ownership. Those costs are reflected in the amount of money I give them for the privilege, not the "right", of residing on their property. When I leave, I have NOTHING to show for it.

It's very simple, even outside of equity earning and the ups and downs of the housing market, once you pay off your mortgage, you now have a place to live that's fairly close to free (other than maintenance, utilities and taxes). If your home is large enough, you can even turn it into a revenue generating asset by renting out portions or all of it.

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.

See my post above. Once you pay off the mortgage it is equivalent to paying yourself out a percentage of cash investment. In NYC that number is approximately 4.5%. That is pretty good but not great considering the risks of ownership.

Home ownership via a mortgage is a leveraged investment. If you're renting, you usually don't have access to leverage for an investment like that. Further, when you're renting, you don't normally have much of an impetus to save extra and accrue interest; whereas a mortgage acts as a forced saving scheme. You must save (build up equity) or else the bank will foreclose on your property!

Except I think you are assuming the renter is starting out with a large cash reserve they can invest and the owner doesn't have that at the start and must accrue that value over their mortgage period.

To compare correctly you must assume both people are starting the same

My big reason for giving up on renting is the control. I ended up being forced to move twice after landlords sold the building I happened to be living in. It was a frustrating experience. This is much less likely to happen with my own house (natural disasters, eminent domain, etc.).

Yeah. It's market-specific, to be sure. Homes in the Western US markets, especially California, have risen at a quick pace, in part because of zoning laws which prevent cheap expansion of the overall housing inventory.

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?

> How is renting wasting money?

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.

This sounds like my parents telling me how stupid I am for renting here in Barcelona for the last 8 years. Property prices have dropped by over a third, and I am spending less on rent than the prices are dropping by every year.

Re: renting is wasting money.

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.

To make your plan work, you'd have to have around $1mil in investment dollars that you'd place into various investments to make the "free" rent money. Since you're relying on those investments to provide shelter, they're just as illiquid as owning property (except with property you can make money off of it).

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.

The amount is irrelevant, since you are making the same percentage on whatever sum investment. I think you are using a non-technical definition of liquidity: I can convert ETFs or stocks into cash almost immediately. So for example, it is easy to scale down or to move money from stocks to bonds. The house is immovable property in all senses of the word. It is difficult to convert to cash or to move (in case of political upheaval, for example).

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.

To make your original scheme work (investment earnings pay for rental costs), you investments are de facto illiquid, otherwise you have no way to pay for housing without breaking from the scheme. You also need to make more from your investments than renting currently costs because over time rental prices are likely to go up and your investment return will need to increase.

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.

A person with $1 million available to put into an index fund is the 1%, and advice for them is not really applicable to the general population. For "normal" people, buying a house can be a good idea because you can deduct the interest from your income. It also gives you much more stability in terms of monthly housing payments if you get a fixed-rate mortgage (unless rent control is an option). Finally, you also "get back" a portion of your mortgage payments when you sell the house. You never get your rent money back.

Rent/buy is not a simple analysis, there is no one right answer. If you ever (for medium-large values of "ever") find yourself in a situation where there's one obvious right answer for all cases, you probably did something wrong.

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...

See above. The amount is irrelevant. Deducting interest is good. However, you must take into account the costs of amortization, real estate taxes, and the costs of borrowing money. Check the NYT calculator. Owning wins out in an up market and only after a decade or so. It is much more difficult the absorb the costs of real estate transaction for those not in the top 1%. Rental is a reasonable financial strategy for any income bracket.

In Canada you may also qualify for tax credits when buying a home. That combined with low rates creates house horniness that's hard to resist.

Who's going to lend me $1m so I can play the stockmarket?

You could absolutely borrow on margin to play the stock, although you would probably need to have more than the typical home mortgage 20% to get the loan.

Is that really something that is available to the ordinary man/woman in the street? (Genuine question, I have no idea ..)

ordinary people can borrow 50% on margin

If losing a job for less than a month is a financial disaster, you're probably not in the market for a house anyway. It's perfectly possible to rent for decades and have years of runway in savings.

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.

>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.

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...

>>Yea, so I'm renting a house where my agreement states that I am not allowed to fix or improve the flat myself.

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.

Why not just rent out your property to somebody else so you no longer have to pay the mortgage on it, then move somewhere else?

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.

True, but you leave out the cost and hassle of moving regularly. Most landlords know that people don't want to be relocating each year, so they can slowly increase rent year-over-year.

