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Rent or Buy? The Math Is Changing
New York Times ^ | 05/27/2014 | Neil Irwin

Posted on 05/27/2014 7:00:59 AM PDT by SeekAndFind

Billy Gasparino and Jenna Dillon-Gasparino were savvy enough to wait out the housing boom of a decade ago as renters. Not until 2010, well into the bust, did they buy a house in the Venice neighborhood of Los Angeles, less than a mile from the beach, for $810,000.

Only four years later, the couple see new signs of excess in the housing market and have decided to go back to renting. They are close to a deal to sell their house – for $1.35 million, a cool 67 percent gain.

“It just seems like the housing market came back so strongly, so fast, that maybe there’s a little bit of a bubble there,” said Mr. Gasparino, 37, an executive with the San Diego Padres.

Their decision reflects a new reality in many of the nation’s largest metropolitan areas. An analysis by The New York Times finds that in the country’s most expensive places, including New York, the San Francisco Bay Area and Los Angeles, buying a home again looks like a perilous investment, based on the relationship between their prices and rents or incomes. And in a longer list of areas, including Boston, Miami and Washington, prices have risen enough that buying is no longer the bargain it looked to be a few years ago.

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy; Society
KEYWORDS: buy; housing; housingbubble; milliondollarhome; realestate; rent; renting
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To: Right Brother

Your neighbor isn’t going to be on the floor above you, nor the floor below you. Even in a duplex, condo, etc. you usually still have separate parking, separate entrances and some real estate between you.

You can’t honestly expect to convince someone that renting in an apartment building is the same as a landed detached house.


21 posted on 05/27/2014 7:39:15 AM PDT by Gaffer
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To: dfwgator
Landlords pass those same taxes onto renters.

Precisely why the price of rentals are going thru the roof here in soviet Red Hampshire...property taxes here are murder. Since carpetbagging M*ssholes and New Yorkers are used to high property taxes, they don't whine too much.

22 posted on 05/27/2014 7:40:10 AM PDT by who knows what evil? (Yehovah saved more animals than people on the ark...www.siameserescue.org.)
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To: SeekAndFind

I can’t possibly see how renting would be a better solution especially in the very long run. Let’s say you buy a home at 30 years old and have to pay 2200 a month for 30 years plus property taxes and insurance at 4700 a year.

At the end of 30 years, you own a home and even if you have to pay 8000 a year for the property taxes and insurance, you are still better off....of course you still have maintenance, but I still think that the saving of close to 24000 dollars a year for the mortgage saves in the end even with maintenance costs. The highest maintenance cost for a house is the roof every 30 years for 20 grand.


23 posted on 05/27/2014 7:41:05 AM PDT by napscoordinator (Governor Scott Walker 2016 for the future of the country!)
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To: dfwgator

Yes they do. But it’s a percentage increase when the next lease period starts, and it’s often mitigated re: price increases if the inventory is large vs. the amount of renters.

You own a home and that increase comes once or twice a year and it’s due for the full amount, directly. No ifs ands or buts.


24 posted on 05/27/2014 7:42:08 AM PDT by Gaffer
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To: dfwgator
Yeah, it’s always better to give your money to someone else, than to build equity. /s

i used to think this too... but now i can see where renting makes more sense in some situations... btw, i have only ever rented for one year--when i moved from my parents' home at 23 to my friend's condo... she and her fiance bought it, and she needed a roommate for one year until they got married... right after that, i bought my first home...

25 posted on 05/27/2014 7:43:02 AM PDT by latina4dubya (when i have money i buy books... if i have anything left, i buy 6-inch heels and a bottle of wine...)
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To: kidd
"If you view your house as a home, then renting isn’t even close to ownership."

And what of someone who views their apartment as a "home". Is it any less a home?

What happens inside the walls makes a home, not whether there's a mortgage attached or not.

26 posted on 05/27/2014 7:43:27 AM PDT by moehoward
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To: WinMod70

I’m currently facing a $700 increase over last year which will result in over a $5K check just to the school district; the county and twp get over $2K on top of that.

Chump change compared to Maryland. I wish I only paid those taxes. It is all relative I suppose.


27 posted on 05/27/2014 7:44:27 AM PDT by napscoordinator (Governor Scott Walker 2016 for the future of the country!)
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To: Gaffer
You can’t honestly expect to convince someone that renting in an apartment building is the same as a landed detached house.

some people rent houses, so no attachment issues there.. and some people own condos that are attached to other condos--so even being an owner can mean being attached to an unfavorable neighbor...

28 posted on 05/27/2014 7:44:49 AM PDT by latina4dubya (when i have money i buy books... if i have anything left, i buy 6-inch heels and a bottle of wine...)
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To: SeekAndFind

RE: How much of that gain will they have to fork over in taxes when the IRS demands its cut?

I believe there are long term and short term capital gains. Short term are taxed as income.


29 posted on 05/27/2014 7:45:01 AM PDT by evaporation-plus
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To: Gaffer

They’ve presumably emptied the house, other than the piano, for sale.

I don’t think they’ve been standing up for the past four years.


