Is homeownership truly better than renting?

[wyvrn]

All I can say is that my home has more than doubled in value since I bought it 18 years ago (including any adjustment to the market that happened in the last 18 months).

We have paid off the mortgage, so all we pay now are taxes, insurance and maintenance ($500/mth) and I get to look forward to these low costs for a long time to come as the asset continues to appreciate. I would have to pay at least $2,500/month plus renters insurance to live in a comparable home, and I would have no asset.

So if you live in the thing for a really long time, then yeah you may be ahead financially. Like 20+ years or more, depending on your rate of payment and how long you have just been paying taxes and not the mortgage.

The first years you were severely in the hole, compared to renting. Most people move after 7 years, so yeah, renting is better in that case, at least financially.

 

[Arkaign]

If you have decent enough credit to get a low interest loan and buy low instead of high, buying makes a MAGNITUDE more sense than renting.

Think of it this way :

10 years of paying $800/mo rent is $96,000.

10 years of paying $800/mo on a mortgage is the same, but on a 20-year note, you're halfway to owning the properly outright, and you have equity to pull from if necessary.

 

[Arkaign]

So if you live in the thing for a really long time, then yeah you may be ahead financially. Like 20+ years or more, depending on your rate of payment and how long you have just been paying taxes and not the mortgage.

The first years you were severely in the hole, compared to renting. Most people move after 7 years, so yeah, renting is better in that case, at least financially.

As long as you don't buy like an idiot on a bubble, or keep trying to move into larger McMansions, or get soaked with high interest due to bad credit, moving every 5-7 years is not a problem. You sell the place, and minus your misc. costs, all the equity you built is yours.

 

[Zebo]

My wife and I (5 years ago) used to live in a 1br apartment for around 600 a month or so. I now own a house.

Please make a big deal about home ownership, if you own a home you have more freedom, it's supposed to be cheaper in the long run, social standing etc... But, I'm starting to think it's probably about the same, if not, it probably cost more.

In most fixed term mortgages you pay interest, many people don't sit down and calculate the amount of interest they are actually paying v.s. the principle. It's almost like a rip-off. Second, you pay property taxes, improvments to home, and the possiblity of losing equity based on what has happend recently.

Only if mortgage is less than rent for similar abode. Simple math.

Insurance, maintenance, lack off mobility, and property taxes demolish any tax savings from ownership.

 

[spidey07]

Don't take this the wrong way, but you live in NYC. I live in small-town oklahoma. Your advice is next to useless to someone in my situation.


I work in the city (tulsa), so I (generalizing hugely here) have two options

Pay $600/mo rent for a good but small 1bd apartment for the next 10 years, while living in the city with a 5-20 min commute while I look around to possibly get married. Living the apartment life, with small apartments, noisy neighbors, little personal space, NO outdoor space, not having the satisfaction of ownership (which appeals to me hugely)

or

Pay $500-600/mo to buy a house 20-40 miles out, 30-45 min commute, while owning my home, and living in the country which I am used to and much prefer to living in town



The second option is looking more favorable every time I think about it



Also I should add that the area I might be thinking about buying in has been appreciating very well. For example, my parents bought a property 1 mile off the highway in the boonies, 50m from the city for ~100k 5 years ago, and it just sold for 200k ish


(side note, I have absolutely NO clue what I might be able to expect for an interest rate being young, with a short but good credit history. Anyone got a half arsed clue?)

I simply must bring this up. Do you want to take the girl back to your apartment or have her spend the weekend with you in your Stabbin' Cabin. And by stabbin' I mean sex.

 

[yh125d]

I simply must bring this up. Do you want to take the girl back to your apartment or have her spend the weekend with you in your Stabbin' Cabin. And by stabbin' I mean sex.

I think this question answers itself

 

[D1gger]

So if you live in the thing for a really long time, then yeah you may be ahead financially. Like 20+ years or more, depending on your rate of payment and how long you have just been paying taxes and not the mortgage.

The first years you were severely in the hole, compared to renting. Most people move after 7 years, so yeah, renting is better in that case, at least financially.

Not so. As long as you continue to roll the equity from the sale of one house into the next home (and don't go crazy and increase your mortgage with each new purchase) you can move reasonably easily every 5 - 7 years and the math still works that at the end of 15 to 20 years you will own your home.

 

[PrinceofWands]

First understand that there is absolutely no 'right answer'. This issue is so value laden that it's 100% opinion. What I say below, is from MY perspective, not anyone elses. YMMV.

