my own space. says it all when it comes to own vs. rent.

i want a yard with room for knife, dart & bow targets.

i want a yard with a modest pool.

i want a yard with room to run around & have fun.

i want my own space.

But for some unknown reason people guy houses with the idea of selling it 3-5 yrs or less. I don't get it...

Whenever people tell me I "must" do something, I'm generally inclined to stop listening to them.

Just because I'm single and have no kids doesn't mean that I don't deserve my own home.

I have planted numerous bushes and flowers in my yard and I enjoy my house. It's not very big and I wish actually that I could have afforded something bigger so I could have people stay over. I need to remodel (my house was built in 1952) but I can do whatever I want, and I don't have to put up with people making noise through the walls like when I lived in apartments.

Even with all the pain-in-the-hiney stuff about owning, I don't think I could go back to renting. I just couldn't handle having neighbors right on the other side of the wall. Yaaaah!

Neither a cat nor a dog? What is it? A hamster? A prairie dog? A compressed elephant?

Now I'm dying of curiosity!

My wife and I will be closing on a house in about a month. It was actually a pretty easy decision. We have enough cash to cover 20% down as well as the other closing costs. The house will be about 1700 sq ft plus a large unfinished basement for tons of storage. Mortgage + insurance will be about $500/month. Our current apartment is about 800 sq ft for $800/month.

Double the square footage for $2-300/month less sounds pretty good to me. Plus we really want to get a few cats and our current apartment wants to charge an additional $25/cat/month.

Depends on the state.. certainly never an option when I lived in Nebraska. 'Course, rent was like 1/2000th what it is here.

Anyway, there are advantages and disadvantages to both living situations. One isn't inherently better than the other. Some of these advantages are unquantifiable, such as feelings of "autonomy" (either from ownership or ease of moving, for example); others are financial, such as appreciation in property value or not having to buy/repair appliances or perform home repairs.

However, unless you have inherited your home, paid cash up front, or have been living in it long enough to pay it off, someone is making a profit off of your mortgage just like a landlord/property manager is making a profit off of rent.

That pretty much sums up the difference in buying or renting.

Lots of misinformation here, imo. Renters are unrealistically giving the best possible scenario when arguing points against renting and the worst for buyers, and even still the advantage falls to the buyer.

The autonomy and tax breaks alone make it worth it to me, and I believe I could move my starter home faster than anyone could get out of their lease.

A person can get a margin account to trade stocks too.

You have to be swinging a pretty solid six-figure income to afford a fixed-rate mortgage on most single-family houses where I live.

I think it's unlikely that the Treasury Department is going to say, "Well, we had this great plan to sell debt and jack up everyone's taxes, but vastrightwing decided not to buy bonds, so I guess we're stuck." If you don't buy it someone else will, and better that our debt be held domestically than for it to be in the hands of sovereign wealth funds.

Or I could pay the $1500 a month for a tiny apartment in the same neighborhood, deal with a bitchy landlord, unable to redecorate, and have to rent a storage unit for my stuff. No thank you.

In the end we paid $22K because so much was broken that was unknown to us at the time of the purchase. It would have cost more but we simply did not have the money and my father and uncle helped me to do most of it ourselves.

Also, your logic that rent has to be a worse deal because they pay all of the same taxes, maintenance and other costs as an owner would is faulty. They can do maintenance in house or have a contract with better rates than you. And they buy properties that are distressed and fix them up. And they have increased tax deductions on anything purchased for the house because it's a business.

It's as though you think buying a TV from Newegg is a bad deal because they have to drive down to Best Buy and buy it the same as you would. For a real business in any field, that's simply not the case.

Here's a 15,500 sq-foot house:

[www.bergproperties.com]

It has "four-stor[ies], 26-room[s with] eight bedrooms, 11 baths (nine full baths and two half baths), a 900-square-foot terrace" and is selling for $13.5M.

What on earth would one do with 15,500 square feet? I'm in 1880 sq-ft and wish I had about half as much house (and about 1/4 as much Stuff in it, but that's another story). I can't even begin to imagine.

@tbax929:

But that's the point, you have more money to invest now, but you lack the tax shelter, the protection of the terms of your loan (assuming fixed-rate), and the ability to significantly reduce your cost of living in retirement.

