Interest plus property tax makes sense to me.
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You were basically doing the DBX Man’s computation, except you didn’t compare with stocks return. The zero appreciation rate and zero rent increase are not realistic either.
Not my point. Was showing the cost of owning a house is not 20% downpayment and hence return is not given by the simplistic computation yielding 15 times return but is in fact merely breakeven if appreciates at 4% p.a.
The amount you invested in the house amounted to $1.08M at the end of 30 years even though it was purchased at $325k with a 20% downpayment. So if at the end of 30 years, it is only worth $1.08M you make nothing.
Not doing any stock vs RE or RE buy vs rent for the current illustration… just reusing the same table for previous topic… context my friend. Frankly, I really hate simplistic computation. Every time I tell people to do detailed computation, they use simple computation… very tiring to explain to them… may be I should just leave it as such.
Got it. Like @Terri said interest plus property tax should be less than rent plus appreciation to make sense.
Given how short term most of these people think, comparing real estate performance every quarter, how can we assume that they have the discipline to stay invested in stocks no matter what. Otherwise that 8% return on S&P is a myth. 
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Doesn’t NYTimes Buy Or Rent calculator allow all these considerations?
It does? Did not know.
Can adjust all sorts of assumptions. Housing appreciation rate is the most important, I believe (obvious).
Previously I did not do detailed analysis on Bay Area average appreciation vs national, and did not buy a condo in 2012. Fail 
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I used the NYT calculator with the following assumptions:
Home appreciation rate: 6.0%
Rent growth rate: 2.5%
Investment return rate: 10.0%
Inflation rate: 2.0%
Ran the numbers on a few house price points, and their break-even rent. If rent is lower than that number, renting is better:
1.0M – 3,500
1.5M – 5,200
2.0M – 6,900
2.5M – 8,700
3.0M – 10,000
It seems like the cross over for bay area is somewhere between 1 and 1.5M. Anything above 2M is certainly out of whack, purely from a financial POV.
This house in Cupertino can sell for around 2.5M but rent is only 4,500, half the break-even number.
Most calculators do, but you have to supply the numbers.
I put 2% as appreciation and 5% rent increase. Oops.
If he continues to do this rent vs buy calculations, I’m afraid his personal finance situation may stagnate for many years. He should look at real houses instead of doing calculations for other people without compensation.
A person spending too much time on abstractions may suffer financially. Many people who don’t think but do things instead are better off.
Couple years back I used to not care about buy-v-rent calculations. It was obvious to me of course buying beat renting. Not anymore today.
I think for primary home, taking into account financial as well as non-financial reasons, anything below 2M is OK. But once you go above that level it feels to me it’s tilting too much towards consumption.
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What a waste of time doing all this mumble jumble…
Answer this:
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Do you know anyone in your immediate circle who is a renter for life and is well off? Pretty darn rare I suspect for most people.
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Now, how many people in your immediate circle is an owner for life and is well off? Bingo! Plenty I bet. That, is all one needs to know.
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The richest person I know is a renter. He short sold his condo to keep his company afloat at the start. Granted, he’s rich since he made the company successful. He doesn’t want to be tied down owning anything. He’s not rich from saving money on rent and investing the savings.
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This DBX guy can just buy a condo or a single family house in San Bruno or Oakland. He picked Palo Alto and other high cost cities for rent vs buy analysis shows that he is a housing bear. I’m concerned about his financial future.
He graduated in 2008 and has been working for 10 years. Did he think rent is better for these 10 years?
Hope I’m not overly critical of this fine dude
Very typical. Shockingly low rent, right? I can get $4500 for an investment of only $600k in Austin.
For highly desirable neighborhood, at any point of time, rent is always a better deal. The only reason to buy is to bet on high appreciation 
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South Bay rent is low. SF has much higher rent-to-price ratio. I think a 1.5M house can get you 4.5K rent.
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How much does a staff engineer at Dropbox make?
You mean with 2 Austin houses, right?
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I don’t understand rentals in Palo Alto or Cupertino. It might be a better investment than BTC or USD though