Living in privately rented homes linked to faster biological ageing, study finds(theguardian.com)
theguardian.com
Living in privately rented homes linked to faster biological ageing, study finds
https://www.theguardian.com/society/2023/oct/10/living-in-privately-rented-homes-linked-to-faster-biological-ageing-study-finds
13 comments
Looks like that to me too.
The interesting thing is that, with 40 variables the expectation is that they would find 2 spurious correlations. They got unlucky and only got to publish 1.
Also, with about 50 control variables that nobody has any idea how related they are to the outcome, I'm sure I could mess with the numbers until I find some 10 spurious correlations on the set. They quit too early.
Still, those studies are important to lead future research into the actual relevant questions. It's journalists that shouldn't touch them.
The interesting thing is that, with 40 variables the expectation is that they would find 2 spurious correlations. They got unlucky and only got to publish 1.
Also, with about 50 control variables that nobody has any idea how related they are to the outcome, I'm sure I could mess with the numbers until I find some 10 spurious correlations on the set. They quit too early.
Still, those studies are important to lead future research into the actual relevant questions. It's journalists that shouldn't touch them.
Usually the variables correlated with socio-economic status.
The vast majority of epidemiological papers are basically correlations with socio economic status.
The vast majority of epidemiological papers are basically correlations with socio economic status.
There should be a public science communication standard that prevents journalists from misleadingly presenting correlation as causation. It is far too common.
It's not only the journalists that are in fault here.
There's a huge academic industrial complex generating this type of crap.
There's a huge academic industrial complex generating this type of crap.
I don't see where in the article they imply causation. They use the words "linked" and "associated." In fact, they specifically call out they don't have a causal explanation.
>As an observational study, the research was not able to determine what is causing the link between housing tenure and biological ageing, and the DNA samples analysed so far were only from white, European householders.
>As an observational study, the research was not able to determine what is causing the link between housing tenure and biological ageing, and the DNA samples analysed so far were only from white, European householders.
Or being in a financial situation where you can afford a house and are insulated from inflation leads to less stress.
The “link” is more likely to financial stress than the kind of housing you’re in.
The “link” is more likely to financial stress than the kind of housing you’re in.
Absolutely. Just signed 14 months lease on a townhouse, and the process was very time consuming. We cannot afford to buy a similar one, would cost us more than double every month.
Also, being in a situation where you can minimize the outside influences of others to some extent and invest in something suitable for your long term (and reap correspondingly lower long term costs) leads to less stress.
But, counterbalanced by the possibility of ‘having a mortgage and being stuck in a place that may not longer be optimal for your given economic changes around you’ that can lead to more stress.
But, counterbalanced by the possibility of ‘having a mortgage and being stuck in a place that may not longer be optimal for your given economic changes around you’ that can lead to more stress.
> But, counterbalanced by the possibility of ‘having a mortgage and being stuck in a place that may not longer be optimal for your given economic changes around you’ that can lead to more stress.
Sure. But we’re talking population level differences. There’s plenty of wealthy people that also choose to rent. However, at a population level, those effects are going to be a lot smaller. If you have a 2008 situation where the entire class experiences a shock then maybe.
Sure. But we’re talking population level differences. There’s plenty of wealthy people that also choose to rent. However, at a population level, those effects are going to be a lot smaller. If you have a 2008 situation where the entire class experiences a shock then maybe.
Situations like ‘08 happen cyclically and population wide? So over time you’ll have various percentages of owners who went through it and were so impacted right?
And those population level differences will definitely impact the data in the study, right?
And those population level differences will definitely impact the data in the study, right?
Firstly, this is the UK. The study compared with people who own & socially rented housing:
> Costs are higher, conditions are worse and tenure is more precarious than in owner-occupied housing or socially rented housing.
This is clearly covering the situation of a very specific income level.
> Policies to reduce the stress and uncertainty associated with private renting, such as ending no-fault evictions, limiting rent increases and improving conditions, may go some way to reducing the negative impacts.
Again, it's pretty clear it's about specific things with respect to how things work in the UK. It's hard to translate this to America. For example, I suspect people who can rent fare better than people who are doing Section 8 housing even though Section 8 housing would be considered the "equivalent" of social housing (& projects which are the direct equivalents have been largely abandoned as failures in the US).
