posted
Yep, NY's rent control has been fairly well studied: it mostly subsidizes better off and more influential residents, and leads to very little rent reduction among those it is alleged to be for, people with lower incomes.
It also significantly reduces the incentives to put up new housing, so it is quite likely many rents would be lower without rent control. I also suspect that the benefits of subsidized housing could be had by simply reducing zoning restrictions so companies are able to build more, more dense housing.
Posts: 15770 | Registered: Dec 2001
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quote:Originally posted by Belle: The right idea, of course, is to buy land, and build a house.
Honestly, if I really had that option, that would be awesome. For me, I think the intangible benefits of such a decision would trump many of the economic reasons that have been mentioned in this thread.
Posts: 7593 | Registered: Sep 2006
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posted
Building is normally a great idea if you have any experience or knowledge of one or more of the construction trades. For us, it was a no-brainer because our plumbing labor was completely free. We also painted it ourselves and did some of the finish carpentry. A friend of ours traded labor with my husband so running the electrical wire costs us nothing except my husband's time.
However, you have to look at what the market is like in your area. right now it would be foolish to build in Bham because we are in a housing slump and there are tons of existing homes for sale at good prices. You would have to do a lot of the work yourself to justify building, because the cost of building materials has gone up so much. And forget about putting in copper pipe for your plumbing! Copper is sky high. Though, most plumbers like my husband have switched over to PEX pipe anyway.
Anyway, if I were looking for a house in our area today, I'd buy an existing home over building one. But, you have to judge how things are where you're looking to build or buy.
Posts: 14428 | Registered: Aug 2001
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I lived in my Grandmother's old home. Then bought my first house for under $60k, and recently moved to a second house to cut my commute and have more space.
I have never worried about the value of my home unless I was trying to sell it, or needing to adopt (when I needed a statement of financial worth).
Sure, the cost of spazzing out over the value of your home is terrible. So is the cost of spazzing out over the value of your stock portfolio, or spazzing out over the next rent increase, or anything.
Posts: 11895 | Registered: Apr 2002
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posted
Irami, the reason I have a house is because it makes good financial sense. You can pay rent all your life and end up with nothing to show for it. A house is investing your rent money into something that ends up having a lot of worth. Houses also appreciate usually over the long run, plus they give you a good tax deduction on mortgage interest. Rents usually go up by $10 or $20 a month every year. So with my fixed rate mortgage, 20 years from now when rents on small apartments are $5k a month or whatever, I'll still have my $1500 a month house payment. I think, in general, owning a house is much smarter than renting.
Posts: 6246 | Registered: Aug 2004
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posted
Belle, does renovating really cost more than building from scratch, assuming you're in an area with plenty of land (like the South)? I had assumed renovating would have to be cheaper since you're not building everything from scratch, but anyone I've mentioned it to says otherwise.
Posts: 2283 | Registered: Dec 2003
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quote:Rents usually go up by $10 or $20 a month every year.
Really, in the places I have lived/looked at houses and apartments, it is very unusual for rent to go up every year. It usually has only happened every three to five years in my experience, if that.
This is another thing that varies by area. For instance, you just can't get a mortgage on anything here, even now, for less than twice what you would pay renting per month.
Posts: 21182 | Registered: Sep 2004
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quote:You can pay rent all your life and end up with nothing to show for it.
If all you have is a house to show for your whole life, I think there are deeper issues at play.
quote:Rents usually go up by $10 or $20 a month every year. So with my fixed rate mortgage, 20 years from now when rents on small apartments are $5k a month or whatever, I'll still have my $1500 a month house payment.
My rent hasn't gone up in three years, as to the 5k number on a small apartment in my neighborhood. If that ends up the case, then something profound has happened to the dollar.
Posts: 5600 | Registered: Jul 2001
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posted
Our rent went up $15 in four years. Then the complex got sold and the next owners wanted to raise it $100. We managed to find a quieter complex in a nicer part of town for the same (higher) price with 250 extra square feet. Apparently, location is everything.
Posts: 2283 | Registered: Dec 2003
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quote:Our rent went up $15 in four years. Then the complex got sold and the next owners wanted to raise it $100. We managed to find a quieter complex in a nicer part of town for the same (higher) price with 250 extra square feet. Apparently, location is everything.
Hmmm. Our complex got sold but we have rent control (of a different kind than NYC's) here. They did raise the rent but they raised it $5 less per month than the allowable yearly raise, AND the new managers actually do something, and they also replaced the washers and dryers that kept breaking down with brand new ones that work much better and have higher capacities (and only raised the cost of washing by $0.25/load, no increase on the dryers) and painted and stuff, too.
