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I have never seen such discrepancies between owning and renting. In Portland it's common to see $200,000 houses rent for $2500. I'm paying $500/mo to rent a room in a house of eight.
Ziillow and Trulia have been saying it is cheaper to own than to rent in at least 48 of the top 50 US housing markets.
Don't believe everything you read from these people....
I live in So Cal and where I live the housing price is an average of $600,000 for a 4 bedroom 2200 sq ft house... So say I wanted to buy and needed to put 20% down... That's 120,000 down not counting other monies to close and so forth..... That's assuming I have or can get that much cash.... So now my house cost for mortgage is $480,000... Or $2345 a month
Now the rent for a 3 bedroom apartment runs an average of $1900 a month... With $1900 deposit.....
So I save $445 each month for a savings of $5340 a year to invest..... Plus I still have the $120,000 garnering interest or dividends....
Also not to forget if something breaks or needs fixing in an apartment it cost the renter nothing....
In a house you have to pay for it all.... Or if you have a warranty you are paying for the warranty....
either way you are putting money out..
Now the part about being able to recoup your mortgage interest... You will ONLY receive a tax refund up to the amount you paid... It's not like you get 2 or 3 times the amount of tax you paid cause you own a house...
So renting makes a lot of sense to people.... Especially if they don't have a ton of money to put down....
I live in So Cal and where I live the housing price is an average of $600,000 for a 4 bedroom 2200 sq ft house... So say I wanted to buy and needed to put 20% down... That's 120,000 down not counting other monies to close and so forth..... That's assuming I have or can get that much cash.... So now my house cost for mortgage is $480,000... Or $2345 a month
Now the rent for a 3 bedroom apartment runs an average of $1900 a month... With $1900 deposit.....
So I save $445 each month for a savings of $5340 a year to invest..... Plus I still have the $120,000 garnering interest or dividends....
SoCalCpl2, I agree with you, with one small caveat. But please be aware that the prevailing consensus on this Forum is to not compare the 3-bedroom apartment (of perhaps 1000 ft^2) with the 2200 ft^2 4-bedroom house. The prevailing consensus is that one should only compare renting said house to buying. The monthly rent on such a house is presumably higher than $2345. I on the other hand assert that people BUY houses but RENT apartments, but I'm in the minority.
Anyway, the caveat: SoCal is an appreciating market. Booms, bubbles and busts occasionally happen, sometimes with sharp swings. But averaged over decades, the market will rise, and will likely rise faster than inflation. Southern California, minus a few ghetto enclaves, is a desirable place to live. Open land is limited. Zoning is restrictive. There are structural reasons to support increasing real-estate prices. So the $600K house in this example does offer some investment appeal. Compare that to say the rural Midwest, where long-term real estate price trends are flat (or negative), and the upshot is rather different.
SoCal also forgot about taxes. Homeowners insurance will also be higher than renters insurance.
I would also agree that you should compare costs for equivalent housing. Compare condo costs with apartment or compare purchase versus rental for equivalent houses.
I would not be surprised to see the cost of rental less than the cost of ownership. At least initially. A few years later and the cost of renting will be increased while the cost of the mortgage remains constant. Ten years from now you will likely be paying 30-40% more for renting. The resale value of your house will likely be much greater than a 30-40% increase.
Don't believe everything you read from these people....
I live in So Cal and where I live the housing price is an average of $600,000 for a 4 bedroom 2200 sq ft house... So say I wanted to buy and needed to put 20% down... That's 120,000 down not counting other monies to close and so forth..... That's assuming I have or can get that much cash.... So now my house cost for mortgage is $480,000... Or $2345 a month
Now the rent for a 3 bedroom apartment runs an average of $1900 a month... With $1900 deposit.....
So I save $445 each month for a savings of $5340 a year to invest..... Plus I still have the $120,000 garnering interest or dividends....
Also not to forget if something breaks or needs fixing in an apartment it cost the renter nothing....
In a house you have to pay for it all.... Or if you have a warranty you are paying for the warranty....
either way you are putting money out..
Now the part about being able to recoup your mortgage interest... You will ONLY receive a tax refund up to the amount you paid... It's not like you get 2 or 3 times the amount of tax you paid cause you own a house...
So renting makes a lot of sense to people.... Especially if they don't have a ton of money to put down....
Ah but the 'savings' you enjoy from renting is merely ephemeral. When you buy with a fixed-rate mortgage your P&I monthy payment remains constant. When you rent, your monthly rent payment is pretty much guaranteed to skyrocket over time. (Not to mention that unlike mortgage payments, rent payments never ever ever go away.) Within a few years your monthly rent payment is usually much greater than what you would be paying if you had bought.
And of course, in California, you are literally at the mercy of your lanndlord when it comes to Prop 13 property tax protections. On average, rental properties are sold (and thus reassessed) more often than owner-occupied homes, with the result that on average, rental property has higher property taxes than equivalent owner-occupied property.
Of course, maret conditions are local and also vary over time. At some times in some places - especially in the short run - renting is a better deal. At some times in some places, especially in the long run, owning is a better deal for most people.
It's always referable to have options; what really sucks is pay too much because you were never able to buy..
SoCal also forgot about taxes. Homeowners insurance will also be higher than renters insurance.
