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Renting vs. owning depends highly on your local market.
Where I live, rents have outpaced sale prices for more than a year which made buying more attractive than owning around the end of 2012.
Median home sale price for my county is $258,000. Median rent is $1482, 13% higher than a normal mortgage, assuming 20% down and 4.25% rate, for a median home which would be $1284.
If you search only for the homes under the median price, then you could do even better. I bought a house that needed some fixing for under $100K. It did require about $25K worth of work and will probably require a few thousand more over the next two years.
My mortgage is $100 less than my rent was for a 2br borderline slumlord apartment.
The rental vacancy rate for my county is about 1%, so there are not many rental options available for less than $950 a month. This was an area hit extremely hard by the housing crisis and our foreclosure rate is still well above the national average. People have income but no credit and that means landlords hold all the cards.
You're leaving a lot of factors out of your rent vs. buy calculation*, but yeah, it does vary from one spot to another. If renting is better, that means the tenant's investment portfolio will eventually be sufficient so that income and credit are irrelevant because he/she could buy it in cash.
*principal paydown, maintenance/repair/taxes/insurance, opportunity cost of equity, and the value of the time you spend on the house.
EDIT: I almost forgot to include - changes in value (appreciation/depreciation).
Renting vs. owning depends highly on your local market.
Where I live, rents have outpaced sale prices for more than a year which made buying more attractive than renting around the end of 2012.
Median home sale price for my county is $258,000. Median rent is $1482, 13% higher than a normal mortgage, assuming 20% down and 4.25% rate, for a median home which would be $1284.
If you search only for the homes under the median price, then you could do even better. I bought a house that needed some fixing for under $100K. It did require about $25K worth of work and will probably require a few thousand more over the next two years.
My mortgage is $100 less than my rent was for a 2br borderline slumlord apartment.
The rental vacancy rate for my county is under 1%, so there are not many rental options available for less than $1000 a month. You can rent a trailer out around here for $700 a month or more. Anyone with affordable housing that is loathe to let it go so apartments that are under $1000 are really not available, even though in theory they exist. The only housing really available are duplexes that are in the $1000-1300 range.
This was an area hit extremely hard by the housing crisis and our foreclosure rate is still well above the national average. People have income but no credit and that means landlords hold all the cards.
You could cut down the rent by having roommates. Some may or may not prefer that to living in a trailer!
A crucial consideration in the rent vs. buy debate is the difference in lifestyle and type of housing. Yes, presumably it's more expensive to rent a 4-bedroom house, on a monthly basis, than to buy one. So with an infinite horizon of occupancy, buying makes more sense. But to me, that's not a fair comparison. A fair comparison is renting a 1-bedroom apartment in the city, vs. buying a 4-bedroom house in the suburbs or exurbs. Note the difference in lifestyle, commuting costs, heating costs, accumulation of furniture and so forth.
To "rent" means to live in an apartment-complex in close proximity with neighbors. To "buy" means to be isolated on a large green expanse in a voluminous stand-alone dwelling. One does not rent a house, any more than one buys an apartment.
My house has declined in value over the past 13 years. Most assuredly, if I rented in at market-rates for 13 years, I'd have paid more in rent than the house has cost me in ownership, even accounting for depreciation and real-estate transaction costs. But had I rented a one-bedroom apartment in town, I'd have saved money over the cumulative 13 years.
A crucial consideration in the rent vs. buy debate is the difference in lifestyle and type of housing. Yes, presumably it's more expensive to rent a 4-bedroom house, on a monthly basis, than to buy one. So with an infinite horizon of occupancy, buying makes more sense. But to me, that's not a fair comparison. A fair comparison is renting a 1-bedroom apartment in the city, vs. buying a 4-bedroom house in the suburbs or exurbs. Note the difference in lifestyle, commuting costs, heating costs, accumulation of furniture and so forth.
