Profile picture for ChanceProAgent

To Rent or To Buy

Most people appear to be against buying a home, and are for renting, whether it be an apartment, house, or condo. What's your opinion? Agents', brokers', investors', dabblers', buyers', sellers', and renters' opinions are all more than welcome.
  • February 01 2011 - US
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Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (30)

Profile picture for Sharon Lewis
why are you posting the same thing over and over again?
  • February 02 2011
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Profile picture for sunnyview
"I can rent for 10-15 years, decide to leave, but have nothing to show for it. Or I can buy, live there for 10-15 years and have the possibility of selling for profit."

People who bought that logic in 2003-2008 are not sure that is true anymore. They cannot sell and they owe much more than they will ever see in 10 more years time. Buying a house is great as long as it does not pose a financial burden. The expense of buying/selling and maintenance has to be worth the risk and potential lost opportunity cost. Otherwise in a flat market or a falling market , you lose money and are better off renting and investing in a non housing sector.

Most people don't buy their primary house for investment. They don't keep their PITI close to or less than rent and so they can't move, sell or rent at will. If they did, they would have more options. I love real estate and do feel that you can make money, but you make that money when you buy based on choosing wisely and not just hoping for the best. You have to look at it as an investment first and analyze things like rent, cash flow, ROI etc, then you can make a reasonable decision about how much you are willing to pay for the "lifestyle" part of being an owner.
  • February 02 2011
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Profile picture for ChanceProAgent
I am just trying to get more opinions. It seemed the same people said the same thing (me included) and I am interested in seeing what others have to say. 


That makes sense. So then if people lived a little more below their means, things would be better? 

For instance, if one was approved for 400k but used 220k, and kept their PITI close to rent prices in the surrounding area, they would be in a much better position and have more options in the future?

  • February 02 2011
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I am always for a person purchasing a property that aligns with their future monetary goals.

For instance, if you don't care about saving anything for the future, and would like to go pay day to pay day without anything left over to build for your retirement, than buy as much house as you can.  You also better hope that the economy increases exponentially for ever and ever so that your initial investment will only increase year after year.  

Or, you could follow your own advice and, if you are concerned about the Rent Vs Buy equation, purchase at the amount that is a wash for this ratio.  Depending on where you live in the Country will help determine what this price is.

  • February 02 2011
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Profile picture for sunnyview
If people kept their housing expense to 2.5 times their steady income and kept their PITI and rent closer, they would have a lot more options. Even if prices go down or stay flat, those owners can choose when they sell and will not be forced to sell in down market. 

Even in the worst case, those owners come out better. The first waves of foreclosure owners got nothing from the government-no loan mod, no lower rate, no help at all. The slightly more stable owners who could hold on for longer had a shot at benefiting from HARP or HAMP.  Owners who bought high, but have a PITI close to rent can afford to hold indefinitely waiting for the market to move forward as their mortgage balance drops. If those owners lose their job, they can move out and allow the house to largely self carry until things are better. 
  • February 02 2011
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Profile picture for lake789

I'd suggest buying at this point.  The key is to find the right location at the right price.  That is an important factor in whether your purchase was a success.

Hope this helps!
  • February 02 2011
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Sunnyview your opinions and point of view is right on, but the one deciding factor for most people is they fall in love with the home. 

Once they find the ONE for some buyers it is beg, borrow, or steal to get it...  As an agent I try to keep my clients looking at homes that I know fit their needs, so that when they do fall in love they are in love with a home that will work for their needs... To me that is the one thing I bring to the table that my clients would not have if they did not have me. 

I don't pick homes or locations I enter my clients desires, and needs (with a touch of reality) and pull a list of those homes for the buyers to choose.  Not saying it is always 1, 2, 3 here you go the perfect home. (*by reality I mean cap the price point within qualification range, show homes that will qualify for the type of loan they are getting, and be sure to watch the HOA, property tax, etc... to keep the payments within the price they really can afford) . 

You sound like a very logical person who thinks before you leap... which I commend...  More homeowners approach home buying with their heart... and of course some have purchased to "keep up with Jones" or for that great "American Dream" which has landed them in the great American nightmare... No one can predict the future... we can only advise according to today... I can't tell you that the rent prices will stay the same or home values will increase, but I can tell you that your new home (from morg to perpetual maint) will or will not be within budget, and satisfy your needs.
  • February 02 2011
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Profile picture for the_country_hick
Marvia, I can see falling in love with a woman. I can even see falling in love with a classic car that is not made any longer. I can not see falling in love with a house. Any house out there can be replicated elsewhere easily.

I can see buying a house that would suit my needs and is priced right. I made on an offer on a house that I could live with. There was no love involved. It was something that would work for me. The seller wanted to much and I never bought that house. The value was not there.
  • February 02 2011
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Dan, That is awesome.  That is a great approach.  I'm just saying that most of my clients light up when they find the right house.  They have to have that one... even if the other one we looked at is the better deal logically... They will get the house they (the clients words) "love".