As for your claim that '08 happens cyclically, it's now 15 years since & hasn't happened since. The longitudinal study starts in 1991. I don't know how many housing shocks happened in the UK, but if it's anything like the US IIRC there weren't any macro economic conditions that affected home owners and not renters unlike '08. I believe like most countries the UK only offers ARM rather than 30 years which means interest rate shocks are guaranteed to hit homeowners just with a bit of added lag. There's just not enough of a cycle and the cycles don't last long enough to tease out health impacts.
> Costs are higher, conditions are worse and tenure is more precarious than in owner-occupied housing or socially rented housing.
This is clearly covering the situation of a very specific income level.
> Policies to reduce the stress and uncertainty associated with private renting, such as ending no-fault evictions, limiting rent increases and improving conditions, may go some way to reducing the negative impacts.
Again, it's pretty clear it's about specific things with respect to how things work in the UK. It's hard to translate this to America. For example, I suspect people who can rent fare better than people who are doing Section 8 housing even though Section 8 housing would be considered the "equivalent" of social housing (& projects which are the direct equivalents have been largely abandoned as failures in the US).
As for your claim that '08 happens cyclically, it's now 15 years since & hasn't happened since. The longitudinal study starts in 1991. I don't know how many housing shocks happened in the UK, but if it's anything like the US IIRC there weren't any macro economic conditions that affected home owners and not renters unlike '08. I believe like most countries the UK only offers ARM rather than 30 years which means interest rate shocks are guaranteed to hit homeowners just with a bit of added lag. There's just not enough of a cycle and the cycles don't last long enough to tease out health impacts.
That is a remarkably rosy view of history - [https://amp.theguardian.com/business/2014/may/24/history-bri...]
There definitely is a cycle, and the cycles definitely last long enough that with some work you could see the impacts. They do tend to hit some areas of society harder than others, but on average hit everyone. And that is in the UK. Similar analysis will show similar cycles in the US, albeit not exactly in lockstep.
The Fed has been pumping since ‘09, and only stopped very recently. which is why we’ve had such a long ‘rosy’ run of it recently. Which means we’ll likely have a particularly painful impact.
But hey, maybe it’s all different this time?
[https://www.gov.uk/government/statistics/uk-house-price-inde...]
[https://fred.stlouisfed.org/series/M1SL]
[https://fred.stlouisfed.org/series/CSUSHPINSA]
There definitely is a cycle, and the cycles definitely last long enough that with some work you could see the impacts. They do tend to hit some areas of society harder than others, but on average hit everyone. And that is in the UK. Similar analysis will show similar cycles in the US, albeit not exactly in lockstep.
The Fed has been pumping since ‘09, and only stopped very recently. which is why we’ve had such a long ‘rosy’ run of it recently. Which means we’ll likely have a particularly painful impact.
But hey, maybe it’s all different this time?
[https://www.gov.uk/government/statistics/uk-house-price-inde...]
[https://fred.stlouisfed.org/series/M1SL]
[https://fred.stlouisfed.org/series/CSUSHPINSA]
The title could also read "Faster biological ageing linked to living in privately rented homes" since there is just a correlation. The interesting question is what are the causal factors, and are there any interventions targeting those causal factors that have more benefit than downside?
The article seems to be making an argument against privately rented homes and in favor of social housing. Would eliminating private renting actually reduce biological ageing? Or are the people who are predisposed to living a stressful life with fast ageing more likely to choose privately rented homes, and taking away that option wouldn't actually help them?
The article seems to be making an argument against privately rented homes and in favor of social housing. Would eliminating private renting actually reduce biological ageing? Or are the people who are predisposed to living a stressful life with fast ageing more likely to choose privately rented homes, and taking away that option wouldn't actually help them?
The majority of people renting would choose not to if they could. You'll get a few people that say it's great and suits there lifestyle, but most would rather the security of owning their home.
I don’t think it’s as uncommon as you suggest. I rent an apartment in Australia and don’t really feel the desire to buy it. Buying is a massively complex financial investment with dubious returns. While renting is convenient and lets me move around to whatever suits me at the time.
The rental laws in my state are also quite good and continuously getting better.
The rental laws in my state are also quite good and continuously getting better.
> Or are the people who are predisposed to living a stressful life with fast ageing more likely to choose privately rented homes, and taking away that option wouldn't actually help them?
