|
Posted by on May 27, 2008, 6:54 pm
Economic Scene
Time to Buy? The Conversion of a Renter
By DAVID LEONHARDT
Published: May 28, 2008
http://www.nytimes.com/2008/05/28/business/28leonhardt.html
I think this article on the buy vs. rent decision is good, but the
author ignores a factor in favor of buying -- over the long term,
house prices can be expected to rise at the rate of inflation, on
average. For a $600K house, a 3% annual gain is $18,000, which cannot
be ignored. A related fact is that if the costs of owning a home,
including mortgage payments on an amortizing fixed rate mortgage, are
currently only slightly higher than renting, it makes sense to buy,
because rents can be expected to rise with inflation over time, but
the payments on the mortgage would not. Property taxes and home
insurance costs probably rise with inflation, though.
I'm not making a short-term forecast of house prices here.
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
|
|
Posted by John A. Weeks III on May 27, 2008, 8:09 pm
In article
beliavsky@aol.com wrote:
> Economic Scene
> Time to Buy? The Conversion of a Renter
> By DAVID LEONHARDT
> Published: May 28, 2008
> http://www.nytimes.com/2008/05/28/business/28leonhardt.html
>
> I think this article on the buy vs. rent decision is good, but the
> author ignores a factor in favor of buying -- over the long term,
> house prices can be expected to rise at the rate of inflation, on
> average. For a $600K house, a 3% annual gain is $18,000, which cannot
> be ignored.
Since we are down over 14% so far this year, and 8% last year, it
is going to take a decade for your 3% to break even, assuming things
don't get even worse. If you are buying a house as in investment,
you are squandering your money. You can do far more using more
conventional investing tools. A house is shelter, and that is an
expense. You decide how much expense you want to pay for, then
find a living arrangement that works within those guidelines. The
fact of the matter is that rent is a great deal right now, and
has been for several years. The rent money that you pay on many
rentals would not begin to cover the cost of ownership.
-john-
--
======================================================================
John A. Weeks III 612-720-2854 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
|
|
Posted by anoop on May 27, 2008, 8:58 pm
> The rent money that you pay on many
> rentals would not begin to cover the cost of ownership.
I can't resist asking the following question: How do the
landlords make money? Is any landlord that bought property
during the boom years bound for bankruptcy?
Anoop
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
|
|
Posted by Ron Peterson on May 27, 2008, 11:03 pm
> I can't resist asking the following question: How do the
> landlords make money? Is any landlord that bought property
> during the boom years bound for bankruptcy?
Landlords are able to depreciate property as well as deduct interest
from income.
Successful landlords don't buy properties that they can't rent for a
profit.
--
Ron
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
|
|
Posted by John A. Weeks III on May 28, 2008, 7:52 am
In article
> > The rent money that you pay on many
> > rentals would not begin to cover the cost of ownership.
>
> I can't resist asking the following question: How do the
> landlords make money? Is any landlord that bought property
> during the boom years bound for bankruptcy?
Many landlords are losing money. Many bought into the idea
that you have to own real estate, and real estate always goes
up. The idea is to get in, make up for the cash flow shortage
each month, the property goes way up in value in a short period
of time, then sell for a huge profit. The problem now is that
properties have dropped 14% this year and 8% last year, so
many landlords are stuck with cash-flow negative properties
that they cannot sell, and they are going down with the ship.
-john-
--
======================================================================
John A. Weeks III 612-720-2854 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
|
| Similar Threads | Posted | | OT Buying A Townhouse | May 30, 2007, 4:59 am |
| buying dollars | July 4, 2008, 7:18 pm |
| chinese buying us equities | May 14, 2007, 5:12 pm |
| buying a house without an agent | February 14, 2008, 2:23 pm |
| Help info on buying into a business | April 14, 2008, 12:14 pm |
| Buying Stocks (or ETFs) for Kids | July 5, 2007, 11:07 pm |
| Buying a bank owned home | July 12, 2007, 5:04 am |
| buying,selling shares within retirement accounts | March 31, 2007, 8:27 am |
| Economics of retaining an older car, versus a buying a new car | July 5, 2008, 5:15 pm |
| Warren Buffett recommends buying U.S. stocks | October 17, 2008, 9:50 am |
|
|
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap