What is Digg?316 Comments
- jenny867, on 12/06/2007, -1/+46This I have to say, is the only thing i have read in years, or really, for ever that has made me feel ok about being a chronic renter. I just want a damn house i can stay in for longer than 1 year!!
- edstate, on 12/06/2007, -0/+33Unless you're one of the lucky MILLIONS who are going to have their ARMs frozen for 5 years by our wonderful government... wow, does it ever pay to be stupid these days.
- edstate, on 12/06/2007, -2/+31Contrary to popular "wisdom" there is absolutely a threshold where it makes more financial sense to rent than buy. In fact, it's a lot lower than people think.
The best sum-up I've heard is "if you buy the house w/ 20% down, can you rent it out and cover your mortgage?" If yes, then you should buy. If no, then don't buy unless you have a compelling non-financial reason. - kkeith02, on 12/06/2007, -12/+39Regardless if the site is a scam or not, the facts are true - renters who were planning to buy are gonna reap the rewards. Sucks to be you, homeowner.
- kidjay, on 12/06/2007, -9/+32the obsession with "ownership" in this country is ***** astounding. you make 40k a year, and you "own" a home. you "own" a brand new car. you "own" all these things, but no, the bank owns them. you don't really own any of that stuff. keep racking up the debt, kids.
- vclortho, on 12/06/2007, -0/+21These homeowner/renter stories are all stupid... why argue about which is better when it really comes down to which option makes the most sense with your financial situation.
- Sep11insidejob, on 12/06/2007, -0/+20That's exactly what happened in Japan. I am saving my money as I have for the last 4 years and will buy when the prices go down.
- AmishRefugee, on 12/06/2007, -14/+30homeguide123.com?
that name sounds so much like a scam website... - bardamuclichy, on 12/06/2007, -3/+18OK. Funny... rent has been rising along with home prices. In the last three years, there has been on average, a 30% rise in rent for new renters in my part of the state. How is it more affordable to rent than buy... despite the housing glut, when the cost per month of renting is the same as buying a home? It was like this even before things 'topped out'.
- Shadow82v, on 12/06/2007, -6/+21LOL at people who purchase a house that they cannot afford. There has never been any shame in renting.
- knotu, on 12/06/2007, -9/+23Renters, dont't pat your backs yet.This is an overly simplistic analysis which ignores tax implications, equity and other factors.
- 1jaxstate1, on 12/06/2007, -2/+15I didn't know I was supposed to ashamed that I rent.
- blackmage439, on 12/06/2007, -1/+13I already don't feel any shame in renting. I can't afford a house or even a townhome right now. It was either rent or stay at home (which was practically not an option). Renting is a perfectly viable option for those who aren't financially capable of owning property. Anyone who thinks there is not a future in renting is just being shallow. Many times, a high-yield money market account, stocks, and other investments out-pace the appreciation of homes.
- asauterChicago, on 12/06/2007, -3/+14Dude, I've had to defend my stance against renting for the past five years. I even got in an argument with a friend of mine how stupid it was that I was "giving" all my money to my land-lord and not earning any equity. Finance 101 states, that a home is NOT an investment that traditionally makes any significant ROI. Usually prices rise with inflation, by the time you include finance charges, taxes and maintenance, your barely breaking even when you sell your house.
In the past few years, when looking at buying a house, I couldn't justify spending double, sometimes TRIPLE what I'm paying now on a monthly basis, for a smaller place, that I would have to do all the upkeep on. It just never made any sense... I could afford to rent a large single family home in Lincoln Park Chicago, but trying to buy one? Forget it. It looks like my stubbornness is finally paying off :-D!! - ontain, on 12/06/2007, -0/+11I'm a homeowner who rents parts of my house. it's good for me either way :)
- mrjit, on 12/06/2007, -0/+11Living in Florida with the insurance rates doubling and the housing market plunging pathetically makes me feel great about renting.
- steelclash84, on 12/06/2007, -1/+12My apt rent/month was the same as my mortgage payment today. Every dollar that I pay on the principle is going towards my equity. So, in my mind, as long as the rent for the apt/house is not significantly lower then a mortgage payment, you'd still be better off buying. I also plan to stay in the house most of the 30 year mortgage, so if you are planning on selling within 5 years, then I'd agree with the article and say to continue renting.
- mattwear, on 12/06/2007, -1/+11A 12-year bubble?! Come on... that's a little long to be a bubble. Surely a large part of the increase in home value from 1995 is sustainable.
- StaticThunder, on 12/06/2007, -3/+12Okay, we will. When you're 67 and have no assets, wheras I have a house and my debts are paid off, we'll see who is laughing.
- andywebb95, on 12/06/2007, -1/+10Sadly that's the way our system is setup.
And that makes me a sad panda. - dynamike, on 12/06/2007, -9/+17Tax-wise, owning a home is still much better than renting.