Why would people living stressful lives choose to rent? That makes no sense—generally speaking, people don't like renting and generally speaking it's more affordable to pay off a mortgage than it is to pay off someone else's.
Why would people living stressful lives choose to rent? That makes no sense—generally speaking, people don't like renting and generally speaking it's more affordable to pay off a mortgage than it is to pay off someone else's.
> generally speaking, people don't like renting and generally speaking it's more affordable to pay off a mortgage than it is to pay off someone else's
Do you like buying houses with money you don't have?
Do you like buying houses with money you don't have?
I like it a whole hell of a lot better than paying off the mortgage some landlord took so that they could buy a house with money they didn't have. Not to mention of course that they get to soak up all the equity while also making a profit from my rent.
Many people are not OK taking any debt, much less massive debt with implication of losing home if not repaid. For me it would be living in perpetual anxiety.
If you rent you're in control. lost job, downsize with little hassle. noisy partygoers or Airbnb managers move in next door, just move
If you rent you're in control. lost job, downsize with little hassle. noisy partygoers or Airbnb managers move in next door, just move
> If you rent you're in control. lost job, downsize with little hassle. noisy partygoers or Airbnb managers move in next door, just move
I call bullshit on both counts. When I was renting I had two separate incidents where neighbors came into the adjacent unit and caused issues. In both cases the landlord finally had to evict them.
"Downsize with little hassle" amounts to the same as "just move" which is by no means a small or easy thing to do. People have kids in school, you can't "just move" but instead have to find another apartment, that you can afford, where you can pay whatever bogus up-front fees the landlord wants. Your landlord could decide at any time to sell your building/unit/house to another landlord. Your rent goes up with no ability to control it.
Owning a home puts me in much greater control of how my life looks than renting ever did. It requires a little more effort and care for renting and there's certainly some risk, but there's a lot of upside too.
I call bullshit on both counts. When I was renting I had two separate incidents where neighbors came into the adjacent unit and caused issues. In both cases the landlord finally had to evict them.
"Downsize with little hassle" amounts to the same as "just move" which is by no means a small or easy thing to do. People have kids in school, you can't "just move" but instead have to find another apartment, that you can afford, where you can pay whatever bogus up-front fees the landlord wants. Your landlord could decide at any time to sell your building/unit/house to another landlord. Your rent goes up with no ability to control it.
Owning a home puts me in much greater control of how my life looks than renting ever did. It requires a little more effort and care for renting and there's certainly some risk, but there's a lot of upside too.
I don't get it. Next door you usually have a place owned by another person. Your landlord evicted another landlord? If one landlord owns entire building, that's super atypical.
The problem is rarely cash flow, it's credit worthiness and access to a one-time down payment. Additionally, the types of mortgages people take out are fixed rate and your payment never changes (so long as you do not refinance) regardless of inflation, as such, you are paying less over time for your housing, especially compared to renting where rents tend to out pace inflation. Additionally, the money you put in for rent is just flowing down the drain as you receive no long term equity or value benefit once it leaves your bank account. As the saying goes, it's expensive to be poor.
Isn't buying a house with money you don't have just describing the institution of mortgages?
And yes, I would love to own a house. I just can't get the mortgage without meeting irrelevant and onerous criteria.
And yes, I would love to own a house. I just can't get the mortgage without meeting irrelevant and onerous criteria.
> Why would people living stressful lives choose to rent?
They live stressful lives because they're running after money
> it's more affordable to pay off a mortgage
Most people can;t afford mortgage. In most places they'll rent you a $500/month place but won't let you take a mortgage for $500/month. Not even taking into account current interest rates
They live stressful lives because they're running after money
> it's more affordable to pay off a mortgage
Most people can;t afford mortgage. In most places they'll rent you a $500/month place but won't let you take a mortgage for $500/month. Not even taking into account current interest rates
They don't choose to rent. They're forced to.
A relative few people think it's financially better to rent than to own so they can deploy their capital elsewhere. These folks have a lot more capital to play with in the first place, and would likely be part of the group that rents but lives longer.
A relative few people think it's financially better to rent than to own so they can deploy their capital elsewhere. These folks have a lot more capital to play with in the first place, and would likely be part of the group that rents but lives longer.
Discussions about correlation vs causation aside I would say that I would not find such a relationship to be surprising.