Renters get some cash savings up front, in some ways, but never get tax protection, and will be paying for living quarters until the day they day, unless you break down and eventually own something, somewhere.

@humphrmi:

This!

I don't know where BJS pulled those numbers from, but you will never stop seeing a benefit to deducting the mortgage, real estate, and PPT paid. Never. The test for home based deductions is related to the standard deduction, not a percent floor (like medical expenses).

So long as the interest and taxes paid exceeds your standard deduction, you see a benefit. My wife and I were in our home for only three mortgage payments in 2008 and between the taxes, interest, points, etc. We exceeded the MFJ SD by approximately $5,000 dollars.

I'm nearly giddy with each CitiMortgage statement to see how much extra interest we'll be paying this year and get to deduct. It isn't a 1 for 1 deduction, and believe me, we're miffed that we missed the NEW 1st time Home Buyer's credit (the one you don't need to pay back), but for us owning a home is something we want, and we've only lost a few thousand in the relative value, seeing as we closed in August and promptly saw the housing market crap itself.

@Brian James Schend: Doesn't matter. First of all, based on my own (non-wealthy) status, 2-3 years is BS, I'm five years into a 20 year fixed mortgage and still seeing $3K per year in federal tax savings.

Second, the point is that the interest you pay on a mortgage is the only part that you are flushing down a toilet. Property taxes pay for schools (and are also deductable), and principle is equity. Compare the interest you pay on a mortgage to the rent you pay, and now you've got a good comparison. You're flushing your entire rent payment down the toilet. Any amount of tax break you get on the mortgage just makes the mortgage look all that much better compared to rent.

And again, you can't live in a US treasury note while it's gaining value.

Some states' housing laws allow renters quite a bit of protection as well.

Peace of mind and flexibility are some great "returns on investment" for me.. but then again, I don't think of everything as an "investment."

It is about choices.

Renting can be a good alternative to avoid the transaction costs of buying/selling a home when in a mobile or changing employment situation. You still have the moving costs that you would have whether renting or owning and moving. And don't say that you are selling your home for profit- we just saw that item implode.

One of the frugal living blogs had a story about a guy who lived in the same home for 40 years because he worked at a fairly low paying but secure teaching job. Nice gig if you can get it and keep it. How many people can stay in one place for 40 years without moving? Unless you are a town/state government employee you are pretty much up the creek...

The real way to profit from home ownership is to buy income producing property. I rented from a couple who had worked the property ladder- they bought a duplex as an young married couple to live in and then rented the other side. Then as they build equity they bought a home to move up into and then rented out both sides of the duplex for income. When I rented from them they had just bought the house I was in from the guy who had gotten it for free, had the house moved it to the land, semi-renovated it and then sold it to them. My grandmother rented a up/down duplex for years from a family in order to stay in her local area yet not have the issues (cost/labor/etc) of home maintenance etc once my grandfather died.

I was planning on buying a place before I go the self-employment route later this year. If I don't buy it now, it will be at least another couple of years before I can do so. (Banks -- at least, in these post-bubble days -- want to see a long record of financial stability from the self-employed before they'll lend.) However, I had to ask myself whether I really wanted to take on the financial obligations just when I'm going to be dealing with a more uncertain outlook, money wise -- where one burst pipe or dead furnace could completely wreck me. That turned the tide pretty squarely in favor of renting for the next few years at least. I'd love to own a home, but not enough to keep working a day job AND doing my own thing at night and weekends for the next several years.

Yes. Yes, I do. I also like the fact that I can legally run my business from my own home, while local laws regarding the use of certain flame-producing devices in multi-family rented buildings prevented me from doing the same when I was renting an apartment. Not that I'd have been stupid enough to have used a welding torch inside the apartment in the first place, of course.

This is part of the reason why the housing bubble occurred. We became obsessed with this notion that our home is an investment. A home is the symbol of land ownership.

A home is not an investment - it's a place to house your stuff, sleep, eat, cook, RESIDE.

For one, Rent is less risky,. therefor your spending a more money to have less of what you would have if you were paying a mortgage.

$1000 in rent does not yield the same quality home as $1000 in mortgage.

