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LAN Party Forums => General Discussion => Started by: The Nstuff on August 12, 2011, 05:23:54 PM
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http://www.getrichslowly.org/blog/2011/08/12/when-renting-is-smarter-than-buying/ (http://www.getrichslowly.org/blog/2011/08/12/when-renting-is-smarter-than-buying/)
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When it comes to home ownership vs. apartment rental, take a look at http://www.nytimes.com/interactive/business/buy-rent-calculator.html (http://www.nytimes.com/interactive/business/buy-rent-calculator.html)
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Now... are we talking renting vs buying when it comes to material objects? Food? Women? Cuz there are a LOT of ways one can answer this.
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The OP article is pretty generic and goes from talking about renting vs buying music (spotify vs amazon) to renting vs buying homes.
Personally, I'm still renting an apartment. As the article stated, with renting an apartment, I have a fixed rate per month that I pay with zero surprises. No new dishwasher, refrigerator, washing machine, etc I also don't have to own and buy and keep a lawn mower, string trimmer, etc all gassed up and maintained and stored somewhere. As long as I buy a house within the next little while, I think the calculation of renting vs buying will come out pretty well... where although my money has been going to the apartment complex, if I had a mortgage, the majority of it would be going towards taxes and interest.
The longer I've waited, the better position I am in to buy something I really want, vs buying a fixer-upper and dealing with extra maintenance costs. Although I'm not afraid to do a lot of stuff myself, I grew up in a house that was a constant fixer-upper and it's really been nice not having to worry about anything. I'm also in a better position to put 20% down (thus no PMI) and immediately start putting lots more toward principle that i would have been able to years ago with near 0% down + PMI.
That's also not to mention it was a really good idea not to buy a house within the last 4 years when the housing market died. The central PA area really didn't get touched at all by the housing bust, at least the specific area I'm in. Thus, there were no drastically low prices and no foreclosures to make me want to buy something.
Finally, here we are in a potential double-dip recession so things are a little crazy to buy something. On the flip side, interesting rates on 15 and 30 year mortgages look like they are going down again.
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*shrug* I have owned a home since 2003 and find it very rewarding. (2 different ones) Also you don't have to worry so much about lawn care. There are always people leaving fliers for doing it in my neighborhood. And appliances... Well, get what you want from your home owners insurance. Get a low enough deductible and if an appliance breaks you won't get hit too hard. Also, your site with the weird little calculator I put in my number and says that I am good at the 2-2.5 year mark. I even played the numbers to minimum FHA requirements. (3% down and PMI) Still making out after 5 years. Maybe housing costs are way different here in MD where rent is closer to mortgage cost. Also, part of me is kinda selfish. This house and property is mine... (Ok the banks.) But I don't have a landlord to answer to or inspect.
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I've gotten into the mentality of either rent an apartment or own a house. Meaning, if I ever move into a house, I want to own it from day one. Not pay off mortgage over time. That's just about the same thing as renting; You don't truly own the house until the mortgage is paid off. I know most people would prefer this as well (don't see why not anyway), but if I can't do that, than I'd rather just rent an apartment knowing that it's not mine instead of pretending it is :P
But I have the same mentality when buying just about anything else. If at all possible, pay it off at once, don't finance over time, and in turn, save money. As such, I have stopped using my credit card completely about 4 months ago. I pay everything via debit.
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http://en.wikipedia.org/wiki/Equity_%28finance%29 (http://en.wikipedia.org/wiki/Equity_%28finance%29)
Yeah... Just like renting.... Except when I moved I get to SELL the place and the $$ over what I owe goes to me.
Hence I can sell a house that I got @ 109K for 154K and use that money as down payment on a new house... And I was only there 5 years. Besides how long would it take you to raise enough cash to by a home that is nice?
Also, renting doesn't get you close to owning it... So instead of you paying a bank interest for a house you will eventually own. You "save" your money by giving it to someone you get NOTHING in return.
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Alright so my wording was a bit flawed. And yes, it would take a long time of saving to buy the house I'd want. My point was that I don't like having debt, or being indebted to anyone, especially a bank. Just my preference, but I like to truly own the things I buy.
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But that's the point. It's not just debt. It's equity. You are building towards owning it. If you plan on staying in that area than renting is just flushing money away. So TECHNICALLY you are in debt when you sign the lease.