Having grown up in socially rented housing (i.e. "council housing") and then lived in private rents as an adult, I suspect the biggest factor here is security of tenure. You have a different outlook on life when your tenancy might well not be renewed in 12 months, depending on the whims of your landlord. Medium term investments like DIY or redecorating are just not something worth undertaking if you might not be there in a few months. And that's even assuming you're allowed to. Imagine needing to get someone's permission to repaint an internal door or (in some extreme cases) hang a picture on a wall.
That's without touching on the performance/behaviour of small private landlords which I think it's fair to categorise as "uneven".
Having grown up in socially rented housing (i.e. "council housing") and then lived in private rents as an adult, I suspect the biggest factor here is security of tenure. You have a different outlook on life when your tenancy might well not be renewed in 12 months, depending on the whims of your landlord. Medium term investments like DIY or redecorating are just not something worth undertaking if you might not be there in a few months. And that's even assuming you're allowed to. Imagine needing to get someone's permission to repaint an internal door or (in some extreme cases) hang a picture on a wall.
That's without touching on the performance/behaviour of small private landlords which I think it's fair to categorise as "uneven".
Potential price hikes are also a factor.
Back when I was still renting, even though I had more than enough income to cover increases, I'd feel immense stress every time the months leading up to lease renewal rolled around. Keeping housing costs below a certain threshold is a critical part of being able to stick away some cash for a rainy day or even having anything left over, and accomplishing this usually meant moving every few years, which meant periodically returning once again to the grueling search for something with vaguely not-horrible value for the price, which is exacerbated if you're anything but a perfect model renter who doesn't have pets or kids — even making substantial use of the kitchen is prohibited in some rentals. A lot of landlords seem to want tenants who only ever come home to sleep and are otherwise ghosts.
Ever since I bought a house a couple of years ago, mental bandwidth I'd lost to this stress has been coming back to me. Housing costs being essentially fixed in perpetuity and there being no possibility of being forced to move has done wonders for cutting down on stress and anxiety.
Back when I was still renting, even though I had more than enough income to cover increases, I'd feel immense stress every time the months leading up to lease renewal rolled around. Keeping housing costs below a certain threshold is a critical part of being able to stick away some cash for a rainy day or even having anything left over, and accomplishing this usually meant moving every few years, which meant periodically returning once again to the grueling search for something with vaguely not-horrible value for the price, which is exacerbated if you're anything but a perfect model renter who doesn't have pets or kids — even making substantial use of the kitchen is prohibited in some rentals. A lot of landlords seem to want tenants who only ever come home to sleep and are otherwise ghosts.
Ever since I bought a house a couple of years ago, mental bandwidth I'd lost to this stress has been coming back to me. Housing costs being essentially fixed in perpetuity and there being no possibility of being forced to move has done wonders for cutting down on stress and anxiety.
Implied: in select population of nations where renters are regarded as serfs. Of course the financial circumstances of shelter aren't causal, because you'd be left unable to explain the robust health and longevity of Switzerland, where owner occupancy is less widely practiced.
It is very much a cultural thing. I remember understanding plain as day for the first time in my life when COVID hit, that renters and owners are a distinctly separate class in the US, with the latter being protected at any cost. Homeowners received subsidy after subsidy to maintain their capital, while renters were left in the dust.
Can't pay your rent? That's a crime, and the sheriff will be knocking on your door in 30 days.
Can't pay your mortgage? That's a tragedy. Here are some local, state, and federal subsidies to take care of you. And if that's not enough, don't worry, because foreclosures take over a year anyways, and you can live there for free. Oh, and we'll be sure to give billions to the private equity firms buying up houses in your neighborhood to keep the prices artificially inflated, too.
Can't pay your rent? That's a crime, and the sheriff will be knocking on your door in 30 days.
Can't pay your mortgage? That's a tragedy. Here are some local, state, and federal subsidies to take care of you. And if that's not enough, don't worry, because foreclosures take over a year anyways, and you can live there for free. Oh, and we'll be sure to give billions to the private equity firms buying up houses in your neighborhood to keep the prices artificially inflated, too.
Huh? During COVID the US had several eviction moratoriums, which covered non-payment: https://en.wikipedia.org/wiki/COVID-19_eviction_moratoriums_...
99% of the time, the story was "hahaha we're gonna jack your rent cuz we can, suck it loser."
