Rent vs. Buy: The Eternal Debate

Rent vs. Buy: The Eternal Debate


The white picket fence. Space for entertaining. Acres of land to call your own. These were characteristics of the American
dream home. But is it still a dream worth chasing? Should you buy a home or rent? We’re here at the White House at 6 Woods Lane
in Easthampton Long Island. You could own this place for the list price
of $12.5 million. With a 30-year fixed rate mortgage 3.991%
interest, you’d pay nearly $47000 a month, and that’s not including closing costs, home
ownership insurance, or property taxes. Now, this kind of place might be a little
pricey for you, but the same principles apply at much lower levels when you’re considering
whether to rent or buy a home. Now, before I break something in here, let’s
get back to the studio. To buy or not to buy? That is the question. We polled our YouTube audience, and they had
a lot to say. One person said owning a house should not
be thought of as an investment. More like something between an asset and a
liability. Someone else shared a pretty common sentiment
these days that student loans would prevent them from ever buying a home. Another said abolish private property altogether. But, okay. A majority of you think ownership is the way
to go, and who can blame them? People think of buying a home as part of the
American dream. The driver of middle class wealth. A sound investment vehicle. Renting a place is less romantic. Throwing money away every month on a place
to rest your head and keep your stuff, but that calculus is changing. To help us run down the reasons why you may
want to rent and not buy, I spoke to financial planner Roger Ma. Let’s talk about renting versus buying. Sure. So, can you tell me why renting is not throwing
your money away? Well, I think the flip side is why is buying
not wasting money? And I think that’s a myth that when you buy,
a lot of your money is building equity, but that’s just not the case. Your monthly payment, and the upfront, and
the backend cost of buying are wasted money as well. You’ve got mortgage interest, homeowners insurance,
property taxes, potentially homeowners association fees. Not to mention the huge closing cost on the
front end and the back end. If you don’t plan to stay in the same area
for at least five years, it probably makes more sense to rent, and that’s because of
those large closing costs. You need to give your home a sufficient amount
of time to potentially increase in value. I feel like the generation now growing is
maybe more likely to be on the move. Definitely. Between the ages of 22 and 40, the average
person changes jobs every one to two years, so they’re changing a fair amount. So, I think having the flexibility to change
jobs could be reasons to rent instead of buy. And that’s okay. There’s no shame in renting, and if you look
around the United States, depending on where you live, it might actually be more affordable. ATTOM Data Solutions publishes a yearly affordability
index of buying verse renting, and in most places, 59% to be exact, real estate prices
are outpacing rentals. In fact, in all 18 of the most populous counties
in America, it’s more affordable to rent than buy. Lets be real. For a lot of people, the choice of renting
verse buying may not even be yours, especially if you’re young. I talked to Bloomberg reporter Patrick Clark
about the unique problems facing potential home buyers. Let’s talk about the unique hindrances that
maybe new home buyers might face. There’s not enough homes they can afford. Right? Sure. That would be a big problem. At the very most basic, there’s an affordability
gap. A decade after the foreclosure crisis, we’re
still building homes. Not just of where they were at the peak bubble
madness, but still below the number of new homes that we were adding in the mid ’90s. The construction that is happening has skewed towards the high end. That is sort of pressured on the other side
by maybe age, people growing older and maybe not moving out of their homes. There’s two different ways you can get listings,
right? You could build new homes or you can have
homes that were already occupied hit the market. There’s some question of whether people want
to stay in their own homes and “age in place”. Older people staying in their homes longer
is an issue, so there’s some gridlock in the housing market. This generation is now saddled with more burdens
than previously was the case. Like way more. There’s more than $1.5 trillion of student
loan debt outstanding. Yikes. The deck is certainly stacked against this
generation. But that long standing elusive goal of home
ownership seems so tempting. All in all, I’d have to put it this way: If
you have your heart set on home ownership, nobody’s going to stand in your way. But you probably don’t need to sweat it too
much either if you don’t. That was probably expensive.

100 Replies to “Rent vs. Buy: The Eternal Debate”

  1. The real answer is how much do you value the freedom to personalise your property? If you want to renovate and construct according to your taste, buy. if you think it all a hassle and prefer a management company to do it all for you, rent. There is a valid argument for saying that in most cases, the deposit and mortgage payments would make a higher rate of return invested in stocks than the capital gains on the property would give you.
    You sacrifice freedom to personalise the property for freedom to move readily and keeping assets liquid to invest in the optimum way. If you want a nice new kitchen either move rental, or buy a property.
    At least we don’t have property tax here in the U.K. I pity Americans that have to pay that. If that was the case, I wouldn’t want a very valuable house.

