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RE: Cheaper to rent or to own a house? - 5/10/2009 7:28:15 PM

oddity83

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I am paying 200 more a month for a house than I was for rent at a apartment, but I am going to be here awhile, and I get twice the space and yard for a garden. So what it boils down to is what you want in life, if your looking for a long term investment to live in and hopefully be able to pay for your senior years, buying not bad, if you looking to be able to move around alot and never worry about fixing leaking sinks etc, etc. Then rent would be the way to go.

(in reply to MasterG2kTR)

Post #: 21

RE: Cheaper to rent or to own a house? - 5/10/2009 7:29:25 PM

servantforuse

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In 2008 there were 3.1 million forclosures filed. Not all were actually forclosed on. One half of these actions happened in 3 states and 2 cities. CA,FL,MI, Phoenix and LasVegas. The rest of the country split up the other half. For most of us the home market went down but not by that much.

(in reply to MasterG2kTR)

Post #: 22

RE: Cheaper to rent or to own a house? - 5/10/2009 7:40:56 PM

DemonKia

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This is one of those subjects that each has to figure out for themselves, the specifics get complicated very fast.

There are lots of arguments out there. One website I like for this kind of data gathering is:

http://patrick.net/

& I want to carefully note that I frequently disagree with plenty that gets posted on the blogs there, but it is a great site for examining just exactly this issue of rent versus buy, has lots of resources to help the potential renter / buyer figure it out for themselves . . . .

Hope you find it useful . .. . .

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RE: Cheaper to rent or to own a house? - 5/11/2009 5:40:57 AM

CatdeMedici

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I find renting a better method, sure rents may be higher, however, its the long haul cash out lay when things start to break that ends up killing financial stability. Rent adds to credit ratings just like any other monthly payment--its easier too when things go south to give notice and move somewhere less pricey then to continue to carry the albatross of a mortgage.

If you buy, unless its brand new and under warranty--one needs to have an untouchable account for repairs.

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RE: Cheaper to rent or to own a house? - 5/11/2009 6:24:58 AM

Owner59

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From: Dirty Jersey
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It all depends.

Is your job stable? I mean really secure.B/c if you take on a mortgage and loose your income,you`re fucked.

Long term,buying is a better deal.Way better.

Short term,renting may be cheaper per month.

Renters though,are paying off the landlord`s mortgage and adding to his/her nest egg/retirement.

But renters don`t have the risk of foreclosure.

You have to crunch the numbers.They have to add up and for god`s sake,don`t buy an ARM type loan.

If you can put 20% or more down,you`ll save on a type of mortgage insurance required for folks w/ less than 20% equity.

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RE: Cheaper to rent or to own a house? - 5/11/2009 3:58:26 PM

MarsBonfire

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Well, actually, 59... if your landlord goes into foreclosure, you could end up on the street then too. I lost an apartment like that, shortly after the first "Black Monday" that the GOP caused in 84-85? (Neil Bush and the Savings and Loan scandal. My landlord lost half his wealth when those jerks ripped him off, and he ended up losing much of his income property. Including the set of apartments which I was renting one of.)

(in reply to Owner59)

Post #: 26

RE: Cheaper to rent or to own a house? - 5/11/2009 9:01:16 PM

Termyn8or

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O59, I think part of the problem is that people don't know how to crunch the numbers. It seems to be a factor in the current mess. Just think if they had and said no, the bubble would never gotten so big so fast.

And yes that PMI adds up on a longer term note. Low down payments compound the problem of getting to that 20% equity. And then some people never realize that you have to actively have that taken off, it is not automatic. I wonder how many people pay it for the life of the loan. And once that money is gone, it is gone.

GR

Used to be I would always recommend that people buy a double as a first home. This is however in this area. With that you can have a place to live and collect rent. You can also control who the tenants are, and in this area if you do not own more than four rental units you can pick and choose tenants at you complete discretion, even based on race or sexual preference. Not that I would do that, green is the only color that matters. The only thing that would get their lease unrenewed would be agravating me. Other than that they can stay forever. After that, pay the place off and move and use the two rents to help pay for the new place. This has been done many times around here.

It also helps if you can fix things, contractor's rates can be quite high.

The only downside is negative equity, which used to be rare, but things have changed.

Mars, I know what you're saying here. I have heard about it happening and actually some sherriff's departments refusing to evict people who have a valid rent reciept. I think we are going to see more of that in the next year or two. Or more (let's not go into that, things are bad enough).

