08-03-2005 00:42									#31
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quote: Originally posted by Ming and the equity you build up make buying a much better option than renting... which is the equilivent of throwing money down a black hole.

Exactly. The equity is in my oppinion the first and foremost advantage of buying property. Without it the the wealth that many people spend a lifetime aquiring would be washed down the toilet, so to speak.

Asmodean

	08-03-2005 00:45									#32
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It's almost like a forced savings plan. Granted, there is interest and taxes, but you still end up with equity in a property vs nothing for renting.

	08-03-2005 00:59									#33
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quote: Originally posted by Ming It's almost like a forced savings plan. Granted, there is interest and taxes, but you still end up with equity in a property vs nothing for renting.

Thats how I view it, I'm hopeless at long term saving but I pay £350 a month off my house, it's likea 20 year savings policy!

	08-03-2005 01:10									#34
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Ming: You could, OTOH, pay the rent and invest the rest that you would've paid to the mortgage. you could get some nice equity on that , too. ( FF 25 years )

	08-03-2005 01:14									#35
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quote: Originally posted by Ming It's almost like a forced savings plan. Granted, there is interest and taxes, but you still end up with equity in a property vs nothing for renting.

I agree but I think the argument in favor of renting usually asssumes that you invest/save (or at least have the benefit of ) any monies when mortgage payment plus other costs exceed rental costs.

In circumstances where monthly ownership costs and monthly rental costs are very similar, ownership always wins since some equity is better than a nothing. When I llok at my mortgage payment and see that about 300 dollars of each payment is equity, I see I am accomplishing something

	08-03-2005 01:21									#36
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quote: Originally posted by Azazel Ming: You could, OTOH, pay the rent and invest the rest that you would've paid to the mortgage. you could get some nice equity on that , too. ( FF 25 years )

It's no dearer to buy than to rent in the UK, so you may as well get something for your money.

	08-03-2005 01:23									#37
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quote: Originally posted by Azazel Ming: You could, OTOH, pay the rent and invest the rest that you would've paid to the mortgage. you could get some nice equity on that , too. ( FF 25 years )

True enough... but you would have to also figure in the money you save on taxes. In the US, the tax structure is set up to favor those paying interest on mortgages.
It is a BIG savings if you are in a high tax bracket.

In addition, part of the advantage of home ownership is the fact that the property appreciates in value, making it even a better investment. Granted, the original post kind of down plays that... but until the bottom falls out of the housing market, there is also big money to be made. My house has appreciated in value over 22% in four years... So I look at the story with a grain of salt, and I'm happy I don't live in SF

	08-03-2005 01:32									#38
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this report doesnst take into account the money you can make when selling a house after 7 years. it might be cheaper by $15,000 to rent, but when housing values go up, you can easily cover that $15,000.

	08-03-2005 01:33									#39
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In Israel, there is a direct subsidy in interest rates, so it's basically the same, just not favoring the rich. ( Also making for far easier long-term calculation )


Basically, the question should be comparing the price of the flat at the end of the mortgage, and then take the mortgage payments, substract rent for a similar appartment, and calculate what would an investment plan with a certain ( educated guesswork ) return make ( don't forget inflation and tax breaks in calculations).

If the house purchase is better ( doubtful ), BUY.

if otherwise, just look at the differences in returns, and wonder, is the warm and fuzzy feeling of home ownership worth it.

Also, a very important aspect is the liquidity of your assets. Your portfolio might vary in liquidity, but there is one thing certain in homes: they aren't liquid.

	08-03-2005 01:37									#40
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quote: Originally posted by Azazel If the house purchase is better ( doubtful ), BUY.

In almost every case here in the states... for an equilivent size house/apartment, purchase would be the better deal. Now granted, I don't live in SF or NY

	08-03-2005 01:38									#41
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The only reason I would consider renting is if I needed a quick place to tied me over whilst moving a significant distance to a new job. The only benefit I see in renting is the short term convenience.

There are of course risks to owning a home with a mortgage.

	08-03-2005 01:42									#42
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quote: In almost every case here in the states... for an equilivent size house/apartment, purchase would be the better deal. Now granted, I don't live in SF or NY

Include liquidity of asset, and the numbers are often sobering.

	08-03-2005 02:03									#43
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Right now, I would have to say my house is a liquid asset. For the last 6 months to a year, the average length of time a house in our neighborhood is on the market is less than 4 days. No matter how ridiculous the asking price.