Before this, I was in Miami. For me, watching my friends who owned property suggested that renting in places where there are a lot of natural disasters (there were a LOT of hurricanes during the period I lived there, and my house got trashed) may be the way to go for me, at least while I don't own much of import....

The rule I keep with me is: I'm the renter. I choose where I live. Places that aren't accommodating to my needs don't need my business.

I'm not saying that all places should conform to me, but I had options. I didn't need to live in one particular building or another. It was my decision.

I like that renting is just a little more carefree for me. And I don't have to pay for water. Mr. Pi and I recently found ourselves looking at needing to move...there's no way we could have done that with a mortgage on our heads. At least with renting, we could pick up and move in a few months to be closer to the city.

I think owning a house IS more expensive than renting, but that's mainly because I just got my first one last year, and we are STILL trying to buy enough yard maintenance equipment, decorating materials, minor construction materials, etc. to maintain it right. Maybe a lot of people wouldn't have as many expenses, since my house is from 1960 and is sitting on 3 1/2 acres, but STILL, that's all stuff you don't have to own when you rent.

That being said, the best part about owning a home is that, when I'm 60, it will be paid for (hopefully) and I will only have to pay maintenance and taxes on it. You can't say that when you're renting.

@krispykrink:

Not everyone has a family they need to house. Does a single person with no children really need to own a home?

@Steven Pryor:

I think that may be true in certain areas. Where I live, a lot of people rent houses. I think a lot of people bought property during the boon in hopes of renting to others to make a profit. There are tons of houses available for rent here.

I do agree with you about the financial aspect of it. Most of the houses for rent in my area rent for $1,000 to $1,500 per month. To me it's just silly to spend that much in rent.

@Etoiles:

I can't speak for anyone else's rental contracts, but mine only requires me to return the unit the way I received it. That doesn't mean I can't paint it or make modifications; it means I have to repaint it when I leave.

My friend is in a wheelchair and has made a lot of modifications to her apartment. That's not a problem; she just has to return it to its original form when she moves. Both of us have painted walls; mine are a lovely shade of peach.

@spankyshay:

I disagree. As a renter whose rent is ridiculously low considering the area in which I live (average home is $300K), I have a lot more money to invest than do my friends who spend all their money on mortgage, taxes, and insurance.

@bennilynn:

These are all excellent points, and the reasons we have chosen not to purchase a home . . . yet. I imagine we will in the future, but at this time it's financially better for us to rent.

My management company does repairs within 24 hours, which is a hell of a lot quicker than any repairs ever got completed in my parents' home when I was growing up. I don't do a lick of maintenance, and I live in a beautifully-manicured complex with a pool, gym, clubhouse, and Wi-Fi. Also, we have apartments that are for guests, and they're less expensive than a hotel. So when friends come into town, they get to stay in a unit as nice as my apartment.

@SexCpotatoes: While the government passes a lot of "ordinances" (and thus sells them to us through taxes), I think the term you are looking for is "ordnance". I don't know why they decided to have two goofy similarly spelled words that can be so easily confused. It took me a year in an Army ordnance unit to get it right.

I didn't consider my home purchase as a money maker. I figured I could own a home for less than I would pay in rent for a decent place. I have 1700 square feet, far more space than any apartment I ever could afford; there is no hassle about having a large dog; I have 1/2 an acre to plant. I am simply much happier having my own place so from that standpoint the payback has been enormous.

We invest to make money. We make money so we can feel secure. We want to feel secure so we can get on with the business of being happy. In this case I just cut out the middle steps.

I just find that a house gives more benefits than a rental. If I want to buy a dog, I'd rather not have to move to do it. If I decide my office is too small, I can knock out a wall. If an appliance is starting to show signs of failure, I'd rather replace it then instead of waiting for it to completely fail (probably at the worst time) and have the landlord replace it. As well, a guarantee of having a place to live in an unstable market is always nice. I'd gladly take a potential loss for those freedoms. But, as with every investment, if you do your homework and buy the right thing at the right time, you'll make a profit.

- Your landlord might decide to sell the house and give you an eviction notice in the middle of winter

I've never in my life had this happen, mostly because, as a responsible renter, I investigate the landlord as closely as the landlord investigates me before I sign a contract. Even if it were to happen, an eviction notice doesn't put you out on the street within 24 hours. In most states, you have a minimum of 30 days to vacate a property - 90 in the area where I live. As a responsible renter, that's more than enough time for me to find another place to live.

- If something breaks, you have to wait for them to fix it

When something broke in the house that my parents' owned when I was a kid, somebody had to stay home and *wait* for the repair person to come a give an estimate. Then they had to wait for several other repair companies to give an estimate. Then they had to negotiate terms of repair. Then they had to wait for the repair.

As a renter?

Last Friday I called the manager of the property where I currently live. "My freezer is icing up and I think the entire appliance is going out," I said.

"OK," replied the manager.

By the time I got home from work Friday afternoon, I had a brand new refrigerator in my kitchen. They even went to the trouble of moving the food over. It looks like they even decided to give the kitchen floor a quick sweep while they were there.

Much like buying a house, it's important to do your research when you're renting a property to make sure you get your money's worth. My rental contract states that if they do not complete a repair within a specific amount of time, I have the right to withhold rent. It's a wonderful clause and everything that needs fixing gets fixed in no time flat.

- Cosmetic upgrades (as you said in your other post) may not be allowed

True. But, my sister just bought a house in that is in a neighborhood with a relatively strict Home Owner's Association. She can't change the color of her mailbox without filing for approval.

The only thing *my* rent contract stipulates is that I leave the apartment in the best shape I can when I leave. I went ahead and painted the walls to my liking. When it comes time to move, I'll paint them back to that lovely apartment beige. It's not a big deal.

- Junky appliances that are often inside rentals

Again, its about doing your research. If you don't like junky appliances, don't move into a place that has them. In my current rental, yes, my stove is a piece of junk. Seriously, I'd blow it up if I could. But, I can live with it.

- Still have to do yardword (at least all the ones I've rented)

I've never had to maintain the landscaping. Not once. It's always managed by the property owner. It's all about the contract. Heck, the last two places I lived included weekly house cleaning services.

- Rent increases

Rising APRs? Nah, I'm sure you have a fixed rate. And that's great! So do I, for two years. Then, I can negotiate with my landlord or move somewhere else without having to worry about selling the place I'm currently in or worry about being upside down in home loan.

- Arbitrary rules (no pets, no kids, no loud music, no waterbeds, etc)

I love the rules. The current property I live at is no kids, no big dogs or aggressive breeds, no loud music, no parties after certain times, etc. It's beautiful. I come home and it's peaceful. If for some reason it's not, I just have to call the management company and they take care of it.

- No tax deductions

I'll give you that. But, then again, I pay fewer taxes because of the type of property I live on. Sure, my landlord has to pay taxes, but what he passes on to me is still less than what I would be paying if I owned property outright in this area.

There's good and bad. I'm not saying I necessarily wouldn't mind owning a house some day. They are a lot of work though, more than I'm willing to put in with the hours I have at my job right now. Considering not only mortgage payments, but also the costs of repairs, insurance, upgrades, and general maintenance, it makes turning a profit on a home an unlikely thing.

Besides, most of the new homes built in the last five years seem to be utter crap. I can't imagine them holding value in the next ten years. Aside from being too big and too energy-inefficient, they're just very cheaply built. Might as well buy a manufactured home for all the good it'll do you.

I've got my money invested in other things and it seems to be working well enough. I love the freedom of not owing a home as well - if the job market here sours, well, I'll put in my 60 day notice and starting looking into moving. At least I won't have a 30 year mortgage to contend with.

Jeez, that got long. :)

As both a long time house owner in the affordable Midwest and a long time renter in unaffordable NYC,I've come to this conclusion. Do you like mowing, gardening, painting, fixing up your house, house projects, and making your house look like a home? If so, then buy a house. If you don't want to worry about any of this stuff and want to have all that stuff handled with a phone call, then be a renter. Many who look at a home as a good "investment" neglect the tens of thousands of dollars they will spend on home stuff.

If you were to try any rent the exact same home you purchased, the rent would most likely be more than the mortgage payments (since someone else is paying those payments and want a profit on top of it).