I can't imagine anything better, or more necessary, than home ownership. To hold property, being a part of an elite class that defined nobility for more than a millennium. Setting yourself back from the flood of sub-humanity which is society. To have near total control over your own space. To be responsible for something quasi-permanent. To have almost dismissible monthly living expenses (at least after you pay it off). To have your 'place' in the world...the one special place that is yours. To establish or continue history for your family line.

 

[Hacp]

600 dollar mortgage payments? How the hell are you guys making payments that cheap?

 

[dullard]

600 dollar mortgage payments? How the hell are you guys making payments that cheap?

It isn't that uncommon. The median home in the US is selling at $170k. If you put 20% down, that would be $136k mortgaged. Interest rates are now about 5%. So interest and principal on that median house will be $730/month. That isn't too far off from $600 a month and that is for the median house in the US. Go slightly less than the median price, pay a bit more than 20% down, or get a good interest rate (by paying points) and you can hit $600/month easy.

Of course, you have to add in taxes and insurance. But in many areas, those aren't THAT pricey. Your point is true, $1000/month payments are far more likely than $600/month though.

 

[yh125d]

Yeah what dullard said. 170k is the median home? In my town of 3000, 170k would probably get you in the top 15 most expensive houses, lol



middle of the country FTW

 

[JS80]

95% of you are full of finance fail.

All you really have to know is that if you can earn a greater return than the mortgage rate+appreciation, then it is worth to buy a house. Some places, like West LA and SF bay area, you are paying a huge premium to own a home.

 

[lsd]

Landlords losing $600/mo is not normal.
You are obviously leaving details out of the story.

Details like what? In my area disney is the largest employer, people can't afford to pay much for anything.
The homeowners unfortunately bought this house at the peak of the boom.
You can see a list of rental houses here
http://www.watsonrent.com/watcatcounty.asp?county=OSC

See that one at the bottom of the list? Check it out in zillow, this house was sold for $586k in '07...

So for me *in this particular area* it makes sense to rent.
For now..

 

[PrinceofWands]

95% of you are full of finance fail.

All you really have to know is that if you can earn a greater return than the mortgage rate+appreciation, then it is worth to buy a house. Some places, like West LA and SF bay area, you are paying a huge premium to own a home.

Except that finance is useless horseshit and doesn't matter a didlers damn to many in the world (nor should it, in my opinion). Not that you can't embrace money, if that's what you love. More power to you. Don't act like you have some kind of corner on the reality market by doing so however.

Some of us determine the course of lives according to things that actually matter...like family, emotions, place, etc. By those thresholds home ownership is obvious.

 

[jinduy]

it's probably not worth it here in socal. the numbers just dont add up to my benefit in the short and long term to get a house. plus housing prices are STILL inflated in prime areas of so cal.

in vegas where homes are like 150-250k, then yeah, it might be worth it if you live there anyway.

 

[Muse]

Depends. If you have the money, renting can save you the trouble of having to keep up the property, assuming your landlord takes good care of it. Your own house comes with responsibilities. I bought the house I used to rent, along with others. I'm paying alot more now than as a renter and it's a lot more work. I have my solitude and privacy now, so it's a tradeoff.
- - - -
Happiness is being married to your best friend.

 

[DaWhim]

I know a lot of people like you (I'm 28). They'll rent for the rest of their lives.. They always complain about shitty landlords.. Never have large furniture so they can move whenever and for cheaply.. Never have a place they can call their own... They never really ever seem to unpack, really. They just move every year!

It's really, really depressing...Enjoy!

I will rather be depressed if I have to stay in NY and can't go anywhere because I need to spend the next 30 years to pay off a house.

When I was backpacking in europe, i have seen some really old people who could barely move were going up and down the mountain. I vowed not to be like them, finally have their free time to do travel when they got older.

I see you own a house in NYC. I live in NYC too. The way you are paying for your mortgage, all I see is you only need a bad tenant or two that won't pay you rent for an extended period of time and you will be filing for bankruptcy protection. Have you ever seen risks like this for being a landlord?

I am planning to go to HK and live there for a few months. I have an expertise doing tax, so I can pick a tax season job and rack up 10k a month for a few months then just enjoy my time traveling. when I come back in nov/dec, there will be a job waiting for me. oh...I call this a life style.

owning a house? I will probably buy my first one in HK, guess what? there is no property taxes, not even sale taxes there.

 

[Capt Caveman]

I will rather be depressed if I have to stay in NY and can't go anywhere because I need to spend the next 30 years to pay off a house.

When I was backpacking in europe, i have seen some really old people who could barely move were going up and down the mountain. I vowed not to be like them, finally have their free time to do travel when they got older.