Posts: 21182 | Registered: Sep 2004
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quote:"If all you have is a house to show for your whole life, I think there are deeper issues at play."
*rolleyes* I think you're addressing a point she wasn't making, and I think you know it.
I don't like pretending that we can compare owning and renting and set everything else equal. The pressures of owning a house would have changed my lifestyle, even political actions, in a profound way. Part of what I've accomplished in my life is a matter of not having my choices bogged down with the responsibilities of property.
Posts: 5600 | Registered: Jul 2001
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quote:I don't like pretending that we can compare owning and renting and set everything else equal. The pressures of owning a house would have changed my lifestyle, even political actions, in a profound way. Part of what I've accomplished in my life is a matter of not having my choices bogged down with the responsibilities of property.
You have a unusual level of knowledge of alternative timelines. *stares suspiciously*
Posts: 3275 | Registered: May 2007
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posted
I agree. I also think that there is something wrong with the phrase "buying a house," when that's not necessarily what's going on. There is a slippage of language with the word "buying" that seems to work in the bank's favor(Big Surprise).
I'll be the first to say that if you have money to buy a house, buy a house, but I think that in general, we should be more sophisticated in our collective aspirations and ethic when we talk about housing given the situation of 2008 America.
quote:You have a unusual level of knowledge of alternative timelines. *stares suspiciously*
The future and human affairs are unpredictable, but there are things one can do to hedge one's bets (exercise, eat vegetables, birth control, sun screen) and can mitigate some untoward situations.
posted
When you pay rent, you're buying someone else's property for them. You pay all the costs, you just don't own it when you're done. It's much smarter to buy than to rent, unless you're planning on moving soon.
Posts: 6246 | Registered: Aug 2004
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quote:I'll be the first to say that if you have money to buy a house, buy a house, but I think that in general, we should be more sophisticated in our collective aspirations and ethic when we talk about housing given the situation of 2008 America.
What on Earth does this mean?
Posts: 17164 | Registered: Jun 2001
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quote:Originally posted by Tatiana: When you pay rent, you're buying someone else's property for them. You pay all the costs, you just don't own it when you're done. It's much smarter to buy than to rent, unless you're planning on moving soon.
Again, this really, really, really depends.
We could be in a one bed/one bath (with our 3 kids), for about twice the price per month that we're paying for a two bed/two bath. (Up to 2 1/4 times, if it was a condo.)
Totally, totally smarter to rent right now.
Now, when you talk about renting 4 bedrooms or above, the dynamic changes drastically, since rent is about 80-95% of a mortgage payment around here (if you got a good deal on a mortgage and an average deal on rent.) At that point, yeah, probably wiser to buy, especially since it's hard to find those rentals. But 3 bedrooms and below? Your money can be doing so much more renting. (Not to mention, many people can't afford more than the rent on a 2 or 3 br apt. for housing costs and still make ends meet...)
I think general statements do not universally appply in every housing market. Each market is going to have its own point at which it's better to own than to rent. In some markets, that's 1 or 2 bedrooms, at some, much higher, but it's going to really depend on the rental and house price market.
Posts: 21182 | Registered: Sep 2004
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quote:Untoward situations like having responsibility for things?
Yep. I think those kind of monetary responsibilities are a gateway to becoming complicit to all manners of behavior I find is unseemly. I start to hear excuses like:
"I have to work for that firm because I have to pay off my Law School loans."
"I can't stand up to my boss because I need this job, and I took this mortgage assuming that I would keep this job."
"I can't stand up for my co-worker because I need this job, and I took this mortgage assuming that I would keep this job."
"I have to stay in this marriage..."
"I can't move..."
"Can't go back to school, I'd have to take a pay-cut and that won't let me stay-up with the mortgage."
"The pill helps me concentrate, and I need to be able to concentrate to do my job and keep up with my mortgage."
"I can't exercise because I have to spend more time at my job to keep up with the mortgage."
posted
Of course, excuses are just that. There are a large number of people out there who either have problems with change or lack the will to take action. But they don't like feeling bad when you do something different, so they make excuses.
I was the first girl on the wrestling team at my high school. Apparently, every other girl in school either wanted to be on the team but had some reason she couldn't or had already gone out for the team but got thrown off. The guys hit each other in the crotch if they think they can get away with it. You didn't get thrown off the team for that, I promise.