Yes, professional tenants were exempt. No, that wasn't much consolation to most renters.
Yes, professional tenants were exempt. No, that wasn't much consolation to most renters.
Exactly. I paid rent during the pandemic then afterwards, California paid landlords for any missed rent money but they did not reimburse renters who did pay. What a scam!
it was incredibly difficult to evict people in my area during COVID, as that required an eviction hearing and those were on hold for quite a long time.
> Huh? During COVID the US had several eviction moratoriums, which covered non-payment: https://en.wikipedia.org/wiki/COVID-19_eviction_moratoriums_...
Sure, for the few lucky people in federal housing and the handful of states that implemented their own (the vast majority of which were lifted in less than 6 months). Point is that nearly all homeowners in the US received 18 months of mortgage forebearance immediately.
https://www.consumerfinance.gov/coronavirus/mortgage-forbear...
Sure, for the few lucky people in federal housing and the handful of states that implemented their own (the vast majority of which were lifted in less than 6 months). Point is that nearly all homeowners in the US received 18 months of mortgage forebearance immediately.
https://www.consumerfinance.gov/coronavirus/mortgage-forbear...
To correct in specifics but not character: there were renter support/eviction prevention programs, as well as some amount of eviction moratoriums. All almost without fail came alongside mortgage/homeowner relief (with owners able to accept the latter while rejecting the former, covering their own asses while leaving renters in the lurch). My personal experience was with an EP program that provided 1) reassuring but functionally useless legal assistance - they couldn't do anything if you didn't have the money - and 2) back-rent cash assistance. The latter (predicated on you having a balance with your landlord but having not actually been kicked out yet) was hobbled by low funding, a long wait list, a process fractured across jurisdictions, and an invasive application process. We only received assistance because we got a tip from our legal assistance rep that the fund had been quietly reopened to applications after half a year of senescence. Ultimately, this did not prevent our eviction, as our property manager's next step was to raise our rates as much as 30% (annual increase + month-to-month fees).
Meanwhile, even at the highest levels of monetary policy, the aim has been to placate hysterical homeowners. Beyond aid programs, beyond preexisting tax incentives, you have the Fed refusing to Volcker us out of the way of catastrophic inflation with an appropriate rate increase, because it would wipe out the market and put everyone who wasn't in a fixed-rate loan for a house they don't plan to leave in dire straits. Instead, we let rental property owners mask their price-fixing under the guise of inflation.
Meanwhile, even at the highest levels of monetary policy, the aim has been to placate hysterical homeowners. Beyond aid programs, beyond preexisting tax incentives, you have the Fed refusing to Volcker us out of the way of catastrophic inflation with an appropriate rate increase, because it would wipe out the market and put everyone who wasn't in a fixed-rate loan for a house they don't plan to leave in dire straits. Instead, we let rental property owners mask their price-fixing under the guise of inflation.
Some aspects of your comment are a little anti-factual, but generally yes. Renters in the united states are regarded as subhuman, and it is socially acceptable to denigrate them as "transients" or worse. Even when such statements are made by government officials in formal proceedings, hardly anyone takes notice. As you noted a defaulting tenant will be turfed out by the sheriff in 72 hours but a defaulting mortgage payer goes through an adversarial court process that can take potentially forever. There are many such inequalities. These legal scholars cataloged them last year. It is for the USA but it applies almost perfectly in all Anglosphere places. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4068843
> while renters were left in the dust
In Seattle, renters didn't have to pay rent during the pandemic.
> Can't pay your rent? That's a crime
Not in Seattle, where it's considered the landlord's fault.
> Here are some local, state, and federal subsidies to take care of you.
Like what, property tax?
In Seattle, renters didn't have to pay rent during the pandemic.
> Can't pay your rent? That's a crime
Not in Seattle, where it's considered the landlord's fault.
> Here are some local, state, and federal subsidies to take care of you.
Like what, property tax?
>Can't pay your rent? That's a crime, and the sheriff will be knocking on your door in 30 days.
What on Earth are you talking about? There was an emergency order during COVID that prevented anyone from being evicted for about two years. A ton of landlords got absolutely screwed because their tenants stopped paying rent and could not be evicted by any means.
What on Earth are you talking about? There was an emergency order during COVID that prevented anyone from being evicted for about two years. A ton of landlords got absolutely screwed because their tenants stopped paying rent and could not be evicted by any means.
