patrick.net

Rent4Ever says

Is having a luxury car, watching cartoon network and having some games on your phone really worth 70k after just 10 years?

Yes.
Yes.
and Yes.

Finally finally finally. Someone who gets it. I am so happy to read that there is someone out there that thinks as I do. I have never and will never buy or own anything!!! I rent everything because all things ,stuff , even our bodies are rented. We all have a lease on life and everything decays, everything.

. Nothingness is true freedom.

You are awesome!!!

Auntiegrav says

We buy all of this stuff because it is cheap and shiny and noisy. Meanwhile, if we spent a few of those bucks on local foods and products, the money would circulate in a local economy and support the infrastructure and sustain better living practices, distribute the logistics over a broader range, and be a more robust arrangement for everyone.

Everyone 'spends a few bucks on local foods'. 'local products' happen to be 'cheap, shiny and noisy'.
The only point here is that there isn't one....

BayArea says

At today's interest rate of 3.5% and 25% down, a $1200 mortgage gets you a $375,000 house. It's not uncommon in parts of the Bay Area to have that level of house rent out for $2500.

That's an 8% annual rent:price ratio...

Why are you so surprised?

Does the math really add up on this? I think I need to go see Patrick's calculator.

Auntiegrav says

Meanwhile, if we spent a few of those bucks on local foods and products, the money would circulate in a local economy and support the infrastructure and sustain better living practices, distribute the logistics over a broader range, and be a more robust arrangement for everyone.

I can kinda agree with that but it also depends as to what area. Every few decades smaller businesses tend to blame something for their ills. In the 50's and60's it was highways, in the 70's and 80's it was the malls, in the 90's it was walmart and now it is the internet.

I know people that don't live in good areas. If you have violence it scares people and hurts businesses pretty bad. That's another reason why the internet tends to work. UPS and Fed Ex deliver..they don't care about how bad it is in the neighborhood. Here's your stuff ma'am.

On the other hand some businesses do well by combining things that would be harder to get otherwise or at least immediately. Tractor Supply has a wide range of goods that are usually by mail order.

There's nothing wrong with buying local products but it also depends in terms of what extent is local? Coffee for example is only made in one state (Hawaii) so is a coffee shop really a local business when it depends on a product that is thousands of miles away? There's only a few tea plantations in the country so that counts as well. Recently I replaced the fan in my laptop. Now the business was local (within 15 miles) and it was cheaper and probably a better service than a box store..but the fan was probably not made here.

The problem with consumption is frankly we have long lasting items that have marginal satisfaction. If you buy a car buying another isn't going to add much to your life - same with a computer - a tv etc. But the stuff we physically use up generally is made by machines - soaps, food etc. Sure we can shop at farmers markets and some craft areas but you aren't going to get a locally made iPhone 6, a cable service plan (for the most part) etc.

I'd argue outside of basics like food and energy you kinda stop buying things like you did when you were say in your early 20's. I have plenty of clothes I don't need anymore even for all four seasons. I need a new belt because it is worn but it lasted me years.

What we have seen in the economy is that anything that was more out there as a luxury or a extra has been hurt the most. How many joke shops do you see these days? How many comic book stores? How many cigar bars? How many sports stores (cards etc).

The baby boomers led the growth in consumption largely because war time production was shifted off and there were incentives to sell to tens and tens of millions of new people. With smaller generations and a concept of less consumption and more open markets it makes it much harder to sell in the same ways as before.

I have gotten rid of most of my stuff, and lived in a three bedroom apartment for 9 years, then inherited a house across the country and had to move. My stuff is still there, and we have replaced everything here. Luckily its a small place, and works, but the work that goes with owning a house is a pain. Anyway I agree with the writer, there is a joy and freedom of not having a ton of stuff around you. After the market recovers maybe we will go back and get our stuff. For you people in CA, listen to this for 350k I can get a completely tricked out center hall colonial from Ryan homes in Pgh. Come here, it's cheap and the people are nice.

mdovell says

With smaller generations and a concept of less consumption and more open markets it makes it much harder to sell in the same ways as before.

last i checked the population was increasing...ever hear of "immigration"??