I'm not saying that the house is bad, but I have told some of my clients that I did not think that price was good... I would not go above X amount... and they just did not care... they wanted that house... the value is up to the client in the end... I can give all the comps in the world, supply them all the data... but in the end the client decides which house is the one they want... and more often than not I have seen them go for the house they "love" over the house the data says is the best purchase... Again - the house they "love" is not a bad deal... just not always or even usually the best deal...
  • February 02 2011
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Profile picture for sunnyview
You're right Marvia. Buyers do fall in love. I've seen that too. I just wish that they would make the important financial decisions about buying first and educate themselves about their basic market before they walk down the aisle. 
  • February 03 2011
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Sunnyview... well put... I agree and that is what I feel is the important element a REA can bring... like I said in my first post... I try to keep them looking at homes that fit their needs and budget... but in the end with all the technology that is available... an agent can only do so much... If my client finds a home on some website and they want to look at it and fall in love with it... I feel horrible when it won't pass inspection... I can keep an open mind about the house, but I fall in love with my clients... and I feel responsible for their happiness and protection...  I try to educate as much as possible and with some clients things go smoothly...
  • February 03 2011
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Profile picture for Connie Klemme
buying is not for everyone. I used to think it was insane to rent when you can buy but I see it differently now (even though having buyer's means more customers for me).  If you need the flexibility to pick up and move without the burden of property, to have someone else do all the repairs then renting might be for you as long as you are sure the landlord is paying the mortgage with your rent money.   And these days with people borrowing more than the house is worth and financing it for eternity they are pretty much renting- just renting from the bank.   That being said, for others home ownership is the way to go.  Some of the perks of ownership are that someday you'll pay it off, you get to make the rules about remodel and changes to the house, you have it as an asset to sell and if it gets re-possessed by the bank it's because of your financial situation not someone else's.    That was the Ferdinand Magellan version of saying  "it depends on your situation (panama canal version)
  • February 03 2011
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Sometimes renting is the best option....you may not get the end reward of selling the home and getting the equity out of it. But in the meantime you are not paying upkeep, maintenance, improvements, property taxes, etc., etc. Also, in an apartment, you are not responsible if the water heater goes out, or if you decide to move, you don't have to paint and you can leave at the end of your lease with no consequences. In a down market, trying to sell your home can be tough. So look at your long term goals and your lifestyle.
  • February 14 2011
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I purchased a home as soon as I could because I can't fathom throwing money away on renting but that's me. People choose to rent over buying for a variety of reasons. It could be temporary relocation, fiances, credit and an array of many others. Some just don't want the home ownership responsiblity. I have a friend who's a retired attorney and he rented for years before he decided to buy just because he didn't want the responsibility of repairing anything, etc. Everyone's reason & lifestyle is different.

  • February 14 2011
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Profile picture for dacolan
"I can't fathom throwing money away on renting"

If local comparable rents are half PITI, who is throwing their money away, the renter or the mortgage holder? I wish more REAs understood the fallacy of this myth the NAR insists on perpetuating.
  • February 14 2011
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Profile picture for Lady Chattel
"throwing money away"

Go tell that to the guy who moved in the same month I did.....he "owned" while I rented.....he sold this past summer......for a major loss.....when I go to buy this summer my loss will be much less than his.....so who threw money away???  If you buy when prices are high relative to incomes then you are paying too much for a home.  The area I live in is still $100K overpriced, unless I get a windfall of free-unearned money then I don't see why I should be compelled to buy.  

I have rented for 3.5 yrs, I am looking to buy this year, but only if I don't have to pay a ton more than what I do to rent.....and the buy home has to be somewhat comparable to my rent home.....so far, there are only a few that meet that criteria......and those homes are from sellers who bought pre-bubble.  The homes for sale from bubble-buyers are endless....and their prayers that I will save them from their bad purchase is just that a prayer and a wish......but they will get a lemmon to buy.....cause the REAs can still convince buyers that prices are so low (but only compared to 2006) and there are still a number of people unwilling to rent because of the social stigma attached to it.  My bank account allowed me to get over that stigma real fast.
  • February 15 2011
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Profile picture for Bruce Cadden

Obviously this discourse proves that whether you rent or buy, you just have to do what conforms to your lifestyle, philosophy, income,ect.

Who was a better artist, Monet or Rembrandt? No real answer, is there.

  • February 15 2011
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Profile picture for sunnyview
Rembrandt may be more expensive here, but Monet is better ;) The real question is would Monet rent or buy?
  • February 15 2011
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Profile picture for Bruce Cadden
I think he rented. Paris real estate was expensive.  No money in art until you die.
  • February 15 2011
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Hi,
I am an agent in Seattle, WA and I feel that buying is definitely better than renting. The opposition would say that renting may be less expensive on a monthly basis, and this may be true in the short term.
When you are ready to move from your rental you will have no equity built up in your rental, you also have very little or nothing to say about decorating, landscaping or improvements for your dwelling while you are there.
If you are wise buyer, then you will buy a home that is affordable for your budget, a mortgage that will not cripple you in coming years and will not lose equity if the bottom falls out again!
Those may seem like very daunting tasks; however with the right mortgage and real estate brokers it can be done. Then you can include pride of ownership to your list life achievements!

