Members UstadKhanAli Posted September 28, 2008 Members Share Posted September 28, 2008 I haven't read the article in depth yet, but this should should spur some interesting discussion: Renting Makes More Financial Sense Than Homeownership By Jack Hough Sep 26th, 2008 Link to comment Share on other sites More sharing options...
Members Rabid Posted September 28, 2008 Members Share Posted September 28, 2008 I'm paying the same rent in my two story apartment that I paid 8 years ago. It is nice to call the owner and say "The water heater is out" or "The Air is not working right" and know that when I get home it will be fixed. On the other hand, I have to play most of my music through headphones. This evening I meet with a builder to see if he has addressed some issues with a house. If so, next month I move from renting to home ownership. It has been a good ride but I am ready for a garden, a koi pond, and mixing through speakers. Link to comment Share on other sites More sharing options...
Members UstadKhanAli Posted September 28, 2008 Author Members Share Posted September 28, 2008 You can also typically rent in a nicer neighborhood than you can buy. I'm not necessarily a proponent of what the article is saying (I own my house currently), but you can be sure I'll be reading the rest of it with interest. Link to comment Share on other sites More sharing options...
Members Dean Roddey Posted September 28, 2008 Members Share Posted September 28, 2008 It's always nice to find out that you've been a genius and didn't realize it. But, of course the grass is always greener. I've been in apartments all my adult life and it does get old after a while, paticularly small ones. And here in Silicon Valley even apartments aren't cheap. My one bedroom (small) apartment is now $1350 a month. At the peak of the bubble it was $1685 a month. The cost of living in the endless summer I guess. Link to comment Share on other sites More sharing options...
Members rasputin1963 Posted September 28, 2008 Members Share Posted September 28, 2008 I've always rented (I'm no Mr. Fix-it, loathe lawnmowing, to name but a couple). And now, at this juncture in American economic history, I'm actually looking like the smart one.... instead of the ne'er-do-well. Link to comment Share on other sites More sharing options...
Members Jeff da Weasel Posted September 28, 2008 Members Share Posted September 28, 2008 Renter here. Link to comment Share on other sites More sharing options...
Members gtrbass Posted September 28, 2008 Members Share Posted September 28, 2008 There is some truth to the argument, but if there was a real basis to this article, then the wealthy would rent homes instead of own them. They don't, except for occasional rentals for vacation properties or properties in cities where they will be doing business for a few months, etc. Link to comment Share on other sites More sharing options...
Members UstadKhanAli Posted September 28, 2008 Author Members Share Posted September 28, 2008 There is some truth to the argument, but if there was a real basis to this article, then the wealthy would rent homes instead of own them. They don't, except for occasional rentals for vacation properties or properties in cities where they will be doing business for a few months, etc. Well, I still haven't done more than skim the article. My first reaction, however, was that I have consistently read articles stating that 80% of the millionaires in the United States made their millions from real estate. But...anyway, the article looks interesting and may have some excellent points. Link to comment Share on other sites More sharing options...
Members Jotown Posted September 28, 2008 Members Share Posted September 28, 2008 It is an interesting article, but still an opinion of the author who rents. For many musicians their home doubles as their studio space. In that case your home is a part of your business and if it is smart to invest in your business owning your home is a double advantage. Link to comment Share on other sites More sharing options...
Members Rabid Posted September 28, 2008 Members Share Posted September 28, 2008 I don't see him crediting the economist that was on national TV a couple months ago saying the same thing. What I remember from watching him on the even news was the inclusion of property taxes, insurance, average utilities, repairs, etc... That made the numbers come out. My huge 2 story apartment with a 16"x20" master bedroom is still $450 a months. My biggest utility bill was $85. It's all electric and I am always running TV, computers and air. But, I'm ready to give it up for a lawn, garden, and no neighbors on the other side of my wall. Link to comment Share on other sites More sharing options...
Members Kendrix Posted September 28, 2008 Members Share Posted September 28, 2008 Unless I've misseed something this articloe offers a false choice.The choice offerd is between plunking down hard cash to buy a house AndInvesting that monehy in stocks and renting However, this misses the alternataive of taking out a mortgage for a house.If you can get a mortgage for 5%-6% and float the house and also leave that other cash of yours in the bnck then buying a house looks more interesting. Dont forget the tax deduction you take on the mortgage interst payments. Essentially, before taxes, you'd be borrowing at 5% and investing to return 7%. This can be a good thing. Link to comment Share on other sites More sharing options...