  2. It’s all about timing. Rent and save your money for a deposit then buy when the time is right/ markets are in a downturn.

  3. One of the worst Bloomberg video ever made. I'm surprised of such poor quality from you guys. I hope you'll do much better in the future !

  4. Landlords watching this like, "good, gooooood, let your money flow through you and into my bank account."

  5. Renting's main downside: cannot feel like a boss (must ask to have a pet or, sometimes, must ask to have a party); Owning's main upside: almost always make far more as an investment than putting money in stocks or mutual funds (not uncommon to make $50,000 per year from appreciation of a home in many large cities). So, for me, I'd rather feel like a boss.

  6. This is stupid, what about the fact that many of the listed costs of own are text deductible. The same is definitely not true for renting…

  7. Try renting a nice home for years feeling comfortable then BOOM the owner wants to move back in and you have to vacate in 90 days. ….I don't recommend renting for this simple fact. And another note rents are way higher than owning.

  8. Here in Norway it is still very much the case that buying is cheaper than renting, but that has to do with a few things that are not the case in the US.

    1. We have a strong workers union, that gives us the opportunity to get great discounts on insurances.
    2. The wealthy still build big apartment blocks that promote renting, but in more recent years it has been clear that they inflated the price so high that it became impossible to actually save up much to buy ones own place later. Therefore the taxing of those who rent space where they do not live themselves (or on second homes and such) has increased to deflate that market somewhat.
    3. To aid people like myself who where first time buyers on the market, the government launched funded loans with low interest to help people afford their own place.
    4. Reregulation to require ownership and live-in requirement on building permits lessened the desire for big real estate agencies to buy and build rental apartments.

    Now we still have a problem with inflated prices on private homes sadly and that has remained almost unchanged for years. The difficulty around it tends to be around the cities where the prices are much more inflated than everywhere else. They do not want the prices to crash because that would affect to many current homeowners and they don't want to them to go up. That means that the only course is for current homeowners to invest in their housing, bringing it up to code and invest in ways to reduce the other cost (heating and such) with owning the place. In addition to this, new housing has to be put up to gradually reduce the inflated prices so that more people can get into the market.

    I myself own an apartment, not the biggest but more than enough for me. It did however take me years of saving, living at home (sometimes driving me nuts), a loan from my parents and using a special account that enabled me a tax cut while saving to be able to afford a place. I think all of that is overkill, but this is what you get when everything is about money.

  9. Mobility & liquidity are worth way more than anyone gives credit, esp if you're young. Owning a home seems insane to me.

  10. They said the same thing about leading cars vs buying cars. years later, leasing cars aren't that popular. People want to own.

  11. Renting can be better IF you invest the money you're saving into a good growth asset like a small cap share fund or your superannuation / 401K / pension plan. If you're just spending the difference on crap, then you're not better off. Remember, you probably don't want to be renting, or paying a mortgage, when you're retired.

  12. Rent: makes more sense to put that down payment in the stock market and make 8-12% (or more/less) per year with having the flexibility (i.e. moving for new jobs quickly) offered by renting. Plus, generally, you get to live in more walkable places and don't need to worry about home/yard costs/work. So rent unless you have the money to say buy a vacation type home.

  13. Boomers are sedentary, settler civilized. Millennial's are mobile, globally nomadic.
    So the culture has shifted from property ownership, to access and sharing.
    Static, long-term commitments give way to economic flexibility and choice.

  14. The real estate market is inflated as it’s ever been. People in Washington are buying 600,000 small houses with tiny yards and paying for those with their average jobs. The market is going to crash and they’re going to lose over 200,000 in equity… It’s stupid.

    Or you could sell your overpriced home, rent for the same price for a couple of years, use your cash to build a business, wait for a recession and use your cash to buy investment properties for pennies on the dollar. You’ll be laughing at all of the idiots saying “renting is throwing your money away”.

  15. No mention of the tax advantages to owning a home? I suppose this advantage is dependent on if what you can deduct gets capped or not.

  16. WTF you show the prie of buying the expensive house but not the price of renting it…that was kind of pointless. I also loved how you framed the fact people want to live in their houses when older instead of being put in old people deposits aka retirement homes as a problem…I think that is why I love capitalism so much lol

  17. This video is boring, non-impactful, made for millennials and gives no amazing sound advice that isn't common knowledge.

  18. Except that when you rent you at the mercy of a landlord most of home are rather unpleasant to deal with. And a lease isn't worth the paper its written on. Most landlords in larger cities just treat tenants as a business necessity, not caring that they are dealing in human lives. And no, I am not a grumpy tenant who has a history of evictions – I've just seen too many good folk pushed out of their home for stupid reasons.