> That's the beauty of renting: if you don't like your current agreement, you can find another place with more preferable terms.

Not where I live. Rental market is WAY too tight.

Sure, but you shouldn't be surprised to hear that many rental experiences are much more positive than that, or that many people's situations lead them to totally difference conclusions. I've listed a bunch of reasons. You wrote "I never understood how people can not own a house and waste money on renting for decades" above, and my response is "It's easy to understand. Take my perspective as one of the millions of examples."

My experience (UK) is that landlords screw people over where they can - they want to make money but actually have a social responsibility for housing conditions. Most people I know live in horrible conditions for a little less rent or increasingly so more precarious and even less stable house shares. Maybe that's an English problem though.

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.

Surprisingly, I seem to be in the minority here: I consider the lack of freedom and NOT being rooted that comes with renting to be much more of a burden. To me a huge advantage of buying a house is that I know where I'll be living next year and 5 years from now. I don't have to worry about my scummy landlord raising rents by 30% every year "because they can". I don't want to burden my kid with having to find a new set of friends every year because we have to move to a different school district again. If I want to build a deck or knock down a wall or install surround sound in the living room, I can do so tomorrow without having to ask permission.

It's only a waste if you don't put the difference to work in some way.

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.

The mortgage interest is deductible, and for many people the one thing that makes it possible to itemize deductions rather than take the standard. That's an advantage that renting doesn't have, all else being equal.

> 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.

Not only do taxes pass through to renters, very often they are substantially higher. In New York, for instance, there is a substantial school tax credit for homeowners not available to rental properties. In addition, some cities have a homestead property tax rate that is substantially lower than the commercial tax rate applicable to rental properties.

One thing I really hated about living in an apartment was that the landlord would show up twice a year with very little warning to inspect the fire alarms etc. As a security person, having all the keys to my home and neighbors homes sitting in a nearby office wasn't very reassuring of my safety or privacy.

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.

Exactly. You are either renting the money or the house. You might as well put your equity into a diversified mutual fund. However, there are massive nonfinancial benefits of owning a home, don't forget

I can drill holes in the walls wherever I want!

Seriously though, renting sucks compared with owning, for all those nonfinancial reasons you mention.

Assuming you can rent or buy an equivalent property, in most markets, the monthly outlay is approximately the same. There's very few circumstances where a renter has such an excess of money that they could make any meaningful gains off of alternative investments.

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.

You are forgetting that your down payment ( and equity )is tied up in the house, when it could be invested elsewhere.

If you run the numbers and assume a market rate of return on most investments, it's very hard to turn the relatively small amount of money a down payment is into a net gain after 30 years.

that statement is simply false

feel free to run the numbers and present here

Here's the classic blog post on this topic

http://assayviaessay.blogspot.com/2014/04/rent-or-buy.html

Try the New York Times "rent vs buy calculator" if you really can't understand that it might be financially better to rent. Also try setting up a budget and some savings - losing your job for less than a month should never be a financial disaster (and if it is you can't afford to buy a house).

Then keep on doing what you are doing. You are the one who started this discussion on buying land and building houses. We were talking about Switzerland.

I've heard it said that real estate is a risky investment.

On the other hand, it's really hard to raise a family of four in a mutual fund.

I don't understand what you mean. Raise a family of four on a mutual fund?

Why do you feel that you need a mortgage in order to raise a family of four? Why not rent?

Because moving a family of four is extremely disruptive for everyone, and it's very rare to have more than a year's security with a lease, even with a good relationship with the landlord. Not only that, but if your kids are school age, there's serious pressure to find a new rental in the same school area, which makes shopping for a new home that much harder.

>>and it's very rare to have more than a year's security with a lease, even with a good relationship with the landlord.

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.

No landlord I have ever had has ever agreed to a 2-year lease. There's no "huh" about this point: if you rent, your tenancy continues at the pleasure of the landlord. That's not a fun place to be if it's important to you to provide a stable address for your kids for the next 10 years --- and that is usually pretty important.

It's kind of a joke or a proverb I guess since both houses and funds are investments with a certain risk but houses also double as a place where you and your family can live ;-)

In reality, the truth lies somewhere in the middle between "rent in throwing money away" and "it's a great lie that buying a house is a very good way to build wealth."

> Renting is, unfortunately and quite inaccurately, viewed as "throwing money away."

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.

