Panther

Yes, we should subsidize home ownership, heterosexual marriage, each child born to married parents (and that deduction should remain as long as that marriage lasts) - and white picket fences.

... and maybe one dog.

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Saboteur

I had a condo back in 2003 - 2005 had to give it to the bank in foreclosure when my wife developed some problems and couldn't work. But on top of the mortgage and property taxes we also had to pay association fees. Plus condos and townhomes don't increase very fast. I know that's not the case for a house but, it makes the difference in what kind of investment home ownership can be.

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American

Define 'encourage'.

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Kandahar

Why is renting "throwing your money away"? Do you consider the money you spend on groceries, electricity, gas, and other normal living expenses to be "throwing your money away"?

By that standard, you're "throwing your money away" on mortgage interest too. If you buy a $200,000 house with a 30-year mortgage at 6.5%, after TEN YEARS you will have paid $120,000 in interest and only $30,000 of the principal.

When you consider the difference in the monthly mortgage payments versus the monthly rental payments (which you could invest in the stock market), and add in the annual maintenance costs, insurance costs, and property taxes, home ownership is not THAT much of a better investment over renting. Maybe a LITTLE bit, but I'm willing to pay a little extra for the freedom to move anywhere at any time and for the freedom to not have to deal with the hassles of homeownership.

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Kandahar

Enact policies that induce more people to buy homes than normally would.

DeeJayH

do you rent all your furniture, clothes ...?

you are also ignoring the tax benefits, as well as the equity built over the 10 years
as opposed to the renter, whose money is just gone, nothing to show at the end

not to mention the average home owner sells every 6 years

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DeeJayH

although i must acknowledge that over the past ~5 years, in my area it was cheaper to rent than to buy, and now you can buy alot more for the money since prices have fallen by more than 50% in some areas

renting a $300,000 house for $1200/mo makes a ton of sense to me waterfront gulf access
owning a $300,000 house to rent it for $1200/mo does not make sense to me
owning $60,000 house to rent for $700/mo does make sense inland typical florida '70s home
renting a $60,000 house for $700 does not make sense to me

Kandahar

No, but I don't take out expensive 30-year mortgages for them either.

The purpose of this thread is to debate whether those should exist at all. I say no.

After ten years, the homeowner's money is mostly gone as well, and he has very little to show for it. For that $200K house, he will have paid $150K and only have $30K (plus appreciation) in equity.

That is a good argument in favor of renting. Most people simply do not stay in their home long enough to build up much equity.

Gabby

Sure, there's no way around interest, but I'm paying it down on the back end of the loan. For me, buying this house was cheaper than rent. I saved for a long time and made a sizeable down payment (big enough that I'm not paying mortgage insurance) and I have spent my extra money making improvements, plus the property value has increased. All in all, right now, I have about three times more equity in this house than what I've paid out in interest thus far.

There are benefits to renting, like I said, but finances isn't one of them. There are stupid ways to do this too, like an interest only loan. But there are smart, good investment ways to do it. See, before my husband retires, we will have a paid-off home. No mortgage payments. No rent. Our end is in sight, whereas yours is not.

No comparison can be made between things like food versus property. That's just silly.

RightinNYC

Buying is also far riskier and far more burdensome than renting. For me and my girlfriend, we have no idea where we're going to be living year to year. It makes no sense for us to buy, as any "equity" we would build up in the house by making mortgage payments (assuming that the house would increase in value) would be more than offset by the costs of buying and selling every year or two. Then there's also the little issue of coming up with 40 or 50k for the down payment...

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