  19. I have owned a couple of houses but not until after my children were grown. As a working-class single parent with no child support, I did not have enough discretionary income to cover both my house and the discretionary "needs" of my children. I am absolutely convinced that was the correct decision.

  20. I own nothing and I aspire to own nothing. I'm free like that. Let's end capitalism before greed ends us. Money isn't real and helping others is the true root to deep happiness, not sitting on imaginary money wealth.

  21. I'm a renter. Same one-bedroom apt for 30+ years. All that money that I would have given the bank has been used to enrich my life – travel, toys, entertainment, good food. My children are building their own lives. I don't need to create a financial legacy for them. That $500k to $1m, that a home costs, wouldn't be working for me. I could invest it and get about 8%, or I could give most of it to the bank. Also – when the roof needs replacing, I just call the owner, or property manager – no cost to me. Same goes for all the repairs. It's a no-brainer.

  22. The thing that people do not understand is ‘BEING HUNDREDS OF DOLLARS IN DEBT ISNT CONSIDERED BUYING FOR GOD’S SAKE’ you don’t own a house until you pay everything that you own, you dummies.

  23. This makes zero sense to me. For example…. Say you Rent a place for $1000 then to set a mortgage of a $1000. Every year typically you're rent would go up say….$1000 to $1150. Then the next year $1250. Etc. Mean while you're mortgage is still $1000. As well to help the matter; wages increase. So, purchasing a home in the long run should still be more affordable then paying rent year to year with increasing amounts. For sure; you have to pay more taxes, insurances and repairs and such with home owner ship, but it should still be worth it in the long run. Right????

  24. No, its giving it away to a landlord… Exploitative… Even if people are used to it… Still worse to rent than own… Realestate asset valuation ponzi scheme… Bunch of classist nonsense… Paying for an asset and getting none of the additional benifits of ownership… While having a home is a human right…. There is more to renting and owning that a place to live… There is a foundational economic understanding regarding the superior benifit to property ownership in American society… There is a distinctive advantage to ownership that elevates said owner into a safer more prosperious CLASS within society… Gona talk some rubbbish about how great renting life is… This sort of deep level con game sparked revolutions… The astoundingly egotistical and explotitive nature required to think this about renting v owning as not being fundamentally unequal is staggering… Ok 👋

  25. But someone has to own the property in order to have it rented out and I bet thats what this guy does, people renting will make the rich richer and the poor poorer.

  26. Think about it – rent and you basically pay the homeowner's mortgage for them while their property value rises.

  27. I am a single woman of retirement age and belong to a couple of FB retiree groups. Let me state this as a fact: Unless you are wealthy, if you don't own your own residence outright by the time that you retire, you are f – – – – d!

  28. This big dudes legs are fucked lol come on man whats with the long walking shot this dude has a limited amout of steps thies knees will allow … Fuckin killin me man!

  29. Bloomberg caters to Wall Street & investors, who thrive on Realestate Management deals. I don’t expect any bi-partisan honest analyses from them any time soon — as Bloomberg, if their own people rent. Home-owners & rental-homes owners/shareholders — they, themselves, sure want the Renting Trend to continue. The same was, the President Trump wants more people to travel — more people will crash at hotels overnight — hotels rooms ARE BEENG RENTED too — only, at ‘one-night-at-a-time’, astonishing rates…

    The Truth is — people rent, because they can’t afford to own. Young/old/newly transferred/just immigrated — you name it, doesn’t matter.
    It’s the affordability issue — not due to some untapped hidden ‘benefits’.

    RENTERS don’t invest their untouched left-over-income (from ‘mortgage vs rental price difference) into a stock market, securities, bonds and 401K. Nope, they do not.

    They rent, because that’s all they can afford to do.

    PS: Who sponsored this Bloomberg’s video? Property Management Funds, in coalition with Bloomberg’s own high-tiered home-owners?

  30. when you invest the delta between renting and owning into corporate wealth (S&P 500, Russell 2000, Nasdaq 100 or simple blue chip stocks outright) you are hitching your financial security onto the back of the freight train that is the U.S. economy. No matter what happens 30 years from now U.S. corporations will ALWAYS be paid first, workers last. This means that you have a common interest with the most profitable U.S. corporations, their GLOBAL customers (think billions of people) and the shareholders of these U.S. corporations. Your house? nobody has an interest in that except for the lender, real estate funds and the hapless government who prop up the U.S. housing market with no real longterm plan. This may be the biggest no brainer in the history of picking sides. A home purchase at the end of the day is what a person who doesn't understand how all their investment options work and stick with the most basic of these. Buying to rent (income property) is another topic entirely and should not be lumped together with owning your own residence.