Members MichaelSaulnier Posted September 28, 2008 Members Share Posted September 28, 2008 Ironically, it's going to a be a good time to buy a house in a year or two. We should be back down to 2001 housing prices in many areas of the country, and if the lending standards relax somewhat, (within reason), the market will finally move forward again. M Link to comment Share on other sites More sharing options...
Members Cry Logic Posted September 29, 2008 Members Share Posted September 29, 2008 Renting is fine if there are houses to rent.We had a situation down here last week where there were only 700 or so houses for rent in the whole of Sydney! Less than 1% availability. Luckily I live in Adelaide which is a bit better..... Link to comment Share on other sites More sharing options...
Members FireWithin Posted September 30, 2008 Members Share Posted September 30, 2008 If you are short on money, no doubt renting is the way to go. Esp. once you factor in the never ending home owners blues! Link to comment Share on other sites More sharing options...
Members Will Chen Posted September 30, 2008 Members Share Posted September 30, 2008 Interesting read, though I completely disagree. My house is not a stock. I'm not looking for some kind of huge pay off out of it. My house is my home. The place where my wife and I are building our memories and raising our child. I don't really like yard work, but I love watching my son run around the back yard. The routine maintenance does get old, but I wouldn't trade the memories of my son using his plastic toy hammer to help be fix a cabinet. For me personally, there's no competition. Link to comment Share on other sites More sharing options...
Members bbach Posted September 30, 2008 Members Share Posted September 30, 2008 Unless I've misseed something this articloe offers a false choice.The choice offerd is between plunking down hard cash to buy a house AndInvesting that monehy in stocks and renting A couple problems with that theory: 1. people are often not discipined enough to actually do the investing part. They rent, and spend the rest. A house provides some forced equity savings over time.2. My retirement plan typically does not do that well. They keep telling me that "over the long haul" you will do well. I stick 10% of my income into that and I'm thinking of stopping that and putting my money into my house, land, or rentals instead. I made $100,000 on my last house when I sold it a year ago. Yes, I was in that house for a number of years, and yes, the market on housing is currently in a tank, but they aren't making land anymore and my feelings are, real estate will rebound. Link to comment Share on other sites More sharing options...
Members Magpel Posted September 30, 2008 Members Share Posted September 30, 2008 I am homeowner, but not a competent one, so I definitely relate. I liked renting, which we did for years and years. But in my town, we would not be able to rent this house for the total of monthly mortgage payment + shcool and property taxes--renting would cost us about $500/month more than what we pay to own. Granted, maintenance is all on us, but us Kendrix points out, the tax deductible interest thing is huge. We bought at precisely the right time, a little less than two years before 9/11 and its consequent diaspora of young urbanite families looking fleeing for idyllic towns in the hills with some culcha...our house tripled in value within out first five years of ownership. And we thought we were paying too much in '99... Now the value has settled but to a point that is still more than twice what we paid for it 10 years ago. If I wanted to sell and move, to say, central Illinois where my brother lives, I could afford me quite a palace and a good start on a genuine nest egg, but I don't wanna live in Central Illinois (no offense to the fine people of Springfield and Champaign) Our house has had historic moments of being a terrific investment, but we passed on cashing out--we discussed it; how could we not with three times what we paid for it pretty much on the table? it will have its moments again, I am sure. Link to comment Share on other sites More sharing options...
Members BlueStrat Posted September 30, 2008 Members Share Posted September 30, 2008 I've rented and I've owned. Both have their place. However, the house I'm currently in was purchased for 64k. It appraised in April for 200k. While it may get down to half that , it is unlikely to ever get below what I paid for it, and meanwhile the monthly payments are locked and about 1/3 of what rent currently is. In about 7 years I won't have any payments except taxes. Link to comment Share on other sites More sharing options...
Moderators Lee Knight Posted September 30, 2008 Moderators Share Posted September 30, 2008 Buying can reinvent you financially if you get lucky. I did. 15 years ago I got divorced just as we were looking for a place to buy (yeah, it can have that effect). So I continued my search as a single guy. As I walked through my old beach neighborhood that I grew up in, I admired the little group of houses they'd built on my old church. No more church but cool houses. As I walked past the makeshift offices I overheard the Realtor talking to a young couple. All I heard was 209. 209? "Excuse me. You said 209. Was that the address or the... price?" The whole little mini development was in foreclosure before they could even finish construction. 209 was indeed the price. I bought that weekend. Today I owe 90k. I live 2 blocks from the beach, and my property 2 years ago was "worth" 1 million. It is not worth 1 million today of course but hey, I scored. Last week the house down the street went for 850. Edit: I should note... I rented out 2 bedrooms the first 5 years of my ownership. That income almost paid my monthly payments. We split utilites 3 ways. They rented and eventually walked away. I bought and own it today. You can't do that renting. So... I recommend always being ready to buy, and always looking. Don't jump unless your gut says, "Hey, what are ya, crazy? Move on it!!" That time is coming again, be ready. My control room is a room within a room that takes up 4/5 of the 2 car garage. I park in the driveway. My front room is my tracking room. And I work a day gig in telephone audio. The home studio is also frequently used for my day gig so... I write off (tax) that portion of my mortgage. Buying worked out great for me. Link to comment Share on other sites More sharing options...
