Robert...really appreciate this scenario, analysis (and calculator), particularly appreciate your economics-driven framework. In thinking through this scenario, would the affordability analysis need to consider any likely additional cash requirements, beyond the down payment, that relate to start-up costs of owning a home (e.g. furnishing home) which may put additional pressure on their cash position/savings in year 1. Also, would it help the economic analysis scenario if calculator could include an assumption related to their holding period (e.g. sell home in 3 or 5 or 7 years), any implicit home price growth rate (0%, 3, or 5%), and calculate any potential gain on sale (and any potential return on their cash/equity position available upon sale). Any potential return (or no return) could be important element to consider in the affordability (and they could use that to evaluate the opportunity cost of their cash used to buy or continue to rent/save/invest). These elements may or may not be applicable in this scenario or framework, just surfaced when I read through the scenario and analysis. Thanks so much for all you share here, it is really important (and thought provoking) content.
Those are great ideas @Lawson Ellinor! I could extend the application to recognize these items. The tool could turn into a more sophisticated buy v. lease where the benefits and costs of buying are measured “on the margin” against a baseline cost of renting.
This raises a business question for me, given PFE is ad free and paid subscribers are its life blood. Is there some market out there that would value these tweaks, or is there untapped demand for the type of personal finance content I offer? You may have ideas.
Good work!
Robert...really appreciate this scenario, analysis (and calculator), particularly appreciate your economics-driven framework. In thinking through this scenario, would the affordability analysis need to consider any likely additional cash requirements, beyond the down payment, that relate to start-up costs of owning a home (e.g. furnishing home) which may put additional pressure on their cash position/savings in year 1. Also, would it help the economic analysis scenario if calculator could include an assumption related to their holding period (e.g. sell home in 3 or 5 or 7 years), any implicit home price growth rate (0%, 3, or 5%), and calculate any potential gain on sale (and any potential return on their cash/equity position available upon sale). Any potential return (or no return) could be important element to consider in the affordability (and they could use that to evaluate the opportunity cost of their cash used to buy or continue to rent/save/invest). These elements may or may not be applicable in this scenario or framework, just surfaced when I read through the scenario and analysis. Thanks so much for all you share here, it is really important (and thought provoking) content.
Those are great ideas @Lawson Ellinor! I could extend the application to recognize these items. The tool could turn into a more sophisticated buy v. lease where the benefits and costs of buying are measured “on the margin” against a baseline cost of renting.
This raises a business question for me, given PFE is ad free and paid subscribers are its life blood. Is there some market out there that would value these tweaks, or is there untapped demand for the type of personal finance content I offer? You may have ideas.