Federally subsidized loans pumped the value of their properties to the moon and saddled the rest of us with the resulting inflation, but I am supposed to feel sorry that they couldn't collect rent from the poorest tenants for a few months?
[deleted]
what does "privately rented" mean? what's "publicly rented" ?
Renting from a private owner vs renting from a municipal/state government. In the US, the latter is virtually nonexistent.
> In the US, the latter is virtually nonexistent.
The state of Massachusetts has subsidized housing for the elderly. And they are closely monitored by social workers.
My uncle lives in one of these apartments, and whenever he goes out of town, he has to notify the social services office. Otherwise, they will open the apartment to see if everything is okay with him.
If he's gone for more than three months, he loses the right to use the apartment.
Edit: minor corrections.
The state of Massachusetts has subsidized housing for the elderly. And they are closely monitored by social workers.
My uncle lives in one of these apartments, and whenever he goes out of town, he has to notify the social services office. Otherwise, they will open the apartment to see if everything is okay with him.
If he's gone for more than three months, he loses the right to use the apartment.
Edit: minor corrections.
> In the US, the latter is virtually nonexistent.
I generally agree with this, but it's worth noting the places that do have public housing have notably lower homeless rates when compared against drug use rates. Furthermore, most housing assistance is done through section 8 vouchers, which you would presumably control for if you repeated this experiment in the US.
I generally agree with this, but it's worth noting the places that do have public housing have notably lower homeless rates when compared against drug use rates. Furthermore, most housing assistance is done through section 8 vouchers, which you would presumably control for if you repeated this experiment in the US.
Section 8 vouchers would typically mean privately rented, right?
Yes, with US Federal Government subsidizing the rent.
Many of these private landlords are non-profit orgs.
Many of these private landlords are non-profit orgs.
"""Within the rental tenure, approximately half rent from a private landlord (private rent) and half from a local housing authority or association (social rent). Other tenure types include shared ownership and rent-free accommodation."""
It references "Gov.uk. Trends in tenure. 2022"
It references "Gov.uk. Trends in tenure. 2022"
[deleted]
Probably from mold contamination
From my own experience, I think this can be part of it.
My wife and I lived in an apartment several years ago. While there my wife had sleep issues and seemed to get sick more often. Close to the end of our lease, after a little rain, we found mold on the carpet and on some of our stuff in our bedroom closet.
We reported the mold to the landlords. They quickly denied it was mold, calling it “mildew” then had contractors tear open the wall and redo the insulation, carpet and walls. They offered to pay us money if we didn’t write a review regarding the incident.
We moved out as soon as we could. Now that we are lucky enough to live in our own home, we both feel a lot better in terms of sleep and health.
I can’t prove the mold was the cause of bad sleep or prove how long the mold was even there. But I don’t think I can go back to renting where I don’t have control or insight into how things are maintained.
My wife and I lived in an apartment several years ago. While there my wife had sleep issues and seemed to get sick more often. Close to the end of our lease, after a little rain, we found mold on the carpet and on some of our stuff in our bedroom closet.
We reported the mold to the landlords. They quickly denied it was mold, calling it “mildew” then had contractors tear open the wall and redo the insulation, carpet and walls. They offered to pay us money if we didn’t write a review regarding the incident.
We moved out as soon as we could. Now that we are lucky enough to live in our own home, we both feel a lot better in terms of sleep and health.
I can’t prove the mold was the cause of bad sleep or prove how long the mold was even there. But I don’t think I can go back to renting where I don’t have control or insight into how things are maintained.
[deleted]
So, being poor isn't good for your health?
You miss-spelled stress.
It's horrible.
It's horrible.
"Link" implies correlation which in this case doesn't explain the causality of renting private homes part.
The underlying "hidden variable" might just be "poverty". So the causal relation would be something like:
Poverty -> Stress -> Faster biological ageing
Poverty -> Renting private homes
The underlying "hidden variable" might just be "poverty". So the causal relation would be something like:
Poverty -> Stress -> Faster biological ageing
Poverty -> Renting private homes
Turns out that paying off someone's mortgage without getting any of the cut really sucks.
The bulk of the mortgage payment is interest, and you don't get a cut of that. Nor do you get a cut of the property tax paid, or the insurance costs.
