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Old 08-03-2012, 10:04 AM
 
Location: On The Road Full Time RVing
2,342 posts, read 3,103,594 times
Reputation: 2226

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Buying Home Beats Renting After Just 3 Years in Much of US


Buying Home Beats Renting After Just 3 Years in Much of US - Yahoo!
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Old 08-03-2012, 11:50 AM
 
85,286 posts, read 82,805,210 times
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to hard to tell without all the data. cant tell what they figured for opportunity costs as an example.

overall i can say they arent far off as things stand at the moment but that can change in a heart beat if alternative investment markets perk up.

while the home in pa we just sold would have broken even as a rental in about 4 years if i could have all that money thats tied up in the house return even 5-6 % i could rent 2 homes and come out ahead.

to many unknown assumptions about the future to be worthy news
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Old 08-03-2012, 11:59 AM
 
Location: Physically or psychologically?
13,108 posts, read 18,010,335 times
Reputation: 25414
Yes but home prices in many areas in the country are now starting to rise again. Albuquerque prices have certainly been tracking well recently. I'm hoping it will continue.
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Old 08-03-2012, 12:22 PM
 
Location: Vallejo
16,231 posts, read 18,179,307 times
Reputation: 14483
If you hit AMT, what's that look like for your tax situation? It has to be handled on a case-by-case basis. The other problem? In many places, you have a lot more choice in renting. Not everyplace has an abundance of studio and 1bd condos one can buy. You either buy a 3-4bd family home or rent. How about when you want out? Rent you lose a bit of your security deposit. Selling costs... 6% commission, 1-3% in closing costs. $250,000@7% closing costs is $17,500. That's a year's rent. Great so you break even in 2-3 years, but if you want to get out you're looking at a year's rent to do it. Renting = flexibility, that's why conventional break-even analysis looks at the cost to get out as well. How much is Zillow assuming the "appreciation" will be? Latest Case-Schiller shows a -14% "appreciation" in YOY numbers for Atlanta. How's that factor into the break-even of someone who bought a house last year, or worse yet, in 2005 counting on the 20% "appreciation" to break even? Real good decision they made there to "lock in their cost of housing" ... at highs we won't see for at least a decade. Buying carries more risk and less flexibility than renting. You'll pay a premium to rent in most cases, but the flexibility is often worth it.
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Old 08-03-2012, 03:37 PM
 
577 posts, read 933,459 times
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Quote:
Our calculation takes into account all costs, plus tax deductions and inflation. It would be very hard for the average consumer to crunch these numbers."
The article is relatively meaningless without a list of their assumptions. There is so much variability in each situation with regard to tax deductions, assumed price appreciation or depreciation, assumed rental increase/decrease, etc. There is the classic example of rent vs buy calculators that didn't include an option for home price depreciation years ago. Saying it is too hard for the average consumer to crunch these numbers seems like a sloppy way to rationalize not listing the assumptions. Articles like these are much too broad for anyone to apply to their personal situation.
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Old 08-03-2012, 04:48 PM
Status: "But in the aggregate..." (set 26 days ago)
 
Location: The Triad (NC)
31,330 posts, read 69,465,060 times
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Quote:
Originally Posted by msdmoney View Post
The article is relatively meaningless...
It's not an article. It's a sales pitch on behalf of their realtor sponsors.
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Old 08-04-2012, 12:59 AM
 
48,508 posts, read 88,422,285 times
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just as the governamnt encorage homeownershnip and promoted programs and skeems to increase it since the 60's they how reralise that the historial levels of 65% from 70+% has Geithner said is more realiistic goal.
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Old 08-04-2012, 07:14 AM
 
1,730 posts, read 1,820,116 times
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In Russia ownership sure beats rent fast (but not in 3 years - that's abnormal), thanks to inflation (6%+ a year, while rent and housing prices increase with inflation, at least). But there's a problem - at first you'll have to pay a lot more than rent. Many people simply can't cover the difference.

Things are not that different in America, I guess.
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Old 08-04-2012, 07:37 AM
 
8,232 posts, read 12,577,302 times
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Depends on how long you plan on living in it. And whether you want to risk on getting stuck with it if the trend reverses
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Old 08-04-2012, 09:22 AM
 
Location: Apex, NC
3,121 posts, read 7,753,781 times
Reputation: 2629
I am a homeowner and have owned two homes now since 2004 (I'm 35), but are people forgetting the amount of money that goes into owning and maintaining a home that renters do not have to pay? My first home was a townhouse that we bought in 2004 and sold exactly 2 years later for about 77% more than what we paid for it. This was obviously not typical and it basically had to do with living in the DC area and buying and selling at the PERFECT times and right before the bubble popped.

My second home I purchased in 2006 in Raleigh and it's actually appreciated about 3-5% in the last 6 years which normally would be pretty bad, but considering other areas of the country not to shabby. However, I've put about $25k into this home in the last 6 years with new flooring, concrete patio, new HVAC system, painting the house, new fence for the back yard, etc.

My mortgage is probably about $300 or so less than what I would pay in rent a month (probably about $200 less when we first bought the house...we've refinanced a couple times), but with all the outlays I don't know if we've even broke even yet. We're looking to sell again in about 2 years, but with realtor fees/other fees, we'll be lucky to make about $5k more than what we bought it for 8 years earlier (if we sell in 2014). Luckily we were able to put 20% down when we bought it, but after putting $30k into the home in 8 years even assuming we get $10k more at the time of sale, we're down $20k in our investment. Even assuming on average we've paid $250 less in mortgage than we would to rent the same house, after 8 years we would have saved $24k. So we're pretty much about even in 8 years if those assumptions are true.

I love owning my own place and we'll buy again, but with the lack of mobility in a bad economy I would make sure that if you want to buy you're in the house for at least 8 years if not more.
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