My favorite work excuse is probably "It's like that anywhere." Really? All bosses break the rules and abandon bank tellers in the lobby alone for hours on end? All companies claim to promote from within, dangle a promotion in front of a manager, and then always fill the management openings from outside?
Some jobs really are at an unacceptable level of wrongness and you should find something else. Yes, you'll always have that coworker you don't get along with. Yes, you'll always have something you have to do that you don't enjoy. I have no idea why the vast majority of people make excuses for the behaviors that fall well outside that, though.
Next time someone gives you a lame excuse, just smile and nod. I doubt they'r telling you the real reason for their actions, and the excuse makes them feel better. It's just what most people do.
Posts: 2283 | Registered: Dec 2003
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posted
Ownership is the key word here not being discussed. There may or may not be financial reasons for owning a house. That depends on the situation.
There is a socio-historic drive for land ownership, to be the King of one's own castle. Owning land was historically a sign of wealth and power. Originally only land owners were allowed to vote.
However, the main reason that Ownership is considered a society is control.
As a home owner I have much more control over my surroundings than as a renter. While rental agreements are different, new paint, new construction, a new window or a better roof are all up to me, not the landlord.
With that control, of course, comes responsibility. I have to get that new roof when its needed. I have to paint the house when needed. I get to choose the color, but I have to do the work.
Stress has best been described as having the responsibility for X without having the ability to effect X. The biggest stresses in home ownership are that I am responsible for a lot, and I am unsure of my ability to manage them all.
Time management and money management usually solves those problems.
Renters, however, do not have as big a list of X. On the other hand they don't have as many options. To cut global warming more efficient water heater is needed. As an owner, I can do my part for the Earth by getting that. As a renter, I can petition the land lord, but other than that, not much.
There is a lot of discussion of the ability to leave an apartment more easily than from a home. This is treating the property as a commodity, to be dropped when it is no longer usable. Ownership requires a better stewardship of the land, making it usable, making it something more than just a commodity.
Posts: 1941 | Registered: Feb 2003
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quote:Originally posted by AvidReader: Belle, does renovating really cost more than building from scratch, assuming you're in an area with plenty of land (like the South)? I had assumed renovating would have to be cheaper since you're not building everything from scratch, but anyone I've mentioned it to says otherwise.
Per square foot cost on renovating an existing space is always going to be higher than building from scratch. Usually your renovation cost includes demo, and there is always difficulty in installing new electrical and plumbing fixtures in to an existing system.
To take a simple example - windows. If you are building a new house you have to buy new windows and have them installed. Your contractor has framed in all your window casings to the exact specifications you provided when you picked out your windows, so unless your framer screws up, they fit. If you are renovating an old house, you have to buy windows, pay to have the old ones removed, pay to have the old ones hauled away to a dump or to a salvage yard, and THEN pay for the installation. Now, even if you buy windows the same size, labor is going to cost more for that installation because it's harder to install new windows in to casings that have already been used - you usually have to scrape, repair, then repaint. All that costs money.
Now, there are exceptions - finishing an existing basement is usually pretty cheap, but that's mainly because you work with what is already there and you compromise on things like installing drop ceilings instead of sheetrocking ceilings. Of course, if you go all out, you can certainly spend a lot finishing a basement, just most people don't.
As crazy as it sounds, there are cases where you can buy a house, and it would be cheaper to tear it down and start from scratch than renovate it.
Posts: 14428 | Registered: Aug 2001
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posted
Irami, The draw backs you list to owning a house aren't really drawbacks of ownership at all. They are drawbacks of having financial obligations. While some financial obligations may be questions of personal choice, some reflect basic human need.
Space and shelter are basic human needs. Even the most primitive human tribes build shelters and protect territories. As with all basic human needs, if you don't own or control your own space, you are necessarily subject to those who do. As a result, ownership gives one a degree of autonomy otherwise not attainable.
Unfortunately, for most people owning a home means trading trading being subject to a landlord to being subject to a mortgage holder. Many people consider that trade off worthwhile because it is a path towards greater autonomy in the long run even if in the short run it means longer term commitment and sometimes (although not always) a larger financial burden.
I should also add, that many if not most people are willing to trade their autonomy for material comfort and so willingly assume debts that have little to do with their real needs. But that isn't an argument against owning a house any more than its an argument against buying a TV or eating at restaurants.
Posts: 12591 | Registered: Jan 2000
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posted
I agree...most of those issues don't necessarily have to do with home ownership. I know just as many people who make those same excuses even though they are renting.