Housing is overrated as an investment. My dad lost money on every house he owned. The trouble is, he had an economics degree and knew how to calculate how much it cost to own the house. It isn't as simple as you bought it for $100,000 and sold it for $110,000.
Have you ever had a house sit vacant for months while trying to sell it? It's extremely costly, and stressful.
Housing is overrated as an investment. My dad lost money on every house he owned. The trouble is, he had an economics degree and knew how to calculate how much it cost to own the house. It isn't as simple as you bought it for $100,000 and sold it for $110,000.
Have you ever had a house sit vacant for months while trying to sell it? It's extremely costly, and stressful.
I have had properties empty for months at a time. In the UK you get (maybe used to get?) a tax discount for empty properties.
There is an opportunity cost of course, but the actual money-out-of-bank costs were almost zero.
What costs are you talking about?
There is an opportunity cost of course, but the actual money-out-of-bank costs were almost zero.
What costs are you talking about?
One not mentioned is the 6% commission you pay to the realtor.
My neighbor did a lot of repairs and upgrades before putting the house up for scale. His family had already moved out. Months of delay and gawd knows how much money he poured into it to just get past the immediate "nope" from customers. There's the rent on "staging" furniture.
In the US, I never heard of a break on the property tax for vacant properties.
When I sold my previous house, I priced it to sell to minimize vacant time.
My neighbor did a lot of repairs and upgrades before putting the house up for scale. His family had already moved out. Months of delay and gawd knows how much money he poured into it to just get past the immediate "nope" from customers. There's the rent on "staging" furniture.
In the US, I never heard of a break on the property tax for vacant properties.
When I sold my previous house, I priced it to sell to minimize vacant time.
In the UK there is no property value tax - you pay a local "council tax" per property that pays for things like rubbish collection and so on. You get a discount on that if your property is empty since you're not putting any strain on those services if no one lives there.
Other costs are essentially zero. Insurance is like £0.50/day. Utilities similar amounts for standing charges and minimal usage since it is empty. You might cost the same as like a Starbucks coffee a day when everything is taken into consideration.
If course if you have a mortgage, yes, there is a cost there. But that is not so much about the empty property itself and more about your debts.
Other costs are essentially zero. Insurance is like £0.50/day. Utilities similar amounts for standing charges and minimal usage since it is empty. You might cost the same as like a Starbucks coffee a day when everything is taken into consideration.
If course if you have a mortgage, yes, there is a cost there. But that is not so much about the empty property itself and more about your debts.
Utilities, risk of vandalism/squatters (where depending on your location can be a real pain to get rid of), tax, mortgage payments. There are very fringe scenarios where using a such a facility as equity on another loan depends upon maintaining a certain occupancy rate in the building. I can imagine all of the above causing stress depending on your income situation, expense obligations, indebtedness, and proximity to the building in question.
Insurance problems, too. Insurers do not like to insure vacant homes.
Turns out being surprised by the rent going up by 50% during a pandemic where a lot of people were forced out of the labor force also sucks.
Whenever I see "financial advice youtubers" saying people shouldn't buy their homes because there's no liquidity I think about my 2.5K 30 years fixed mortgage in a mcmansion which is the same I paid for rent in a 2br in PHL's center city 3 years ago.
Had I listened to them i would likely be paying half my salary in rent alone to live at some shitty apartment building with bad schools and a landlord that was going to hike the price as far as he could. Guess that constant stress might not be good for my health.
Whenever I see "financial advice youtubers" saying people shouldn't buy their homes because there's no liquidity I think about my 2.5K 30 years fixed mortgage in a mcmansion which is the same I paid for rent in a 2br in PHL's center city 3 years ago.
Had I listened to them i would likely be paying half my salary in rent alone to live at some shitty apartment building with bad schools and a landlord that was going to hike the price as far as he could. Guess that constant stress might not be good for my health.
The "cut" you're getting is dwelling in a building where you own near zero liability for its upkeep; you often get to live in a place whose ownership is above your means and credit worthiness to own directly; you have no long-term commitment to the facility. These characteristics of your living situation all have value for which you cannot expect for free.
> The "cut" you're getting is dwelling in a building where you own near zero liability for its upkeep
No, the liability is rent. I'd happily take upkeep just to avoid a parasitic middleman that adds no value. People generally don't rent because they don't want to buy; they rent because banks withhold the mortgages necessary to own even though renting is a higher monthly commitment.
