Posted on 09/01/2015 7:47:01 AM PDT by SeekAndFind
In most areas of the country, homeownership costs more than renting. Many economists with calculators claim the opposite, but the calculations and conclusions are often highly misleading. As is often the case, the devil is in the details.
We recently reviewed one highly publicized calculation that owning was cheaper than renting in almost all markets. That calculation had a number of outdated assumptions, including:
Don’t get me wrong. We believe homeownership is a great long-term investment for those with stable employment. It is just not less expensive than renting.
(Excerpt) Read more at businessinsider.com ...
That is vastly different than 'owning' a home. Having a mortgage is just renting from the bank. [Yes, we still have to give to the King]
Property taxes on my house are about $200 a month.
That's not bad 'rent' for the neighborhood I live in.
I willingly rented for several years. I considered it an acceptable premium for the flexibility to move without a host of transaction costs and being tied to the fortunes of the manipulated housing market.
Where I'm at in life now I'm buying a house because its where I intend to stay for longer than I'll be making house payments. Before making assumptions about the preferability of buying or renting what is more important than the time horizon?
Then you take a loan out and but a 70 inch samsung tv with surround sound a couple jet skis and a Toyota tundra to pull them to the shore
Yeah - except I’m paid off at 15 years and only have to pay my taxes now, so....no.
Owning a home means eliminating that from the equation. I put a high premium on that.
Yeah stop paying them and see what happens. Even after the house is paid off at the bank you pay taxes forever.
“Regardless, renting is dropping money into a pit never to be recovered where in owning a house at least some equity in it can be realized.”
I submit to you that it is a matter of cash flow.
It is often true that renting leaves additional cash flow for investment.
It is usually true that homes require upkeep to maintain. Mine all have.
BOTH take money out of your pocket - disqualifying them from being considered an asset.
Equity, so called, is built up from two sources - paying off the mortgage, which costs the payment of interest. It also builds equity in inflated dollars...
In the end, it is often financially better to rent. You never know until you run the numbers.
According to Martin Armstrong, we have entered a time of decreasing real estate prices (some localities may increase) that will continue for quite a while.
Best.
“The only cost with a cash house is maintenance and taxes.”
I like paid off.
There is a lost opportunity cost to having capital sitting in your house, which will change value regardless of how much equity is there.
It is also a very inviting target for attorney’s, unless you live in a homestead state and claim it.
I started paying equity on day one.
I also had 25% down.
I also paid double principle payments for several years. Which cut years off my loan pay off date.
My house payment is $375 cheaper than the rent on the house across the street from me. If I added double equity to my payments I am still below the rental house.
So all that said in a short while I will be paying about $350 for taxes and insurance for a house that will rent for over $1200. And I will have all the equity that is in my house.
Of course if you own and your neighborhood goes downhill you’re going to take a loss on the sale. If you rent it becomes the landlord’s problem that they won’t be able to charge as much.
There’s pluses and minuses in everything. Everybody needs to decide which ones are important to them.
Exactly. Still a good idea. However, there is always talk about eliminating the interest write off.
That is why a flat tax will never be. Because too many people rely on the interest write off. And that is probably mostly psychological since their taxes may be less under a flat tax.
Otherwise, they pay maybe hundreds of thousands of dollars in interest.
And ARMs and other gimmicks are dangerous if you don't know what you are doing. A 30 year fixed is best, IMO. Heck, I wonder if you can get an ARM now. Anyway, an ARM allowed people to buy something that they couldn't afford.
Yes, but landlords generally have good lawyers and the funds to dispute their tax bills and win, so at least you’re paying a fair share of RE taxes.
Only idiots proclaim “proof” when they are too stupid to understand ALL the facts.
The fact is that only in a few small markets is it best to rent, but for the majority of markets it is best to own.
Opportunity cost isn't a big deal for someone single with Stage 4 cancer.
One size does not fit all. What works for me may not work for everyone.
And it's small enough that a woman can't move in. Free! Free at last! 3 ex-wives is plenty. ;)
/johnny
“At the end of my lease, if my landlord decides to jack up the rent or decides he needs to give my unit to one of his nephews I am out of luck and have to move. Owning a home means eliminating that from the equation. I put a high premium on that.”
That is huge issue. We rented between purchases to find the perfect property. Our landlord stole the security deposits and declared bankruptcy while the owner of the property decided to sell. What a pickle!
There are no homeowners. I have no mortgage and it cost me 10k per year to live in my house before insurance and maintenance costs.
You sell the house and you get the money back you paid for the mortgage unless you are under water. Money in the bank most of the time. Prices here near Los Angeles are way high, I look at real estate places like zillow.com and see big homes with a big yard for half the price elsewhere.
I rent and I have crazy neighbors at times and wish to own a home but until I can afford to I will not buy just anything as the homes around here are too close to one another and I can have a crazy neighbor that I will be stuck with!
Right now my monthly payment (which includes taxes and insurance) is $365 less than the rent being paid on the house next door to me.
Plus that house is a 3 Bed, 2 Bath with 1700 Sq Ft. Mine is a 4 bed, 3 Bath with 2100 Sq Ft with high end finishes and a pool. So my house could probably rent for an additional $2-300 a month easily.
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