  • February 16 2011
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Profile picture for dacolan
Housing Market Looks Sickest in Cities That Once Seemed Immune

Few believed the housing market here would ever collapse. Now they wonder if it will ever stop slumping.

The rolling real estate crash that ravaged Florida and the Southwest is delivering a new wave of distress to communities once thought to be immune — economically diversified cities where the boom was relatively restrained.

In the last year, home prices in Seattle had a bigger decline than in Las Vegas. Minneapolis dropped more than Miami, and Atlanta fared worse than Phoenix.
  • February 16 2011
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Profile picture for blue screen exile
"and will not lose equity if the bottom falls out again!" -

Hi agent in Seattle that "feels" it is a good thing for people to give you a commission!

Does that mean that if a bungee cord jumper salesman "feels" it is a good thing for you to pay him to jump off a bridge that you will do it?

But you really need to explain your "new age" math to us "ignorant people"...

1) If the bottom never fell out since the market was obviously bubble and needed to correct, how can it be "again"?

2) If the correction is still occurring, and thus prices (and values) are still dropping, how are you not going to lose equity?  Even if paid off, you still lose equity!  Even if you walk away from an underwater asset, you still lost equity!

3) If the bottom ever does fall out, how are you not going to lose equity as there is no part of the market that is immune from market forces?

What Junior High School taught you to do mathematics and analytical decision making based on "feelings" anyway?
  • February 16 2011
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Profile picture for the_country_hick
Teresa, "If you are wise buyer, then you will buy a home that is affordable for your budget, a mortgage that will not cripple you in coming years and will not lose equity if the bottom falls out again!"

What kind of insurance are you offering that protects a buyer against house prices dropping? That is the only solution for this problem.
  • February 16 2011
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Profile picture for Lady Chattel
Teresa has too much wrong with her post.......let's just say.....she is the reason why the entire profession gets a bad reputation. 

I get my $4K deposit back when I leave my rental.....my neighbor who is selling is short selling....so what does he get?  Yeah, exactly!
  • February 16 2011
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Profile picture for SteadyState
I want what Teresa is smoking!
"If you are wise buyer, then you will buy a home that is affordable for your budget, a mortgage that will not cripple you in coming years and will not lose equity if the bottom falls out again!"

Teresa how does one buy a home that doe not loose equity when the bottom falls out again?
Clearly, thinking is not for you. You may also want to reconsider your career.
  • February 16 2011
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Profile picture for SteadyState
Teressa amused me so much I had to check out her page on Zillow. It gets better. Here is a quote from he page on Zillow:

"The bottom line is whether my clients trust the advice I provide.  If they trust the fact that I will tell them NOT to sell or NOT to buy just as readily as I will offer to help them sell or buy, then we are in the right kind of relationship.  Yes, there are better times to buy or sell, but my job is to provide information and my client's responsibility is to make the decisions that are best for them.  The better information I can provide, the better decisions they can make.

No matter what, my real estate market is great!  Yours may differ based on where you bought, how you bought, when you bought and even why you bought."


If you will buy when I tell you and sell when I tell we will have a great relationship! Moreover, no matter if the bottom is falling, my real estate market is always great!.

I have begun to doubt the sanity of the educational system in our country since I started reading posts from REAs on Zillow!
  • February 16 2011
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Profile picture for Lady Chattel
WTF!!!  "If you will buy when I tell you and sell when I tell we will have a great relationship!"   I don't know where to begin......uh.........WTF.......I mean really.........I want what she is smoking too and if her method works to get clients then I want to attend the same drive by license course she took.
  • February 16 2011
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Profile picture for Lady Chattel
Renting is in....foreclosures & mortgages out.....
"On rich neighborhoods, annual rents are often 2.5 percent of purchase price while mortgage rates are 5 percent, so it costs twice as much to borrow the money as it does to borrow the house. Renters win and owners lose! Worse, total owner costs including taxes, maintenance, and insurance come to about 9% of purchase price, which is more than three times the cost of renting and wipes out any income tax benefit."
  • February 16 2011
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Profile picture for dacolan
Great link, Lady. It is simply mind boggling that so many "professionals" responsible for six figure transactions fail to understand the math behind the concept of renting does not always equate to "throwing money away."
  • February 17 2011
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Profile picture for SteadyState
Georginia O'Bryan writes:
"I purchased a home as soon as I could because I can't fathom throwing money away on renting but that's me."

Please tell us how that worked out for you? I certainly want to know how you did personally.
  • February 17 2011
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