adexkola
Doesn't understand sportswashing.
- Joined
- Mar 17, 2008
- Messages
- 48,603
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- orderly disembarking on planes
Few points here (applicable to America but may also apply across the pond)Thread bump:
I'm seeing more and more articles about how "renting isn't that bad" and that owning a house "costs plenty of money too".
To me, this is kinda missing the point. Yes, ownership has costs of its own. And yes, you can rent and build equity through an investment portfolio.
But when you own your home and pay off your mortgage, your monthly expenses go down. For me, that was always the main advantage of home ownership. Selling a home with profit for me was a secondary potential benefit. I use the word "potential" because there is no guarantee that you can sell with profit.
Your rent won't go down, in fact it's likely to go up. So again, the fact that your monthly expenses go down over time when you own a home was always the primary advantage for me and yet, these recent articles completely ignore this point?
Depending on where you move, rent may go down. You can decide to buy a property in retirement using equity that has been built up. And yes you're no longer paying down a mortgage + interest, but taxes and insurance will always be there, and will most certainly grow over time. Maintenance on an aging property will be substantial.
With the rent vs buy debate, there is no "right" answer. It is perfectly fine to buy a house for sentimental reasons. However very few people look at it the following way:
When you rent, you are "throwing away" the rent every month. You will never see that money again. Let's call this quantity A.
When you buy, you will never see the following money again:
Interest paid on the mortgage
Property taxes
Opportunity cost of the down payment (that money could be used for something else (building equity in the stock market for example))
Maintenance that doesn't raise the property value
Closing/legal/inspection costs during buying
And more... Let's call this quantity B.
Now usually (not always!!), the cost of B most of the time exceeds the cost of A. That delta is money that could, again, be used to build equity in the market or start a business or something... In particular, the stock market has beat real estate over a long period of time. So there are many scenarios where over time, you're better off renting vs buying, when taking the potential of B-A into account. Strictly from a numbers perspective.
The question people need to ask is: is paying B-A extra, worth the drop in monthly expenses down the line, or the feel good factor about owning a home, a backyard for the kids, or whatever other reason is given for homeownership? If so, feck it, buy the house. But I do see way more people going with the old trope of "your mortgage payment is less than your rent so buy" than arguing that rent isn't that bad.
I say this and also believe that for all who want to own a house of theirs, it should not be that difficult or expensive.