I stopped buying stuff years ago. All furniture from 1994 until I left the States except a nice bed and Mexican bedroom furniture were hand-me-downs from family. I've had two cars since 1998. From 1998 - 2005 a little Hyundai with manual windows and no air conditioning, and in Argentina I had an 80's Peugeot a couple of years, which I sold in 2008. I haven't driven since. I buy everything I need used at auction and street fairs, including most clothing, although I admit to having endulged on $10 jeans and shirts at Walmart in 2010 on a short trip to the States. Now I buy vegetables at street markets, make my own plain yoghurt, almost never buy prepared foods, and never visit restaurants. I have a phone line for the internet connection with no dial out and ADSL for $20 a month, and a prepaid cell I hardly talk on (just text messages for about 5 cents each).

American consumer culture is deadly, and it's freeing not being a participant. I still can't understand the need some people have to live in certain places like the Bay Area. I lived there in the 80's - very nice while it lasted, but it's over now, and I can adapt to almost anywhere. I like to live where I can live on less than $5000 a year, and can save the rest. I was surprised that on my $1300 salary I can save about $800 a month if I really pinch, as I had to do recently when confronted with an unexpected bill.

rgermano says

I like to live where I can live on less than $5000 a year, and can save the rest. I was surprised that on my $1300 salary I can save about $800 a month if I really pinch, as I had to do recently when confronted with an unexpected bill.

you are not living. you are existing...

xrpb11a says

you are not living. you are existing...

No, xrpb, it's lots of fun if you don't HAVE to do it!

jan says

I have gotten rid of most of my stuff, and lived in a three bedroom apartment for 9 years, then inherited a house across the country and had to move. My stuff is still there, and we have replaced everything here.

I moved from a small apartment to a house 12 years ago and still have stuff in boxes from that move. It very obvious to me that I don't need that "stuff". I am slowly editing all of my stuff(the good thing is in my neighborhood, 1 hour at the curb is all it takes for it to dissapear).

On the other hand, I have a friend that moves every year. He doesn't have more than two pickup trucks of stuff.

Good thread.

wthrfrk80 says

Your example of $375k is pretty close to Alameda, what's the median rent there?

Median rent in in Alameda, CA is $1,498. Here's some nice graphs for you too:

http://patrick.net/housing/trends.php?uaddr=alameda%2C+ca&v=rents

The ops theory about money is flawed. Fiat money is seriously at risk yet op thinks it is the way to go. The idea of living simple is great. The more you have, the more responsibility you have, more work to care for what you have. Having debt is a burden. But what if all that paper money was greatly devalued? Where and what would you do then? Suffer I think.

There are people out there that practice the art of owing And owning nothing, they are called homeless.

Yes just go to the border towns of Mexico and find out why they risk death or despair to get here to work for little bits. They are hungry. It is an idea opposite of yours. They have been to nothing and didn't like it.

Cautious1 says

xrpb11a says

you are not living. you are existing...

No, xrpb, it's lots of fun if you don't HAVE to do it!

what part of it is fun? Eating out of a trashcan??

xrpb11a says

what part of it is fun? Eating out of a trashcan??

"Simple Living" doesn't have to mean living in extreme poverty. It just means having everything you "need" and not just wanting more, more, more, and more.

Median rent in in Alameda, CA is $1,498. Here's some nice graphs for you too:

Ok, so according to Patrick's calculator it's still better to rent a median apartment than buy a median house in Alameda, CA.

After 7 years: cost to rent is about 107k, cost to buy is about 208k

I used the "default" assumptions.

I don't like either extreme. I think many American's have lost their sense of balance. I have many friends that are struggling nonstop with finances, yet every single one of them own an iphone with a very expensive plan. On the other spectrum I have friends so frugal they make their own soap and don't have cable tv. I'm somewhere in the middle and from what I can tell am probably one of the most content. I do however totally agree with getting rid of "stuff". Having been forced to move a couple of times really made me realize how much stuff you have and really don't need and don't even use!

http://www.youtube.com/embed/QzE76nUSjL8

jan says

For you people in CA, listen to this for 350k I can get a completely tricked out center hall colonial from Ryan homes in Pgh. Come here, it's cheap and the people are nice.

I love Pittsburgh! Most of my family is from there. I used to live near Freeport.

The Californians wouldn't be able to handle the winters in Pittsburgh though. Plus I'm sure most of them think it's a polluted hell-hole. That's good. It keeps the house prices reasonable!

Jvolstad, that's one of the best SNL skits ever!

