We Are Spending More Money Than Ever On Rent
Nicole Dieker
286

I feel like we may be stuck in the weeds of opportunity cost. I know that relative to rent, house prices are affordable. For example, my all in cost for condo (with mortgage, insurance, taxes) is $1,200 but if I rented it, the going rate is about $1,500. So it is $300 cheaper for me to own than rent my place. This is somewhat surprising from a historical standpoint. Yes, I forgo the investment returns I could have gotten on my down payment but also am ignoring the mortgage interest deduction on my taxes, so let us just call it even. From an opportunity cost I am losing $300 each month I don’t rent my place but I would then have to go out into the rent world myself as I can’t choose to temporarily cease to be a person who needs shelter. So I would end up losing that money renting. I would rather lose the opportunity cost $300 than pay the real extra $300 in rent.

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