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Old 09-30-2014, 09:21 AM
 
15,733 posts, read 9,242,575 times
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Quote:
Originally Posted by freemkt View Post
You got your affordability - 30 years worth and more - when you got your fixed-rate mortgage (lenders are very good at making sure your loan is affordable, what with ratios and all ). Even in the worst-case scenario - which obviously won't happen - you'll almost always come out ahead in the long run for having owned rather than rented. (Median homeowner net worth is, what, approx 50 times median renter net worth?)

Renters have affordability - if at all - for only the length of their lease, which rarely exceeds 12 months. (And most renters today do not have affordability, according to the government, what with rents having necessarily skyrocketed over the past five years.)

What homeowners are really saying is, we have a loaf, and we want it to grow into two (or more) loaves, and in order to ensure that happens, renters will just have to settle for having no loaf at all, even if that means they pay more than we in the end.
Lenders charge a rate that the market will bear. Period. And that interest rate that I got 30 years ago was 13% adjustable. You could have gotten the same rate 30 years ago. Remember, we were at the same point in our lives (although you had an actual degree, and were a man). I was a renter then, too. But I was not prohibited from purchasing a home then. Neither would you have been.

As for ALWAYS coming out ahead, I did a quick calculation on my own home. I paid $90,000 for my home. In 30 years, I will pay $66,000 in interest, $60,000 in property taxes, and $90,000 in insurance (based on rates of today).

That means I will have to sell my home for $306,000 in order to break even. That doesn't include upkeep, maintenance and repair. I can guarantee that my home will not be worth that in 30 years. You on the other hand will pay $144,000 in those 30 years (assuming your rent is $400 a month.) Yes, rent will increase in those 30 years, but so will insurance and taxes on my part.

Median homeowner net worth being 50 times that of a renter has NOTHING to do with the fact that one owns and one rents. It has to do with lifestyle, mindset and financial discipline. Someone that owns a home does MANY things that put their net worth ahead of a renter, including choosing to have a better paying job.
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Old 09-30-2014, 11:27 AM
 
2,553 posts, read 2,003,488 times
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Quote:
Originally Posted by ringwise View Post
Your jealousy is quite pathological at times.

There is NOTHING that discriminates against renters. There is no law, ordinance or rule that says only certain people can own a home. It comes down to simple choices. You own a home or you don't.
Well, while I generally disagree with most of what Freemkt has written, rents in many markets have become quite expensive, eating away at the idea that rents should be the cheaper alternative in most cases (unless you specifically seek to rent in a luxury building), and the tax credit for mortgages biases against renters.
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Old 09-30-2014, 11:42 AM
 
33,046 posts, read 22,034,672 times
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Quote:
Originally Posted by ringwise View Post
Lenders charge a rate that the market will bear. Period. And that interest rate that I got 30 years ago was 13% adjustable. You could have gotten the same rate 30 years ago. Remember, we were at the same point in our lives (although you had an actual degree, and were a man). I was a renter then, too. But I was not prohibited from purchasing a home then. Neither would you have been.

As for ALWAYS coming out ahead, I did a quick calculation on my own home. I paid $90,000 for my home. In 30 years, I will pay $66,000 in interest, $60,000 in property taxes, and $90,000 in insurance (based on rates of today).

That means I will have to sell my home for $306,000 in order to break even.
That doesn't include upkeep, maintenance and repair. I can guarantee that my home will not be worth that in 30 years. You on the other hand will pay $144,000 in those 30 years (assuming your rent is $400 a month.) Yes, rent will increase in those 30 years, but so will insurance and taxes on my part.

Median homeowner net worth being 50 times that of a renter has NOTHING to do with the fact that one owns and one rents. It has to do with lifestyle, mindset and financial discipline. Someone that owns a home does MANY things that put their net worth ahead of a renter, including choosing to have a better paying job.

??? What about the income tax savings you should enjoy year after year until you retire your mortgage? What about the peace of mind you enjoy knowing you'll never have to share your roof with drunks and druggies, nor will they create a chaotic environment of fighting and domestic violence, nor will the roof over your head be under anyone else's control?

Lifestyle, mindset and financial discipline? Homeowners consume far more than renters, so perhaps renters are more frugal. I know I have gotten by on financial fumes more than once; I don't see many homeowners doing that. All the frugality in the world does not turn a poor renter into a wealthy homeowner.

As for choosing to have a better job, that's hardly a unilateral decision - employers have a lot to do with that.
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Old 09-30-2014, 11:45 AM
 
26,585 posts, read 52,247,863 times
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Typically it cost less to own over a long period of time...