LOL wthrfrk80, it takes a year to acclimate to phg, but the summers are much better than florida. We were slaves to the a/c down there. California was fun to visit, but no we decided against it more than 20 years ago.

But, boy could we spend money in California, the whole society is like that, but here keeping up with the jones is not cool. We had no housing bubble here, yep, flat as a pancake. Doing things right just isn't the same here as it is there, a whole different mindset. Lots of tech and insurance and health here now, all the mills are gone, except a few specialty mills. But no Rolls Royce dealer, or whole foods are here. If you want fresh food there are farmers markets each weekend. You only go to Macy's for a special occasion outfit, mostly blue collar and kids of blue collar who went to college thanks to the unions wages of their parents. And if you were caught selling an exploding arm here, know that your neighbor who owns that arm is armed. Very little crime here because everyone is packing, hunting, or shooting at the range. Well, dinners ready, thanks for the giggle.

@Hey you, that Carlin clip really is priceless, one of the funniest bits ever. Thanks for posting it.

As some famous person somewhere once said "Everything I know I learned the hard way."

I've owned property. Local `authorities` (cough) annexed and rezoned my several properties from what I bought to what they wanted it to be, till I was nothing but a tax serf paying their alms. I sold those properties which cost me a bundle. Lesson learned. Never again.

I still have TWO storage units (full of stuff) in two different states, one of which is full of my grandmother's stuff and dammit she died thirty years ago. Just couldn't part with it and what the hell do I do with it now? Trying to negotiate with my kids to take great grandma's stuff, but what the hell are they going to do with it all? Moving it will cost a fortune.

We now rent an apartment--with a garage which was necessary--because when we moved back to the US from overseas we brought back all this damn interesting and wonderful stuff. What to do with this garage full of fascinating foreign stuff?

AND I have another storage unit with a housefull of stuff that's been in storage for 10 years. I will never live in a house in the US again, what the hell do I do with furnishings and garden fountains and patio furniture when I move to a tiny flat in Monevideo or Ecuador?

I was railroaded by a lifetime American thinking and the fraud of ownership. I'm done with the American thinking and the fraud, but I'm still stuck with with all the stuff.

I just thank god every day that I'm a renter and I don't have a house I need to unload as well.

gardener1 says

I just thank god every day that I'm a renter and I don't have a house I need to unload as well.

As a landlord .. I salute you and encourage your mindset. Own nothing. Sell the valuable bits to me and then use the money I paid you to rent from me. Sounds good!

Jan,

Great description of Pittsburgh vs. California. Love it!

jan says

LOL wthrfrk80, it takes a year to acclimate to phg, but the summers are much better than florida.

Met my third wife in Pittsburgh. Her ex-husband at the time was the number #2 boy in town. deputy mayor. Just to give you some idea of JC's powers of charm! Florida is a strange land. Was stationed on the coast in '78. Lots of good stories from Florida, The things is everyone from Ohio and Jersey moves to Florida so you get a real weird bunch doing real weird things to one another.

gardener1 says

I will never live in a house in the US again, what the hell do I do with furnishings and garden fountains and patio furniture when I move to a tiny flat in Monevideo or Ecuador?

I am leaning towards digitizing everything and only keeping a laptop and an iPad...

JodyChunder says

gardener1 says

I just thank god every day that I'm a renter and I don't have a house I need to unload as well.

As a landlord .. I salute you and encourage your mindset. Own nothing. Sell the valuable bits to me and then use the money I paid you to rent from me. Sounds good!

He he funny guy.

dublin hillz says

In San Jose, for a SFH 3/2 rental in a semi-safe area at least $3200.

Jeez what part of SJ are you looking at?

Here in Blossom Valley/Cambrian a 3/2 1500 sqft rental runs $2500/mo give or take. Go to the Silvercreek area and it drops $300 or so. My rental is 2 houses away from a nice park and I have on occasion gone on midnight walks with no question of my safety. I signed my first lease only a few months ago and prior to that I did my research. I was looking at higher end houses as well, $3000/mo would get you 2000 sqft in Almaden Valley. As we have multiple pets and are honest about it our options were severely limited but even still we managed to find a decent 3/2 for far less than you are quoting.

drew_eckhardt says

Starting compensation packages for fresh graduates at all the big software companies are over $100K and some of those kids rent houses together. Mid career good people can net over $200K at larger companies without getting into management. There are also couples with both partners working in that industry.