I see you own a house in NYC. I live in NYC too. The way you are paying for your mortgage, all I see is you only need a bad tenant or two that won't pay you rent for an extended period of time and you will be filing for bankruptcy protection. Have you ever seen risks like this for being a landlord?

I am planning to go to HK and live there for a few months. I have an expertise doing tax, so I can pick a tax season job and rack up 10k a month for a few months then just enjoy my time traveling. when I come back in nov/dec, there will be a job waiting for me. oh...I call this a life style.

owning a house? I will probably buy my first one in HK, guess what? there is no property taxes, not even sale taxes there.

Huh? I don't know too many people who are homeowners and feel stuck for 30 years due to their home. I think many of them are making more than you and are traveling the world too.

As a tax expert, you should know that property owners make up the majority of millionaires in this country. They're life style choice is to have their tenants pay for that trip to Europe.

 

[Kev]

Huh? I don't know too many people who are homeowners and feel stuck for 30 years due to their home. I think many of them are making more than you and are traveling the world too.

As a tax expert, you should know that property owners make up the majority of millionaires in this country. They're life style choice is too have their tenants pay for that trip to Europe.

The only thing missing from this post is the phrase "everyone knows this"

 

[bobsmith1492]

You have to think long-term. If I pay 500/month for an apartment for 15 years or 500/month toward a mortgage for 15 years, where do I stand?

House: Assuming half has gone to interest, I own $45000 worth of a house, not including the fact that the value should at least rise with inflation

Apartment: I have nothing and may be thrown out at any time.

 

[lifeobry]

I'd rather live in an apt. and save my money until I know I'm settling down. I would hate to buy a house and then have to sell it. I want to pay that mortgage off so I don't pay anything to live in it except taxes/utilities.

 

[JS80]

Except that finance is useless horseshit and doesn't matter a didlers damn to many in the world (nor should it, in my opinion). Not that you can't embrace money, if that's what you love. More power to you. Don't act like you have some kind of corner on the reality market by doing so however.

Some of us determine the course of lives according to things that actually matter...like family, emotions, place, etc. By those thresholds home ownership is obvious.

It's a response to the jackasses that claim paying rent is "throwing money away" while 80% of their mortgage payment is going towards interest.

 

[DaWhim]

Huh? I don't know too many people who are homeowners and feel stuck for 30 years due to their home. I think many of them are making more than you and are traveling the world too.

As a tax expert, you should know that property owners make up the majority of millionaires in this country. They're life style choice is too have their tenants pay for that trip to Europe.

my definition of stuck is the lose of mobility. What if you want to move? sure you can sell the house. but what's gonna happen if you are underwater? We all have seem how real estate can go down in value. you are going to take a lose or you are stuck in here.

I am sure a lot of homeowners travel the world too, but for how long? 2 weeks on average? how about going for 2 months? I plan to live in asia for 4-5 months, how many homeowners can do this?

 

[TruePaige]

Except that finance is useless horseshit and doesn't matter a didlers damn to many in the world (nor should it, in my opinion). Not that you can't embrace money, if that's what you love. More power to you. Don't act like you have some kind of corner on the reality market by doing so however.

Some of us determine the course of lives according to things that actually matter...like family, emotions, place, etc. By those thresholds home ownership is obvious.

Finance is only considered "horseshit" by those who can't properly utilize and take advantage of investment vehicles.

Hell, I've always been interested in Business and even when I was making very low money I was doing tiny investments on the side. If you do it properly you can't lose. Stock goes up? Sell it and make some cash! Stock goes down? Great tax off if you want to sell it to free up liquidity for better investments!

But yeah, I suppose making money, looking for a chance at a comfortable life and using your brain to get an advantage in the world is just smart people showing off...

Worked for the richest man in the world though.

(Hmm, that came off a little snide but your comment was so bullshit)

 

[Capt Caveman]

my definition of stuck is the lose of mobility. What if you want to move? sure you can sell the house. but what's gonna happen if you are underwater? We all have seem how real estate can go down in value. you are going to take a lose or you are stuck in here.

I am sure a lot of homeowners travel the world too, but for how long? 2 weeks on average? how about going for 2 months? I plan to live in asia for 4-5 months, how many homeowners can do this?

I've taken six months off and traveled cross country and I was home owner. And I've sold houses making $100k+ in profits after owning them for only a couple of years.

You plan on working when you're asia and pay for housing yourself. A homeowner might have their company pay for overseas housing or sublet their house.

Sounds like you're not doing it right.