Pittsburgh Housing: Cheaper to Own than Rent (Mars, Portland: hardwood floors, for sale)

[pman]

Originally Posted by BrianTH

That is true, but only up to a point. First, it is only good on a first or second home. Second, it is only good for up to $1 million in debt. Now for most people, that is adequate. But if you are wealthy enough (and by this I mean quite wealthy), you might find it covers only a small portion of what it would take to finance your residences.

partially regressive? It would seem that the world would be a better place without it, perhaps trade it in for a cost of living adjustable standard deduction.

[BrianTH]

Originally Posted by pman

partially regressive?

Yeah, or u-shaped, or something like that. This is also complicated by the fact that the amount people spend on housing tends to go down with income, so use of the deduction doesn't actually go up linearly with income (as you might expect in a simplified model).

It would seem that the world would be a better place without it, perhaps trade it in for a cost of living adjustable standard deduction.

The arguments for it include: that it equalizes the rent-own equation (precisely because landlords can deduct interest as a business expense); that homeownership can encourage people to invest more in their local communities; and that encouraging personal wealth in the form of homeownership can help moderate the business cycle. That last argument has obviously fallen on hard times given what just happened, but there is historical support for the idea as long as you don't let home-lending get out of hand.

Personally, I don't have strong feelings either way. I can see the merits of some of the arguments I mentioned, but conversely I don't like the fact that it is regressive (up to the relevant point). But on the third hand I'm not sure that situation would in fact be improved if it was removed (e.g., if the additional revenues were used to reduce top marginal tax rates, the overall tax system could get more, not less, regressive as a result).

[Hopes]

Originally Posted by ryanswindle

My guess as to why renting is more expensive here than buying is because the Pittsburgh metro area has been (slowly) losing population driving down the cost to own permanently, whereas rentals support a different market - temporary residents. Population statistics in Pittsburgh could point to growth in temporary residents with loss of permanent residents.

It has always cheaper to own that rent---even before the crash of the steel industry. Thanks for taking a stab at my actual question though!

Originally Posted by aaronibus62

Hope to join you all, including my fellow wannabe transplants, soon

Hope to see you here soon too! Transplants with positive attitudes are always welcome!

[BusyMomofOne]

I am new here I have lived out of state for a long time and finally had the opportunity to come back to Pgh. I currently live in Mt. Lebanon and I have to say I do love it here! I am renting currently and am looking to buy a home in the Sunset section or behind Washington Rd, which might be sunset hills too. I have a question for anyone who might live here or know of the area...I have seen a home on Pennsylvania Ave that is in my price range. It is on the trolly line, I wanted to know if that hurts resell value or not? I do not mind that, in fact I am thinking when hubby and I retire one day, it might be an even more valuable for us, thanks for all your replies!''

Hopes...I think renting is more expensive, that is why I am buying a home!!!

[BrianTH]

Originally Posted by BusyMomofOne

I have a question for anyone who might live here or know of the area...

Unfortunately I don't know that area enough to help, but I wanted to suggest you start an entirely new thread to ask your question. People who could be helpful may or may not see it in this thread, and if you put Mt. Lebanon in your thread title it should attract the right group.

[Copanut]

I lived in Sunset Hills for a few years, great little area. I would not hesitate to buy a property on Pennsylvania Avenue and I don't think the location near the trolley would hurt its resell value.

[IheartRobots]

Hmm...interesting.

I have a two bedroom house in the South side that I rent out for 650 a month....but it overlooks the South side and the city.

any bigger city and it would of been probably 6 times that to rent and 10 times that to own to have a place that overlooks a city.

[BusyMomofOne]

Thank you for your information!

[pman]

Originally Posted by BrianTH

The arguments for it include: that it equalizes the rent-own equation (precisely because landlords can deduct interest as a business expense); that homeownership can encourage people to invest more in their local communities; and that encouraging personal wealth in the form of homeownership can help moderate the business cycle. That last argument has obviously fallen on hard times given what just happened, but there is historical support for the idea as long as you don't let home-lending get out of hand.

and there is reason to believe that artificially inflating the housing market doesn't work all that well as people get into mortgage they can't afford or take on commitments they can't afford. interestingly, prior to government promotion of homeownership, the rate was stabel around 46%. then I believe they got it up closer to 60%, adn recently pushed it up near 70% (which was clearly out of hand). renters aren't all bad people.

Originally Posted by BrianTH

Personally, I don't have strong feelings either way. I can see the merits of some of the arguments I mentioned, but conversely I don't like the fact that it is regressive (up to the relevant point). But on the third hand I'm not sure that situation would in fact be improved if it was removed (e.g., if the additional revenues were used to reduce top marginal tax rates, the overall tax system could get more, not less, regressive as a result).

except that top marginal rates would still be progressive. probably the most useful thing would be to kill it in order to get rid of the AMT.

[Katarina Witt]

Originally Posted by BrianTH

As an aside, that BusinessWeek article appears to be omitting the opportunity costs of any capital invested and is just looking at monthly cash flows. They also probably got property taxes and maintenance too low in Pittsburgh.

But in any event, generally the cost to own versus the cost to rent should never get too far out of line because of the ability of property owners/developers to shift from sellers to landlords or vice-versa in order to maximize their returns. So, it was indeed a sign of something going wrong in some of these market when buying had become a lot more expensive than renting, and that something was bound to prove unsustainable.

For once, I agree with you, Brian. "Opportunity costs" is a big issue with people with little to no savings. You need to have some savings for the proverbial "rainy day". Plus, with renting you are paying the taxes in your rent, also the maintenance and insurance (except for your personal property). All of these expenses need to be considered. Also needing to be considered is that houses in the Pgh area don't appreciate very quickly. I'm not saying "don't buy", I'm just saying, "be careful". What may sound less expensive on paper may end up being much more expensive.