I would also agree that you should compare costs for equivalent housing. Compare condo costs with apartment or compare purchase versus rental for equivalent houses.
I would not be surprised to see the cost of rental less than the cost of ownership. At least initially. A few years later and the cost of renting will be increased while the cost of the mortgage remains constant. Ten years from now you will likely be paying 30-40% more for renting. The resale value of your house will likely be much greater than a 30-40% increase.
Well just freaking DUH. Homeowners insurance typically has coverage (including structure annd contents) of hundreds of thousands of dollar and often $1 million or more. Renters coverage covers contents but not structure; I don't even have $1000 at home to insure.
And YES the cost of renting is usually much less initially, but in the long run renters usually pay more than owners and have NOTHING to show for iit, unless they have an investment stash earning a better ROI, which obviously the vast majority of renters do not have given that median net worth of renters is $5,000.
From the article, it stated that consumer debt is the problem.
Credit card balances that are high, and stay high,
GSL which are high, the colleges are enjoying that,
Car loans, I don't know anyone who can buy a car cash,
it's really not the loan that is the problem.
It's the price of a car.
Credit cards are to be handled only by people who know how
to use them wisely. Like a scalple to a surgeon.
GSL are a necessary eviel to everyone who wants a population
that can run the country.
Car loans are a neccesity, unless you are a mechanic and can
spend half of your day fixing your old beater.
These really wouldn't be that much of a problem if the
basic neccesities to survive weren't so expensive.
Rent, mortgage, food, utilities, that is where all of the money
if spent in a family budget today.
Wages are really low, then add the high cost of surviving,
well, your going to have a lot of credit card debt, just to get
by.
Also, taking into acount that 48 to 49 percent of the American
population do't even make enough to pay Federal income taxes,
WOW.
Wages will go up when the sales go down so low that companies
start going out of business.
That is unfortunately what it is going to take. Housing prices will go down when people stop buying homes.
The demand will cease, you wait and see.
Only this time, (I'm refering to homes), people will just not by
because there aren't fraud mortgages this time around like in 2005.
You can't get blood from a stone.
When people stop buying homes rents will necessarily skyrocket.
Ultimately houses are both financial assets and physical things. This is both the curse and the appeal of houses. Stocks, bonds and so forth are just financial assets. If I don't maintain my house, its value will decline. If my jurisdiction passes property tax levies, the cost of house-ownership will rise. Such vicissitudes don't apply to strictly financial assets.
House prices are ultimately paced by inflation and demographics. Equity prices are ultimately paced by profit growth. If recently fashionable economic analysis is to be believed, profit growth is faster than "real" economic growth, suggesting that equities will enjoy stronger capital gains that houses.
Houses can however produce more cash flow than equities, either in the form of a paid-off house obviating what would have been a rental cost for the occupant, or through rental income for a non-occupant owner. Whether such rental cash flow exceeds interest on bonds or dividends on stocks of course depends on many factors.
Personally I'm disconcerted by houses being both physical things and financial assets. I don't do well with physical things. On my watch, they decay, rust, fray, break, rot. For me, renting would make more sense (even though I'm a house-owner). For others, it's the reverse. The upshot is that we can't really disentangle the lifestyle-aspect of house ownership from the financial-aspect. Those who enjoy the house-ownership lifestyle will extol its financial benefits, and vice versa.
Also, a data point about rent. 20 years ago, a one-bedroom apartment in a decent part of my "metropolitan" region rented for around $500 per month. Today it rents for maybe $700. That's a 1.7% annualized increase - substantially lower than inflation. Not exactly a runaway increase in rental costs, is it?
Nice deal if you can get it. Five years ago, a studio apartment in Portland rented for around $500 per month. Today it rents for $700.
we would buy a co-op here in bay terrace. the place we are interested in if we do would run us about 8k a year in maintenance . there is a flip tax that helps keep the maintenance low. those who leave help pay for those who stay.
I have owned as investments or lived in co-ops off and on for many years now. to be honest life has been pretty transparent as far as rules for us.
even the co-ops we own by central park have not been a problem even as far as hindering
sales.
Flip tax my eye. Right now I'm flipping birds with both hands. (It's not pretty.) NYC just sucks. I left years ago and didn't have to pay squat.
Wrong, once again. I've been a renter 3 times in my life. In all three instances I bought a home after renting. In two instances I started renting with almost zero money in the bank. Once, right after getting done with trade school. Once, right after my divorce and moving to a new state.
In every instance, I put buying a home as a TOP priority. I scrimped, cut back, ate lots of low cost meals, never went to movies or out to eat, and ALWAYS questioned whether I REALLY needed to buy something when I was at a store.
Renters CAN buy. Who do you think buys starter homes?
How did you pay for trade school? Heck eating low cost meals is my LIFE not just a temporary cutback. Last month I spent $95.11 on food. I've gone to exactly one movie in the past 30 years and that was on a date. My idea of going out to eat was two double cheeseburgers at Mickey D's ($2.00) when I had to unexpectedly work a double shift. Haven't even done that in five years.
mommy covers my debt
i dont pay for stuff i sign for stuff
i have always had everything free and never had to work to eat
Have you ever considered getting a job and becoming a productive member of society?
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