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There are local markets where a property can be rented for less then owning it. But I'm not interested in that. Those are the exceptions not the norm. If renting came out cheaper in general then you would never have as much landlords invest in a property as there is in the US because there would be no money to be made. You may have singular examples of many scenarios where either renting or owning can be beneficial. I can give you examples of countries where renting is cheaper then owning but the USA is not one of them.
IN GENERAL in most areas of the country renting an identical property will cost more monthly then owning it. If you can disprove the last sentence, then I'm all ears. And by "in general" I mean "in most cases" not that "owning is ALWAYS better then renting." This isn't an idea I just came up with in my head. It's an established fact:
The article states, as I stated in my previous posts; besides mobile people almost all others are better off buying then renting when looking it from a pure financial point of view. Even if you adjust the interest rates to the historically average of 7-8% buyers would come out ahead if you crunch all the number. Anyone that believes otherwise is only analyzing this comparison from real estate experience limited to the local area they live in. Otherwise, they have confirmation bias from their own math or read a website designed to push a false idea.
Trulia's estimate of repair/maintenance cost is far from realistic, as is their estimate of the opportunity cost of the down payment. Furthermore, they fail to factor in the forgone wages of the owner's time.
Which renders your whole argument suspect. You need to make sure you are not omitting lost income on time and down payment, repairs, maintenance, HOA, taxes/insurance if not included in mortgage, immobility costs (e.g. commute cost when job moves) etc.
Just curious - do you also take lost time into account for non real estate investments - all the time spent analyzing and managing your portfolio and investigating various companies stocks, mutual funds and other investment vehicles, time spent purchasing and trading around your assets, meeting with a financial advisor, etc.??
Just curious - do you also take lost time into account for non real estate investments - all the time spent analyzing and managing your portfolio and investigating various companies stocks, mutual funds and other investment vehicles, time spent purchasing and trading around your assets, meeting with a financial advisor, etc.??
Yes, I do. That is why I don't trade actively, even if I thought I could squeeze out a few extra tenths of a percent in returns.
Being an accountant, why didn't you factor in the tax benefits of owning the home, and then calculate the profit of appreciation when you sell in 5-7 years? You didn't fully run the numbers. You ran the numbers to satisfy your own thinking, that you do NOT want to buy. You didn't prove that you shouldn't.
Based on what? Falconhead, you as a realtor should know better than anyone else never to bet on your home appreciating in value (See the home mortgage crisis of 2008). Also, considering OP has to pay property taxes and mortgage interest he/she never would have paid as a renter, taking a tax deduction for these really isn't a benefit either. Houston has a more stable real estate market than most areas, but even here it's slowing down a lot. OP, I live in Houston myself, and I also think you're underestimating your utility costs as a homeowner. $250/month is often the amount of your electric bill just by itself in the summer because that A/C is going 24/7, even while you're at work and have the thing set on 80. This is especially true if you buy an all electric house (which you should NEVER buy if you live in Houston). Everyone needs to make their own decisions RE: home ownership. I agree with OP that owning a home isn't the right choice for him/her now, probably.
Based on what? Falconhead, you as a realtor should know better than anyone else never to bet on your home appreciating in value (See the home mortgage crisis of 2008). Also, considering OP has to pay property taxes and mortgage interest he/she never would have paid as a renter, taking a tax deduction for these really isn't a benefit either. Houston has a more stable real estate market than most areas, but even here it's slowing down a lot. OP, I live in Houston myself, and I also think you're underestimating your utility costs as a homeowner. $250/month is often the amount of your electric bill just by itself in the summer because that A/C is going 24/7, even while you're at work and have the thing set on 80. This is especially true if you buy an all electric house (which you should NEVER buy if you live in Houston). Everyone needs to make their own decisions RE: home ownership. I agree with OP that owning a home isn't the right choice for him/her now, probably.
Don't renters pay their own electricity in Houston?
There are local markets where a property can be rented for less then owning it. But I'm not interested in that. Those are the exceptions not the norm. If renting came out cheaper in general then you would never have as much landlords invest in a property as there is in the US because there would be no money to be made. You may have singular examples of many scenarios where either renting or owning can be beneficial. I can give you examples of countries where renting is cheaper then owning but the USA is not one of them.
IN GENERAL in most areas of the country renting an identical property will cost more monthly then owning it. If you can disprove the last sentence, then I'm all ears. And by "in general" I mean "in most cases" not that "owning is ALWAYS better then renting." This isn't an idea I just came up with in my head. It's an established fact:
The article states, as I stated in my previous posts; besides mobile people almost all others are better off buying then renting when looking it from a pure financial point of view. Even if you adjust the interest rates to the historically average of 7-8% buyers would come out ahead if you crunch all the number. Anyone that believes otherwise is only analyzing this comparison from real estate experience limited to the local area they live in. Otherwise, they have confirmation bias from their own math or read a website designed to push a false idea.
i already said i can give you examples of where buying is cheaper , but i can also give you examples where renting and investing elsewhere blew the doors off buying.
that is my point , you are arguing something that has many different outcomes . just figuring buying without figuring what your opportunity costs are with the money tied up in a house is flawed logic.,.
Rent for $1000 for 30 years = $360,000 (and you own nothing when you move $0)
Now lets say you buy for $1000 month for 30 years = $360,000
but...... you can now sell that place for $350,000. $10k difference divided by 30 years means it cost you $28 month to own vs $1000 month to rent.
I know I'm oversimplifying it. I'm generalizing just to prove a point. In the end.... if you don't want to buy, don't. Simple as that. Tell your friends and family to mind their own business.
The house next door to me cost $13,500 brand new in 1954. Today it is worth $500,000.
Sounds great.
However, $13,500 invested in the S&P 500 in 1954 with dividends reinvested is worth $5,000,000 million today.
Don't renters pay their own electricity in Houston?
Most do, but maybe OP has an all bills paid apartment. I'm just explaining OP was probably underestimating the costs of his total utility bills as a homeowner in Houston. (For purposes of simplicity, I'm going to assume OP is male, so I apologize in advance if you're a woman, OP). $250/month for all utility bills on a home in Houston is a very conservative estimate, if not just unrealistic. Water in the city proper for under $5K gallons runs about $40/month, which includes trash. And that's the minimum monthly. (Outlying suburbs tend to be much more). Gas varies, but for my family of two it was $20-$70/month, depending on season. Electric was $100/month in the winter-$250/month in the summer, and that was keeping my 2000 sq ft home set on 77-80 degrees in the 95+ degree summers.
This of course, lends credence to OP's argument that buying a home does not make good financial sense for him. Home ownership is very overrated. For some people, it makes sense. For others, it's not worth it. Oh, and he didn't mention HOA expenses either, which average $450-$600/year for most homes. The yard care alone is $540 minimum assuming he pays someone to cut the grass twice/month in spring and summer and once/month the other months at a cost of $30 each time. Most homeowners hire yard people because they don't want to be out in the heat doing yard work. (Every two weeks in the spring summer is actually pushing it on the frequency because the yards grow frightfully fast).
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