	08-03-2005 02:30									#44
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quote: Originally posted by Azazel Include liquidity of asset, and the numbers are often sobering.

What is sobering?? In Calgary, the cost to rent is comparable to what my mortgage payment would be for a comparable home.

Add in "costs of ownership" and owning costs a little bit more but not much. Barring a housing crash which COULD result in my owing more than my asset is worth, I don't see the advantage of renting

	08-03-2005 03:54									#45
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quote: What is sobering?? In Calgary, the cost to rent is comparable to what my mortgage payment would be for a comparable home.

This isn't the case in most places. Not in the old world, at least, from what I know.

	08-03-2005 04:05									#46
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It is the case in the UK, my costs come to something like £500 a month, £350 mortgage the rest in bills (gas, lecy, water, rates, insurance etc)

It'd cost me at least £450 to rent a similar place.

	08-03-2005 04:06									#47
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quote: This isn't the case in most places. Not in the old world, at least, from what I know.

Wouldn't that depend mainly on the size of the mortgage you are taking as a percentage of the cost of the home.

A percentage that decreases in a rising market.

	08-03-2005 04:08									#48
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quote: Originally posted by Dauphin Wouldn't that depend mainly on the size of the mortgage you are taking as a percentage of the cost of the home.

Mine was 95%, so it's pretty much 'like for like'

Ah, you snuck that last line in after I posted, I see what your saying now though.

	08-03-2005 18:29									#49
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quote: Originally posted by Oerdin Kid, when ever property prices go up there is a lag time between when those valuations occur and when they are reflected in the rental prices. Trust me they are coming. They always do.

I don't think so. I agree with the Economist that prices will fall before rent goes up much.

	08-03-2005 18:40									#50
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In some markets the growth rate in real prices has been enough to justifying buying if you count capital gains that haven't been realized, but I think the Economist is going with the assumption that prices will eventually normalize. Places like California it's kind of tough to judge because prices have gone up so much in the past, but I do think that that will change.

	09-03-2005 00:48									#51
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Even if housing prices fall, you're still better off in the long run buying than renting. Suppose you only get ten cents on the dollar back from your house? That's still more than you'd get renting?

	09-03-2005 02:20									#52
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Hey Flubber... I just had a "senior moment"... instead of hitting the quote button to respond to your post, I hit the edit button... and pretty much destroyed your post.

So I just deleted what was left of it.

Sorry about that...

	09-03-2005 02:22									#53
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* Az points and laughs at Ming.



don't be sad, we'll all come to that age at some point.

	09-03-2005 02:24									#54
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quote: Originally posted by Azazel * Azazel points and laughs at Ming. don't be sad, we'll all come to that age at some point.

Advancing age sure beats the alternative

	09-03-2005 02:25									#55
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Point!

	09-03-2005 03:22									#56
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quote: Originally posted by chegitz guevara Even if housing prices fall, you're still better off in the long run buying than renting. Suppose you only get ten cents on the dollar back from your house? That's still more than you'd get renting?

Mainly true, but *some* people do fall into negative equity.

	09-03-2005 04:04									#57
	Re: Cheaper to rent than buy a house? Support Apolyton, buy GURPS/ Alpha Centauri

quote: Originally posted by Kidicious According to this article at the Economist it's now cheaper to rent a house than it is to buy one in many countries including the US. It seems to me that that is clear evidence of bubbles. People are buying houses only for speculation of capital gains. When prices stop increasing there could be trouble.

After Fannie Mae goes down in flames and sorrow this will not be the case.

	09-03-2005 07:24									#58
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I don't think it's bubbles though, rather "inverse bubbles" where development, especially residential development, has been held down for decades by anti-development neighborhood organizations. Now, the shortage of housing has gotten so bad that all it took to tip the scales was a weak stock market.
As long as population growth exceeds the growth of housing units, prices will keep rising. In California, the state grew about 17% in the last ten years, but only increased housing supply by 10%.

	09-03-2005 10:42									#59
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The fundimentals of the realestate business is sound in this state. Population growth keeps exceeding the growth in housing supply plus the economy keeps growing. That's a recipe for price increases.

Last edited by Oerdin on 09-03-2005 at 11:26

	09-03-2005 11:00									#60
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quote: Rent money is indeed lost money... and is somebody else's profit.

Depends.

1 heater replaced.

1 new tile floor.

Renting and not owning, Priceless!