Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I can't speak for the masses, but the fact that our house payment has stayed relatively the same has been a great boon for us. When we first bought our house the payments were 650 a month -- and we paid extra. We made maybe around 40K a year.
When we rented an apartment we paid a couple of hundred bucks less, BUT every year when we got a raise, so did our landlord. Our rent would go up.
So now -- years later, my mortgage is now 416.50, and we pay 200.00 extra. But our income has grown much higher, more so since we started our own business. So I can save much more. If I rented this house the rent would be 1500 a month.
Yes, this is something that has steamed me - rent inflation means renters can't get ahead fiinancially unless their income rises faster than inflation. (Mine hasn't.)
There are lots of people in the Bay Area paying more to rent a room that you are paying to buy a house.
Those with negligible net worth's, are unlikely to qualify for a mortgage and currently own a home. Although, there was a time in the not so distant past, that the bank's rubber stamped the application of anyone with a pulse. There were tens of thousands of "owners" that bought before the collapse using ARM's and still others that compulsively refinanced every few years, pulling equity each time. The majority of them are renters once again, or will be soon.
Not quite true; in 2007 I got tired of the incessant mortgage telemarketers calling me and took one up on his claim I could get a mortgage - I made minimum wage and was pretty sure I couldn't qualify.
Yes, this is something that has steamed me - rent inflation means renters can't get ahead fiinancially unless their income rises faster than inflation. (Mine hasn't.)
There are lots of people in the Bay Area paying more to rent a room that you are paying to buy a house.
So why stay in the Bay Area? It's one of the highest COL areas in the country. If your answer is "because it's where I want to live", that's valid, but you have to accept that the price for that choice is renting.
the problem is that most renters dont rent because they have made a well thought out financial decision that its in their best interests to rent. most of them rent because they are too dumb to figure out how to save up money and accumulate wealth.
so you dont have to be broke to rent, but most of them are.
How does an intelligent burger flipper save money and accumulate wealth? Could low incomes hinder accumulation?
the problem is that most renters dont rent because they have made a well thought out financial decision that its in their best interests to rent. most of them rent because they are too dumb to figure out how to save up money and accumulate wealth.
so you dont have to be broke to rent, but most of them are.
Like i said the renter group takes in to many different levels of capability and income to have anything but a diluted study.
So why stay in the Bay Area? It's one of the highest COL areas in the country. If your answer is "because it's where I want to live", that's valid, but you have to accept that the price for that choice is renting.
The numbers I've seen suggest that renters generally hhave very little net worth, with a median under $5,000. Obviously renters have no home equity, but homeowners have substantial non-home net worth.
Numbers I've seen suggest that median homeowner income is very close to 2x median renter income, so this income gap surely has something to do with it. But does this fully explain the net worth gap, or are there other things going on?
Renters spend a higher proportion of their income than homeowners on housing, which is largely due to renters' lower incomes - renters are not enjoying more or newer or better housing than homeowners.
Who spends more overall? Do renters have low net worth because they overspend, because they underearn, or what?
Where are your statistics on this? We rent our primary residence (a house) because it is a lifestyle choice. We like the flexibility of being able to move (with 30-60 days notice) to any area that best suits our needs. E.g. We moved to be near the lake when we had a boat, moved to put our kids in one the best schools in the state, may move again for schooling, our business, to experience Europe, etc...
Renting offers flexibility and freedom. There are many people who paid too much for a house in a depreciating neighborhood. So glad I never bought into that "American Dream." FWIW, I outright own many investment properties, businesses, etc. and rent is an insignificant proportion of our income. I will only buy properties if they are a good investment and can provide an income stream (I don't property flip). I know others think differently and will happily invest all their life savings into one primary residence.
Wanted to add another point - I own an apt. complex in Chicago and every one of my tenants has strong credit rating, good career and income ($100K+) and they could easily qualify / afford a mortgage but choose to rent because it best fits their lifestyle (e.g. they frequently travel/relocate, don't want to maintain a home, prefer to invest in other areas, etc.) Those who assume people who rent cannot qualify for a mortgage are misinformed. Many higher income earners choose to rent for various reasons.
Absolutely. Events of the past decade have shown all too clearly that homeowners are not the financial laureates they like to believe they are. Buying isn't necessarily superior to renting; there are a multitude of factors to consider. In many cases, it makes more economic sense to rent. I know it has in my case.
Quote:
Originally Posted by GoCUBS1
Where are your statistics on this? We rent our primary residence (a house) because it is a lifestyle choice. We like the flexibility of being able to move (with 30-60 days notice) to any area that best suits our needs. E.g. We moved to be near the lake when we had a boat, moved to put our kids in one the best schools in the state, may move again for schooling, our business, to experience Europe, etc...
Renting offers flexibility and freedom. There are many people who paid too much for a house in a depreciating neighborhood. So glad I never bought into that "American Dream." FWIW, I outright own many investment properties, businesses, etc. and rent is an insignificant proportion of our income. I will only buy properties if they are a good investment and can provide an income stream (I don't property flip). I know others think differently and will happily invest all their life savings into one primary residence.
Wanted to add another point - I own an apt. complex in Chicago and every one of my tenants has strong credit rating, good career and income ($100K+) and they could easily qualify / afford a mortgage but choose to rent because it best fits their lifestyle (e.g. they frequently travel/relocate, don't want to maintain a home, prefer to invest in other areas, etc.) Those who assume people who rent cannot qualify for a mortgage are misinformed. Many higher income earners choose to rent for various reasons.
Where are your statistics on this? We rent our primary residence (a house) because it is a lifestyle choice. We like the flexibility of being able to move (with 30-60 days notice) to any area that best suits our needs. E.g. We moved to be near the lake when we had a boat, moved to put our kids in one the best schools in the state, may move again for schooling, our business, to experience Europe, etc...
Renting offers flexibility and freedom. There are many people who paid too much for a house in a depreciating neighborhood. So glad I never bought into that "American Dream." FWIW, I outright own many investment properties, businesses, etc. and rent is an insignificant proportion of our income. I will only buy properties if they are a good investment and can provide an income stream (I don't property flip). I know others think differently and will happily invest all their life savings into one primary residence.
Wanted to add another point - I own an apt. complex in Chicago and every one of my tenants has strong credit rating, good career and income ($100K+) and they could easily qualify / afford a mortgage but choose to rent because it best fits their lifestyle (e.g. they frequently travel/relocate, don't want to maintain a home, prefer to invest in other areas, etc.) Those who assume people who rent cannot qualify for a mortgage are misinformed. Many higher income earners choose to rent for various reasons.
In the past 12 years, the net worth of the typical home owner has ranged between 31 and 46 times that of the net worth of the typical renter.
Home owner equity is a substantial component of home owner wealth. The Federal Reserve’s Survey of Consumer Finances, conducted once every three years, provides a snapshot of family income and net worth along with basic demographic details and more detailed information on where families keep the wealth they have accumulated.
The most recent survey, concluded in 2007, offers a picture of the situation before home price declines and the tumbling equities market hit household balance sheets. At that time, median home owners had well over $200,000 in net worth or 46 times that of the median renter who had just over $5,000. Furthermore, $200,000 was the median value of owners’ homes.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