Members Jeff da Weasel Posted September 30, 2008 Members Share Posted September 30, 2008 Folks, your perspective on this is going to be drastically different based on where you live and the average rental vs. purchase prices in that area. ALSO: many of the "rules" that applied to this over the last 20+ years are changing before your very eyes, in that home ownership was automatically a great investment until very recently. And like most of you, I also see the benefits to both. But the median home price in my city is $794,900... and that number includes both condos and free-standing homes. A typical small tract house is over a million dollars. I don't have a million dollars. I don't want to be up to my nose hairs in debt for decades. So I rent. Link to comment Share on other sites More sharing options...
Members BlueStrat Posted September 30, 2008 Members Share Posted September 30, 2008 Folks, your perspective on this is going to be drastically different based on where you live and the average rental vs. purchase prices in that area. ALSO: many of the "rules" that applied to this over the last 20+ years are changing before your very eyes, in that home ownership was automatically a great investment until very recently. And like most of you, I also see the benefits to both. But the median home price in my city is $794,900... and that number includes both condos and free-standing homes. A typical small tract house is over a million dollars. I don't have a million dollars. I don't want to be up to my nose hairs in debt for decades. So I rent. Yeah I don't see how anyone buys a house in Southern Cal. Even with the higher wages there, they aren't that much higher. Even when I lived there, with two incomes and me being in the home building business, we still couldn't save fast enough to put enough down on a house that would give us an affordable payment. My wife is addicted to those "Flip that house" shows and we're always seeing people buying absolute tiny dumps in the ghetto to fix up for "only 750k". WTF? 750k will get you a new 3000 sq ft craftsman style house with the works on the river here. Link to comment Share on other sites More sharing options...
Members Lee Flier Posted October 1, 2008 Members Share Posted October 1, 2008 Interesting read, though I completely disagree. My house is not a stock. I'm not looking for some kind of huge pay off out of it. My house is my home. +1. It's economists like this who are only looking at a couple of factors when analyzing the "value" of something, who are the reason we're in the mess we're now in. My band also rehearses and in many cases records at my home studio. I doubt any landlord would've let me build a soundproof studio in my basement. I have a garden too, which saves me money at the grocery store. I've been in my house 14 years and I could never find a rental place today for as cheap as my mortgage payments. But most of all I have a place where I can do what I want - paint the walls purple if I feel like it, buy decent fixtures and appliances that will last instead of being stuck with the typically crappy ones at rental places, etc. Link to comment Share on other sites More sharing options...
Members nerol1st Posted October 1, 2008 Members Share Posted October 1, 2008 I rent but would rather have a house. Just not to the point where it would make any sense to do it (finacially, job wise, life wise, etc...) Link to comment Share on other sites More sharing options...
Members dgarman Posted October 1, 2008 Members Share Posted October 1, 2008 +1. It's economists like this who are only looking at a couple of factors when analyzing the "value" of something, who are the reason we're in the mess we're now in. My band also rehearses and in many cases records at my home studio. I doubt any landlord would've let me build a soundproof studio in my basement. I have a garden too, which saves me money at the grocery store. I've been in my house 14 years and I could never find a rental place today for as cheap as my mortgage payments. But most of all I have a place where I can do what I want - paint the walls purple if I feel like it, buy decent fixtures and appliances that will last instead of being stuck with the typically crappy ones at rental places, etc. That is the reason I want to buy a house. I currently have to pay two rents, one for where I live, and one for where I practice, because I was an idiot and ruined my credit a few years ago, so I can't get a house. Link to comment Share on other sites More sharing options...
Members Dean Roddey Posted October 1, 2008 Members Share Posted October 1, 2008 Everyone's credit is ruined now, so just look at it as being ahead of your time. Link to comment Share on other sites More sharing options...
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