Now a bit over ten years ago when I was on vacation in FL, I was staying with a friend and he told me that in his area at least (Longwood, near Orlando) that there was a standard $100,000 deduction on house taxes. That means if you had a $125,000 house the taxes were based on the remainder, $25,000. But Florida is different, they rely alot on tourism for revenue, which of course is attractive for many. But the infrastructure is stressed to the limit, so those days are numbered. The hampered growth along with the lack of increase in market value is not attractive to investors.

So here we are, and where would that be ? That is the next piece of information. Things are different in different parts of the country. I didn't perve the OP's profile because current location is not the issue, it is the destination.

T

(in reply to Owner59)

Post #: 27

RE: Cheaper to rent or to own a house? - 5/12/2009 9:32:51 AM

ienigma777

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Now, Now, don't be cynical...you can't blame them for wanting to make a living.
You are so very right...8 years ago, everything was fine, just a war, and protecting our children (kinder) & the homeland, making it secure.

Yeah, those experts, they know it all, give their advices, as per what the in fashion thing is at the given moment.

It is decidedly better to own, provided one has bought smart. Renting is throw away money, with no possibility of recuperating any portion thereof. You wind up, in effect paying the 'APARTMENT/HOME owner's mortage or a portion thereof.

They (someone) owns, you rent, in the end, they sell, you move....what portion of the sale did you get back. Not to mention, every so many months there is that rent increase. THe deprepreciation to the owner for the rental.....what do you as a renter get to write off and benefit from.

I love the experts, and the rags they write for.....they give advice...better and cheaper to rent...from their OWNED townhouse, or OWNED estate. Before it was...BUY NOW, VALUES LIKE NEVER BEFORE, IT CAN ONLY GET BETTER.

THe Banks, mortgage lenders make the loans, knowing full well the people cannot make the payments, loans go like a wildfire.....aho...can't make this month's 3,500 payment...oppps...I'll make them both next month....(if you don't have the 3,500 for this month's rent, where the hell will you get the 7,000 plus late fees next month)......FORCLOSURE...but you get to stay in the house free, till the forclosure goes though, save what money you can, and then after the forclosure comes down, you move into an apartment, or another house at 2,500, per month, (first & Last months plus cleaning fees);six months later the rent increase, to 2,900 per month, then six months later another increase....and let's not mention, the costs in the UHaul adventure. Meanwhile...back at the bank....your forclosed house sits empty for a year, put on the market, no one buys, overpriced values have dropped, Bank takes a loss, ....demolishes the house...even now a total loss....then goes to the government, says...please kind sir, we will collaspe, we have made 'questionable' loans; if you do not rescue us...we need 35 billion dollars to survive...the goverment then rebutts...okay.

Now, the experts give the numbers, comparison, and with their all knowing authority anounces...now the rent market is good..renting is more cost efftive than owning...and so people run out to rent, because they can no longer afford to own, their credit score zero, due to forclosure. Okay, cleaning deposit, first and last months rent....opps did I mention, because of the economy...you lost your job.

But there is hope; GM is hiring, and taking their bailout funding, reinvesting in upgrading the manufacturing.....hiring in China, at the plants they built there, ..... upgrading in Brazil.....and that GM car, costs more here in the US than it did a year ago....built in China, Brazil, eleswhere...but not in the US.

(in reply to housesub4you)

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RE: Cheaper to rent or to own a house? - 5/12/2009 10:39:41 AM

popeye1250

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From: New Hampshire
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I suppose it depends on where you live too and the "local market."
I've "owned" since the mid 90's and did very well. I always put down a large down payment to keep my payments low and luckily I had a lot of appreciation in the two homes I owned in New Hampshire up until 2003 when I sold the last house.
I walked away with $70k from that one, something that would never happen if I had rented.
It's my opinion that in the "long run" it's always better to "own" rather than rent. Although in New England these days the home prices are *still* too high. When I can buy *three houses* here in Myrtle Beach, S.C. for the price of one in New England that tells me that either N.E. prices are still way too high or the prices here are too low. And we have *much better weather* and lower taxes. And I'm not paying $400 per month for heat for half the year or more! In Jan I paid $92 for heat *and* electric here.
In New England anyway until prices go down about 30-40% more I think you're better off renting.

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RE: Cheaper to rent or to own a house? - 5/12/2009 10:53:59 AM

YourhandMyAss

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houses have reached an all time low in California the news says, however buying a house right now may not be the best move, because house aprasials are done once a yewar, and even if your house was only 1 k when you bought it, if the aprasial of last year valued it at 3 k, you're still going to have to pay the precious amounts taxes, but you will get a refund next year.

