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Better to rent. I for one don't care to be called a homeowner if...
We can rent in without worrying about...
1.) Mortgage + principal interest / 15K Property Taxes / Insurance /15K closing
costs
2.) Carrying costs of a homeowner - maintenance / lawn care / shoveling snow
etc...
3.) Being pushed to far from NYC for lower prices and a LONG commute
4.) We can save save save and gain interest! For when we're really ready
5.) Home prices declining below what we pay for one - depreciation
The article below clinched it for me. Now to convince my wife.
Mod cut: no links to blogs
Last edited by Viralmd; 10-28-2009 at 02:58 PM..
Reason: No links to blogs per TOS
And, don't forget two train tickets each month, and parking passes at the train stations, which can add a few thousand to your annual costs. It might not be a bad idea to wait and then buy what you truly want at a later date, though I'd still recommend many Westchester areas, when it's time to buy.
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I own on Long Island. I don't deal with maintenance b/c I live in a co-op. Yeah I pay a maintenance fee, but I don't have to do things like shovel or lawncare b/c that is done for me.
My closing costs were $1,500...NOT $15k like you mentioned. If you are a first-time buyer you can get discounts off your closing costs.
If you own a co-op or condo, you don't essentially pay property tax seperately- it is factored into your monthly payment...and most taxes are not as high as you mentioned. My parents pay about $8k a year for their property taxes.
Not everywhere outside the city is a long commute. Bayside has great homes as well as condos and it's about a 20 minute commute by LIRR to the city. Same as Forest Hills. Yeah if you want to live on LI or Westchester, you are obviously looking at a further commute.
While home prices may be at their lowest now, this is the time to buy. I truly think prices will go up again soon.
I don't really understand how people say they save money when they rent. I bought my place and pay less a month than I would renting. I'm building my own equity...at 27 years old. Buying is definitely a good decision, I would recommend looking to purchase something over renting any day.
Certainly, for many people, renting makes more financial sense. Mostly, if you don't intend to stay in the same residence for more than 3-5 years. But if you plan on staying more than 5 years, almost always makes more sense to buy.
Afterall... All those costs, like property taxes, maintenance--- you still pay those costs when you rent, it's just built into the rent. And when you buy, you get a tax deduction for mortgage interest and the property taxes.
As to betting that real estate prices will continue to fall--- those things are impossible to predict. It actually appears prices have stabilized. So it's just as possible that you are missing a chance at appreciation, or could even see yourself priced out of the market at some point.
Certainly, for many people, renting makes more financial sense. Mostly, if you don't intend to stay in the same residence for more than 3-5 years. But if you plan on staying more than 5 years, almost always makes more sense to buy.
Afterall... All those costs, like property taxes, maintenance--- you still pay those costs when you rent, it's just built into the rent. And when you buy, you get a tax deduction for mortgage interest and the property taxes.
As to betting that real estate prices will continue to fall--- those things are impossible to predict. It actually appears prices have stabilized. So it's just as possible that you are missing a chance at appreciation, or could even see yourself priced out of the market at some point.
You make good points and after some # crunching it still keeps me in the game. From our standpoint, with a 20% down payment and the possibilty of landing a sweet deal in this market, it makes more sense to buy. Man, nobody tells you about how fast your mind changes when actually getting ready to hit the market. Who knows WHAT I'll be thinking tomorrow! So much to consider
Pauly
I think your first analysis was correct. Things have changed now, and it is no longer a given that it is better to rent then to own. I think people just assume that it is better to own, but if you do the math in this market, maybe not. The NYTimes has a rent/buy calculator to help you do the math. The carrying cost on a house in Westchester is at least $6000 per month. You can rent the same home from the owner for maybe half that. There are plenty available now since people cannot sell. This will likely keep prices on their downward trajectory. I don't know if prices will keep falling, but what is the reason prices would start to zoom up?
Higher salaries? No.
Lower unemployment? No.
Interest rates declining? No.
Lack of supply? No.
Easy credit? No.
Prices at historical lows compared to rent? No.
Prices at historical lows compared to income? No.
Pauly
The carrying cost on a house in Westchester is at least $6000 per month. You can rent the same home from the owner for maybe half that.
6K a month is a crazy minimum. My costs certainly are not at all that high--and I have a big, old, costly house with relatively high taxes. Also, don't forget that the rent on a house does not include the utilities--the renter has to pay those costs on top of rent. People rent their house in order to cover their costs--no one is going to rent a house for 3K a month if their costs are 6K.
Which is not to say that everyone should buy. It depends on a million variables, and I for one would not try to guess what the market will do next!
On top of all the financial variables, there are also intangible factors such as not being able to do what you want to the house and yard. As someone currently renting who owned for the previous 10 years, I am suffering through someone else's choice of decor/fixtures/carpet/landscaping/appliances and it is driving me crazy. The location is great and the house is functional but I am counting down days until we are once again the masters of our own domain regardless of the net monthly savings. Some things are truly priceless...
agree. owning a house gives me a sense of home, a true belonging. renting makes me feel I am going to move anyday. I do believe price will fall after the spring/summer selling season in this area. Many prime mortgage defaults have not hit the market yet, in addition to pent up supply that will show up as next spring's listings (people who listed but cancelled have to come back to sell).
PEmom- are you advocating buying now even though you think prices will fall? DMA-how much was your house? Did you buy a long time ago? A $3800 mortgage plus $1200 in taxes and $1,000 a month in expenses, (gardening, electric, insurance, maintenance, water and heat (which are included in rent) adds up to $6,000 per month.
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