Perhaps it is the result of choosing to take a historical price chart and say, "look the value goes up" rather than any sort of analysis. It is amazing to me so many people take out huge loans (mortgage, car, college) without doing the math on the final price after compounding.

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.

In the US, we get a tax savings for owning rather than renting. Also renting includes a required profit for the owner. When you rent, your monthly bill includes everything the owner has to pay (mortgage, taxes, utilities), plus their profit. When you buy, you pay mortgage, taxes, and utilities, but no extra for profit. Also, you get to deduce the local taxes you pay on your national taxes, so overall you pay less.

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!

Just because someone else is profiting from you doesn't mean you are wasting money.

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.

Also consider that dividend income from the stock market gets taxed each year before it can be reinvested. So, it does not compound as rapidly as the untaxed "yearly dividend" (aka price appreciation) of the house.

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.

It's a financial calculation like everything else. Don't assume they do it for purely emotional reasons.

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.

Pilot's who pour everything into their planes have a staying: you can sleep in your plane but you can't fly your house!

I guess people have different aspirations in life.

I own and rent.

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.

While I feel neutral about your post, I upvoted it to counter the downvotes. It seems to follow the HN guidelines and merely presents your side of the issue, so I can't see any reason for it being downvoted other than people not liking your opinion, which doesn't seem fair to me.

> But rooting oneself in one labor market (vs. being mobile) decreases one's employment options and therefore their salary.

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.

While I agree with you financially, when you have kids, buying property is a safer vehicle to leave something behind for them. Sure, if the rent is low enough and you invest the difference of what you'd be paying for a mortgage, you may grow a much bigger capital in 25-35 years. However, most people are risk averse or simply do no understand how investing works, hence: they buy real estate.

"You just pay about 70% you would pay for the rent and the house is yours in 30 years! But you need to fix all issues yourself and comply a lot of third party rules how everything has to look and work".

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.

Because if you look over a 20-30 year period of home ownership you build equity in your home and get a pretty significant tax benefit as well (mortgage interest deduction).

If you were to have kids, think about the financial security owning a home provides them.

What financial security? I take it you have completely forgotten about the 2009 crash?

I was thinking that one would have paid off all mortgages by the time the children inherit the house.

The American Dream was narrated by banks in the USA as a way of fighting "the Red terra" and to make the populace wear the yolk of a mortgage. People with mortgages generally don't protest or strike.

As American hegemony spun the globe so did the "own your acres".

This is ridiculous.

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?

I don't know, I find the "yolk" of a mortgage to be eggcellent!

yoke http://www.merriam-webster.com/dictionary/yoke

> to make the populace wear the yolk of a mortgage. People with mortgages generally don't protest or strike.

You know when I mention this to my co-workers they grimace. We call mortgages and a family the 15-30 year jail sentence.

In Zurich city it is not impossible to buy property, it is just very hard. Everything surrounding Zurich is affordable also for software engineers. I was looking into buying a three room apartment in Effretikon (20 min from Zurich by train) for 370k. I work here for 2 years and could afford the downpayment (20% of the buying price).

Parent was posting about buying a house with land. Your example is for a (small) condo - way cheaper than what he was talking about.

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.

Buying a house with land in a city is a very american thing – which is why the focus on a small condo is a lot more realistic.

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.

I think even in the US nobody really buys a house (with land) in the city, but in the suburbs. Big difference and much more similar to the 1 hour drive discussed above.

Most of Chicago, the third-largest city in the US, is single-family houses with yards. For that matter, when I lived in San Francisco back in 99-2001, I had a yard.

But by European standards, Chicago is a small city of about 100,000 people surrounded by an enormous commuter town.

To pick a random European city, let's compare Chicago to Amsterdam: http://swontariourbanist.blogspot.com/2015/01/amsterdam-area.... Amsterdam's metro region has about 670,000 people living in neighborhoods above 20,000 people per square mile.

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 has 1.12 million people living in census tracts above 20,000 people per square mile, the satellite cities are more in the 10-15k/sq mi range. http://swontariourbanist.blogspot.ca/2014/03/toronto-and-chi...

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 think we're getting pretty close to "No True Scotsman" territory when we start designating neighborhoods --- inside the city limits of a metro statistical area with vast, sprawling suburbs --- as themselves suburbs, despite being on trunk CTA train routes, on one of the city's main drags, because "European cities would call those neighborhoods suburbs".

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.

What I mean is that in many European cities, the suburbs will be pretty similar to Jefferson Park or Outer Sunset in terms of the commuting situation and walkability. Although in Switzerland the suburbs are still much more expensive. Elsewhere in Europe it's generally not so bad.

