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318 Comments
- TheSabre, on 10/10/2007, -2/+61My monthly rent is $1400 and that's cheap for my area. My wife and I have a small one bedroom apartment. I know people with houses that have $1100 mortgages. So, no, I don't pay property taxes or anything, but renting is still horrible. Furthermore, I get no capital appreciation, no home ownership investment, nothing. Each month, my rent goes into the pocket of another investor... just as if I was staying in a hotel room every day.
I can't wait to buy a house... - mlarsen, on 10/10/2007, -6/+46renting is good in the short term, but you make more money at the sale when you own a house. If you rent your whole life you received no return on your $, at least with home ownership you get tax breaks and the possibility to sell it for a profit.
- airiox, on 10/10/2007, -2/+37Cool, hopefully in a few years when I'm ready to buy a home, the bubble will be near its trough.
- mrbubbleboy, on 10/10/2007, -10/+41The graph really shows how small the 80's and 90's housing bubbles were in comparison to this monster bubble. Also shows that incomes were no where near keeping pace with the explosion in home prices. Here is another great housing bubble graph that compares home values with GDP. http://www.housingbubblebust.com/Fed/GDPvsHSG.html I think just between these two graphs there is pretty compelling evidence that we are going to see price corrections >30% nationwide...which is truly unprecidented. I'm glad I don't own property right now. Also, if you like housing crash news, this guys daily housing bubble links are the best. I read them every day. http://patrick.net/housing/crash.html
- futureisours, on 10/10/2007, -14/+43If I went by that logic, I wouldn't have earned about 50% on my home investment over the past two years. Check your local markets as the bubble isn't everywhere.
- jdbeast00, on 10/10/2007, -8/+37No tax break and nothing to show for your rent payments are on the flip side
- Indyanna, on 10/10/2007, -10/+37Other reasons renting may make more sense for a lot of people: no property taxes, renter's insurance rather than house insurance, no maintenance or upkeep.
- dpottz, on 10/10/2007, -5/+30Renting may be throwing your money away, but the point of the article is that buying a home right now will mean that you throw away even MORE money by buying than you would by renting.
- inurb, on 10/10/2007, -14/+39Owning is always better then renting. It's just that there were idiots that lived beyond their means and purchased houses that they couldn't afford to being with. Owning > Renting. If they bought houses that were within their means then they wouldn't be in the financial crisis they are today. I love wanna be real estate moguls,because it gives me more opportunities to buy real estate when they default on their payments lol.
- InfiniteNothing, on 10/10/2007, -3/+28There are way too many intangibles to ownership. My favorite lately is home improvement. Customizing your dwelling is awesome (like hard wired Cat 6). In my last apartment I lived above noisy renters who smoked and made my apartment stink.
- nwoolls, on 10/10/2007, -35/+58This guy is retarded. Renting is throwing your money away. Buying a home is an investment. There is NO comparison.
- EclipseGSX, on 10/10/2007, -2/+24It's amazing to me seeing some people I work with trying to sell their homes/condos right now. They're absolutely convinced they're going to get top dollar for their property, and are wondering why they're only getting a few prospective buyers, and all the offers have been at least 10% below the asking price. I don't expect prices to come down much in the next couple of months, but over the next couple of years people are going to realize the pipe dream they were living during this bubble.
- asianautica, on 10/10/2007, -8/+29By your logic, you'd be crazy not to buy a .com stock in 2000. After all, it always goes up. If a 20 years historical chart doesn't convince you of the logic of fundamental in asset classes, nothing will.
- perryjoyce, on 10/10/2007, -0/+19Totally missing the point of the article. He's not saying that buying a home is bad, it's that buying a home NOW is probably not a good idea.
- DrMonkeyLove, on 10/10/2007, -2/+19If only buying a house was actually a real possibility in this overpriced housing market. Yeah, I'd love to be a homeowner, but damned if I'm going to pay $400,000 for a house that's only worth $200,000. I can afford $1000 a month in rent. You can't buy a house in my area for less than $2000 a month. Renting isn't throwing money away when the only other option is to buy an overpriced house and drown in dept.
- slonrgjon, on 10/10/2007, -2/+18i hate subprimers
- tmspecial, on 10/10/2007, -2/+17You are probably one of the morons who bought overpriced real estate in the last couple of years. Now you are desperately trying to find an even bigger moron to sell it to.