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I like to truly own the things I buy.
But? You'd rather rent?
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Yeah? If I can't own it up front, then I'd rather rent. Is this a new and confusing concept?
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It's confusing cause it's wasting money.
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How so?
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/facepalm
Equity vs Trash Can (aka Rent)
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*plugs ears* Lalalalalalalalalaaa What?
Oh well, guess I don't know enough about equity to comment. I could research it, but from what most people have told me (where I got it into my head to buy at price from the start), it's not worth it. *shrug* Paying $650 a month+utils for a 3 bedroom apt isn't that bad to me (splitting the cost with one other person). That's actually cheaper than what my parents were making me pay to live with them :P
Still sticking to what I said about paying up front for everything else tho. As it stands now, I could buy a new bmw 3 series up front (and be totally broke afterwards :P ).
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Me and the wife are going to start looking at houses soon. In all honesty I want us to hold off a bit. The housing market is not expected to recover any time soon and may actually decline again with the talks of a double dip recession. It would give us more of a chance to save for a down payment making our mortgage less a month.
I'm really thinking about moving to Florida. I know most of you are in the Harrisburg area where housing isnt so bad. But out here near Philly a 250k house gets you damn near nothing. Its too damn expensive. We were down in Key West for vaca and my job sent me to Ft. Laudale and Miami and Tampa for installs (no it wasnt cool I never have time to myself, I'm usually in a datacenter the entire time), and for Craps and giggles I looked at housing. Thers waterfront housing that can be had for under 300k. Nice 4 bedroom, 2 bath homes, garage, for 200k.
Since 90% of my job can be done virtually I'm really considering the move....
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apparently you can move out to Baltimore and pick up something real cheap :)
http://articles.baltimoresun.com/2011-08-20/business/bs-bz-baltimore-region-housing-market20110821_1_metropolitan-regional-information-systems-average-sale-prices-housing-prices (http://articles.baltimoresun.com/2011-08-20/business/bs-bz-baltimore-region-housing-market20110821_1_metropolitan-regional-information-systems-average-sale-prices-housing-prices)
In general, i don't think you can rely on what used to be normal where your house continues to gain in value while you own it. The fact that it happened for so long was for many different reasons. Inflation, mortgage investments, actually making physical improvements to the house thus driving up the value, etc. But now with the recession, you can't *expect* the house to keep its value and/or go up in value.
With that in mind where is the equity you are supposedly building? Obviously it all depends on where you live. Some areas never felt the housing bust, others were devastated by it. But in general, what used to hold true may not necessarily be taken for granted any longer.
Instead of buying a house thinking it's an investment, now you must look at buying one for the other merits that you want, regardless of what they may be.
For me, the value in not having to lift a finger to maintain my apartment is worth it. Too many people buy a house when they shouldn't because someone, somewhere, told them that they should. If I had bought a house many years ago, I would only have been able to afford a place that I would most likely hate.
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you make some valid points. the housing collapse only effects you if you're selling your house. its great if you're buying right now. the housing market will eventually recover. probably not for 5 or more years.
renting now may be the best way to go. but this will change in the future. over time its probably not the best idea. if you buy a home and move in 15years you can get a good portion of that money back. you get nothing if you're renting.
but there are plenty of reasons someone may prefer renting. especially if you're a young single male.
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apparently you can move out to Baltimore and pick up something real cheap :)
[url]http://articles.baltimoresun.com/2011-08-20/business/bs-bz-baltimore-region-housing-market20110821_1_metropolitan-regional-information-systems-average-sale-prices-housing-prices[/url] ([url]http://articles.baltimoresun.com/2011-08-20/business/bs-bz-baltimore-region-housing-market20110821_1_metropolitan-regional-information-systems-average-sale-prices-housing-prices[/url])
Just like every city you can buy Crap property at low prices. Is this a dig at where I live?
Also, for Baltimore being a Crap city that I know it is, how did Harrisburg lose?
http://www.cityclash.org/rankings/verdict/393028/Harrisburg/USA/Baltimore/USA (http://www.cityclash.org/rankings/verdict/393028/Harrisburg/USA/Baltimore/USA)
For me, the value in not having to lift a finger to maintain my apartment is worth it. Too many people buy a house when they shouldn't because someone, somewhere, told them that they should. If I had bought a house many years ago, I would only have been able to afford a place that I would most likely hate.
It's also easier to justify living somewhere that's easiest for yourself when you don't live with someone and if you are legally bound to that person it makes it even more difficult.
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Yeah? If I can't own it up front, then I'd rather rent. Is this a new and confusing concept?
Yes. I'm really unsure how to even express my mental facepalm. Let me pretend I understand you for a second because I know you to be intelligent. You want to own the things you buy, this makes sense. However if you can not do this you'd rather rent. That's the the total opposite. Previously stated analogy I've used on you for completely separate topic: You're the vegan who would like to grow all his own veggies, but if you can't, you go buy meat.
Oh well, guess I don't know enough about equity to comment. I could research it, but from what most people have told me (where I got it into my head to buy at price from the start), it's not worth it. *shrug* Paying $650 a month+utils for a 3 bedroom apt isn't that bad to me (splitting the cost with one other person). That's actually cheaper than what my parents were making me pay to live with them :P
Still sticking to what I said about paying up front for everything else tho. As it stands now, I could buy a new bmw 3 series up front (and be totally broke afterwards :P ).
Think about equity like this: all that money you paid renting...gets refunded to you when you move (ie selling the house, borrowing against the house, etc.). The current economy has a ridiculously low interest rate. We're looking to buy and a CDA loan is about 3.5% right now. AND given inflation your house will most likely be worth more than you bought it for. You can "print" more property.
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In general, i don't...But now with the recession, you can't *expect* the house to keep its value and/or go up in value.
With that in mind where is the equity you are supposedly building? Obviously it all depends on where you live. Some areas never felt the housing bust, others were devastated by it. But in general, what used to hold true may not necessarily be taken for granted any longer.
Instead of buying a house thinking it's an investment, now you must look at buying one for the other merits that you want, regardless of what they may be.
...I would only have been able to afford a place that I would most likely hate.
No! If you are correct it is in relation to timing. The market goes up and down, I'm not saying we've hit bottom. But we are most likely close, so your home as an investment can ONLY go up.
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Ok,
Sorry for the multiple posts. It helps avoid the TLDR. Here are my numbers attached(must be logged in).
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http://www.zillow.com/homes/harrisburg,-PA_rb/#/homes/for_sale/Harrisburg-PA/11817_rid/0-10000_price/0-38_mp/40.328763,-76.703956,40.235523,-77.056892_rect/11_zm/1_fr/ (http://www.zillow.com/homes/harrisburg,-PA_rb/#/homes/for_sale/Harrisburg-PA/11817_rid/0-10000_price/0-38_mp/40.328763,-76.703956,40.235523,-77.056892_rect/11_zm/1_fr/)
I hope that link works... But there are 139 for sale under 10k.
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Those are what we call Getto Fabulous in Baltimore. hahah
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The Zillow link isn't an accurate count for either Harrisburg or Baltimore because a lot of foreclosures are listed as N/A and therefore are listed as <10,000.
No one ever made the comment that one city was better than the other; trust me, if you live in Harrisburg you are well aware of the Craptiness of that city (which is why you'd be a fool to actually live in the city). The areas surrounding Harrisburg are actually quite nice, just not the city of Harrisburg itself. I'm sure the same could be said for many cities across the US. I wouldn't want to live in LA, but Beverly Hills is nice. I wouldn't want to live in Detroit, but [insert name of suburb here] is much nicer ;)
FiveAces, where'd you grab that chart from? I'd like to take a look at how my own numbers would come out.
Nevermind, I found it with my Google-Fu. http://www.ginniemae.gov/rent_vs_buy/rent_vs_buy_calc.asp (http://www.ginniemae.gov/rent_vs_buy/rent_vs_buy_calc.asp) Note: It does not seem to work in Chrome, had to open FireFox for the calculations to show.
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I carry a gun and a tomahawk... just saying
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HAHA precisely why i moved AWAY from Harrisburg. Nothing of interest there. Move along...
except this 3 day geek party every year in February. Thats the only reason I visit :D
To put things in perspective my grandparents sold their house on 29th st in harrisburg about 15 years ago. 4000sq ft, 4 bedrooms 1.5 baths, full basement and attic, 1/4 acre lot, detached 2 car garage. wrap around porch, screened in sun room for 75k.
Thats a million dollar home out here in bucks county.