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Old 08-05-2012, 02:27 AM
 
Location: Summerville, SC
3,382 posts, read 7,596,988 times
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Hopefully it works out for us. We probalby should have waited for a bigger down payment, but I saw this as a steady time in our lives, and I figured, I have a good solid 8-10 years in my current place it was worth getting started on buying, and put the time in.

We also bought a house that has a good amount of room to grow.


Digging around on this subject I found this calculator
Is It Better to Buy or Rent? - Interactive Graphic - NYTimes.com

Quick run through on our numbers, its showing it will only take 2 years to be better. Which is good because I am confident I will be in my job for 8-10.
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Old 08-05-2012, 02:31 AM
 
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Quote:
Originally Posted by mathjak107 View Post
You can rent ,invest the down payment,closing costs
If you did this a decade ago, investing in the Dow Jones, you'll be up like 20%, adjusted for inflation. Ownership beats this any time of the day.

And there's absolutely no guarantee that tomorrow the stock market won't crash, and stay there.
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Old 08-05-2012, 04:03 AM
 
85,430 posts, read 82,912,146 times
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a decade is nothing in the run of long term assets.go back 20-25 years and look again .

especially trying to use a decade with 2 back to back recessions as an example.

my home was 169k in 1987 and i sold in the nyc area for 330k in 2004. the same amount in my funds is 1.2 million . thats enough to buy 2 homes even after subtracting out the rent.
long term the markets have out performed residential real estate in most areas by many many times.

historically residential real estate has just managed to out pace inflation by 2 points or so , not the 6 -8 points the markets saw.
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Old 08-05-2012, 04:22 AM
 
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Quote:
Originally Posted by mathjak107 View Post
a decade is nothing in the run of long term assets.go back 20-25 years and look again .
The problem is, capitalism of the 20th century is gone. We've got no idea what lies ahead, but one thing's for sure - a past can't be used to forecast future.
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Old 08-05-2012, 04:32 AM
 
85,430 posts, read 82,912,146 times
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correct , but if you are comparing you have to compare what was other wise you have no facts you only have speculation about what may be going forward.

the fact is renters have also done very nicely investing in other asset classes with the dough thats typically tied up in the house and the bills that go with it.

its only a question of whether a renter has the discipline to invest the down payment money they would have spent and the money they saved by renting in the early years.

most do not.

remember ,we are only talking about the renters who have the dough to have a choice about buying vs renting and investing. if you got no money to buy then you have no choice but to rent.

we had a choice like that recently ourselves.

we made the decsion 5 years ago to buy a 2nd home we planned to retire to. paid cash for the home.

we decided now we dont really want to retire to such a rural area and we sold it 3 weeks ago.

that home ran us about 10k a year to maintain . our real cost was another 10k that i could have earned a year on the money in the home. thats 20k a year and thats without a mortgage. just taxes,maintaince and bills like heat and water .

you can rent for far less in that area and bank the difference.


i think back to my first rental property i bought in nyc, it was a co-op.. it was back in 1987 and i paid 78k plus closing costs. we put 15k down.

it ran us 1200 per month. my tenant was paying 850.00 in rent. typically there was about a 30% difference in buying vs rents in nyc.

i calculated through the decades that she could have banked the 15k i put down plus the closng costs , the almost 350.00 dollar a month difference in rent the first year she saved and whatever was left over the mext 10 years before renting was more and paid the rent and rent increases for decades and had a bigger pile of dough left over than the value of my aparment after subtracting out all the rent she paid..


every area will pan out different but general statements like home ownership wins is just not true at all. it may turn out that way or it may not. those that make statements like that only are running on whats in their own head.

like i said the same amount of dough i spent on my home which i sold for 330k grew to 1.2 million in plain jane funds over the same time. there was enough left over after subtracting out what would have been spent on rent to buy 2 homes.



going forward i think home prices will just keep up with inflation for at least the next decade if i had to guess . market gains im predicting will be in the 6% average return range rather than the historical 11%.... renting and investing may trump buying a home once again but thats only my speculation .


home ownership should be a lifestyle decsion not a financial decision about which is better. you can win either way or you can lose either way.

Last edited by mathjak107; 08-05-2012 at 05:20 AM..
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Old 08-05-2012, 05:48 AM
 
1,730 posts, read 1,821,469 times
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Quote:
Originally Posted by mathjak107 View Post
every area will pan out different but general statements like home ownership wins is just not true at all. it may turn out that way or it may not. those that make statements like that only are running on whats in their own head.
Absolutely, just like saying that rent is better for all.
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Old 08-05-2012, 06:14 AM
 
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Not only is it locality sensitive to rent vs buy costs but its based on the investing skills of the renter and their discipline not to spend the money that should be invested.

For homeowners a wild card is how committed are they to taking care of every issue with a house.

I know many folks sho dont spend a dime maintaining anything until its a big issue.

Others prefer to stay on top of things and can spend a ton of money repairing and doing things to a house.

A house can very easily own you instead of you owning it.
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Old 08-05-2012, 04:09 PM
 
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Not in my area.
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Old 08-07-2012, 01:12 PM
 
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Just today it was shown that average rents have gone up 5.5% Y to Y. Many metro areas have gone up much higher as this is national average.
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Old 08-07-2012, 01:33 PM
 
19,337 posts, read 16,938,002 times
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Quote:
Originally Posted by russiaonline View Post
The problem is, capitalism of the 20th century is gone. We've got no idea what lies ahead, but one thing's for sure - a past can't be used to forecast future.
You are not looking far back enough.
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