Reply to What if we just rent for the long haul...

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[quote=Anonymous][quote=Anonymous]You miss out on appreciation but pay all the costs and a huge loss vs inflation over a long period.

It’s a mistake to think you aren’t paying for interest, taxes, insurance, maintenance over the long haul - who do you think pays for these on rentals?  You reduce risk of major system failure hitting at the wrong time and you’re sharing in the discount with the landlord of tax deductibility and depreciation (landlord needs less cash flow to be flat/positive) but over the long haul, these advantages pale in comparison to locking in a huge portion of your cost of living.

15 years ago I left an apartment paying 2200, it was re-rented at 2500 after I left.  I purchased a house and my PITI was 1600.  After doing significant renovations it went as high as 2400 and was eventually 2000.

I sold that house and banked (gross) 935k.

I bought a new house with a 80/20LTV (didn’t use proceeds of house sale) to buy and my PITI is around 3700.

In 14 years, I’m paying 1500 more for a whole house as I was paying for a builder grade inside the beltway near the metro rental.   For a huge portion of that time I was paying less than I paid in rent.

That’s why you buy. [/quote]

Except that right now the mortgage for the same place is roughly double what you would pay in rent for it and most of it goes to interest. The prices are also not increasing at the same rate they used to. Plus you need to consider all the transaction costs of buying and selling plus the maintenance expenses. From a purely financial perspective (I realize there are other benefits of owning) you are highly likely to come way ahead by renting and putting your down payment in the market. I own myself, so I am not some jealous renter, but I did the math for our case. With all we have put into this house we would be well ahead financially if we just continued renting and put the 500k we spent on down payment and renovations in the market. And we bought 5 years ago at much lower prices and have a sub 3 rate. People who are buying now are making a completely different calculations. It is worth remembering that many people do in fact lose money from buying. [/quote]

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