If that is true you can expect those jobs to be sent overseas ASAP. Heck send them to Pittsburg - I hear its nice and the housings cheap.

New renter says

Starting compensation packages for fresh graduates at all the big software companies are over $100K and some of those kids rent houses together.

No.

New renter says

Heck send them to Pittsburg

Hey now you forgot the "h" at the end. ;-)

Pittsburg is in the Bay Area!

clambo says

Herewith I will regale dear readers with an *extremely typical case* of the woman who must have everything.

Sounds to me like you need to find better dates. Non-materialistic women ARE out there - I married one and am grateful for it.

It does help one's perspective to go through a bottleneck at some point in your life. To watch all those things burn that were once so important to you or to be forced to whittle down you possessions to just about what will fit in your car or worse, what you can carry. Happens to people in other parts of the world all the time.

I suppose for most Americans its moving day. Finding and having to move all those heavy boxes still unopened from the last move is quite enlightening, especially when time is short.

xrpb11a says

Rent4Ever says

Is having a luxury car, watching cartoon network and having some games on your phone really worth 70k after just 10 years?

Yes.
Yes.
and Yes.

You are not alone, most of America would agree with you. Most of america is also heavily in debt, living paycheck to paycheck, and ill-prepared for retirement. Now that's living!!!

clambo says

Mexican professional guys blow money like it's water.

Professionals in Mexico barely make enough money to afford a small apartment and a ten year old beater of a car.

The ones you are talking about at the 1%'ers of Mexico.

Sr. Software Engineer / Developer / Programmer MXN 293,527
Project Manager, Information Technology (IT) MXN 413,475
Information Technology (IT) Manager MXN 424,847
General / Operations Manager MXN 808,889
Software Developer MXN 210,000
Regional Sales Manager MXN 497,996
Software Engineer MXN 204,193

http://www.payscale.com/research/MX/Country=Mexico/Salary

Cboy,
They also don't have expensive mortgages usually. Many live with a parent, grandparent, or have inherited a house.
It's culturally acceptable and common to be a spendthrift and save nothing because 1. former 150% inflation teaches blowing your money, "use it or lose it" 2. not common to find investments like Fidelity, T.Rowe Price, etc.
Once years ago I told my local friends about this idea for their proceeds from a business. The bank guy said they have mutual funds in Mexico and I spoke to a guy on the phone right there. The minimum investment=$100K USD.
The girl I mentioned in particular inherited a house and a pension income from both her father and grandfather. She works to spend her dough flying around and eating in restaurants, buying Raybans, handbags, etc.
Newrenter of course there are some "non materialistic women" out there. The exception proves the rule.
Go to your local *fancy* mall and tell me who is in there. I have never met an "extreme cheapskate" female. She must exist however, like unicorns.

I think the real comparison once the house is paid off is taxes + maintenance versus rent. Where I live, the paid off house wins by a large margin. Hate to be an 80 year old and still needing to come up with the rent money, and have no equity.

Which assumes of course you have no other form of equity, e.g. stocks, mutual funds, annuities, inheritance, 401k, social security, etc.
Those gangsta wannabe punks shuffling around in their baggy pants are not going to be making house prices rise much.
You can be an old geezer, take a chunk of change from your Roth IRA and make the down and immediately reverse mortgage the little house you want to live in the rest of your life. Problem solved using no "home equity".

clambo says

Go to your local *fancy* mall and tell me who is in there. I have never met an "extreme cheapskate" female. She must exist however, like unicorns.

On the rare occasions I hit the mall - and I HATE malls! - I see mostly high school kids. I don't know how old you are but if you are over 40 and looking at those kids I think I see your problem....

Patrick, guess who's reading your website?

Max Keiser and the Keiser Report.

http://maxkeiser.com/2012/07/08/anybody-ounce-good-sense-can-see-buying-property-anywhere-risk-need-taken-you-can-rent-place-live-anywhere-world-money-ahead/

This thread has been referenced on his website today. I am honored and humbled. As a mere part time gardener and lifelong peasant, I had no idea that anything I had to say meant shit in this world. I am stunned.

On the other hand, I do my best writing in the middle of the night befriended by a jug of Russki Standart.