- inactive, on 10/10/2007, -1/+16I was just in Oakland and there are several new Condo's going up downtown, and a 2 bedroom starts at 720,000$ plus HOA fees of over 500$ a month?!
Who the hell can afford that? Do the quick math of 20% down, 144,000, plus a 30 year fix at 7.8% for the remaining 576,000 is 4164$ a month PLUS 500$ a month in HOA fees. bringing monthly payments for a new 2 bedroom condo in Oakland, CA at 4664$ a month! Jesus, plus you are out 144,000 grand up front. - kalikkalik, on 10/10/2007, -2/+15And the divide increases...
Contrary to popular belief, a home is (usually) not your greatest asset. For most people, is is their greatest DEBT. When you sell it and make actual money, THEN you can say it was an asset. You may have built up what some folks call "equity", which means "imaginary money", which also assumes that you owe less than what the current market would PROBABLY pay for your house. Its not assured....which is what people are starting to realize in a market like this.
Equity != Money
Your homes' value is always subject to change.... - SoCalMario, on 10/10/2007, -8/+21I don't regret buying my home no matter what this article says. It feels good owning your own place. Especially when girls know you own your own place! ;)
~mario - schnikies79, on 10/10/2007, -2/+15My parents have a fixed interest rate on their home at a low rate. Why not own it? They are having no issues what-so-ever. Not everyone was silly enough to got an ARM.
- 0rion16, on 10/10/2007, -6/+19So its good that I'm poor right now?
- imacommi, on 10/10/2007, -0/+12This is a buy vs rent calculator that the NYT put up. This pretty much includes everything you could ever think of. Great resource, it turns out in todays environment it's better to rent unless you plan on living at the residence for over 15 years or so. food for thought.
http://www.nytimes.com/2007/04/10/business/2007_BU ... - ztexas, on 10/10/2007, -4/+16Nobody is suggesting your parents sell their house and start renting. But it would be folly to buy a house now, knowing that housing prices have only started to fall after the biggest run-up in modern history. Why buy a house today when you can rent one more cheaply, avoid pay property taxes and maintenance costs, and purchase an equivalent (or better) house in a few years for less money. This is likely to happen in most markets.
- MrTsLoveChild, on 10/10/2007, -0/+12uh...there's that little nuisance of the mortgage.
yeah...kinda have to pay that every month. - liquidfirex, on 10/10/2007, -1/+13... Can you not read a simple graph? Look at the deviation of Income vs Home price... yeah you see that? notice how little it deviated for 30 years? Now look at '95 on.. the deviation is increasing.. a lot.. over a short period of time. People and banks simply cannot close a gap that big, that fast. If wages go up, sure housing can go up in price, the differential will be about the same, but that isn't happening.
- user12345, on 10/10/2007, -1/+12what planet are you guys from? Are you assuming people are actually buying there homes outright and actually hold the deed?
- drburk, on 10/10/2007, -0/+11The biggest issue may be the uneducated buyer. I've talked to several struggling owners who thought they could dump 50% of the income into a house. The buyers were brought in under the pretense of a low monthly payment, no one mentioned insurance and taxes, HOA fees, water (for the new lawn), sewer, and so on. Suddenly there is a layer of $150 - $200 on top of the low payment and it isn't low.
When I got the mortgage I insisted that everything include these figures. It made my builder squirm each time he said my payment amount I said plus $175 for other items. Just before a co-worker bought her first home I asked what her mortgage payment was going to be (I am that rude) she said $1000 plus whatever my taxes, HOA fees, and insurance is. She didn't know these were in the monthly payment and made frantic calls to her mortgage company when the first payment was due. She is a single mom with 2 kids earning $36,000 a year with 5% down with an ARM. Didn't ask questions, bought spur of the moment, didn't educate herself first. - albinorhino101, on 10/10/2007, -2/+13wow and my main reason for renting is so i can take a massive ***** at 2am, clog the toilet and call somebody else to come and fix it.
- catalysis, on 10/10/2007, -6/+17Renting is only better than buying if you pay less than you would pay on interest to your mortgage.
If your mortgage interest is less than a rent payment, then the extra would go into equity and you could deduct the interest from your taxes. - inactive, on 10/10/2007, -1/+12Agreed. I think all the other commentators are pissed at themselves for being the victims.
- Sirocco, on 10/10/2007, -6/+15>> I'm glad I don't own property right now.
