That's exactly how I feel.

$1100 on a $135k puts the yearly rent at 10% of the value of the property. By comparison I rent and my rent is ~4.5% of the value of the property. If my rent was 10% I might very well consider buying but at 4.5% it would be a horrible decision to own. When I was considering moving a few years ago I looked at two properties that I could rent for ~3.5% of the property value.

Can you expand on why those percentages precisely... and where is line between renting and buying?

These annual salary figures is bs measuring stick. It's not what you earn, its what you save. Many people have terrible spending habits, you can make 100k+ a year but still living paycheck to paycheck because you're spending like a millionaire. Making lot's of money doesn't guarantee financial freedom, so learn to live with less and have peace of mind.

Why those percentages is just a market situation. I'm sure if my landlord could get 10% he'd love to but he can't. If he tried to charge that much he'd have a bunch of empty units. As a general rule the further you go up in property price the lower the the rent will be as a percentage of the value of the property.

As for a cut off of when it is better to rent vs buy that really depends on your personal ability to get a return on the funds that will be tied up in the property, the amount of leverage you can get, interest rates, other costs associated with owning etc. Other costs associated with owning are really important -- right off the bat in my case I have 1.3% for property taxes and 0.9% for condo fees so I'm actually only paying ~2.5%.

Might have asked this before but I'm curious what you do for a living Henry. You seem pretty intelligent on a variety of financial topics. You in business or finance?

No. I don't work. Went to law school but never worked. I'm just a unemployed bum.

There are a couple of things I'd like to highlight in this thread.

1) 100k is an arbitrary number. Some of you live in big metropolitan areas where your 100k is roughly equivalent to my wife's nursing salary of ~45k in Louisville (where I live). This is why the concept of 'real' earnings is so crucially important to this conversation. My wife and I have made the conscious choice to try to build out our budget around her income rather than our joint income, and where we live that's possible. We live in a nice apartment, and do what we want when we want to entertainment wise. The only major sacrifice we've made is operating with one car that is less nice than we would prefer.

2) Salaries have absolutely declined in real terms for the bottom 70% of the job market since the 1970's. This is largely the result of the female half of the population entering the job market. It's now more or less expected that both spouses will work--and this is very new. As a result household income is probably a much better measurement of how well you're doing than your own salary.

Not like you need me to tell you this but that is spot-on about rent vs buy. You see all these articles, all these discussions about what is better. It really depends on the persons age, job, goals, specific local market, spending habits (this 1 is underrated since a mortgage is atleast a form of forced savings)

Neither 1 is ever going to really be that much better than the other when comparing apples to apples. I do think for the majority of peope owning is just better because of the forced savings part. Hypothetically people can save $ that they aren't putting towards property tax, insurance, yard work etc. However, we know it doesn't happen like that for the most part.

You having 20k+ posts, I always suspected that....

I think the best measurement of how well you're doing is savings and investment growth rate. I've come to realize that income is only a factor and not even the biggest factor. It's all about being able to save a certain % of what you make every month.

I personally know people who make good salaries (+120k) and are broke and in debt, and I know people who make half that who have assets and investments and savings. People tend to stretch their money to a point where they see something they want and then try to figure out how they can make it affordable with their salaries instead of going for the best deal. A perfect example would be opting for a 20 year mortgage instead of the 30. If you can't "afford" to pay the 20 year, you probably can't "afford" the house, but people don't think this way because they can swing the 30 year payment.

The key is keeping the housing and car payments in a reasonable range, allowing for savings and assets to increase over time. After a few years of that, you actually can have money that you can do something significant with. Nothing opened my eyes up to this more than when our retirement accounts and savings got to over 60k or so, then I started really becoming interested in growing it.

That is an odd metric to choose. What if you are not someone who values savings?

I have no idea what this means. How could you not value savings? It's cash.

For example, I don't consider "doing well" living in a nice house and having a nice car and having no money. It's pointless to have these things if you don't have any money saved or any money going into investments. You're simply spending what you're making, you're not getting ahead at all. This doesn't make sense to me in the least bit.

What do you mean when you say "not someone who values savings"? I think we're just misunderstanding each other.

We are all going to die. While I obviously value not having to eat cat food when I'm 70 my concern for my quality of life as a senior is less than my concern for my quality of life now. Obviously avoiding the cat food scenario requires some savings but I'm pretty happy to have a modest lifestyle when I'm old. I see the value of enjoy life now as more important than saving to enjoy later when I'm less physically able and when there is a chance I might die before I get around to it

Henry: