Housing versus renting - this calculator looks interesting

[2Design]

http://www.cepr.net/calculators/hb/hcc.html

You plug in the numbers and the area of the country you are looking at and get a picture.

[TallahasseeGrannie]

1. Without actually doing it

does it ever make sense to rent? I rented for years, but we've had more disposable income after buying because we refinance and use the cash out.

[yorkiemommie1]

2. cute penguins!!

lol!

[TallahasseeGrannie]

3. My penguins are my alter egos

I waddle out innocently only to get slapped into the ice hole. But I always get out.

[thinkingwoman]

4. I think it only makes sense in the short term

For example...if you move to a new area and don't know the local market well enough to know where to buy and how much to spend there. You might rent for 6 months to a year first and get a feel for the community.

Other than that...I'm so glad we finally bought. We were fooled for years into believing that we couldn't buy because we couldn't save a downpayment. Who knew you could get an FHA loan and then get the seller to PAY THE DOWNPAYMENT FOR YOU! LOL. We actually got money back at closing. We essentially bought our first house for a $500 earnest money check. We're much better off because our mortgage is less than rent would be (local rental market is inflated because of college students).

[mhr]

10. Unemployed For Three Years In Bush's Amerika

Landed new six figure job last June.

Mortgage brokers said that I had to have two years of W-2s before I could buy.

Sometimes some of has no choice but to rent.

Always examine your assumptions before making a comment.

[thinkingwoman]

11. those are extenuating circumstances

the post I responded to was speaking generally and so was I.

Your admonishment that I should examine assumptions before making a comment is just plain silly. :eyes:


If you're looking to take offense where none can be construed, be my guest. I wouldn't dream of stopping you.

[mhr]

12. Not Taking Offense - Just Pointing Out Facts!

eom

[thinkingwoman]

13. If that was the case

you would have responded to TallahasseeGrannie or the OP, rather than to me.

But suit yourself.

[shrike]

15. Off-topic, but how's the job going, MHR?

Didn't know it was six-figures -- that's terrific.

[Chico Man]

5. I'm thinking of selling my house and going back to renting..

Cashing out on this investment (bought in 2002) would net around 100k at current values, and we can rent a house for a while and wait for prices to go back down. All the while, the 100k could be sitting in an investment.. appreciating...

Of course, the risk is prices will never go back down.. who knows.

Also, I'm sure it is a lot easier to buy a home when you don't have one to sell.

[TNDemo]

6. I'm not too sure about this calculator.

I put a number of different scenarios in there and every time it said it would be better to rent. Houses in my city (which is what I put in the calculator) are still selling really well and appreciating pretty quick. I tried the formula with a huge down payment, a small down payment, keeping it for different lengths of time, etc. and could not get any answer but that I should rent. I have to say I have done well owning the homes I have here over the last 20 years. Maybe the calculator is factoring in a recession or something.

[enid602]

7. calculator

I plugged in my specifics for Phoenix, and it said I would save quite a bit of money by renting because it predicted a 54% decrease in (in inflation adjusted terms) over a 5 year period. Curious, I plugged in 15 other cities (big and small, east and west); they all predict drastic decreases in home values. This calculator will advise you to rent no matter where you live. Many areas of the country have not seen substantial increases in home prices during this housing boom; I doubt if these homes will lose substantial value over the next five years. I can't tell, but I think the calculator also assumes that your rent will be stable over the period specified. This may not be realistic as we enter a period of possibly high inflation fueled by increased gas prices.

That said, if I had the good fortune to live in NYC or LA (I have two big, middle-aged dogs, so relocation might be problematic), I would happily rent and concentrate on enjoying the cultural opportunities that those over-priced cities have to offer. Here in Phoenix, home prices have risen by 48%. If I did not already own, I would not be looking for a home here.

[pop goes the weasel]

8. unrealistic

I'm planning on buying the house I'm in right now. It's worth around $30K. The calculator says I would be better off if I could find a similar house to rent at $100/mo. How stupid. The rent on this house is $425/mo. There have been no houses to rent at $100/mo since the mid-1980s. Rents do not reflect housing value--they reflect (1) whatever the owner can get away with, (2) the risk of the owner in renting out the property and/or (3) rental demand, which is very different than purchase demand.

[TechBear_Seattle]

9. Not everyone has the option of renting

I live in Seattle. The median price of a single family home is $381,250 as of last month. The median price for a condominium is $229,950. In the Seattle city limits, the median price has always been about 10% higher than county median. My legislative district (43rd), where I want very much to stay, is one of the more expensive areas of the city with median prices as much as 20% higher than the county median. ("Median price" means that half go for higher, half go for lower.)

Even if I could come up with a 20% down payment on a median priced condo (very unlikely any time soon), the principle and interest of the mortgage, plus the cost of property taxes, would mean paying a bit more than half again what I am paying in rent. I am already stretched as far as I can go; there is no way I can afford an additional $600 a month, no matter how smart the investment.

As bad as it is in Seattle, there are many cities where it is worse.

[midnight armadillo]

14. I'm in the same boat

Buying a home outside of Boston, MA where I live to get the same sq. ft. as my 2-bed apartment (about 750 sq ft) with no driveway or yard would result in me paying TWICE what I do in rent.

Since an extra $1k in expenses is out of the question, my wife & I will keep renting. Our next place will be a 3-bed apartment, and after that we should have enough money put away for a down payment. Maybe in 2008.

[amandae]

16. We looked at jobs/homes in Virginia and had the same response

It was one of the markets we looked at that would clearly make more sense to rent than to buy at this time. We simply could not afford the homes in the market, but could get a great place to live at a reasonable rent in the same areas. If you can afford to buy a house in the area, more power to you. I just don't know how "worth it" it would be. Those prices are so inflated they're bound to level off or come down at some point.