Why not? As long as it's paid for (or you have a locked interest rate) and you hold on to it there's nothing to worry about. What you should have said was "I'm glad I didn't purchase land recently." - pintomp3, on 10/10/2007, -0/+10the tax break isn't for ownership. you don't get a tax break on the principle, only the interest. it's a government subsidy for the banking industry.
- blitzer, on 10/10/2007, -0/+10It depends. Buying a house has taxes, insurance and interest costs which may actually cost more than rent. Do the math.. see what works for you.
- MrTsLoveChild, on 10/10/2007, -7/+16i'm kinda sick of people not only buying into, but also passing along the myth that a house is the best investment you can make.
take the money you're dumping into a mortgage (and home owner's association fees, and interest, and insurance...) and put that in a marginal investment account. you'll come out WAY ahead renting and investing competently. - esaks, on 10/10/2007, -0/+9In some market's it is much better to rent now than to buy, many parts of California fit this bill. It doesn't matter if you're monthly payment is going towards a mortgage, you lose all your equity if the market value of your home goes down. I hate it when people say a house that they live in is an investment or an asset. It is NOT even if the bank says it is. The only real estate that is an asset is a property that is performing and paying you every month. Also since the economy is bound to take a hit soon, losing your job is far less of a problem when you rent than it is if you have to pay a mortgage. On the other hand since interest rates are bound to go up soon to combat inflation caused by the massive injection of liquidity by the Fed, a low interested fixed mortgage may become an asset in the near future. 6% or 7% fixed is going to become very rare soon so being able to payback in devalued future dollars is a real asset. Inflation will knock off a huge part of your loan if left unchecked.
- zarex, on 10/10/2007, -0/+9No one has mentioned the awesome tax writeoff of mortgage interest - basically reducing your net payment by a third. This is a big deal for home owners, and renters don't get this benefit.
- dtilford, on 10/10/2007, -2/+10Dugg down for telling two different people the same thing copied and pasted. Even if I agree with you, it still makes you a jerk.
- jcaino, on 10/10/2007, -0/+8i purchased a house recently and im glad i did. the market in pennsylvania is probably one of the best around, with housing prices more or less the most reasonable in the nation. its not paid off, but i over-pay each month to knock off more of the principal. oh yea, and i have a fixed rate. for the same price, i have a TON more square footage than anywhere i could rent for no where near the same price. not only that, but it gives me projects to do. and i don't have to worry about a landlord coming and bitching at me because i have a pet.
edit: i dont see prices falling FAR in pennsylvania either...its about as low as it will/can go. like i said, it has been fairly steady here without the exagerated bubbles that have been experienced elswhere - BenHanby, on 10/10/2007, -2/+10You are either sitting on an asset that's going to lose 30% of its value, or you are accumulating cash while the prices come down. Your choice.
- schnikies79, on 10/10/2007, -6/+14When it's paid off, it's not a liability, it's a huge asset. Learn some economics before you speak.
- clark1001, on 10/10/2007, -1/+9Depends how long term you are thinking. The financial success of the United States will eventually prove to be the biggest bubble in the history of economics.
- schnikies79, on 10/10/2007, -0/+7That makes sense. Thanks for clearing that up.
- jdbeast00, on 10/10/2007, -2/+9PROOF? you got to be kidding me. somewhat likely is more like it.
- krusader3z, on 10/10/2007, -4/+11Buried after 3 words.
- Starflyer59, on 10/10/2007, -2/+9The biggest liability you will ever own is your brain.
- asianautica, on 10/10/2007, -0/+7As you requested: http://lilurl.com/?aqe . This chart goes back to 1890 and inflation adjusted, price didn't change between 1890 and 1997.
- slothlovechunk, on 10/10/2007, -2/+9What kind of retarded markets are you guys living in where rent is more than buying?
In my market, with property taxes, home-owner's association fees, housing insurance, you are probably paying 50% more to buy. If you are only paying a very small proportion of that amount towards principle, the renter has much more money every month to invest in perhaps more lucrative investments. - shaunhey, on 10/10/2007, -0/+6Hey, I didn't get a house passed down to me... I work for what I have. My children will have to do the same! Besides, so many people lose all of that equity when they spend their last 12 months of life in a "waiting to die" hospital. Just take me out back and shoot me once I start "waiting to die". Someone will appreciate the oxygen I'm no longer breathing :)
- BenHanby, on 10/10/2007, -0/+6And they have a $1100 mortgage because they bought in 1999? What do you suppose their mortgage would be if they bought it today?
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