There is no shortage of excuses in the USA, you know. I doubt there are shortages of them anywhere else, either.
Posts: 15082 | Registered: Jul 2001
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posted
After reading over this thread, I've decided that the difference between owning and renting is the difference between marriage and living together.
Living together/renting is more convenient, especially if you plan on a more transient lifestyle. It saves the headaches of legal problems in case of either party leaving. And it is a good recourse for those not wanting to make commitments, or who were burned in a previous marriage/ownership situation.
Owning/Marriage is a more permanent answer to the situation, more likely to be chosen by those raising children, and more conservative. In deed, some are so enraptured by their choice, the consider those who choose renting/living together to be living in sin.
Posts: 1941 | Registered: Feb 2003
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Unless you're going to move a lot, owning makes more sense. You're going to have to pay for housing every month whether you rent or buy; but at the end of the lease, you're left with nothing. If you own a house and sell it, you get something back.
The same people who have to keep their job to pay their mortgage would have to keep their job to pay their rent. If their mortgage is so high they're in over their heads, they've bought too much house. But that isn't an argument against ownership, just an argument for living within your means.
Posts: 1522 | Registered: Nov 2005
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quote:You're going to have to pay for housing every month whether you rent or buy; but at the end of the lease, you're left with nothing.
I'm left with nothing EXCEPT:
1. The money I saved by NOT BUYING*
* May be unique to my situation
I like Belle's input on building a house versus buying a house. It's cool that everything worked out so well in their situation. Posts: 1813 | Registered: Apr 2001
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quote:Unless you're going to move a lot, owning makes more sense.
There are a few more "unless"es, like not being able to buy in the same neighborhood. Now we are talking about moving neighborhoods, and a few other quality of life issues, not to mention that one can rent without dealing with banking rules.
If you think this is wild, I actually think that, depending on the stability of your financial situation, it's better not to have a bank account and just pay a three dollar check cashing fee, twice a month. I've seen what banks can do to people on the margin, and I've also seen financial disasters hit with the speed and ferocity of a hurricane in the form of overdraft fees. To a lot of people, the latter advice sounds stupid, but I've seen what I've seen.
Posts: 5600 | Registered: Jul 2001
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posted
And yet overdraft fees can be entirely avoided by keeping a checkbook register and not spending any more once you've spent what you put in. People being irresponsible isn't the bank's fault. (Says the bank employee sick of people coming in to complain about fees who don't keep track of what they spent.)
Posts: 2283 | Registered: Dec 2003
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quote:If you think this is wild, I actually think that, depending on the stability of your financial situation, it's better not to have a bank account and just pay a three dollar check cashing fee, twice a month.
And where WOULD you be storing your money? I'm not opposed to putting your money somewhere with a better return than your typical bank (or buying hard assets with it), but it's pretty darn stupid to stick it in your mattress.
Posts: 37449 | Registered: May 1999
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posted
Overdraft fees can become unreasonably high, but that a person incurs them over and over again is a personal failing, not some issue with the bank. Some people might be better off paying a check cashing fee, but not because of lack of a stable financial situation, but because of lack of personal ability to plan and control spending.
edit: this does not apply, of course, when incurred overdraft fees are truly outside a person's control, as sometimes happens. I suspect that rarely happens over and over to most people, though.
quote: it's better not to have a bank account and just pay a three dollar check cashing fee, twice a month. I've seen what banks can do to people on the margin, and I've also seen financial disasters hit with the speed and ferocity of a hurricane in the form of overdraft fees. To a lot of people, the latter advice sounds stupid, but I've seen what I've seen.
I agree with this. "Personal failing" or not, banks are vicious on those who live on the margin. That "personal failing" could be other people not cashing checks on time or needing $30 for a doctor's copay.
Once you start a few hundred in the hole, when you're living on the margin and spending your whole tiny paycheck every two weeks, it can be death to recover. Bank overdraft fees make that worse, not better, and they know it.
I think overdraft fees should be a percentage of the amount it was over. It is absolute robbery to slap a $40 on someone when they went $2 over and their average balance is less than $300.
posted
Whereas at $3 a paycheck every two weeks you're guaranteed to pay $78 a year, minimum, just to have access to your money. And instead of being able to pay $30 for a doctor's copay and incurring an overdraft, you just wouldn't be able to pay. I'm not sure how that's better, unless a person is having these out of their control overdrafts more than twice a year, in which case I refer to you my post about not being very good at managing money. And people not cashing checks on time are annoying, but can be wholly accounted for.
