It's pretty obvious that it's usually cheaper to rent to buy. Also with the way things have been going it's become very apparent that rents haven't gone up at the same rate as homes. It's also true that renting typically has always been cheaper than buying. So if you wanted to say live closer you could usually rent a place cheaper than it would cost you to buy. This is probably even more true if you have been renting say for 10 years. The amount paid might definitely be lower than owning in this market.
So my friend who rents in our neighborhood has rented here for about 15 years. She's gotten a great deal on a rental since she's lived there so long. But now owning in our neighborhood and surrounding areas have gotten beyond their reach. Because they've waited so long it's gone up way faster than rent. And their income hasn't gone up by the same percentage. If you had to ask I would say that prices have 3x but their rental hasn't gone up by that much nor has their income.
So the question should they keep staying here? She said that she's starting to realize how they don't fit into the neighborhood anymore. The lifestyle that most people affording living here is substantially more than average. I agree it's not normal, it's not like most of the US. It's a very priviledged, affluent area. It's not how most people live.
What brought this on? The fact I mentioned that a bunch of our friends are on vacation for the week of Thanksgiving. They've pulled their kids out of the week and they are vacationing somewhere. Some are going somewhere warm, others are visiting family. She said most average people need the income of working the full week and I agree that's normal life.
But at the same time it's part of affording the area. That if you can afford to buy $1m home you probably have the type of job that affords you the privilege of taking a week off and vacation. I didn't know what to say because we visit hawaii 2-3x/year. But our trips to hawaii are cheaper than most since I know when to buy my tickets. I know how to work the system. We also don't pay usually for hotels/rental cars and eating out isn't as pricey as someone going for the equivalent amount of time.
Our expense is paying for airfare but like this Christmas the kiddos and I are using miles and DH is traveling for $549 roundtrip at christmas which is an outrageous deal. So total for family of 4? $549. Not what people usually pay for hawaii at Christmas for a family of four. This summer? I think we did miles again and DH came for $400 roundtrip which is again a great deal because of covid. Hotel? I think we paid $1000 for a couple days on another island and I did spend a lot on eating out the month with my parents so $1500. But a month in hawaii for $3000 for a family of 4? Again not possible for most people. But would I come to hawaii if I weren't seeing my family? No I would not. So it's not exactly a fair comparison. I also watch airfares constantly and have updates can tell you when the price hits $149 or $199 one day per person. Sometimes I buy and sometimes I use miles.
But that being said, typically DH and I can afford our neighborhood. Yes we live somewhat modestly but for the most part we probably make now what most people make in our neighborhood. Before we were making a lot more than most of the people we live near. Now we are average. So I feel normal.
But I get what my friend is saying. They are barely affording their rental and no way can they afford to buy. But their kids are in 6th and 1st grade and they are becoming more established. But it's also becoming evident that they can't "keep up with the Joneses" which you don't want to do but it's hard to not notice. To realize that you don't go to Mexico, Hawaii, Europe or Caribbean for vacation. That every holiday you don't travel for a week and think nothing of it. That you can't and don't drive high end cars. That thrift shopping isn't the norm.
So how do you deal with it? I didn't know what to say. I wouldn't live somewhere I couldn't afford. I would look at moving to be honest where I think I fit in and we are the average income if not higher than average. Where we could own our house and still afford everything like everyone else. Meaning the 1 week vacation we take a year is similar to others. That the car we drive is similar.
I know that we don't seem like our neighbors (the minivan and legacy) stick out like a sore thumb. But it's by choice not because we couldn't if we didn't want to. So I think that makes a huge difference. Affording a nicer lifestyle but choosing not too I don't feel the comparison or jealousy. But I think when you know there is a difference it's harder to overcome. To know that you are comparing your lifestyle with their. I can't help but think that it would be easier to live somewhere that you can afford everything everyone else can.
So should someone rent where they can afford to buy? Or is it okay to rent where you know you can never buy?