Really cool buying vs. renting calculator (NYTimes)

[Phokus]

http://www.nytimes.com/2007/04/10/busin...0789-++itm0GGtOeoqQWQ/iZXWg&oref=login

Based on the assumptions around my area, it is almost always better to rent than buy (from a financial perspective), unless you're absolutely terrible at saving/investing your money.

 

[ScottFern]

This is great timing! Now I can show my gf that buying a cheaper condo is a much better idea then renting!

 

[dullard]

That was fun to play around with. Note: be sure to check the default setting for the tax rate. Many people buying houses will have federal + state + local taxes at more than 20%. For example, a single person making more than $30k taxible income would be at a much higher tax bracket.

Also note: this is for EQUIVALENT places. Renting a large house vs buying a large house. Renting a crappy apartment vs buying a crappy apartment. I think many people will use that when comparing renting a crappy apartment to buying a good house and therefore get the wrong impression.

I put in the numbers on my house, and it says I'll break even on the 5 year mark.

 

[LegendKiller]

Originally posted by: ScottFern
This is great timing! Now I can show my gf that buying a cheaper condo is a much better idea then renting!

As with anything garbage-in -> garbage out. In order for that calculator to be accurate you need to input accurate and reasonable assumptions. The key here is.


1. Find out your local tax rate.

2. Find out what her actual interest rate will be, without taking out an exotic mortgage.

3. Find out what the annual appreciation has been for the last 5 years, divide that by 4 and input that in. Assuming growth will be 1/4th what it is is reasonable, since negative appreciation is what many areas of this country will experience.

4. Find out what she would rent normally.

5. Finally, figure out how long she plans to stay in that *ONE* place. Keep in mind that every time you move you pay a lot of costs, comission on houses, taxes...etc. That figures in pretty heavily and is somethign the calculator doesn't factor.

 

[dullard]

Originally posted by: LegendKiller
5. Finally, figure out how long she plans to stay in that *ONE* place. Keep in mind that every time you move you pay a lot of costs, comission on houses, taxes...etc. That figures in pretty heavily and is somethign the calculator doesn't factor.

It does too calculate those factors. This says how many years you must stay in that same house before moving to break even (including the selling cost when you sell that house). If you want multiple houses, you'll have to run this for each house though.

 

[Dirigible]

Cool. It says I'm probably already well ahead with my decision to buy a few years back. A quick back-of-the-envelope calculation shows that if I sold and moved now I got this place for about half of what renting it would have cost. Excellent.

 

[FP]

Put in my situation and...

"Buying is never better than renting over 30 years..."



Oh well, I guess that is what it is like living in California!

Edit: Actually, after playing with the annual home price appreciation and annual rent increase sliders it looks like...

"Buying is better than renting after 6 years"

W00t!

 

[zephyrprime]

Originally posted by: binister
Put in my situation and...

"Buying is never better than renting over 30 years..."



Oh well, I guess that is what it is like living in California!

Edit: Actually, after playing with the annual home price appreciation and annual rent increase sliders it looks like...

"Buying is better than renting after 6 years"

W00t!

Renting is definitely better than buying for the time being in calif.

 

[AMCRambler]

Originally posted by: zephyrprime

Originally posted by: binister
Put in my situation and...

"Buying is never better than renting over 30 years..."



Oh well, I guess that is what it is like living in California!

Edit: Actually, after playing with the annual home price appreciation and annual rent increase sliders it looks like...

"Buying is better than renting after 6 years"

W00t!

Renting is definitely better than buying for the time being in calif.

Seems to be the same here in the Hudson Valley in NY. Unless you can get your house for under $250,000. Thankfully the housing market has sagged, so that may soon be a reality.

 

[DrPizza]

Based on my area, you'd be a fool to rent rather than to buy. (Either that, or for some reason, can't get a mortgage.)

 

[dr150]

Great stuff.

 

[LeiZaK]

I always buy my calculators... never tried renting one.

 

[novasatori]

Originally posted by: LeiZaK
I always buy my calculators... never tried renting one.

me too
who rents calculators
well apparently people in op's area should