Renting vs. buying a home (part 2)

Factoring in appreciation and depreciation into the rent vs. buy decision.

Category:

Education

Tags:

• personal
• finance
• renting
• buying
• home
• economics
• interest
• appreciation

[OhhhThatGuy]

If you think you truly OWN your own home and are debt free, just quit paying your property tax - after all, why should you keep paying for something you OWN - you will soon find out who truly OWNS your home (even if you built it with your own hands!). Property tax is rent that never goes away.

The term "real estate" comes from latin and roughly translated means "royal estate" "royal land" or "the king's land."

Mortgage is also from latin and means "death-promise" or "promise 'til death."

[docbrown8]

@bsnakeage You're an idiot. The 6% is per year. Come on, who the hell would loan 750K in order to make 45K in 30 years? That would be a 0.4% interest rate.

[ddetour]

@s2mar33 of course, you just buy the house cash. If you aren't taking a loan from a bank then previous income in meaningless

[DaveJLin]

Just don't buy such an expensive house. It is true, though, that you never really ever completely "own" your house, since you have to pay property taxes, which is basically like a perpetual rent on the land and house.

[asianstrength]

@docbrown8 as of right now swiss national bank has 0% interest rate, japan 0.4% and england 0.5%

[xavierlert]

buying house is always better.

[adamaqmal]

it make me understand the process

[pkk9091]

@OhhhThatGuy

Your argument is flawed in many respects....

1. you can't equate a $1 million house to a monthly rent of $3000!...the rent would probably be around 4500/mth for a 1 million dollar home

2. Over -20 to 30 years, real estate has increased at an average rate of 6% per year

3. the house prices in many sectors of the US market are an annomaly

4. interest on the $250,000 is taxable at your marginal tax rate..close to 45% not 30%

5. there is no tax on the capital gain of house

[mikegleeson909]

you must also remember that with house or property ownership comes very high upkeep expenses that are simply not present for renting. condo fees or equivalent house repairs can easily figure into 25% of the monthly outlay. factor that in and it's not a pretty situation for home ownership.

that said, there is a nebulous quality to actual ownership. some people take great pride in this, and others want nothing to do with it. to each their own, but the $ argument is rather clear.

[kidyeahman]

@Ducky888888 I totally agree with you on this. How can he miss something like that?

[Ducky888888]

He forgot about one thing: even if you pay more by buying, at the end of 30 years

you have a house.

[Ducky888888]

I think its not the way to calculate it.

You should add up all the payments through 30 years on both sides and compare the two together.