Renting versus Buying a home | Housing | Finance & Capital Markets | Khan Academy

Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/housing/renting-v-buying/v/renting-vs-buying-a-home?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/housing/home-equity-tutorial/v/home-equity-loans?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: Is it always better to buy than rent? What if home prices go up dramatically and rents don't? How can we compare home prices to rents to figure out what to do. This older tutorial (low-res, bad handwriting) walks us through this. It is about housing but similar thinking can be applied to any rent-vs-buy decision (spoiler alert, Sal did eventually buy a home). About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Comments

1. ;;;;::::/
2. Renting is better in my oppinion, because it's not so hectic.
3. People who rent don't have 100K to invest at your 2%. I like your vids Khan. When you buy you HAVE to put cash down. There are all different walks of life. Renting can be attractive to well to do people. Anyhow I'm drunk and rambling.
4. Never realized how much factors have to be taken into account.
5. Good luck renting a $400000 house for $1500 a month. Your comparing apples to oranges.
6. I say Im sick of renting" rent gose up, but not my wages,,, its bullshit,,,, yes buy a house,,,,,! stop making other people rich! think about your own future "
7. How do you make so many videos
8. Lol.. Comparing 400k home to 1,500/month rent... Get real
9. Typically you can get a much better house by buying.....remember the owner of the rental is doing it for a profit...rents WILL go up....and when you finish renting you have nothing but receipts...no equity, nothing
10. If you are going to talk about the investment income on the $100,000 of unused money that was saved for the down payment on the renters side you need to balance that with the appreciation of the $400,000 asset (the house) on the buyers side. That down payment IS an investment in itself. It also lets you get appreciation on the amount you borrowed which (in addition to the tax credit) lets you offset the expense of interest even further.
11. your math sucks
12. This video is grossly misleading.
13. LOL $1,500 a month to rent a $400,000 house?! No.
14. Why is he assuming that you are going to pay only the interest to the bank each month, instead of the loan itself? If you pay only the interest, you will still have to pay $300k in 20 years or so if you want to actually buy the property that you borrowed from the bank to live there. Sounds like you are getting all of the downsides of owning with none of the perks of renting?
15. The market is unpredictable, and as time moves forward becomes more and more unpredictable. Jobs don't pay what they use to and a lot of people are not in a position to buy a home. Buying a home is nice if you know you're going to be at your job long enough to pay off the mortgage, or if you invest wisely or create a solid business all of which are gambles. In today's economy education is becoming outdated much faster than it used to be, so you can expect people to last much less time at their jobs unless they keep up with the new age educational demands. Also, there are various illnesses you can get for no damn reason if you are unfortunate and this happens across the economic board and it only continues to get worse. Renting is safer, and buying is a gamble. My advice is to live a modest life, with all the work that comes with owning a home I think it's better to own a nice apartment. People are weird, they want a living room, a dining room, a kitchen, an entertainment room, a video game room, individual bedrooms for all their children and a huge backyard where the kids can go out and play. Reality is most kids are on their phones all day, on the internet, or playing video games. If you want them outside send them to the local park and let them play there it's much better than your lame ass backyard, give them some money and let them go to the arcade, mall or movies with their friends. You've got this big ass house for the sole purpose of trying to be like everyone else and don't think about how many other options there are for your family. Most people make around 45k a year...what world is everyone living in where buying a house actually makes sense on that kind of income lmao I guess if you believe in self fulfilling prophecies you can take the gamble, but life is a roller coaster and unless you've got a supportive family you'll find yourself in sticky situations so it's just better to play it safe and make the most of what you have.
16. So if I buy a house I can keep it forever but the only thing I have to pay now is my bills for water,electric,phone and all that
17. how the hell do you write so neat with a mouse!
18. Also that unbeatable sense of ownership... Beats em all imo.
19. Great insight. Thank you. Correct me if I'm wrong, but in the Rent scenario wouldn't you have to pay taxes on the interest $2k earned with the $100,000 investment? Certainly a percentage based on your tax bracket --not the full $2k, but still something to consider....
20. Question: What if you buy a house and it is just for investment (means it is just for leasing, you don't live there). The house condition is not bad (means the quality of the house is good, and there is no big accident), and the local economy is stable. Will you or your tenant gain more benefit? If so in long term or short term?