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I feel like there should be a difference between "rent" and "mortgage rent" (programming.dev)

submitted 6 months ago by danhab99@programming.dev to c/chat@beehaw.org

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Since the housing market looks like a crowd of people just signing mortgages as fast as possible just to then turn around and charge that mortgage plus a little bit.

I shouldn't pay someone's mortgage like seriously this is just adding an unnecessary problem to the real problem of "living somewhere"

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[–] furrowsofar@beehaw.org 4 points 6 months ago* (last edited 6 months ago) (1 children)

Buy your own house or condo for cash. Then you pay maintenance and taxes only. Done.

The big issure is the high cash price of housing. The true total society cost of housing per unit per year is actually the annual maintenance cost plus the cost of new construction per year divided by the total number of units. This is presumably less then the cash price.

General cash price is pretty close to the cost of building a new house. I guess you could annuitize that over a life time to get a set of annual payments and compare. Or you could go the other way and calculate the present value of the annual per unit cost and compare to cash price.

[–] bane_killgrind@kbin.social 7 points 6 months ago (3 children)

But I don't have hundreds of thousands cash

[–] metaStatic@kbin.social 6 points 6 months ago (1 children)

hundreds of thousands

oh man, if I could find anything under a million ... I still couldn't afford it

[–] bane_killgrind@kbin.social 5 points 6 months ago (1 children)

You can build new at the edges of suburban wasteland for cheaper sometimes don't lose hope

[–] metaStatic@kbin.social 6 points 6 months ago (1 children)

I live in Australia. Hope wasn't lost so much as drug out on the street and shot.

[–] bane_killgrind@kbin.social 5 points 6 months ago

Yeah... That hope was a nice bloke. Should have seen it coming.

[–] furrowsofar@beehaw.org 3 points 6 months ago* (last edited 6 months ago)

Even if you do pay cash, housing is expensive. Our little house in a not so good part of town costs about $25K a year. About half that is out of pocket and the other half is capital opportunity cost. One reason many people carry mortgages longer then they need to is the capital opportunity cost. My wife and I both rented until about age 45 and to our surprise we were just barely able to do cash at that point so we did.

The other issue at the moment is high interest rates. Mortgages look less good compared to cash. The other issue of course is the high market price of homes as I said previously. That drives both mortgage and capital opportunity cost and is not directly related to true society wide cost, but is more of a financial mumbo jumbo thing.

[–] furrowsofar@beehaw.org 1 points 6 months ago* (last edited 6 months ago)

I am guessing but probably about half of the cost of rent is related to true costs and the other half related to the financial mumbo jumbo of capital opportunity cost.

Just based on my experience owning our house.