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There is no "one answer fits all" when comparing renting to owning. There are benefits and liabilities to each, and those benefits vary depending on your situation, vary depending on the person.
For those who say that at least you aren't throwing all your money away paying rent, just how does that figure in a down real estate market? If it costs you $2000 a month to rent a house vs. owning a house whose value is sinking at $2000 a month (and never mind taxes and maintenance) then just how is owning the house not also throwing away money?
IMO the present is not a good time to buy a house, and won't be until prices stabilize. I've just sold my house and expect to wait for the market to go lower before buying my next house. Even with the depressed and likely to be further depressed market it might make sense to buy a house for somebody who plans to live there a long time (several years minimum).
thanks for this. i input the relevant figures and no matter how i played around with the variables....the conclusion is clear - renting is better (as i had suspected)....regardless of how many years.....for my case that is.
The part about paying someone else's mortgage is irrelevant and ought not play any part whatsoever in one's decision as to whether or not to rent or buy.
Its a stupid, emotion based argument perpetuated by people looking to self justify their decision to purchase in a bizarre backdoor attempt at schadenfreude where none actually exists.
Okay, cool - so can I have some money from you every month? Just, you know, for the schadenfreude of it all.
This is a great link (and the advanced settings help make it more precise, so make sure you check out that tab). According to this, buying would only be worth it for me after 8 years where I currently am. That's a lot to commit to, considering I've never lived anywhere more than a few years. Good to know.
I pay for a place to live. I don't generally go out handing out money to random people for random things.
I note you fail to make an argument that substantiates tge relevance of "paying someone elses mortgage".
Yeah, what's with the "emotion" comment... I almost responded earlier. "Emotion" is one of the key drivers for buying, it helps drive the machine. From a pure financial perspective, there are very few reasons to buy in a declining market.
and "paying someone else's mortgage" - I never even understood what that means. How do you even know they have a mortgage at all?
thanks for this. i input the relevant figures and no matter how i played around with the variables....the conclusion is clear - renting is better (as i had suspected)....regardless of how many years.....for my case that is.
I tried the link as well. I found it to be pretty accurate for my market. 3 years was break even, 6 years to come out way ahead. That's about what I'd have speculated.
It boils down to how fast is the market actually declining and whether or not your monthly rent would be equivalent to monthly mort. pmt.
If a mortgage payment is approximately the same amount as rent (it was in my case), then renting does not make sense in most cases. Now, if you did not put enough down or you over bought so that your pmt is 2x or more than renting, then perhaps, renting would have been better from a month to month perspective.
As stated before, when paying a mortgage, you have a much better chance of recapturing some of those payments when you sell the house. As you pay down the loan, you are increasing equity even in a flat market. The additional tax benefits to owning can help offset any home maintenance costs.
I will grant that if you are severly underwater or if your market is declining rapidly and there is little chance of recovery in your area, then you are no better off than renting. I still find it hard to believe that renting is somehow better assuming rent and house payment are relatively equal.
However, if you don't plan on moving and can wait it out, then the market will likely recover over time and you will likely recapture some or all of those payments should you sell. It may take a while but it will recover.
If you are paying rent, you have 0 chance of recapturing any of your rent payments.
If you are someone that moves a lot, then owning is problaby not the right choice. Home ownership is more of a longer term payoff in my opinion.
I don't know about your area but here owner occupants get a tax break on the property taxes. What would be taxed at about $4000 a year is about $1600-1800/yr with the discount. You should check on the tax break in your area to see if it's applicable.
nope sorry...no tax break unless you are blind/disabled/severe financial hardship etc.
in fact, just water/sewer cost alone is already $2000ish a year on average...and i'm not talking about elaborate sprinkler system or the upkeeping of over an acre of yard etc. it's like basic cost for perhaps a family of 3-4 person.
I tried the link as well. I found it to be pretty accurate for my market. 3 years was break even, 6 years to come out way ahead. That's about what I'd have speculated.
yup....so we are all right. just that we live in different parts of the united states...thus making apple to apple comparisons very hard.
another thing i was wondering about the link and the figures. it requires the rent and the mortgage amount. but like i've said before....i'm renting a million dollar property but if i buy....i cannot afford anything close....so i'm just going with the highest i'm willing to pay for a home.
but if i were to just buy the cheapest available property at a super low mortgage/no mortgage...then perhaps the rent vs buy comparison result might be different?
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