renting vs. buying

Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date renting vs. buying beliavsky 05-27-2008  Re: renting vs. buying John A. Weeks I... 05-27-2008  Re: renting vs. buying anoop 05-27-2008  Re: renting vs. buying Ron Peterson 05-27-2008  Re: renting vs. buying John A. Weeks I... 05-28-2008  Re: renting vs. buying Default User 05-28-2008  Re: renting vs. buying joetaxpayer 05-28-2008  Re: renting vs. buying kastnna 05-28-2008  Re: renting vs. buying Mark Bole 05-28-2008  Re: renting vs. buying Coffee's For Cl... 05-30-2008  Re: renting vs. buying Mark Bole 05-30-2008  Re: renting vs. buying Default User 05-30-2008  Re: renting vs. buying Elle 05-27-2008  Re: renting vs. buying Mark Bole 05-27-2008  Re: renting vs. buying Elle 05-28-2008  Re: renting vs. buying beliavsky 05-27-2008  Re: renting vs. buying Elle 05-28-2008  Re: renting vs. buying Augustine 05-28-2008  Re: renting vs. buying Daniel T. 05-27-2008  Re: renting vs. buying Don 05-27-2008  Re: renting vs. buying Don 05-28-2008
Posted by on May 27, 2008, 10:20 pm <snip> > > 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. > > I respectfully disagree that one should expect as much as 3% > a year. I think Robert Shiller is the best source on this > subject. His data argues appreciation is less than 1% a year > over the long run. See for examplehttp://money.cnn.com/2005/01/13/real_estate/realestate_shiller1_0502/ His 1% number is for annual *real* (after inflation) appreciation, and I was thinking of this when I estimated a long-term 3% annual gain, assuming 2% inflation. -------------------------------------- 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 Elle on May 28, 2008, 6:55 am > wrote: >> I respectfully disagree that one should expect as much as >> 3% >> a year. I think Robert Shiller is the best source on this >> subject. His data argues appreciation is less than 1% a >> year >> over the long run. See for >> examplehttp://money.cnn.com/2005/01/13/real_estate/realestate_shiller1_0502/ > > His 1% number is for annual *real* (after inflation) > appreciation, and > I was thinking of this when I estimated a long-term 3% > annual gain, > assuming 2% inflation. You are right. My mistake. -------------------------------------- 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 Augustine on May 28, 2008, 11:57 am > > Renting is often a very sound financial decision. IMHO, not retirement-wise, when having a roof paid off is a wiser situation than being at the mercy of landlords, maintenance and property taxes included. -------------------------------------- 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 Daniel T. on May 27, 2008, 9:14 pm 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. 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. I don't know... I live in central Florida (on the west coast) and using the formula from the article I'm running a rent ratio of over 21 (using just/market value, 25 if I use comparable sales value.) According to the article "a rent ratio above 20 means that the monthly costs of ownership well exceed the cost of renting." I also happen to know that a full 41% of my rent money goes directly into paying the taxes on the home, and I expect that another 40% or so goes to paying the home-owner's and flood insurance (The Gulf of Mexico is in our back yard.) -------------------------------------- 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 Don on May 27, 2008, 10:20 pm On 2008-05-27 15:54:13 -0700, beliavsky@aol.com said: > 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. Not only that, but also rents themselves rise along with inflation as the years go by. Owning your own home gives freedom from worry that your landlord will decide to jack up the rent next year and maybe more the year after that. And that can be very disturbing in old age when your pension check may stay about the same year after year. These comparisons of renting vs owning rarely take into consideration all the many factors involved. The calculations often look good on paper. But that money you think you are going to save by renting can easily slip away. -------------------------------------- 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 new car at distress prices? 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