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I've been showing that chart to people for months. Everyone stares at it for 5 minutes after plugging in the numbers, sees that it'll be 16+ years to make buying worth it, turns back to me and goes "you know house values always go up right? Your paying your landlords mortgage!"
...sigh.
4 years @ 200k, 7 @ 225k... At 0% appreciation. Depends if I get the 10-15% drop I'm expecting in the next 6 months - right around fall, when people didn't sell by the time school starts - to put the houses I want into that price range.
That calculator linked to in the article is great - thanks for posting!
Obviously, a key data input is what the average annual appreciation will be in your home's value. I know that 4% annual appreciation seems to be a good historic average, but with the bubble we've had over the past few years I would be surprised to see real estate appreciate at an average rate higher than 2% for the next decade.
Here in the NY metro area, as the article pointed out, the calculations are definitely still in favor of renting instead of buying ("I’m also not sure that we would have been willing to buy in Boston, New York or much of California, where the rent ratios remain above 20, according to data from Moody’s Economy.com.")
mark, I'm in NYC too (staten island) and yeah - renting is still way cheaper than buying, even if rent goes up 5-7% a year. However, if you canvased 100 average people who live in my neighborhood, 90 of them will give you some reason they believe prices CANT go down here, and when they go to buy/sell they do it under that assumption. Its a game of chicken to see who's right.
Rent vs. Buy is not a question!!! you should buy!! any good agent can show you why within 5 mins.!
First off...yes, not everyone is meant to be a homeowner. There are many reasons, wich all the nay sayers will gladly tell you on this site. But, if they want to equate buying a home to an investment(as they do!)? When do you buy stock...on the way up or on the way down?
There are many good buys out there now. Buy smart, know your market, what loan programs are available, how much home you can afford and understand if it is a starter home, move up home or empty nester home.
Happy HOME Hunting...Buy Now.
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Johnresales and Bneed gave exactly 0 reasons for their statements. Christ it's amazing how mindless some of the people involved in this industry can get. They standarize their mindsets into talking points and attempt to push their ideas through constant repeating false prattle. I'm amazed that they don't need to scream "BREATH BREATH BREATH" before they go to sleep in case they go into respiratory arrest. Just amazing.
Sometimes, I wonder if people in the industry are actually real. They repeat the same dribble,
"BUY NOW!!! NOW IS THE GREATEST TIME TO BUY!!!"
Get a load of this heaping piling of crap from the NAR!!!
“Real estate professionals around the country know that a lot of the negative publicity about the real estate market just wasn’t true,” Stevens says. “They’re really glad we’re setting the record straight.”
http://www.realtor.org/RMODaily.nsf/pages/News2006110701?OpenDocument
Buying is not for all, and neither is renting. Some of my most recent clients are buying because of personal things going on in their lives (getting married, having a child) and others are waiting on the sideline waiting for their time to "jump in." Of course, one of the main reasons for buying is appreciation, but there are other emotional benefits as well - community, no landlord, family memories, etc. If it was all about appreciation, none of us would buy new cars! Right?
Bump.
Chris here is saying 'renters' are not entitled to family memories, getting hitched or hatching offspring. Only happens if you buy a home :-(
I won't even touch that last comment comparing the sale of a Hyundai to the biggest financial purchase in one's life.
It's crap. When home ownership represented 15-18% of the family's income -- and that income came from normally one earner -- then the so-called "intangibles" were a reasonable argument. After all, appreciation was ***not*** the norm. Housing only appreciated at inflation up until the late 60s, ignoring that huge period of almost 50 years where housing __lost__ about 60% of its value (1890s-1940s).
But today, people are forking out 40%, even close to 50% of a *two* income household income. It's a much more critical decision.
Trust me, when things get critical then ***everything*** is quantifiable. Everything. Saying things are somehow beyond measure is a luxury afforded to us when we have slack in our decisions. In fact, when it comes to a housing decision, I can precisely value your so-called intangible-value in exact dollar figures. I've done it. It's in that model I created a few years ago. Go try, you'll be surprised what the NAR-spin froofy stuff really costs you.
By the way, Chris: After we sold & moved we decided to rent _precisely because of our child_. Implying that buying a home is somehow automatically better for one's children is frankly offensive. It's a cheap, disgusting NAR emotional sales tactic that is beyond pale. Have you guys no sense of decency?
Two clueless Realtors for the price of one thread?
johnresales:"Rent vs. Buy is not a question!!! you should buy!! any good agent can show you why within 5 mins.!"
Well we are still waiting for that 5 minute eye opening presentation.
And Chris Kamali... Randy has your spiel pegged:
"Some of my most recent clients are buying because of personal things going on in their lives (getting married, having a child)"
Next time can you throw in some lines about having people over to watch the superbowl, maybe something about grandkids too? That usually gets the marks all misty.
Why pay your landlord's mortgage when you can pay your own? And, often your mortgage may be less than you are paying for rent and you will have more house for the dollar. There are two advantages of owning vs renting. When you look at the savings in taxes you will be amazed at how it lowers your actual monthly costs. You can deduct the interest you pay on your mortgage and your real estate property taxes. If you live in Flroida you can also lower your taxes if you Homestead your property (register it as your main residence.) There are many other reasons that make home ownership a plus over renting. [content removed by moderator for being self promotional]
Geeze, I did it all wrong.
My hubby and I were renting when we got married and continued renting for 5 years while we had 2 children. I didn't know it couldn't be done. Gosh, durring that time we managed to put a lot in savings and now in our ealry 30's are very well off . I must have made some sort of deal with the devil to be able to get married and have children while renting. My children still have great memories of the place we rented for so long. I'll have to tell them they need to be more somber about it because we were renting after all.
Guess it was magic, becuase even though we weren't making that much and (gasp) renting back then, we still managed to sock away a large nest egg.
The worst part is that cmyork is referring to FL in her "financial benefits of buying" scenario. She is conveniently leaving out of her calculations the fact that house prices are dropping about 10k a month here. Mortgage insurance deduction and homestead - LOL
Perfect K...lets do the math and school 'em.
Rent for a 3 bed 2 bath?
Sale price for a 3 bed 2 bath?
Standard deduction (based on the median income)?
Now is when you get it...the 10K a month. Maybe even be EXTREMELY conservative and say 12K per year.
Don't forget closing costs (which are more than a security deposit) and you won't get it back, figure it like it's the 6% you'll pay to sell. We won't even count down payment.
Now, after 15 years it may make sense, don't get me wrong. But if you're moving anytime soon, it may not be the best option.
Haha wow. cmyork joined in the fun hoping that someone would read her comments in a semi popular thread without reading it. At least put thought and reasoning instead of blind faith in that glorious 'Best time to buy' phrase. It's like rejects from garbage tech schools went to town with marketing 101 and are pretending they're business professionals.
oh boy, 2 drive by realtors in 1 day! 2 for the price of 1!!!!!
Actually it was a trifecta.
Check out the 3rd realthwore's cut and past job straight from the NAR manual.
Give me a B give me a U give me a Y
What does it spell? I Need Commish!
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Nope, she had to type it, you think they would release that secret information for all buyers to know?
''Prior to becoming a licensed Realtor® in Florida, my career has included Receptionist '
If I was a prospective client..I would stop reading right there. Next!
Ah come on...I was...A laborer, a lifeguard, a server, a lot boy, mechanic's assistant, deli counter clerk...what's that got to do with it?
... and, it's free and anonymous
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Rent vs. Buy
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Mikal1
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Nice, simple article that talks about the rent versus buy situation in a reasonably balanced, calm fashion. Nothing new, I just like the simplicity and the interactive charts.
NYT
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