Rent or Buy: Rent Ratios (Raleigh: apartments, lease, insurance)
Raleigh, Durham, Chapel Hill, CaryThe Triangle Area
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.
That study just doesn't seem right to me. It says buying a house in Raleigh costs 25 times what it would cost to rent the same house for a year. Can you really rent a $250,000 house in Raleigh for $833 a month?
I believe my home is worth about $285,000--$300,000.
If I wanted to rent it out, I would be looking for about $1700/month; X 12 months, X 25 equals...
Hmmmm.... $510,000? Maybe I will sell it to a cash buyer who declines an appraisal?
The issue with most real estate analysis is that it is idiotic, to be tender about it, to analyze the broad market rather than to do the real work of analyzing price and location niches.
That may be the case for some of the more expensive homes in Raleigh, but certainly not the entire triangle.
I like Clark Howard and think he is uber smart, but just because he says something does not make it true in all cases. It bothers me when reports like that come out and make folks think "OMG Buying in NC is BAD!" Not true at all. This cannot be a blanket statement for every home in the triangle and my guess that most rent vs. own ratios in our general area would prove contrary to that statement.
There are many ways to examine the rent/own dynamic. To come out ahead owning, one has to consider the cost of capital, ongoing expenses of taxes, maintenance and repair, calculate appreciation or depreciation and assume that neither is automatic, and one may include opportunity cost, i.e., assume that the down payment, closing costs, etc, would be giving a modicum of return to the renter rather than being P'ed away on baubles.
Some people justify not owning because they calculate a 10% or better annual return on their capital. That is heady territory for the average investor.
Clark Howard is a bright guy, but is best known for his mantra, "I'm cheap. Everyone knows I won't pay a penny more for quality."
Lifestyle quality is one of the most subjectively influenced determinations we can make. I'm glad to own, consider it a component of my personal lifestyle quality, and don't routinely second-guess that orientation.
If someone feels better renting, then that also should be respected, I think. And, they have many accommodations from which to choose.
We develop way too much friction when we try to impose our subjective values on others, IMO.
That's a great way to conclude, Mike. Different strokes for different folks. You are 100% on the money.
There are many ways to examine the rent/own dynamic. To come out ahead owning, one has to consider the cost of capital, ongoing expenses of taxes, maintenance and repair, calculate appreciation or depreciation and assume that neither is automatic, and one may include opportunity cost, i.e., assume that the down payment, closing costs, etc, would be giving a modicum of return to the renter rather than being P'ed away on baubles.
But, in real world terms, how we live day-to-day, that calculator is very limited. "Whether renting is better than buying depends on many factors, particularly how fast prices and rents rise and how long you stay in your home."
I think there are other criteria that this calculator ignores.
"Better" is the most subjective term one could contemplate, bringing all the intangibles imaginable into play. But the site nods to no recognition that there may be any other considerations.
We are in our current home for 8 years now, with an agreeable mortgage rate. But, I have to really tweak figures unrealistically to come up with a profile that creates such a financial burden that it would induce me to believe renting is a "better" lifestyle choice for us than owning.
When I turn back the clock 8 years, even unrealistically flat-lining appreciation and rents, it is clear that we are many tens of thousands of dollars ahead, if we desired to sell today.
And, we have an ownership mentality which, for us, trumps those numbers, until the financial burden would become untenable.
At what point should one decide to rent if the "better" comes in tilted toward renting? At $1,000/year cost to own? $2,000/year? $30,000/year?
If one would gain $3,000 or $13,000 year in ownership, but would be averse to maintenance chores, etc, or travels a great deal, should one go for the ROI, or the lifestyle?
All subjective, relative to the individual. I would pay $2000 or $3000/year to own. Renting would not be "better."
Of course, this is all personal reflection. Folks should decide what is important to them in life.
The calculator is a rough tool, and fun to play with.
You forget, the purpose of buying a house is to live for less, much less, after you pay off the loan. It's an old fashioned concept, but it works every time.
You forget, the purpose of buying a house is to live for less, much less, after you pay off the loan. It's an old fashioned concept, but it works every time.
Oh, yes!
I want to hold a deed and a Cancellation of Deed of Trust.
My only argument of rent v. own is the amount of money you do NOT get to write off when you rent - mortgage interest, property taxes -
then there is the monthly buy-down of your mortgage, which in theory helps give you a home someday that is yours (if you can stay in one place long enough), or at least helps you build equity when you sell, plus keeping tax-free any gains that you have made (within IRS guidelines)- although these days the box-under-the-bridge sounds tempting.
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.
Examples are suspect