That's neither here nor there. The question is whether you can have houses with yards in walkably-dense cities. Southern European cities may be denser, but nobody would say Amsterdam is not walkable.

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.

Those cumulative density charts for population density are the best representation I've ever seen of that stat. Did you make those charts?

Which standards would those be?

The standards of the "City" ending where you go from city style buildings (multiple people per building, density high enough that it’s fully walkable, etc) to suburban or rural style buildings (seperate, one or two family homes, unusable by foot)

Chicago is one of the most walkable cities in the country. Moreover, the stuff people actually want to go to --- the various bar and restaurant districts, &c --- are in the residential north side of the city, not downtown, which basically shuts down at 6PM.

Almost every neighborhood in the city has a mix of freestanding single family homes, townhouses and 3-flats, and dense apartment buildings.

Are most other big cities like the loop after business hours? I'm always shocked at how deserted it is on weekends, and evenings aside from the odd theatre traffic.

I don't know about most, but downtown Manhattan is very similar at night.

Some places like downtown Dallas are even more empty.

Most big cities after business hours are full of life, full of people out going to bars, clubs, other events, etc.

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.

This isn't true in the U.S. Downtowns all across the country are dead at night.

London is interesting, in that the square mile (financial district) while being very busy (even at night) during the week, due to workers drinking and socialising after office hours, is absolutely empty at weekends. On Sundays the streets are absolutely deserted, which makes it a great time to film apocalyptic zombie movies - see '28 Days Later' for an example.

Well, I can’t really compare – I’ve never been in the US.

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.

Thats part of it, the other part is simple market economics. It is hard for the things that people want to do at night (clubs, art galleries, restaurants and bars) which are much lower margin businesses to compete with the large financial and governmental institutions that dominate places like the Chicago loop, lower Manhattan or downtown Dallas.

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.

I don't think it's so much the financial uses pushing out restaurants and retail but rather housing that's being pushed out.

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.

Relative to NYC, not that many people live in downtown Manhattan either, and there isn't that much stuff open there at night. I'm not sure what conclusions there are to draw from nightlife in the loop.

> I have much less experience in European cities, but my experience in Dublin, Amsterdam and Frankfort are not much different than this.

I only visited cities which don’t really have high-margin businesses, so that’s maybe why I never noticed that.

People have been moving out of the urban core in U.S. cities for the last 50 years. This has hit mid-sized U.S. cities particularly hard. While enough businesses may have stayed behind to maintain a central business district, the residents chose to live elsewhere and commute in.

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.

"Urban core" has little to do with it. "The loop" in central downtown Chicago hosts pretty much nothing but large office buildings. It's dead after 6PM because nobody is there. Where are they? Other parts of the urban core of Chicago.

Sorry. "Urban core" is ill-defined enough to be almost meaningless and I was using it alternately to mean Downtown and to mean it in the sense you do, which was bound to cause confusion. I was trying to point out that the St. Louis Downtown isn't even dense by the standards of other places in its urban core (in the sense you mean).

That's my fault.

I live in a neighborhood of 25k people in Chicago that precisely matches that standard. It is surrounded on 3 sides by similar neighborhoods (and a lake on the other). Those style neighborhoods are the norm in Chicago. Further, there are many Chicago suburbs that match that description.

The standard Chicago city lot is only about 25' wide though. The houses are very close together, with a tiny front yard and a slightly large back yard but only a narrow strip on either side.

That's a big part of what makes them not suburban. I like the narrow lots. Why would I need more than the typical Chicago lot?

He only thing I don't like is that I feel like I live in a bowling alley because all the homes are long and narrow.

Antenna towers.

Less lawn care. :-) That said, there are large pockets on the northwest side that have lot sizes comparable with some near suburbs.

Toronto was/is like this too. It's a pretty big city similar to Chicago. All of the houses are >$1 million now in Toronto proper. Now the only thing being built are hundreds of cookie cutter condos right in the downtown core. So many were built in recent years that the price of condos actually went down for the first time in forever while house prices continued to rise.

You can get a decent house in a nice neighborhood on the north side of Chicago for around 200k.

As a person who's currently dealing with the market in Chicago I can say your data is out of date. Bungalows in virtually any decent north side neighborhood are more like 250-300k. The only exception is Belmont-Cragin which is so inaccessible it might as well be a suburb.

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.