Some places have even started letting economically disadvantaged people , rent the house while it's on the market for sale, because houses that just sti vacant end up looking shitty. You do of course have to be ready to move out at a moments notice if the house sells, but with how long some of these houses sit on the market, hey I think it's a good deal.

I can't say if it is worth it or not living with family as I do, since I don't have to worry about taxes and up keep.

quote:

ORIGINAL: Vendaval

Are you better off buying, leasing or renting a house? How is the market in your area? Are all the repairs and taxes worth the effort in the long run?

(in reply to Vendaval)

Post #: 30

RE: Cheaper to rent or to own a house? - 5/12/2009 10:57:55 AM

YourhandMyAss

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You do have to be careful buying a house when markets at it's all time lowest, I saw on the news yesterday, because, if a recent tax thingie hasn't been run, you'll get stuck paying full retail value in taxes on a house that you didn't buy for full value.

quote:

ORIGINAL: Lockit

If I had an income base that would support a house, I would have bought a house now while the prices are down. But that is for personal use, not as a rental.

(in reply to Lockit)

Post #: 31

RE: Cheaper to rent or to own a house? - 5/12/2009 11:57:41 AM

Jeptha

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From: Portland, Oregon
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quote:

ORIGINAL: popeye1250
...Although in New England these days the home prices are *still* too high. When I can buy *three houses* here in Myrtle Beach, S.C. for the price of one in New England that tells me that either N.E. prices are still way too high or the prices here are too low. ...

That's similar to here, in Portland, Oregon.
Prices are lower, but they're not *that* much lower.
I still see them as inflated.

I was lucky to buy in when it was relatively cheap to do so.

Home ownership is practically the only investment plan that I've been able to get my head around and actually make happen and make work for me.

If I were to start over again, I'd have to consider relocating to someplace much more affordable, I think. Maybe the middle of the country somewhere.

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RE: Cheaper to rent or to own a house? - 5/12/2009 9:46:44 PM

ienigma777

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I bought and lived in Michigan, years ago, the house was low enough, but the heating bill, in winter, was more than the house payment....there were news reports of some elderly people frozen to death watching TV....yes, Michigan Power, didn't give a damn about anyone, can't pay...die. Okay, they instituted a welfare part pay program, not because of their concern for anyone...but, because of the public outcry, it was forced on the ulitility.... You establish a payment for the winter months, pay that, the excess is added to your bill, to carry over to the summer months when your heating is nil. Sounds good...within two years you're back to the 700 buck or more heating bill.

I don't know, sailorman, but I never did like renting and paying the mortgage for what someone else owns. However, depending on where you live, the markets flucuate so very much. In CA it's almost impossible to buy, the houses are so very high, generally the same in AZ, NV as well.

But you can get a good buy, if you look, long enough and hard enough.

(in reply to popeye1250)

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RE: Cheaper to rent or to own a house? - 5/13/2009 8:16:40 AM

popeye1250

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Well 777, we get a lot of people moving here from the N.E. and upper mid west too.
The Carolina's and San Diego have some of the best weather in the country! And we don't get that tropical heat that Fla. gets.
And if you look on Realtor.com you can buy a great house here, 3br, 2 ba. 1,800 sq. ft with garage for $160-$200k, the same thing in Calif. would probably cost you $750k.
I don't like renting either, also I don't like doing outside maintainance so I bought a condo and everything outside is taken care of.
I just "use" the pool not maintain it, it's like the pool is my bitch to be "used" whenever I feel like it.
And, with the money we save on heating costs and *taxes* down here as opposed to the N.E. there's plenty left over to buy a Cadillac or Lincoln.
I pay $380 *per year* here for real estate taxes on this condo, the same condo on a golf course in N.H. would cost me $5-$6k!
Taxes on a house here are about $800 per year.
As you might imagine the Myrtle Beach area is a growing area.
Also we have a lot of people from up North who spend the winters here in condos or houses they bought for that purpose and many of them end up moving here permanently due to the high cost of living up North.
I don't want to tell you how much my mortgage payment is, you'd start crying.

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RE: Cheaper to rent or to own a house? - 5/13/2009 8:53:56 AM

BlackPhx

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BP and I won't invest in a condo..might as well be renting. But we do own..and we do have our eye out currently for a larger house. Our criteria is simple, No HOA, a good roof, concrete block, away from flood areas, and doable repairs. Let me qualify that last, we do, between us, minor plumbing repairs and replacements, tiling, drywall, built-ins, cabinet installation, minor electrical ( no wiring but replacing fixtures etc), cable runs for networking and cable, insulation, and a few other things, (have a friend on tap for roofing problems) so we are not afraid of a house that requires some fixing, but not a major overhaul. We are also pretty savvy about searching out grants and tax breaks to help with the costlier repairs..our current home in Florida has high impact, low e double pane windows, half of which were paid for with a grant. A Plumber replaced our tub for us, but we did the demolition of the walls and tiling as well as several custom touches that would have cost us $$$ to have done for us.