While $40 is too high for $2, the cost incurred by the bank when someone has an overdraft is not a percentage of the amount over. Every overdraft is a surprise occasion where they need to loan someone money for the short term, with no interest paid except as is collected by fee. Each individual person might not be a big deal, but across the number of customers a bank has, an overly high number of people overdrafting can seriously decrease cash on hand.
Were I to set up a policy, I'd probably not charge any fee for overdrafts up to $10, charge $10 for overdrafts up to $40, and then charge $40 for overdrafts greater than that. Something tiered along those lines, at least.
Posts: 15770 | Registered: Dec 2001
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posted
The "hole" is the danger. As Katie notes, once you're in it, it's very difficult to get out. My first priority, back when I was poor, was to scrape together enough money -- $3000 was the goal at the time -- to just sit in the bank, doing nothing. And the only reason that money was there was so that it'd be available to cover emergencies.
It seems in retrospect like an obvious thing, but it felt at the time like something very difficult. It was probably the first real financial decision I ever made.
Posts: 37449 | Registered: May 1999
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posted
That would be better than what happens now. For those that regularly overcharge, you could make it so the third tiny overdraft is treated like the next tier up.
Posts: 26077 | Registered: Mar 2000
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quote:Originally posted by Mucus: All I have to add is I could easily find at least five investments that could have made the same gain (or much bigger) in the same time, in retrospect The question is identifying them at the right time, a problem which is not entirely absent when investing in real estate. Long term, it is unclear to me if house prices in my area will rise faster or slower than the returns on a simple index fund.
This is what troubles me about the idea of buying a house (other than my age). My parents didn't buy a house until they were married at 35. Today, 26 years later, that house is worth at least 5 times as much as what they paid for it. Seems like a great deal to me. At the same time, the original value of the house, if it accrued interest at 5% a year, would return a comparable sum, without the great expense of upkeep and renovation that my parents have incurred in 26 years. If a higher rate of return is assumed, for instance 10% through very wise investment, over 26 years, that original sum would be increased 10 fold. Granted, they didn't have that money in its entirety when they bought the house, but they did have a large part of it.
Now, the fact that they avoided paying rent during that time is something I didn't consider, which reminds me, once again, that my life is going to be a very difficult one given my lack of interest in material wealth- the idea of owning one thing for 26 years scares me. Maybe I'm like Irami in that way alone- I just don't personally find the idea of home ownership appealing on a visceral level. I spent 18 years of my life watching my father go out every weekend into the garden, into the garage, around the house, down the street, working. My mother did untold numbers of chores, uncountable loads of laundry, and they collected stacks of mail that seemed unapproachable. In my later teens, I took over most of the heavy lifting and yard work for my Dad, and pretty much hated every hour of it, and every inch of the dense yards and gardens he had maintained for decades. Now, to go out into the world and work, every day, for that, is not something I would want for myself. It's not something I ever liked in the details.
Maybe I was born to own a condo? Ultimately, I am glad to be 23 instead of, say 33, when I'm sure family will be pressuring me to buy a house, get married, and "figure things out for yourself."
Posts: 9912 | Registered: Nov 2005
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posted
I could be worth much more today if I had bought a house when I left college. However, I could not have lived the life that I've lived, and I am glad that I didn't. One thing about buying a house is that you are then tied to a place, a neighborhood, and usually a lifestyle. That's great if you're done exploring and know what you want, but if you haven't, then those decisions are made for you. In the past, I have preferred my freedom to money. If I'd had the money, I would have used it to fund my freedom.
Posts: 26077 | Registered: Mar 2000
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quote:Originally posted by TomDavidson: The "hole" is the danger. As Katie notes, once you're in it, it's very difficult to get out. My first priority, back when I was poor, was to scrape together enough money -- $3000 was the goal at the time -- to just sit in the bank, doing nothing. And the only reason that money was there was so that it'd be available to cover emergencies.
It seems in retrospect like an obvious thing, but it felt at the time like something very difficult. It was probably the first real financial decision I ever made.
I'm currently scraping money together for my move to Europe. I'm paying for my English teaching course, and two months of wage-less living in Prague. I have had 3,000 dollars (which has accrued interest) in an investment account for the past 10 years, but which I had actually, *forgotten about* as I had invested the money at the age of 13, saved from Christmas gifts and car washing.
My goal in the next two months is to increase my secure savings to about 6,000 dollars, while still paying those expenses, by selling my car and spending my summer wages on airfare and rent. It's interesting to me that you had that goal in mind, and that it was the same 3,000 dollar amount. For the first time in my life, and for the foreseeable future, I am poor, and will receive no further financial support from my parents.