Conversely, a person can always get into a better neighborhood/location short term for less than it costs to own...

There is no right or wrong answer...

Some people should never be owners and some should never be renters!
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Old 09-30-2014, 11:55 AM
 
33,046 posts, read 22,034,672 times
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Quote:
Originally Posted by darkeconomist View Post
Well, while I generally disagree with most of what Freemkt has written, rents in many markets have become quite expensive, eating away at the idea that rents should be the cheaper alternative in most cases (unless you specifically seek to rent in a luxury building), and the tax credit for mortgages biases against renters.

If that idea ever existed, it is long gone. I can remember when there was a so-called rule of thumb that a good approximation of a home's value was the monthly rent multiplied by 70. At some point, that number became 100 times monthly rent, and then 120 times monthly rent. For all I know, the principle of a price-rent ratio might no longer exist..

A couple years ago, owning was said to be cheaper than renting in 48 or 49 of the 50 largest US markets. I see a not-distant future in which owning a home will be largely hereditary in the sense of being handed down from generation to generation, and in which homeowners and renters will be regarded as distinct castes.
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Old 09-30-2014, 12:10 PM
 
26,585 posts, read 52,247,863 times
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As interest rates plummeted the multiplier increased...

Huge difference between a 4% 30 year fixed and the 13.5% I had starting out.

If interest rates went to double digits and stayed... prices would drop like a rock in just about every market...
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Old 09-30-2014, 12:30 PM
 
15,733 posts, read 9,242,575 times
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Quote:
Originally Posted by freemkt View Post
??? What about the income tax savings you should enjoy year after year until you retire your mortgage? What about the peace of mind you enjoy knowing you'll never have to share your roof with drunks and druggies, nor will they create a chaotic environment of fighting and domestic violence, nor will the roof over your head be under anyone else's control?

Lifestyle, mindset and financial discipline? Homeowners consume far more than renters, so perhaps renters are more frugal. I know I have gotten by on financial fumes more than once; I don't see many homeowners doing that. All the frugality in the world does not turn a poor renter into a wealthy homeowner.

As for choosing to have a better job, that's hardly a unilateral decision - employers have a lot to do with that.
What income tax savings are there after retiring a mortgage? I'm not familiar with that one. But what about all the money renters are able to sock away because they have no property taxes, insurance or repairs to pay for? My mom has a LOT more disposable income now that she rents, even living on a retirement income that is a lot less than when she worked.

As for peace of mind, I've rented quite a bit in my day, and I've never shared my living space with drunks and druggies. Guess I'm just more careful about finding places to rent? And having the roof over my head being under someone else's control - that isn't any different when you own a home. The government can increase property tax that can become quite a burden. A few years ago, our area was designated a flood risk, and I was hit with a mandatory $2,000 a year flood insurance. That wasn't in my control.

Can you please provide me with statistics that show homeowners consume more than renters? Or are you just making assumptions and see nice homes where folks make purchases and assume they own?

Your "financial fumes" are a) of your own doing, and b) not yours alone. Many homeowners do that - why do you think there are foreclosures? Because their costs are more than they can handle.

No, frugality doesn't make you a homeowner, but making good financial choices does. That includes being frugal, making smart investments and earning a good living.

Employers have NOTHING to do with you choosing a better job. But in your case, I'm afraid that ship has sailed. You had a chance many years ago to get a better job, never took that chance. Now you're living with the fallout from your financial choices.

Cue the excuses about how it wasn't your fault.......
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Old 09-30-2014, 12:51 PM
 
33,046 posts, read 22,034,672 times
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Quote:
Originally Posted by ringwise View Post
What income tax savings are there after retiring a mortgage? I'm not familiar with that one. But what about all the money renters are able to sock away because they have no property taxes, insurance or repairs to pay for? My mom has a LOT more disposable income now that she rents, even living on a retirement income that is a lot less than when she worked.

As for peace of mind, I've rented quite a bit in my day, and I've never shared my living space with drunks and druggies. Guess I'm just more careful about finding places to rent? And having the roof over my head being under someone else's control - that isn't any different when you own a home. The government can increase property tax that can become quite a burden. A few years ago, our area was designated a flood risk, and I was hit with a mandatory $2,000 a year flood insurance. That wasn't in my control.

Can you please provide me with statistics that show homeowners consume more than renters? Or are you just making assumptions and see nice homes where folks make purchases and assume they own?