As tptacek says, Jefferson Park is the bang for your buck winner in Chicago. My sister in law just bought for under 200 with a yard, and a decent 2 floor home. House next door was listed for 150 (incredibly small though), and these aren't garbage homes in a bad neighborhood over there.

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.

Jeff Park was one of the first neighborhoods I lived in Chicago, and it has proved to be one of the best. Quiet, clean, friendly.

My sister just last year bought a house in Jefferson Park for around that, and her neighbor's house just went up for less than 200. I'm sure it's not the best house in the world, but it's a nice neighborhood walking distance from a blue line station.

I don't know about the particulars of their places. The only properties I've seen in Jeff Park for that cheap have been Bank Owned, in need of serious rehab, or have some other mitigating issue like being on a short lot.

My sister's place is almost as big as mine in Oak Park. We could haggle over whether nice houses cost 200 or 250k, but for starter homes (the kind you'd pay over 1MM for in SFBA) in the city itself, that's the range.

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.

>>I paid nothing close to 500k in Oak Park...

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.

Oak Park is significantly more expensive than Chicago.

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.

I guess there are a lot of weirdos in Chicago by your estimation. Virtually every decent north-side neighborhood in Chicago (including Jefferson Park) has a median sales price above your $250k point and that includes all types and sizes of homes:

http://www.trulia.com/home_prices/Illinois/Chicago-heat_map/

That might be realistic for a condo, but a single family home at that price would have to be a serious fixer-upper or have some other significant flaw (near gang areas, etc.). The types of homes most urban professionals would consider suitable are hard to find under $500k in Chicago. And if you're targeting one of the few decent public school districts, even that number is a stretch.

No, this is just not true at all. Sorry. Read the other branch of this thread.

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.

I am not sure where your figures come, but as someone who looked seriously at eight houses in various neighborhoods of Chicago, you can find quite suitable houses in the $200-250k range.

I guess I should have specified that I'm thinking of 3+ bedroom homes. Here's what Zillow looks like for a wide drawing of north-side Chicago SFHs under $250k.

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.

Have you seen Dublin? ;)

Los Angeles used to be approximately like that. We're still emerging from that kind of pattern and distribution.

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.

I'm pretty sure LA is still a sprawl and density has increased very little. Even in Santa Monica, and the rest of beach areas, there are plenty of single family homes. Not sure if they make up the majority of residential land, but sure feels that way.

> you're ignoring a fact...it's close to impossible to buy a part of land

What does that have to do with s3nny's post? I can't afford to buy a house in the area I work.

Not being able to buy a house near work is pretty common for younger people these days across the world.

Not wanting to buy a house seems pretty common for younger people, at least in my experience (in various parts of the US).

I think young people realize that the suburban dream was just that.

Young people almost always change their mind about that once they have kids. This isn't a new phenomenon.

My wife and I are young parents (not 30 yet and our kid is going to be 8 soon) and don't have plans to buy a house, at least not in the next 10 or so years.

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.

Buying a house doesn't necessarily mean buying in the suburbs. We've got kid and live in the city, and we know other families that do as well. Probably still a minority, but a growing trend. Remember, it wasn't that long ago that people with kids lived in cities too.

This is a weird comment. Is this a Baltimore thing? American cities are full of families. With the possible exceptions of San Francisco and Manhattan, they are mostly families, aren't they?

Sorry, I meant we're in the minority of families that live in a city, not that a minority of people in the city are families. The latter is true, as you point out: 57% of Baltimore households are families.

Downtown and surrounding areas in Seattle seem devoid of families with kids. My wife and I live in Bellevue but wanted to move to Seattle. We tried finding people at our workplaces who lived there and had kids, to ask about schools and such, but found no one. Everyone seems to move to farther neighborhoods or to the suburbs once they have kids here.

Depends if you mean with kids or not. Most college educated families with kids in Chicago move out of city limits post kids to avoid the bomb that is Chicago Public Schools.

Do you have stats to back that up?

Is it origin/master or origin master?

It depends on the command of course

But part of not wanting to buy comes from the sheer expense. My wife and I could buy in D.C., but it seems financially irresponsible. But if prices were what they were when my parents moved here in 1990 (less than half, even adjusting for inflation), we'd probably pull the trigger too.

But is a condo affordable? When people say "buy a house" that can be a euphemism for "own my dwelling".

Sounds just like SV!

Why do would I want to buy part of the land, specially in a foreign country?

Then rent.