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Old 04-24-2014, 05:59 AM
 
101 posts, read 186,445 times
Reputation: 131

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Quote:
Originally Posted by StPaulGal View Post
I have to quibble with the bolded statement above. Wherever you live, you are paying the property tax. Period. Whether that be through a direct payment to the local government or through in intermediary via your landlord, you are paying it. Landlords are not in the business of subsidizing your costs of living--they rent out property because the payout exceeds the input costs.
Very true, and in my city, the property taxes for rental homes is more than double the rate for owner-occupied (the latter receives a tax break and lower millage rate), so by renting a home you would subsidize the community even more than if you were buying.
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Old 04-24-2014, 07:25 AM
 
Location: Florida
4,103 posts, read 5,407,708 times
Reputation: 10105
A home is a commodity, not an investment. It has real value, but does not reliably return a gain. If you time the market right/get lucky then yes you can gain off of the sale by an amount exceeding inflation. However in general it is not an investment. It just just like gold, oil, and the like....its a commodity.

But to say people think theyre better off than they really are is strictly a biased argument. The only people I know who attack home ownership are self justifying the fact that for some reason or another they cant own.
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Old 04-24-2014, 07:29 AM
 
Location: Florida
4,103 posts, read 5,407,708 times
Reputation: 10105
Quote:
Originally Posted by rburnett View Post
Every market is different. People need to sit down and do the math. What worked for Grandmaw, might not work for you. Renting can be a better financial move in a lot of situations.

Don't buy a house because you're ___ years old or because "it's time to settle down" or because "I have a kid, so..." Signing up for a 30 year mortgage doesn't mean you've 'made it' or finally 'grown up'. All it means is that you've agreed to take on a monumental amount of debt.
I disagree that you are "taking on a monumental amount of debt" because that gives the perception that you are suddenly over burdened by something you cant bear. In a "normal" economy its actually very easy to get out of a mortgage if you are unable to afford the payments. Sure right now people are grossly underwater but thats not the norm. Many years ago my parents needed to move suddenly and sold their house in a matter of days. They broke even on their mortgage and walked away with exemplary credit because they always made their payments on time.

Also the mortgage isnt burdensome because you are typically qualified for an amount similar to what you would be paying for rent in your area anyways, or less more often than not. Rent in my area for a 2/2 is 1200 a month. My mortgage is the same on a 2 story brick home with a pool.
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Old 04-24-2014, 08:55 AM
 
Location: West Orange, NJ
12,546 posts, read 21,363,427 times
Reputation: 3730
I view my home as a place to live. I was just involved locally and nationally when I rented. That's personality, and I don't think it changes all that much between a renter and owner. Sure, some deadbeats start caring more when they own. But apathy is common in our country among homeowners and renters, so I discount that.

Home ownership is a nice forced savings account. I'm unlikely to ever tap that savings, but it's nice to have and the historical 3% avg gains for real estate isn't a bad return. i just don't view it as an investment. I have to pay to live somewhere so as long as I don't need to be mobile, I like home ownership.
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Old 04-24-2014, 09:01 AM
 
20,187 posts, read 23,800,118 times
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I never viewed my house as an investment because if I did, I lost a lot of money... even though I lose money living in my house, I rather live in my house then pay rent to live with a bunch of people constantly around my living space... The same reason I would never consider "buying" a condo or townhome...
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Old 04-24-2014, 11:28 AM
 
2,220 posts, read 2,789,636 times
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Quote:
Originally Posted by John1960 View Post
Some people never learn: Polls show that Americans still view their homes as the best and safest place to invest their hard-earned cash.

Gallup asked Americans this month to choose the best “long-term investment.” Real estate was the most common pick, ahead of mutual funds, bonds and other options. Similarly, Fannie Mae’s National Housing Survey asked Americans to assess whether various kinds of assets amounted to a “safe investment with a lot of potential.”

Catherine Rampell: Americans think owning a home is better for them than it is - The Washington Post
For tax purposes, it still is. So if they start toying with *that*, expect another real estate crash.
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Old 04-24-2014, 12:20 PM
 
Location: Sunnyvale, CA
6,288 posts, read 11,748,611 times
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A few years ago, I crunched numbers comparing owning a home (paying a mortage) versus renting your whole life, and it worked out to be the same. In other words, your equity (financial worth) when you retire is exactly the same, regardless of whether you purchase a home or rent. I took into considerations all the variables including taxes, etc. So from a financial standpoint, there's no advantage to going into debt to own a home.

I came to the opinion that the only value in purchasing property is if you have enough cash to pay for it all at once. Then you're not paying interest on any mortgage. You own it free-and-clear, and subsequently can rent it out and earn some cash flow you wouldn't otherwise have.
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Old 04-24-2014, 12:39 PM
 
494 posts, read 847,110 times
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Quote:
Originally Posted by 80skeys View Post
A few years ago, I crunched numbers comparing owning a home (paying a mortage) versus renting your whole life, and it worked out to be the same. In other words, your equity (financial worth) when you retire is exactly the same, regardless of whether you purchase a home or rent. I took into considerations all the variables including taxes, etc. So from a financial standpoint, there's no advantage to going into debt to own a home.

I came to the opinion that the only value in purchasing property is if you have enough cash to pay for it all at once. Then you're not paying interest on any mortgage. You own it free-and-clear, and subsequently can rent it out and earn some cash flow you wouldn't otherwise have.
Doesn't this depend significantly on the interest rate? I would think you couldn't make a blanket statement about this because the numbers would vary based on that. And I would also think that the average rental price would also vary significantly also altering the calculation.
I think when you crunched the numbers it worked out for you to be equivalent. I don't think you can extrapolate beyond your situation. I'd be willing to bet if someone crunched the numbers in a different area of the country, the calculus would be much different.
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Old 04-24-2014, 01:23 PM
 
Location: SLC, UT
1,571 posts, read 2,809,836 times
Reputation: 3919
It really just depends on where you live. What is the cost of rent versus what your mortgage, repair costs, upkeep costs, taxes, and insurance would cost? Is there rent control? Are you someone who moves around a fair amount?

I have friends who insisted they buy a house when they graduated college and found employment in another state. They wouldn't even consider renting. Then they got transferred to another state about three years later. And then about two years later they got transferred to yet another state. Each time they moved, they sold their house as quickly as possible so they would have enough money to buy a house in the new location. They never did anything to update any of their properties, and they were moving too soon for the houses to have appreciated. It was awful planning and ended up costing them tens of thousands of dollars. They financially would have been much better off if they had rented, and currently are living on a lean budget because of their mistakes.

Every situation will be different, depending on the people involved and the location involved.

Personally, the only time when I'll consider home ownership a good investment for myself, will be when I'm living somewhere I want to stay and when I have a considerable (20% or more) down payment. And then I'll only consider it to be a good investment if, when I finally sell, I at least break even with all the money I had to put into it over the years.
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Old 04-24-2014, 02:42 PM
 
Location: Born & Raised DC > Carolinas > Seattle > Denver
9,338 posts, read 7,087,791 times
Reputation: 9487
Quote:
Originally Posted by ghettoivory View Post
repeat after me children: single family homes are not investment vehicles.

PERIOD.
.
I built my house in Douglas County, Colorado (southern suburb of Denver) for $259k in October 2009. Now, 30 months later, Zillow lists it worth at $315k, and I've had multiple e-mails in the last week (literally, 4 e-mails in 7 days) about people wanting to see our house if its for sale.

So you were saying?
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