Your "financial fumes" are a) of your own doing, and b) not yours alone. Many homeowners do that - why do you think there are foreclosures? Because their costs are more than they can handle.

No, frugality doesn't make you a homeowner, but making good financial choices does. That includes being frugal, making smart investments and earning a good living.

Employers have NOTHING to do with you choosing a better job. But in your case, I'm afraid that ship has sailed. You had a chance many years ago to get a better job, never took that chance. Now you're living with the fallout from your financial choices.

Cue the excuses about how it wasn't your fault.......

Oh. My. God. (Or, as the bottle of olive oil sold in the NYC deli where I worked says, O Dio Mio.)

Are you aware that property taxes are generally higher - and often much higher - on rental property than on owner-occupied homes of equal value? Same for insurance and even for mortgages.

I'll get you some numbers tonight but for now I can tell you that median homeowner income (circa 2010) is almost exactly 2x median renter income. In the 1980s, median renter income was approx 60% of homeowner income; since then homeowners have increased their income advantage over renters.
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Old 09-30-2014, 12:52 PM
Status: "Summer!" (set 14 days ago)
 
Location: Foot of the Rockies
86,978 posts, read 102,527,356 times
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Renting is almost always cheaper than owning, at least in the early years. When we bought our house 25 years ago, the monthly payment was much higher than the average rent in Denver/Boulder. Rents have just recently caught up to our house payment. I can't find a stat back that far, but even in 1996, the average rent was about 60% of our house payment. Then you have all the upkeep costs, usually covered in rent, and the "home improvement" costs, such as "wouldn't it be nice to have a new kitchen?" Because a house is usually bigger than an apartment, utilities are higher.
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Old 09-30-2014, 12:57 PM
 
15,517 posts, read 13,509,459 times
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Quote:
Originally Posted by ringwise View Post
What income tax savings are there after retiring a mortgage? I'm not familiar with that one. But what about all the money renters are able to sock away because they have no property taxes, insurance or repairs to pay for? My mom has a LOT more disposable income now that she rents, even living on a retirement income that is a lot less than when she worked.
What makes you think that the rent does not include property taxes and insurance? You think a landlord just eats those costs? Those costs are included in the rent price.

After retiring a mortgage, there is no more mortgage, that is a huge savings, a savings so big, a person could purchase another house.

Repairs are always overstated, and an excuse by owners to justify their "sacrifice" being an owner; if owning was that bad, no one would own. I have been a renter for over 20 years now, and I can count on my hand the number of repairs that had to take place during that time. When I did live in a house, as a kid with my parents, a house we lived in for seven years only needed the heater repaired and a septic line repaired, that was it. I cannot think of any owners who are overburdened by repairs to the point they consider renting a better alternative.

Quote:
Originally Posted by ringwise View Post
As for peace of mind, I've rented quite a bit in my day, and I've never shared my living space with drunks and druggies. Guess I'm just more careful about finding places to rent? And having the roof over my head being under someone else's control - that isn't any different when you own a home. The government can increase property tax that can become quite a burden. A few years ago, our area was designated a flood risk, and I was hit with a mandatory $2,000 a year flood insurance. That wasn't in my control.
I agree, and the idiotic insurance swings in rates in S. FL. is the reason why I do not buy and still rent. Also with renting (which I will contradict my own post above a little) is that the rent prices itself is a market, whereas things like one landlords special assessment or large repair bill cannot impact the rent he demands, as the rent has to stay competitive regardless of the cost to the landlord. This actually provides a little more stability to rent prices, in which it takes an increase in the whole area to raise rents, not just one specific issue to a home.

Quote:
Originally Posted by ringwise View Post
Can you please provide me with statistics that show homeowners consume more than renters? Or are you just making assumptions and see nice homes where folks make purchases and assume they own?
Yes, not really seeing how one consumes more than the other, other than home improvements.

Quote:
Originally Posted by ringwise View Post
Your "financial fumes" are a) of your own doing, and b) not yours alone. Many homeowners do that - why do you think there are foreclosures? Because their costs are more than they can handle.
Agree.

Quote:
Originally Posted by ringwise View Post
No, frugality doesn't make you a homeowner, but making good financial choices does. That includes being frugal, making smart investments and earning a good living.
I agree. I am a renter by choice, all because I have a great condo right now, and the market in Florida is not to my liking, I will not put myself in a financial bind over a home; the insurance issue is really holding things up as the target area for my home purchase is next to the ocean. Maybe with an all cash purchase, or enough cash to the point a swing in insurance rates will just eat into my discretionary/entertainment budget, I will purchase a home.
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