Hoping for a four-year tenancy
XYZZY sends along this article on why it’s stupid to buy a home when you can rent one. For several years now I’ve included under “Useful Links” over on the right a “Rent or Buy Calculator”. It still works and was even thoughtfully updated by the NYT last May, probably to allow for negative numbers on the “appreciation” slide.
For What It's Worth 
If it were the case that it is better to rent than own 100% of the time, what does that say about landlords?
For all the people who have lost or are in the process of losing their
homes, buying a house was obviously a bad idea. But all the carrying
costs that he’s mentioning are going to be paid by the tenant anyway, plus
profit for the landlord and with the cost of maintenance figured in. Of
course, the landlord could be renting out his property at a loss, in which
case he’s likely on the way to losing his investment property, and the
tenant could face a surprise eviction and the loss of any last months rent
and security deposit — can’t get blood from a no assets, bankrupt stone.
To me the main question should be liquidity: how long are you going to be
there, or is there a possibility you may have to move because, unlike
stocks and bonds, sometimes houses are hard to sell. In a strong market
such as the capitol region of Canada, sellers are getting all their money
back, down payment and mortgage payments; so once they sell they have
essentially lived in their last place rent free. How dumb is that?
With the way the US government creates money, inflation is an absolute
certainty, and at the rate they’re printing it and with the mess in Europe,
hyperinflation is a possibility; and, if not, an increased rate of inflation is
almost certain. Mortgage payers with fixed rates will benefit from this
while renters will most likely get hammered. Sure the value of reasonably
price houses could still fall further (deflation), but given everything that’s
apparent, inflation is the much more likely scenario. I think, if it doesn’t put
you too close to the edge, you think you can hold on to your source of
income, and you’re almost certain that you’re not going to be forced to
move, buying a home is still a very good idea. Besides which, I’m such a
slob that if I had a landlord, I’d surely have been kicked out by now.
it’s amazing how smart professors are when doing regression analysis vs. in real-time & real money to prove their thesis.
oh that’s right, with his real money he sunk over a couple mil in a place that went kerplunk. now he needs to prove that it was a bad idea….
yet were he to do a thesis in 2003-2004, his conclusion would’ve likely been smarming about how “real estate is a terrific hedge against financial instrument volatility through it’s steady, measured growth.”