If you can swing a hammer, work a pipe wrench or operate a saw, there are a lot of repairs you can do yourself saving multiple bucks. A renter is at the mercy of a landlord and his time schedule and employees/contractor. We are at the mercy of our pockets and skills, and sometimes things have to wait a little but they get done. We can do anything with our home we desire (mortgage is under 500$ a month including insurance and taxes) which we couldn't do if there was an HOA or Landlord. I get tired of the wall colors..it is a day or two to change them, we don't need permission, and the paint for the outside of the house, we get free from county recycling. Limited in colors, but free is free, same for landscape mulch. Our neighborhood is quiet with a couple of rentals on our block, but mostly people who spend time taking care of their homes and helping each other. We have dogs, a cat , a good size yard..and equity. Something we wouldn't have if we rented.

poenkitten

(in reply to popeye1250)

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RE: Cheaper to rent or to own a house? - 5/13/2009 8:59:04 AM

GreedyTop

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I'll likely never own (my credit rating is in the sewer). But even so, I like renting. If something major goes wrong, it's the landlords responsibility (assuming the landlord isnt a PITA, like my current one is.....)
I can do minor stuff myself.. most of the problems I've had at this place I've dealt with myself or with the help of friends. The well/water issues are something the landlord needs to deal with (I'm not holding my breath).

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RE: Cheaper to rent or to own a house? - 5/13/2009 9:05:36 AM

Bstardsbitch

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Dunno about over there, but over here house prices are still stupidly high. We rent, more for convenience than anything else, who knows where we're gonna end up, this year, next year or in 5 years time. We're also lucky in that the landlord is usually hot on repairs, 24 hours is the longest we've had to wait for an engineer or such.
xx

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RE: Cheaper to rent or to own a house? - 5/13/2009 10:55:06 AM

ienigma777

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Hey Sailorman, you are dead on with property values, no, don't tell me your mortage, Most likely, I'd be in tears, and importantly too, it depends on where you live, and if there is work to support you.

I'm not an 'outside' guy either, so I have rock landscaping, no watering, well I want more rocks, and a boulder or two, so I water the rocks...but nothing happens. No pool however....they wind up being giant flower pots anyhow.

Now, I see they've coined (pardon the pun) a phrase...SHORT SALE....this is nothing more than a EBay auction, without the EBay. I have heard some real horror stories. A total 'Bait and Switch' by the realtors...real professionals...what a joke.

I love San Diego, Coronado, Laguna...I'd hunt clients there so I could just go and do some business and enjoy the beach, the bikinis. It was 'Playtime'; at one time, you could drive all along PCH and never be out of view of the ocean...not any more.

Once, Camp Pendlelton was having manuvers along the coastline. Tanks, Marines, all sort of military gear. Motorist stopped and watched, it was great fun for the kids...a real show. So, they fired off a Flame Thrower tank.....GOD WHAT A SIGHT.....that liquid fire .....if I were the Bad guys....that would make me surrender, no thought about it......WOW. I thought, with all the shit we have.....what the fuck.....barefooted afgans are kicking our ass.

(in reply to popeye1250)

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RE: Cheaper to rent or to own a house? - 5/13/2009 2:01:13 PM

DemonKia

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From: Chico, Nor-Cali
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FR

Well, individual number crunching varies, but one of the arguments against buying is that the difference between the costs to rent & the costs to buy can be more profitably invested in other ventures (stocks, etc) by those who know how to play that particular money game . . .. . . That argument is supported by pointing to the long-run average growth in stock markets being somewhat higher than long-run average growth in housing markets . . ... .

Here are some specific pages from that patrick.net site that discuss potential home-buyer drawbacks in far greater detail:

Who disagrees that house prices will continue to fall?

What are their arguments?

Here's some of the pertinent argument (from the second link, above):

As a renter, you have no opportunity to build equity.

FALSE. Equity is just money. Renters are actually in a better position to build equity through investing in anything but housing. Renters can get rich much faster than owners, just by saving the money that owners are wasting on mortgages, taxes, and maintenance and investing it conservatively in anything that pays reliable interest or dividends.

* Owers are losing every month by paying much more for interest than they would pay for rent. The tax deduction does not come close to making owing competitive with renting.
* Owers are losing principal in a leveraged way as prices decline. A 14% decline completely wipes out all the equity of "owners" who actually own only 20% of their house. Remember that the agents will take 6%.
* Owers must pay taxes simply to own a house. That is not true of stocks, bonds, or any other asset that can build equity. Only houses are such a guaranteed drain on cash.
* Owers must insure a house, but not most other investments.
* Owers must pay to repair a house, but not a stock or a bond.

& this:

Renting is just throwing money away.

FALSE, renting is now much cheaper per month than owning. If you don't rent, you either:

* Have a mortgage, in which case you are throwing away money on interest, tax, insurance, and maintenance.
* Own outright, in which case you are throwing away the extra income you could get by converting your house to cash, investing in bonds, and renting a similar place to live for much less money. This extra income could be 50% to 200% beyond rent costs forever, and for many is enough to retire right now.

& this:

To add insult to "owners", their property is declining in value. Renters do not have to worry about the massive losses owners are experiencing. Here's a great quote from NPR:

Underwater owner: "We would do it [pay the mortgage] if the equity was there, but in a case where we're already so behind... Imagine that for five years, say, we're gonna pay four grand a month and then we're just gonna be back up at what we bought the house for. We feel like we're throwing away money."

& this:

There are great tax advantages to owning.

FALSE. Every married couple filing jointly automatically gets a $10,900 tax deduction, just for breathing. You have to have mortgage interest payments greater than $10,900 to get any advantage at all from the mortgage interest deduction. And even then, the tax advantage is not significant compared to the large monthly loss from owning.

Compare the cost of owning to renting.

Many people believe you can just reduce your income tax by the amount you pay in interest, but they are wrong. Buyers may not deduct interest from income tax; they deduct interest from taxable income. Interest is paid in real dollars that buyers suffered to earn. That money is really entirely gone, even if the buyer didn't pay income tax on those dollars before spending them on mortgage interest. You don't get rich spending a dollar to save 30 cents!

Buyers do not get interest back at tax time. If a buyer gets an income tax refund, that's just because he overpaid his taxes, giving the government an interest-free loan. The rest of us are grateful.

If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc. Since you can rent a house for 3% of its price, but have to pay 6% to borrow the equivalent amount of money, it is much cheaper to rent the house than to rent the money.

& from that Compare Costs link, above:

"But haven't houses always appreciated in the long term?"

Prices did rise a lot from 2001 to 2005, but that was very unusual, caused by exceptionally low interest rates and very lax lending standards. Prices peaked in the middle of 2005, and have been falling since then. ...

If you look at the very long term, houses have been the worst investment available to the general public:

Average Annual Real Returns beyond inflation

............Real Estate.......Stocks.........Bonds.........T Bills
5 Years ........1.39%........6.97% .......2.91% ........3.01%
10 Years.......1.28%........6.91%........2.75% ........2.85%
20 Years ......1.25%........6.67%........2.54%.........2.65%
30 Years.......1.36%........6.59%........2.34%.........2.47%

As has been pointed out there are a lot of variables to be crunched for each individual to figure out what works for them, but it's not a slam-dunk that owning always beats renting . . . . Many of the examples of mortgages being cheaper than rents are for what I think of as 'higher end' properties, but I live at the bottom end of the market, & for the poor renting has always been cheaper than owning. Just getting into an ownership position can be prohibitively expensive below a certain income level . . . . . .

& I gotta point out that there are a whole bunch of would-be retirees right now who are in a world of hurt cuz their 'investment home' is not gonna sell for what they 'needed' it to in order to do their planned retirement on schedule . . .. . . There are no guarantees, not even that a home-owner will necessarily get their equity back . . .. . .

< Message edited by DemonKia -- 5/13/2009 2:02:25 PM >

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RE: Cheaper to rent or to own a house? - 5/13/2009 2:24:45 PM

LadyConstanze

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Actually my mortgage has dropped A LOT and I am paying a hell lot less than I would pay rent (next door, the house is rented out, they pay 5 times in rent what I pay as mortgage), additionally when I'd be paying rent, that money would "disappear", I'm not living in a mansion (I wish) but a normal house, if I don't like anything about the house, I can change it without asking the landlord for permission. Especially in the UK there is still a shortage of houses, so I think the market will recover again, people will always need places to live. I agree with you that there is no guarantee that a house will be your pension fund, but from the other side of the spectrum, what if you rent and you retire? Your pension fund might not be so good that it will keep up with the inflation, rents might rise and you might not be able to afford renting then or will have to lower your standards considerably...

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