- brstilson, on 12/06/2007, -0/+8Actually renting does not affect your credit rating. Pull your credit report right now and I will guarantee you will not see any payment record like you would a credit card or loan. The only way your living arrangement affects your rating is if a) you're paying off a house (i.e. a loan) and b) how long you've lived in one place.
- mal1964, on 12/06/2007, -1/+9Not paying your rent = shame.
- inactive, on 12/06/2007, -1/+9http://news.yahoo.com/s/nm/20071206/bs_nm/usa_econ ...
Houses prices are set to come down by 30% or more in some markets acording to this article. - PawisBetlog, on 12/06/2007, -2/+10Wrong. You own the items. The bank "owns" a promise by you to pay them the money they loaned you. If you break your promise, yes they can take the items you put up as collateral when you borrowed money, but the title on my current house has MY name on it.
Many of you should take a history lesson and learn what has propelled us as a species to where we are today. Here's a hint, loaning money is a BIG part of it. Loaning money is not the giant boogeyman it's made out to be, the boogeyman is both speculators and jerks/idiots who take out loans with no hope of ever making good on them. All the good borrowers end up collectively paying for the dumbasses. - robdiggity, on 12/06/2007, -5/+13This may come as a shock, but paying a mortgage helps build your credit too.
After my rent check clears, you have 30 days more of a place to live. After the mortgage check clears, you have that 30 days equity. And a mortgage interest tax deduction.
I'm sorry, but for any period of time equal to or longer than 4-5 years, mortgage > renting. - skippy17, on 12/06/2007, -1/+8But... but... interest rates are at all time lows!
- petemcfraser, on 12/06/2007, -4/+11LOL at comments that restate the article title. There has never been any shame in adding insightful dialog to the discussion.
- dissident, on 12/06/2007, -2/+9Would property taxes make up more then 30% of your mortgage payment? If so, don't buy the house.. there's no use owning a house if you are basically just renting it from the government.
- captmorgan555, on 12/06/2007, -1/+8And the government is ruining the dollar... so we lose both ways. I prefer to have a hard assets rather than the American dollar in 0's and 1's in a bank account.
- bluesnowmonkey, on 12/06/2007, -0/+7"Many times, a high-yield money market account, stocks, and other investments out-pace the appreciation of homes."
That's true, but irrelevant. If you buy a home as an investment and let it sit there empty, sure, you'd have been better off in a money market. In reality, you'll either rent it out or live in it, which is worth as much. Try comparing your "high-yield" money market account to the appreciation on a home PLUS its rental income. - ubuwalker31, on 12/06/2007, -3/+10Wrong, wrong, wrong, wrong. There are dozens of factors which determine if renting is better than buying. In general, if house prices are going up 4% a year, buying is better than renting after 4 years. However, if housing prices are dropping 1% a year, buying is better than renting after 22 years. Check out this calculator at the New York Times website: http://www.nytimes.com/2007/04/10/business/2007_BU ... play around with interest rates, down payments, taxes, and other assumptions. Its very educational.
- asauterChicago, on 12/06/2007, -1/+8Tax wise how? Right now I pay no property taxes. I pay $4500 for a 5000 square foot single family home in Lincoln Park, Chicago, IL (heat, water, gas included, pay for electricity, which costs about $200.00 a month). The same house in Lincoln Park to buy would be 1.4 Million Dollars. That monthly payment would be $9,314.23 (which means I'll ultimately pay $1,953,100 in interests over the 30 year loan). My property taxes estimated would be, minus a $5000.00 dollar exemption, would be 29,297.00 per year.... which means an additional $2441.00 a month I'm paying. Throw in an additional $700.00 a month in utilities, and I'm looking at a grand total of $12,455.00 on the house. So essentially TRIPLE what I'm paying now for the same house... just to say I own the damn thing.
Oh if something breaks? who fixes it: ME. How does this make sound financial sense? - chrispix, on 12/06/2007, -3/+10I hate it when people call buying a home an investment. Buying a home should NOT be treated as an investment. It should be treated as a way to reduce expenses after a certain amount of time. If you look at it that way a bubble will not matter. I look at it this way. I purhcased my home, spent $250,000 on it. I don't care if it goes up or down, I am comfortable with that payment. In 15 to 30 years when it is paid off, I will no longer have ANY house payment. If I rent I will have to pay that for the rest of my life. Typically renters pay to an INVESTOR the cost of their mortgage + taxes, or it would not be an investment, so they can cover their costs while they play the housing rollercoaster market. So I would expect to pay the same amount of money to live in my house as an owner or a renter. You can't say, well live in a smaller apartment, because then it is NOT apples to apples.
- inactive, on 12/06/2007, -2/+8I bought a few years ago... maintenance sucks with things like lawncare, etc... Honestly, I think I would have been happier in an apartment. Word to the wise... think it over... the promise of "building equity and not throwing money away" sometimes just isnt worth it anyway.
- stubadub, on 12/06/2007, -0/+6Rent is rising as well, but when property values drop they can purchase their home at a lower rate, making montly payments much smaller. The person that bought the house at the inflated price will not see the same reduced cost.
- way2muchsense, on 12/06/2007, -0/+6Just like our stupid President. When your stupidity overlaps Bush Family interests (banking, for example), you can get absolution just by crying loud enough. That's why they're getting their ARMs frozen, not because George Bush is concerned about you.
- skinjob1, on 12/06/2007, -1/+7There should be a correction in many markets but a crash is unlikely. Just look at the graph and extrapolate a line to 2007. The average cost should be around 200k not the current 225k. So the market should correct down about 12 percent. If you take into account the extremely low interest rates we enjoy you could argue that prices are not that crazy. On the other hand cost of owning and especially heating these homes are way up.
That being said, if you are on the sideline waiting to buy you may want to wait until at least the end of 2008. Let the sellers panic then step in and buy. Remember because of liquidity issues in real estate the cycle lengths tend to be long i.e. 2-5 years. If you are buying long term, getting a good rate on a fixed interest 15-30 year mortgage and don't plan on moving within 3-5 years you should be safe buying now. - PawisBetlog, on 12/06/2007, -2/+8That equation is over-simplified. There are plenty of other factors. The 20% doesn't include the mortgage interest deduction for instance, nor does it include the potential other savings as a result of being able to itemize deductions, etc.
Renting now is good if you haven't bought yet (wait for it to go down) or if you think you'll be moving in the next several years (sell before prices go down more). But if you're like me and not going anywhere anytime soon, this down cycle doesn't mean squat. It's all paper money that I wouldn't be touching anyway, and I didn't buy my house to make money on, I bought it to LIVE IN. - inactive, on 12/06/2007, -1/+7I don't understand your comment. I own a beautiful home with a fixed rate of 5%........ Not all of us are stupid..
- chuckDontSurf, on 12/06/2007, -0/+6Your common sense and logic has no place here on digg.
- bacon_skoda, on 12/06/2007, -0/+6"Renting is a perfectly viable option for those who aren't financially capable of owning property."
well duh!
I think the logic here is, if you can buy a property, do you stay a renter? article says yes. - ngmcs8203, on 12/06/2007, -1/+7Exactly. Renters cover our mortgages and a portion of our HOA dues. If our mortgage goes up by the end of the length of the contract, so does the rent. If someone is willing to pay our mortgage, how does that make the homeowner the dumb one?
- NICU, on 12/06/2007, -1/+7House prices aren't in a 'bubble' everywhere, in some markets the prices never rose to southern-California-like rates. In places where houses are reasonable it still makes more sense to own (if your taxes aren't too high).
- stickywheelz, on 12/06/2007, -0/+5Actually the 5 year frozen arms probably won't matter much. 1st, In order to qualify you have to have less than 3 percent equity in your badly mortgaged home. No problem there. 2nd, You have to be current or less than 60 days behind in your payment. Ok now we getting a little more restrictive on who is going to benefit from the freeze. And 3rd the borrower must demonstrate they can't afford the home. Which means you have to explain what the hell your doing in your position in the first place, which means you or your broker lied on the mortgage application, which in turn means you are in the position of admitting to mortgage fraud. Who is going to do that?
- inactive, on 12/06/2007, -1/+6I hear that! I moved every year for about 10 years, become a professional mover of sorts. I found a great place about 4 years ago and haven't moved since. It's OK to rent a place for more than a year, as long as the landlord is cool and they don't raise your rent out of control. That said, I am already starting to see prices drop... like $50 in my area. I see a house in my future!
- dave6, on 12/06/2007, -0/+5This is not true. You're confusing tax deductions with tax credits. For those who don't know the difference, here it is:
Tax CREDITS reduce your tax liability. If you claim a $1000 tax credit, this would turn a $200 refund into a $1200 refund.
Tax DEDUCTIONS reduce your taxable income. If you claim a $1000 tax deduction, then assuming you're in the 30% tax bracket this would turn a $200 refund into a $500 refund because the tax on $1000 is $300.
So the bottom line here is that if your property tax bill is $5000, you only get $1500 back from the federal government. You might also get a couple hundred back from your state government if your state has an income tax. The other $3000-$3500 comes out of your pocket.
If deductions really worked the way you're saying, I would donate my entire paycheck to charity since it would cost me nothing to do so. - JB449, on 12/06/2007, -0/+5I think he means that he rents out part of his house to someone else.
- captmorgan555, on 12/06/2007, -0/+5Why does everyone assume people want to sell their homes? I'm on the market for a home im not moving out of until my unborn children are out of college.
This whole article assumes people sell and buy houses every 5-10 years. -
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