Pittsburgh Housing: Cheaper to Own than Rent (Denver: real estate, rentals)

[Hopes]

Originally Posted by Katiana

So what is the average rent for say a 2 BR apt in a decent neighborhood? Just curious. What do people here on CD pay?

The family from Boston was having a hard time finding an appropriate house for less than $2,500 per month.

Originally Posted by engineerman66

It kills me to see people say renting is more expensive or I am not building equity by renting (area of the country doesn't matter). Do some basic math and you realize that with interest, taxes, repairs, and insurance, owning a home can provide less equity than if rented and equal number of years (i.e. more liquid assets from renting compared to the sale of your home at a set number of years). And yes, that includes the tax benefits, home appreciation, and rent increases.

My first mortgage is approximately $500 and that includes taxes and insurance. My home is far above equivilant to your one bedroom apartment in Squirrel Hill. I own a fairly large 3 bedroom on a huge lot in a very nice suburban neighborhood. It's already worth three times what I paid for it and I'm not planning to move anytime soon.

[Katarina Witt]

Originally Posted by BrianTH

I have been playing around with this website recently and it seems plausible based on what I know about Pittsburgh neighborhoods:

Pittsburgh, PA Apartments & Houses Rent Comparison, Neighborhood Rent Maps

Thanks. It appears that rents are similar to rents in metro Denver, which is interesting b/c housing prices are higher here.

[engineerman66]

Originally Posted by Hopes

The family from Boston was having a hard time finding an appropriate house for less than $2,500 per month.


My first mortgage is approximately $500 and that includes taxes and insurance. My home is far above equivilant to your one bedroom apartment in Squirrel Hill. I own a fairly large 3 bedroom on a huge lot in a very nice suburban neighborhood. It's already worth three times what I paid for it and I'm not planning to move anytime soon.

Find me a house (any size) in 15217 in good condition that will be equal to a $500 a month mortgage with taxes at: 30 years, 5% interest and 10% down. You cant. Not even close.

[Hopes]

If a fixer upper ever goes on the market in 15217 (and they do), you'd be crazy to not buy it.

If you insist on good condition, move a few blocks over into Greenfield, and it can be done for less right now.

I only mentioned Greenfield because it's right next door, and you focused on that area in your quesiton.

I never said that it was necessarily possible within the same neighborhood.

There are comparable houses all throughout the county--larger houses than your one bedroom apartment, in good condition, in good neighborhoods, similar expense.

But if you're stuck on zip codes, continue renting and throwing all that money away.

You are throwing mone away by renting. There's simply no way around it. All your monthly rent payments can be put directly into an investment.

[BrianTH]

Originally Posted by Hopes

You are throwing mone away by renting. There's simply no way around it. All your monthly rent payments can be put directly into an investment.

This is overstating the case for buying. When you buy, the money you spend on mortgage interest, property taxes, insurance, maintenance, and fees isn't being invested: those are all costs. And to the extent you are investing capital in equity, it is an undiversified investment with a low expected return in real terms.

The bottom line is that there is no such thing as housing for free, and both renting and buying will cost you. That said, it is true that under some circumstances buying can cost you less, but it is important that people view it in those terms (as a comparison of costs).

[Hopes]

I understand and agree, Brian.

However, with owning, you will eventually get your money back---especially in a market like Pittsburgh where housing prices don't boom and bust.

Renting is best for those who need short term housing. In Pittsburgh, that means even if you're staying for a few years.

[BrianTH]

Yep, as we have discussed before it is really more a question of longevity than anything else: if you can reliably plan on staying in the same place for long enough, the math will start favoring buying.

[engineerman66]

Originally Posted by Hopes

I understand and agree, Brian.

However, with owning, you will eventually get your money back---especially in a market like Pittsburgh where housing prices don't boom and bust.

Renting is best for those who need short term housing. In Pittsburgh, that means even if you're staying for a few years.

For me at $450 a month it is NEVER better to buy than to rent unless the home is in perfect condition and under 60k. You do not eventually get your money back when you factor in taxes, interest, ownership expenses, etc. Even if you sell you home, you would have saved more money renting. I have run the numbers in excel, it doesnt work out. Don't believe me, try the following link (although you can play with the numbers to make it work one way or the other).

http://www.nytimes.com/2007/04/10/bu...T_GRAPHIC.html

My whole point is that people constantly say you throw money away while renting without ever considering the actual costs. I am not saying there are intangibles that also factor in, just that for some, it is actually cheaper to rent. And, I would go as far as to say that for most people it is financially better (in the end) to buy than to rent.

[Hopes]

You basically agree if the house is in perfect condition.

Homeownership is an excellent investment for many people---especially for people with do-it-yourself motivation and skills.

I guess it comes down to motivation.

I hope you earn enough to buy a home meeting your criteria one day.

[engineerman66]

Originally Posted by Hopes

You basically agree if the house is in perfect condition.

Homeownership is an excellent investment for many people---especially for people with do-it-yourself motivation and skills.

I guess it comes down to motivation.

I hope you earn enough to buy a home meeting your criteria one day.

Hopes,

I am going to buy a home shortly, in the pittsburgh area, and it will need work. I come from a background of remodeling homes where most only kept the balloon framing. I am motivated to do-it yourself especially when you consider the contracting and labor savings, let alone the ability to do it right.

You keep saying that it is a good investment. I keep saying run the numbers. People have been saying its better to own than rent for decades, but very few present an accurate comparison of costs and when they do, it's a very different picture than presented by the anecdotal "i bought my home for 100k and sold it for 150 10 years later". Just making 50k on the sale itself is no where close to being a good estimate of making money. And, 98% of people dont know how or dont think to count up their total expenses in that 10 years to compare that against the equity at sale.

I agreed with you that it can make sense, but to generalize it is better to own than rent, is to show poor financial judgment. Again, home ownership is about much more than money, but you cant own a home for very long with out money.