The other choice would be to rent the same amount of space but in am apartment complex, which in many cases is not nearly as nice and if it is, it is typically expensive.

You also have to take into account the disadvantages to renting:
- Your landlord might decide to sell the house and give you an eviction notice in the middle of winter
- If something breaks, you have to wait for them to fix it
- Cosmetic upgrades (as you said in your other post) may not be allowed
- Junky appliances that are often inside rentals
- Still have to do yardword (at least all the ones I've rented)
- Rent increases
- Arbitrary rules (no pets, no kids, no loud music, no waterbeds, etc)
- No tax deductions

It's possible that it'll be a bad investment (money wise), but there are other benefits.

The net result is that without substantial asset inflation, most people who buy a house and live in it for fewer than 5 years will lose money on the deal compared to the value of imputed rent.

and since i'm buying in an area with no homeowner's association, if i feel like getting up in the middle of the night and painting my front door purple, that's only my business. [good thing for my neighbors that i'll have half an acre and the house is set well back from the road - they can't see the front door easily anyway!]

and if i feel like using my propane torch in the shed and accidentally burn it down, there's only myself to be accountable to [detached shed, far from the house]

i'm fully willing to not gain any profit from it, as long as i can have my own space. the bank won't care as long as i make my payments on time

I mean, the values just crashed. By the same token, I could compare the Dow Jones in 1997 to today, and say that stocks are a terrible investment. That would completely ignore everybody who made tons of money in the mean time.

Any type of interior decorating, painting or landscaping is purely cosmetic and not necessary, so you cannot factor these costs into your argument.

People who rent houses make a profit.

People that this article is geared to don't run out and buy a house cash, they take out a mortgage.

5% down on a $200,000 house is $10,000. Appreciation is yours, not the banks. So, if the house appreciates a perfectly reasonable 2.5% ($5,000) in the first year, for your initial investment of $10,000, you got a 50% return your first year.

If you were going out and investing in bonds, or stocks, or just about anything else, your investment would be $10,000, and you'd have to hit the jackpot at a 50% return on investment (hello, Bernie Madoff?) to see the same result.

Of course, you are making mortgage payments, but, as others stated, you have to live somewhere, so I don't see how that affects the picture here.

And yes, houses are NOT liquid, and the money "made" in appreciation only means anything if you sell. However, it is a good long term method to build wealth because of the simple fact that it is one of the only investment strategies that lets the average individual take advantage of a leveraged investment.

The only people that see homes as an investment are those that make a living out of buying and selling them, not living in them.

This is just additional justification to not put every dime you can afford into your house when you buy it....not that you should rent instead of own.

You must notice that the landlord will pay the same insurance, taxes and utilities as you and he still makes a profit. Any type of interior decorating, painting or landscaping is purely cosmetic and not necessary, so you cannot factor these costs into your argument.

I've lived in a lot of apartments over the years, and many of them -- many markets -- have piles of restrictions that really start to get tiring after a while. I've had several friends become really desperate after becoming dog owners in pet-friendly apartments, and then having to move and not being able to find a single place that will permit their beasties to come with. I used to have a design sense, 12 years ago, but the last time I was allowed to buy and use a can of paint was 1998 so now I've forgotten what it's like to live in someplace that's not white with white accents and layers of white underneath.

Right now it doesn't make economic sense to buy, for us, so we're happy renters, but... when I was a kid the place we rented was sold out from underneath us, and we had to move. And it happened again to my parents when I was 21 (I had an apartment elsewhere by then). And one of my NY roommates moved in with me when her apartment building was foreclosed upon. Owning is a lot of work and money, but I think some of the advantages are worth extra cost.

It's immoral to buy government bonds (in my opinion) because the government gets 100% of its revenue from taxation. This means that in order to pay your money back at a higher rate (due to interest), they must jack up the taxes they collect from its denizens (you and all of your neighbors)

It may be true that you can get a "better" return in the short run, but in the long run, the government will inflate its currency and tax you more to offset its growing debt. I don't know what your effective rate of return would be after you factor all of that in, but I say to stay away from "investing" in any government debt instrument.

Why encourage the government to get further into debt? Would you encourage your own family members to do that? Why not? Would you keep loaning money to anyone who spends more than they make? Why not?