30 posted on 05/27/2014 7:45:19 AM PDT by 9YearLurker
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To: Nevadan

the taxes paid on short selling a home is from “loan forgiveness” taxable at the income rate.

the taxes paid on a profitable sale is cap gains which there is a nice exclusion.

let’s say you are my employee and you make 100k. I say how about I loan you the money instead and then forgive the 100k to avoid you paying income tax. Bad idea. You still owe the tax.

ditto for short sale, I loan you the money for a house, you short sale the house, I forgive the loan portion the short sale did not cover, You still owe the tax on that portion of loan forgiveness.

Now, you buy a house for 500k, it appreciates to 1,000k, I loan you 1000k, the house drops in value, you sell for 750k on a short sale, I forgive the 250k in lost value.

You owe income tax on the 250k in loan forgiveness, but you pay zero capital gains on the difference in sale price of 750 minus 500k.


31 posted on 05/27/2014 7:45:28 AM PDT by staytrue
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To: napscoordinator

That’s why rent vs. buy calculators tend to factor in the length of time that you expect to stay in the same place.


32 posted on 05/27/2014 7:47:24 AM PDT by 9YearLurker
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To: latina4dubya

Yeah...lots of people rent houses, or here in my county commonly called trailers, mobile homes, etc. They’re mostly Section 8.

I’ve lived in both - apartments, rented homes, etc. and they were always TRANSITIONAL. On the way to better things.

The only positive thing about an apartment in my book is not having to do yardwork. But you pay a high price for that.


33 posted on 05/27/2014 7:48:02 AM PDT by Gaffer
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To: kidd; Durbin

i know renters who have made their rental spaces very much a home for the families... and i know homeowners who really have not made their “homes” very “homey.” it just all depends on the people... on their situation... do i want to rent a home? no... i like being a property owner... but different strokes for different folks... or for different situations...


34 posted on 05/27/2014 7:50:01 AM PDT by latina4dubya (when i have money i buy books... if i have anything left, i buy 6-inch heels and a bottle of wine...)
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To: 9YearLurker

One could presume that. But one could be wrong, too. Just like I could be. The thing to me that keys this whole article is there is a lot of hype about high salaried people coming into the area, etc. and the “market is exploding”, but there is not one word about why there is no furniture in the house when they are only “close” to a deal.

Smells not right, it does.


35 posted on 05/27/2014 7:53:24 AM PDT by Gaffer
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To: Gaffer
i have had an uncle who lived in a mobile home, and it was beautiful! larger than most homes... it was in the state of Washington... the yards were all manicured... just lovely... my brother has two houses in Las Vegas... one a typical 3 house, 2 bath... the other a huge 6 bedroom 4 bath, swimming pool etc... he is currently working in San Jose (for another year) living in a mobile home that he purchased... it is very nice, in a beautiful mobile home park... swimming pools, community center...

my nephew and his family moved to Simi-Valley a few years ago for his job... they have been renting the same home in an upscale neighborhood... it works for them... they do not plan to be in Simi Valley much longer, so they were not ready to buy there... not every renter and rental is crappy... not every home owner has pride of ownership...

36 posted on 05/27/2014 7:56:35 AM PDT by latina4dubya (when i have money i buy books... if i have anything left, i buy 6-inch heels and a bottle of wine...)
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To: WinMod70
"So there is not such thing as owning a home in PA. "

There's no such thing as owning a house. Anywhere. At least anywhere desirable. The only difference between "owning" and renting is the volume of paperwork attached to the transaction.

37 posted on 05/27/2014 7:56:39 AM PDT by moehoward
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To: kidd
It is only changing if you view your house, first and foremost, as an investment.

Bingo. I bought mine to provide a stable place to raise my children, not to flip it five or six times. It has increased in value but not to the absurd extent of some properties bought for that purpose.


38 posted on 05/27/2014 8:01:34 AM PDT by Buckeye McFrog
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To: latina4dubya

You’re taking personal anecdotes for normality as I am.

Yet, I am going by what I’ve seen in 40 years of living in the same areas (except for 8 years overseas) and what rental houses, trailers and condos mean. 20% of the residents in my county are on SNAP, and damned near everyone of them are in rented trailers.

Yeah, mobile homes in CA could be nice, even in Vegas or Oregon but that ain’t Georgia, Alabama or Mississippi.....even your SV relative is doing what he’s doing because the circumstances are planned transition.

My best friend once was concerned about his son being in trouble at school, doing badly, etc. and he drove him by the trailer park and parked in the middle, and he told his son “Take a look around, look at them closely, pick one out, because that’s where you’re gonna end up if you don’t get your act together.”


39 posted on 05/27/2014 8:03:45 AM PDT by Gaffer
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To: WinMod70

Bingo. I like to ask people if they own their home. Many say a resounding yes. I then ask who owns it if they don’t pay their property taxes. We are leasing from the local and state governments. And don’t forget it.
Part of the brain washing that goes on.
That was the reason for the 1/64 parcel on the original northwest ordinance. That was to pay for local officials and the schools.


40 posted on 05/27/2014 8:05:50 AM PDT by prof.h.mandingo (Buck v. Bell (1927) An idea whose time has come (for extreme liberalism))
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