No, the liability is rent. I'd happily take upkeep just to avoid a parasitic middleman that adds no value. People generally don't rent because they don't want to buy; they rent because banks withhold the mortgages necessary to own even though renting is a higher monthly commitment.
> the liability is rent.
Yeah, the words "monthly commitment" are the key there, which describe the upper limit to your exposure. There's value (which has a cost) to the limited liability.
Conversely, you're not entering into a long-term debt relationship, nor do you have the obligation to fund or perform ad-hoc maintenance. As a renter, you are abstracted from those additional and significant risks, but you do pay for the privilege. You get to simply throw money at the problem, not concern yourself with where to find a new zone valve at 11pm or whether you should tie up cash to keep inventory on hand.
There's a sizeable market of people who prefer not to buy - young people who aren't settled down to one place; older people who don't want to do maintenance work; middle-aged people who don't want commitment (because reasons).
There are also people who would prefer to buy but can't qualify. There are also people who merely think they would prefer to buy (but do nothing to structure their lives around it, or even comprehend the obligations it entails).
It seems you're talking earnestly about the people who prefer to buy but can't qualify.
In that case, you're stuck renting and invariably are going to hate the landlord/super (they always suck), the place will seem rattier every month, you obsess over visions of what you would do with the place if you just had ownership incentive to invest in the asset. Been there.
The only way out of that is to structure your life financially towards the goal. That can include voting with your feet to live somewhere not as expensive to buy (and taking the trade-offs in location), it can mean disciplined spending to reduce expenses, ambitious career advancement to increase revenue, and maybe partnering with someone highly trusted to go halvsies. This can be an outcome (though not a sole motivation) for marriage, or may look like an LLC with a friend with an operating agreement that clearly details the terms of dissolution, buy-out, inheritance, etc.
But at the end of the day it's important to recognize that mortgages are money-making endeavors for banks who are greatly incentivized to set them up (sometimes too much, e.g. see 2008 CDOs), but through a combination of regulation and their own risk-management need you to meet a certain risk profile (e.g. are you "stable", do you make more money that you owe, are you gainfully employed, etc.). They would no more lend to a bad profile than you would. Any you're not even family. ;)
Yeah, the words "monthly commitment" are the key there, which describe the upper limit to your exposure. There's value (which has a cost) to the limited liability.
Conversely, you're not entering into a long-term debt relationship, nor do you have the obligation to fund or perform ad-hoc maintenance. As a renter, you are abstracted from those additional and significant risks, but you do pay for the privilege. You get to simply throw money at the problem, not concern yourself with where to find a new zone valve at 11pm or whether you should tie up cash to keep inventory on hand.
There's a sizeable market of people who prefer not to buy - young people who aren't settled down to one place; older people who don't want to do maintenance work; middle-aged people who don't want commitment (because reasons).
There are also people who would prefer to buy but can't qualify. There are also people who merely think they would prefer to buy (but do nothing to structure their lives around it, or even comprehend the obligations it entails).
It seems you're talking earnestly about the people who prefer to buy but can't qualify.
In that case, you're stuck renting and invariably are going to hate the landlord/super (they always suck), the place will seem rattier every month, you obsess over visions of what you would do with the place if you just had ownership incentive to invest in the asset. Been there.
The only way out of that is to structure your life financially towards the goal. That can include voting with your feet to live somewhere not as expensive to buy (and taking the trade-offs in location), it can mean disciplined spending to reduce expenses, ambitious career advancement to increase revenue, and maybe partnering with someone highly trusted to go halvsies. This can be an outcome (though not a sole motivation) for marriage, or may look like an LLC with a friend with an operating agreement that clearly details the terms of dissolution, buy-out, inheritance, etc.
But at the end of the day it's important to recognize that mortgages are money-making endeavors for banks who are greatly incentivized to set them up (sometimes too much, e.g. see 2008 CDOs), but through a combination of regulation and their own risk-management need you to meet a certain risk profile (e.g. are you "stable", do you make more money that you owe, are you gainfully employed, etc.). They would no more lend to a bad profile than you would. Any you're not even family. ;)
Eumenes(1)
Appears to be a typical “look at dozens of variables and pick the one that turned out to be significant” to my untrained eye. Would love to know if I’m wrong and why!