Record home prices and now 30 year rates 7% +, FAIL (loans, insurance, 2013)
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Assuming you can rent something similar to what you can buy. I've been a renter and a homeowner. Maybe it's where I've lived, but I have never lived in a place where the rentals equal the for-sale properties in quality.
Rentals are apartments. Properties for sale are houses.
The exception would be duplexes - my experience is that those are fairly close in rent vs. buy calculations and the duplexes for sale often come with an HOA that negates the savings.
When people complain about being renters, it's usually because they're in an apartment. You can hear the people around you through the ceiling, floor, walls. Even the best apartments I ever had featured sluggish property managers who were loathe to fix anything.
We rented single family homes in southern California when we lived there. They were very nice homes in excellent neighborhoods with good schools. It was the best financial choice for us. We were homeowners before we moved there and after we moved out. We didn't lose a penny when the housing market crashed.
It would be great if renters took those savings and actually invested and made the returns you're alluding to, but human nature says they'll likely to just inflate their lifestyle.
There are also plenty of homeowners who use their home equity to inflate their lifestyle. Each person will decide for themselves if financial security is a priority. This can be accomplished as an owner or a renter. The idea is straightforward, spend less than you make and invest that difference.
There are also plenty of homeowners who use their home equity to inflate their lifestyle. Each person will decide for themselves if financial security is a priority. This can be accomplished as an owner or a renter. The idea is straightforward, spend less than you make and invest that difference.
As a homeowner you at least have an asset you can leverage against.
I agree with with the premise of spending less and investing the rest.
Even w/ the rising interest rates, I've always wondered whether buying a home is a sound investment, unless its a home in an area that suddenly becomes hot. When you consider all those years of paying property taxes and insurance (both of which NEVER go down), and being on the hook for all the repairs and upkeep......and then you adjust the money you paid for it vs the money you might get from selling it 20-30 years later, combined w/ the interest paid over those 20-30 years if its mortgaged, and factor in the dollar inflation over 20-30 years (which would be huge), if you did manage to make any money after all that then you'd have to pay taxes on it!
You're paying the property taxes, insurance, and upkeep each month in the form of your rental check. All that is figured in when the rental rate is determined.
You're paying the property taxes, insurance, and upkeep each month in the form of your rental check. All that is figured in when the rental rate is determined.
We keep going in circles on this. But we forget the economies of scale, and the value of capital gains.
In an apartment building, there are economies of scale. Sure, as a tenant, I have to cover a proportional amount of the taxes, maintenance, insurance and so on. But it doesn't cost 10 times as much to maintain or insure 10 apartments, as it would have, to do so for just one solitary individual dwelling. Similarly, the cost per-car, for Tesla to build a car, is much lower than it would be, for a mom-and-pop garage, to custom-craft an equivalent. And so on. The whole argument for renting is based on economies of scale, on specialization. In a rental-society, there is a specialized class of people, called landlords, who do only one thing: landlording. Meanwhile, other people are blacksmiths, barbers, soldiers, priests, scribes and so on. Barbers can cut hair more efficiently and at lower aggregate cost, than if every man were his own barber.
Second, the effect of capital gains. Here in SoCal, it costs vastly less to rent even a SFH house (with no economies of scale) than the PITI to buy the same house. But the owner gains from price-appreciation, whereas the tenant does not. So if I rent, I get to enjoy lower monthly payments, which I like, because I'm going to be moving soon. Meanwhile my landlord is losing money every month, sustaining negative cash-flow, but will recoup his losses, and then some, over the course of decades of ownership, due to capital gains.
Different people have different needs, financial constraints, and lifestyle objectives. Housing has always been a priority objective of mine (Maslow's hierarchy of needs).
Just remember that Maslow's Hierarchy has been updated:
Just remember that Maslow's Hierarchy has been updated:
Lol, funny because it's true. No WiFi, no rest of triangle
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