3 Reasons Why Americans Are in So Much Debt (wholesale, currency, work)
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Property values go down too; sometimes they plunge 70%.
In my opinion, the real economic value in buying a home is semi locking in your housing costs. As the years go by and the cost of living increases, your housing expense does not keep pace. In my state, property taxes cannot rise much either.
Property values go down in exceptional circumstances such as after the bubble burst several years ago, and in places that fail such as Detroit.
Even then, owning beats the pants off renting. Rents are skyrockketing today in many markets and Detroit has the most overpriced rental market relative to owning.
And YES I consider owning your home a crucial DEFENSIVE strategy especially for low earners. Appreciation is never guaranteed and should not be expected, but stabilizing your housing costs with an eventual end to mortgage payments is for may low earners the difference between being able to retire with a modes standard of living and never being able to retire at all.
Rent is not an investment. It's an agreement whereby a landlord agrees to provide a service (roof over their head) to a renter for a specified cost. The thing you get "back" is a place to live. Just like the grocery store gives "back" food when you pay them.
You envy is starting to reach pathological proportions.....
All I ask is that government not get in the way of real estate transactions between willing buyers and willing sellers. You know let the free market work.
So, set yourself up to become a homeowner. Start with increasing your income.
Oh, and it's 250k tax free for us single people.
Millions cannot become homeowners in an unfree market where a person who cannot buy X is prohibited from buying 0.5X. (Imagine if you could buy milk only in gallons and not in quarts of if you could buy 25 watt incandescent bulbs but not 100 watt incandescent bulbs. Oh wait...)
And yes it's $250K for a single person but the vast majority of homeowners are married.
Flip tax my eye. Right now I'm flipping birds with both hands. (It's not pretty.) NYC just sucks. I left years ago and didn't have to pay squat.
I am not a city person, but you might have missed a few things on your way out.
The best hospitals and doctors in the national
The financial capital of the world
Great universities and colleges
More museums and cultural opportunities than the entire rest of the country
Two great music conservatories: Juilliard and Manhattan School of Music
Broadway
Great restaurants
Cultural variety
More than a few good stores
The fashion capital of the US
A few million people who would not want to live anywhere else
You are missing the point - it is not renting that causes a lack of wealth, it is the other way around.
Owning creates wealth (principal reduction plus appreciation). Renting equals not owning and thus effectively works out to lack of the component of wealth facilitated by owning.
Owning creates wealth (principal reduction plus appreciation). Renting equals not owning and thus effectively works out to lack of the component of wealth facilitated by owning.
Nonsense. You will create more wealth by renting and investing the difference if renting is cheaper. If owning is cheaper then that is what a person should do, but owning itself is not what creates wealth. My rent is $2K/month and is cheaper than buying, but when my contract is up the rent will be more than owning will be by about $500/month. Did I lose wealth by renting instead of buying? No! I gained wealth. In addition to not having to pull any money out of my trust I saved money each and every month I rented.
Nonsense. You will create more wealth by renting and investing the difference if renting is cheaper. If owning is cheaper then that is what a person should do, but owning itself is not what creates wealth. My rent is $2K/month and is cheaper than buying, but when my contract is up the rent will be more than owning will be by about $500/month. Did I lose wealth by renting instead of buying? No! I gained wealth. In addition to not having to pull any money out of my trust I saved money each and every month I rented.
Renters do not lose wealth by renting, they forgo creating wealth by renting. For those renters who CAN invest the difference - obviously I cannot - the wealth gained by investing often exceeds the wealth forgone by renting. Most renters are in the bottom two income quintiles and are unable to invest the difference.
Ah but the 'savings' you enjoy from renting is merely ephemeral. When you buy with a fixed-rate mortgage your P&I monthy payment remains constant. When you rent, your monthly rent payment is pretty much guaranteed to skyrocket over time. (Not to mention that unlike mortgage payments, rent payments never ever ever go away.) Within a few years your monthly rent payment is usually much greater than what you would be paying if you had bought.
And of course, in California, you are literally at the mercy of your lanndlord when it comes to Prop 13 property tax protections. On average, rental properties are sold (and thus reassessed) more often than owner-occupied homes, with the result that on average, rental property has higher property taxes than equivalent owner-occupied property.
Of course, maret conditions are local and also vary over time. At some times in some places - especially in the short run - renting is a better deal. At some times in some places, especially in the long run, owning is a better deal for most people.
It's always referable to have options; what really sucks is pay too much because you were never able to buy..
real estate taxes and maintance on a home in many areas eventually can exceed the entire home cost in inflation adjusted dollars making a paid off home a minor point.
homes when my generation started buying were 30-35k in the 1970's. today taxes ,insurance and maiintaince can run more than 20k a year .
your costs sky rocketed over time as an owner as well.
Renters do not lose wealth by renting, they forgo creating wealth by renting. For those renters who CAN invest the difference - obviously I cannot - the wealth gained by investing often exceeds the wealth forgone by renting. Most renters are in the bottom two income quintiles and are unable to invest the difference.
bull , renters who have the resources to afford to buy in most areas can afford to rent and invest elsewhere possibly doing not just better but way better in other assets.
renters are a group that includes very poor and very wealthy so no you can't claim renters can't invest elsewhere. you are generalizing and that is false . those with no resources are screwed in any case .
Well just freaking DUH. Homeowners insurance typically has coverage (including structure annd contents) of hundreds of thousands of dollar and often $1 million or more. Renters coverage covers contents but not structure; I don't even have $1000 at home to insure.
And YES the cost of renting is usually much less initially, but in the long run renters usually pay more than owners and have NOTHING to show for iit, unless they have an investment stash earning a better ROI, which obviously the vast majority of renters do not have given that median net worth of renters is $5,000.
Renter's insurance only covers contents because that's all that is yours. Why would you pay for insuring the structure? The landlord has insurance on that.
You act like insurance is there to put lots of money into someone's pocket. It's there to replace what is lost. In some cases, it's stuff. In others, it's the home itself.
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