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The one reason that Americans are so much in debt is a monetary policy which punishes savings and rewards indebtedness.
When the value of your take home pay is being eroded by inflation, you do not have any incentive to save it because it will buy less in 6 mos. than it does today.
Likewise, if you go into debt to purchase a large ticket item such as a home, it will be worth more than you paid for it at some point down the road.
People have been sold the culture of happiness through materialism, and now believe they are only a new car or a 60" TV away from being able to buy their happiness.
The banks create the inflationary fiat money policy, and they benefit from the income stream created by the interest that Americans pay on nearly every item that they purchase.
I don't know if this is really true. All you ever really get when materialism is brought up is everyone attacking it, says how terrible it is. I reckon it's a definite minority of people who actually think that's what life is about.
i would say with the amount of debt the typical american is carrying it is quite easy to borrow ,in fact to easy hense the majority have easy access to credit and use it. this is why home equity levels are at all time lows..
I don't know if this is really true. All you ever really get when materialism is brought up is everyone attacking it, says how terrible it is. I reckon it's a definite minority of people who actually think that's what life is about.
People don't do as they say. My mother in law would say materialism is bad and then go shopping ten minutes later.
Many are in debt because they are compelled to do certain things their school peers are able to do, except the peers are earning money or have saved for it, and you have not set money aside so you swipe Visa card
Local zoning codes are often used to restrict the supply of rentals. I lived in a town where many homeowners believed there was "too many" rentals and reacted by pushing for a couple decades to gradually tighten the zoning to the point where an existing 8BR house was limited to 2 unrelated individuals (or a family of 12). Rents necessarily skyrocketed which made the landlords happy.
They didn't do it to limit rentals. They did it to limit boarding houses, which are basically motels. And not something I want to live near.
I live next door to a rental. A very nice woman and her young daughter live there.
You are confusing your own living situation, which is basically a motel, to a typical rental.
I proudly defer to the National Association of REALTORS:
The bottom line: It’s not the lifestyle choices but financial constraints that renters say keep them from purchasing a home in the future. More than half of renters recently surveyed said they do not intend to buy because they think they cannot afford it or their credit is not good enough, according to JCHS.
According to the research, the top 10 reasons renters give for not planning to buy in the future:
People need to do what is right for them at the right time and not be forced to buy like their friends do. If they are buying that way, then they are just weak-minded.
Home equity wealth means nothing if the bank won't give you a loan because your income dropped a lot in your late 50s and 60s. If you do qualify, your life becomes an endless cycle of earning to borrow (unless you like hard money loans which are based on equity only). Hopefully, the majority of your earnings become passive income than active as you age. No wonder cities and counties are cutting back on pensions for those in public service.
Yes and no. There are many factors influencing rental rates, and costs are certainly one of them. However, a landlord cannot charge higher than market rates simply because s/he wants to make a profit. Other factors also come into play, such as local housing supply and demand, local job market, advantages and disadvantages of the particular property. It's not as simple as "Oh, I need a new HVAC. Your rent just went up $500 per month. Oh, my property taxes just went up, make that $600." The tenant will simply move and the unit will sit empty.
The idea that property taxes are built into rent and rent is ALWAYS adjusted IMMEDIATELY is using 100% supply side economic theory. The real world is a mixture of supply-side and demand-side effects.
In the long run, rent should approximately be adjusted $1 for each $1 of property tax the landlord has to pay. But the key here is "in the long run". In the short run, various market frictions such as the high transaction costs of real estate and the desperation of landlords to avoid prolonged vacancies, prevent sudden changes in property tax from propagating to rent.
Though this article from Forbes was very interesting... it's basically the same debate we are having here, what is better buying or renting?
So it would appear, in a real world scenario, owning ends up being better. However, that said, the article does point out that,
The problem with such "studies" is that it is (pragmatically speaking) impossible to control for savings propensity personality factors. Even if you weed out all demographic and income factors, it is still inconclusive. The possibility that owners are more disciplined savers to begin with has not been ruled out. Renters may be behind only due to the same lack of discipline or financial prioritization that prevented them from having down payment funds in the first place.
Quote:
Originally Posted by jillabean
Like I said earlier, where I live, buying is a much better deal (scarcity of rentals means rent is high and goes up a lot each year... my mortgage started out the same as my rent and is now much lower). Or the nature of your situation might make renting better (say you have a job where you end up moving ever couple of years... etc).
For the umpteenth time, rent vs. mortgage is an apples to oranges comparison until you account for other expenses and opportunity costs of time and capital.
Quote:
Originally Posted by jillabean
The only thing I want to point out is this. For some reason, I keep seeing in this thread where some people assume renting saves you from fees like property tax and maintenance. Trust me, you pay them. It's calculated into your rent... landlords aren't running a charity, renting is a business. They are charging enough to cover their costs and make a profit.
No, you pay rent, not property taxes and maintenance plus rent.
If you make the argument that the owner's costs are built into rent, then you have to reduce the rent by the corresponding amount to avoid double-counting the costs the tenant pays. Either you say the tenant pays rent and not taxes/maint, or you say the tenant pays "net rent" and also pays taxes/maint.
You cannot double-count the costs unless you want your analysis to be laughed at and ignored.
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