  31. I paid my mortgage off 2 years ago on the house I live in, I also have another property which I rent out. I insure neither…. logic being that I have no liabilities and the land value is mor today than the original purchase price, so if worst case happens and my houses burn down, I just sell them as building plots.

  32. It really depends on a case to case bases. If you're already buried in debt (like most millennials) then buying is a bad idea. If you have no debt, job stability, and don't plan on moving in the next 10 years, can afford 20% down, then you absolutely should buy a home that is no more then 3x your income on 15 years fixed rate mortgage… This video sucked… probably because Bloomberg lost too much money on homeowner securities in 2008.

  33. It depends where you live. Where I live rent on a house is more than your Mortgage payments. Houses rise in price every year. The hardest thing is saving for a down payment. But once your in it is an excellent investment. If your in an area where house prices are stagnant and rent is low, then yes renting and investing your assets in the market or owning real estate and renting that out may be a better option.

  34. Of course renting is less expensive than owning in the most populated counties… That's basic supply and demand..

    Most of the land is owned, by investors or residents. The only feasible option becomes to rent. -Most likely in an apartment complex. Which are propped up by the housing prices in the surrounding area. Each option makes the other seem normal.

  35. It would be interesting to see a canadian version of these , were real estate prices never collapsed and decades of unllimited 3rd world immigration has made housing astronimcally expensive

  36. Who the hell makes more then $50k a month that's a working member of society that doesn't operate at a desk , office , ect ect ect ect position

  37. Home is a human right.
    Not house. One can have many hours, but everyone should have a home. Its basic needs of humans.

  38. In lithuania we spend on rent three times as much as on mothly payments if you’re buying a place. Only thing stopping from buying is that it’s hard to get the initial downpayment. Maybe in metropolies like NY or LA buying doesn’t make sence, but in less urban locations in does.

  39. Buying only makes sense if you're staying decades and you got a sweet deal. Then you can move and rent it out like my parents did.

  40. I think that the Japanese style pencil homes, and town houses would be better suited for this generation. Add in the ability to own a shop on your bottom floor and we're golden.

  41. some important things to consider if you are deciding whether to rent or buy. Downsides of renting are the owner can decide at their will to stop renting to you with a 30 day notice (that is if they are following the law). And in some cases a landlord does not follow the law and will do illegal acts like claim they provided you a 30 day notice.. Or they can shut off services that you are contractually provided with your rent. Also, there is expenses in moving all your belongings if you are evicted (costs of moving objects, cost of lost or stolen, damaged objects in process of moving. cost in terms of time and lost opportunity while having to deal with moving. Also an owner can decided to raise your rent, to above market rate to get you to leave. This can be done as form of discrimination or harrassment to a tenant. They could also poorly maintin plumbing. They could also enter your home at thier will when ever they want. And if you are not availble to be present to supervise, it is too bad, they have legal right to come in when ever they want. And also you have no say on who can come in to your home. They could have convicted felons come in. They could steal things you have or steal information from inside your home when you are not present. I personally know of landlords who literally said they would triple a tenants rent, because the tenant complained about maintenance issues that needed to be adressed.). If you own the home, yes you are obligated to pay for all expenses of maintenance and part of that is insurance,. But insurance can protect your persoanal belongings too in case of fire or flood or robbery etc. It can also provide liability insurance. As a renter, you would have to pay extra, on top of rent, to have even a basic level of insurance. But you also have say on who can or can not enter your home and when. And if you want to, you can rent out your home or rent out a room etc to supplement income. All of this means you have to be a much more sophisticated manager of your money. And as some people pointed out.. in some cases the cost of new home ownership is very hight. And hopefully in those places there are programs to help first time home buyers buy a home in which they can afford. And for people who buy with the hope that the home price will go up and are relying on that to be able to sell.. sometimes the home prices are depressed for several years, and that may mean they either are not going up or the price has gone down since you bought the home. And if you are not able to still pay the mortgage, and unable to sell for what you paide for home and the sales costs, you may be stuck and could end up having to a forclosure of your home. and possible loss of any downpayments you made. On the other hand, there are some tax advantages, potentially, for buying a home with a mortgage, and getting reduction in overall income tax costs each year, which could also ofset the cost of rent verses owning a home with a mortgage. The interest can be deducted from over all income for the year. And there is also some other deductions called depreciation per year, which can further reduce income taxes. These are some of my thoughts to consider.

  42. If you have student loan or any other debt that you believe prevents you from owning a home you can always buy a fixer upper in Florida where the law will not allow creditors to put a lien on your home. I just put up a video of the $41k home I fixed up in Daytona Beach and my property taxes are only $182 a year.

  43. American are literally eating each other to survive, student go to college then get a job working as a slave just for paying college debt and rent. The rich get richer the poor get poorer

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