Posts: 9912 | Registered: Nov 2005
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posted
I'm in the same position. My dad supported me as an undergrad, but the parental help ended when I graduated from college. He figured, with some legitimacy, that at that point I could take care of myself. It wasn't a surprise - I always knew it would end then.
Posts: 26077 | Registered: Mar 2000
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quote:You can pay rent all your life and end up with nothing to show for it.
If all you have is a house to show for your whole life, I think there are deeper issues at play.
Ultimately, if you dismiss the need for the security, or sense of security and autonomy that a house provides you, and choose to spend your money in other ways, or be truly autonomous and travel much of your life, then I think you may be right on. As for your other complaints about a society of ownership, I don't know. I think you can't see the trees for the forest.
The plain fact is that individually (which is how people aught to be considered if possible) our motivations for owning homes are not tangibly governed by the structure of society and its ills. There is an unmistakable influence, but what people here have been saying is that the visceral advantages are the real attractors, not just the trappings of ownership- not just membership in the society of consumption and a set culture and lifestyle (against which your objections run deeper than economics, as you've demonstrated before). For me though, the autonomy of the spirit, of experience, is more attractive. I love the company of people in cities. I like not knowing where I will be sleeping in a month. I like the idea that I can leave all my friends and my family behind and live my life episodically. Maybe that's middle child syndrome? But whatever the cause, the advantages of owning a home feel to me like the advantages of becoming a lawyer or an orthodontist- I'm sure I could do it if I had to, but why would I subject myslef to a life I don't want?
Posts: 9912 | Registered: Nov 2005
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quote:This is what troubles me about the idea of buying a house (other than my age). My parents didn't buy a house until they were married at 35. Today, 26 years later, that house is worth at least 5 times as much as what they paid for it. Seems like a great deal to me. At the same time, the original value of the house, if it accrued interest at 5% a year, would return a comparable sum, without the great expense of upkeep and renovation that my parents have incurred in 26 years.
Your calculations are in error for several reasons. By my calculations, they would have had earn an interest rate of 6.39% after taxes annually in order for the value to be equal to the value of the house. But that is assuming that they paid cash for the house, a very unlikely assumption but it turns out to not matter assuming that the mortgage rate, the rate they could have earned investing the money elsewhere and the appreciation of rate for the house are all equal.
If they had a mortgage rate of 6.39%, it turns out that the net present value of their down payment and their mortgage payments over the 30 years of the mortgage are essentially equal to the price they paid for the house, assuming that they could have invested that at 6.39% (after taxes).
So essentially, if your parents had rather than buying a house put their down payment and then each of their mortgage payments into an investment that earned 6.39% annually, they'd have a savings equal to the value of their house.
That all looks fine until you realize 3 things, 1st over the long term real estate does better than most other investments. They would have had to have been quite lucky to earn that much after taxes consistently over the past 26 years.
2nd: They would have had to pay rent. If at the time they bought the house, they had put their 25% downpayment in the bank and rented the house for 80% of what they would have paid for a mortgage, and the rent went up a modest 2.5% per year -- the net present value of their downpayment and rent payments would have been equal to the net present value of the down payment plus mortgage payments -- but right now they would have only 1.25 times the original value of the house in the bank.
3rd: Assuming that they got a fixed rate mortgage, they are effectively protected from inflation, whereas rent is not. In the hypothetical scenario where rent starts out 20% lower than the morgage and goes up a very modest 2.5% per year, the rent will be higher than the mortgage payment after 10 years and by 26 years, its 50% higher than the mortgage payment. At year 31, the mortgage payment will drop to zero, but rent will be 68% higher than the starting value.
4th: Taxes. Mortgage payments can be deducted from your taxes and rent can't. Furthermore, the appreciation on your personal residence is effectively tax free for ever. In most IRAs, you have to pay taxes on the earnings when you take the money out of the account. This makes it very difficult for any investment to compete with owning your own house.
[ August 04, 2008, 12:57 PM: Message edited by: The Rabbit ]
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![[Roll Eyes]](rolleyes.gif)
The guys hit each other in the crotch if they think they can get away with it. You didn't get thrown off the team for that, I promise.![[Dont Know]](graemlins/dontknow.gif)
But whatever the cause, the advantages of owning a home feel to me like the advantages of becoming a lawyer or an orthodontist- I'm sure I could do it if I had to, but why would I subject myslef to a life I don't want?