To "rent" means to live in an apartment-complex in close proximity with neighbors. To "buy" means to be isolated on a large green expanse in a voluminous stand-alone dwelling. One does not rent a house, any more than one buys an apartment.
My house has declined in value over the past 13 years. Most assuredly, if I rented in at market-rates for 13 years, I'd have paid more in rent than the house has cost me in ownership, even accounting for depreciation and real-estate transaction costs. But had I rented a one-bedroom apartment in town, I'd have saved money over the cumulative 13 years.
Each person should consider all the options based on both financial and lifestyle considerations - including the 'unconventional' ones like renting a big SFH or buying an apartment...
A crucial consideration in the rent vs. buy debate is the difference in lifestyle and type of housing. Yes, presumably it's more expensive to rent a 4-bedroom house, on a monthly basis, than to buy one. So with an infinite horizon of occupancy, buying makes more sense. But to me, that's not a fair comparison. A fair comparison is renting a 1-bedroom apartment in the city, vs. buying a 4-bedroom house in the suburbs or exurbs. Note the difference in lifestyle, commuting costs, heating costs, accumulation of furniture and so forth.
In what world is this a reasonable comparison? Might as well compare Manhattan to Boise, ID. It makes much more sense to compare a SFH rental to a SFH and a condo to an apartment.
Quote:
Originally Posted by ohio_peasant
To "rent" means to live in an apartment-complex in close proximity with neighbors. To "buy" means to be isolated on a large green expanse in a voluminous stand-alone dwelling. One does not rent a house, any more than one buys an apartment.
This sounds like people don't rent houses or buy condos near you. That's not really a reflection of most markets. To buy simply means to gain ownership of the dwelling and to rent simply means to purchase time in the dwelling.
Quote:
Originally Posted by ohio_peasant
My house has declined in value over the past 13 years. Most assuredly, if I rented in at market-rates for 13 years, I'd have paid more in rent than the house has cost me in ownership, even accounting for depreciation and real-estate transaction costs. But had I rented a one-bedroom apartment in town, I'd have saved money over the cumulative 13 years.
Why compare the two though? If you didn't live in the city it doesn't matter what the rents were going for. I live in the city (vs burbs) now and it is slightly cheaper to buy, but much cheaper to buy out in the burbs. However, since I don't live in the burbs anyway it doesn't matter what those housing prices are.
...............
Well, this is because you choose to have an expensive lifestyle. I live in the greater DC area and probably only spend about $16k/year. .......
Now I understand. Someone living on $16k may not have a lot of experience which would help the average family make decisions on the value and risks of mortgages and car loans. Thanks, anyway, for your perspective on these issues.
Now I understand. Someone living on $16k may not have a lot of experience which would help the average family make decisions on the value and risks of mortgages and car loans. Thanks, anyway, for your perspective on these issues.
What I have to say stands or falls on its soundness, not whether I have personally experienced it or not.
Would you avoid talking to a divorce attorney simply because he/she has never gotten a divorce?
A divorce attorney has years of training in the law and specifically in issues related to divorce. Based on your opinions, it does not appear that you have an training, education or experience in buying mortgages, managing an investment portfolios or even in simple transactions such as buying a new car with or without a loan. Your opinions may seem sound to you, but I see no indication that you really understand these issues.
A divorce attorney has years of training in the law and specifically in issues related to divorce. Based on your opinions, it does not appear that you have an training, education or experience in buying mortgages, managing an investment portfolios or even in simple transactions such as buying a new car with or without a loan. Your opinions may seem sound to you, but I see no indication that you really understand these issues.
I do have a couple of investment portfolios and a CD and other bank accounts totalling about $34,000 but am more the passive investor type. More importantly, while I can't tell you much about what is in a contract such as a car loan or mortgage, I am very talented at accounting and math. If you want advice on the application process for a mortgage, sure, I know little. But if you want to know how much interest you'd save by paying X amount, I can tell you as much as you can ask, and I can give you the formulas.
You haven't addressed what I said earlier at any rate.
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