Also, consider what would happen if everyone stopped buying government bonds and loaning them money. Never mind, don't think about it. Sorry.

People who rent houses make a profit. Owning the same house would stop you from paying that profit. Their profit would become your equity, given that the taxes/repairs/utilites you pay while owning would be identical if renting (but paid for by the landlord by use of the rent you've paid).

@spankyshay: I'm pretty hip to what the houses around me rent for. It would be about $300 more a month to rent a comparable house after property taxes but before tax write offs. So about $6000 less a year to own over renting. That said, I put much more than $6000 in materials and labor (my time is worth $50/hr to me) in the house each year. There is also a cost benifit of having the freedom to up and leave whenever you want (assuming you can get out of a lease).

Do you think you could rent a similar dwelling for your mortgage minus tax savings plus property tax?

Remember, the guy who owns the would be rental pays property tax too...

Not to defend what were crappy decisions, but if all the houses in your neighborhood went from $140k to $500k in the span of like 9 months or so, you'd probably be more inclined to roll the dice too, especially if there really weren't many other options available.

You have a living expense, i.e. you need to live *somewhere*. So, what is the rate of return on your investment?

Owning your own house, yes, you get "all" the money in the house when it's paid off (that's if your house is ever paid off, i.e. you stay there the entire time). But once you deduct the interest paid on your mortgage, and adjust for the increase in housing prices (which by many calculations, including the WSJ article, barely rises above inflation over a long-enough time, i.e. the 30 years you took to pay off your house), the financial "benefits" evaporate.

Now, I'm not entirely sure this is technically accurate for short-term owners, as the interest is deductible, so you get some money back.

That said, throw on the other incidentals-- property taxes, insurance, and maintenance-- and you start jacking up the price even more.

Of course, *some* people made money on their houses in the past decade and successfully flipped them-- but that's not an investment "value", that's just successful speculation. Nothing necessarily wrong with that, as long as you're not the last speculators joining the game (and left holding the bag once the bubble bursts).

BTW, I say all of this not only as a convert to the argument in the past year, but *also* as a homeowner. I look at the money I've spent on my home in the past six years. Mortgage, insurance, taxes, utilities, and the horror that is paying for *everything* associated with your home maintenance (from interior decorating to painting to landscaping to plumbing to electrical to everything else), total that up, subtract the money I got "back" on my interest deduction, and compare those expenses to the value of my Northern Virginia home post-bubble burst (which is still above water but shockingly close to the price I paid for it six years ago), and guess what?

I paid A LOT more for the "privilege" of owning a house than I would have for a comparable rental property in this area. A rental property that I would never have had to fix on my own, or likely pay all of the utilities for, and not have to take time out of my life to keep it up.

The difference in dollars between the two? Even with the lousy market, I would have made more money investing the difference between owning and renting-- even with the annual expected increase in renting. (And heck, I'd probably have traded a lawn for a pool, covered parking, and a party room).

Now, I know that my case is anecdotal, but mine is an example that proves the argument, at least to me-- unless you are "lucky" enough to flip your home during a bubble, owning a home affords only a psychological benefit, and makes a lousy investment.

I totally buy that.

FYI, all you have to do to learn more is Google "home ownership bad investment," and you'll find plenty of sites that pop up with additional information-- like this one from 2007:
[www.getrichslowly.org]

I own a house and am happy with it. Then again, I enjoy doing some repairs and having the ability to put up pictures wherever we like. There are days, like when there is a major repair, it sounds like a good idea to rent.

@ugadawg: Buying a house to get a tax deduction is like spending a dollar to get back a quarter.

Obviously my situation is different than most, since I'm living in Los Angeles, but my rent is about $2000 a month cheaper than a mortgage for a house in my neighborhood (and a cheap house at that, assuming 600k, which doesn't buy much (if anything) in Silver Lake). I could get a mortgage for the same as my rent, but I'd be dodging bullets on my way home from work.

Heck, what's the return on buying groceries? Zero -- building your own farm is a better investment. When you rent, you don't get "zero" out of it; you get a place to live. Owning a house isn't the only end to everyone's storybook.

Plus, if most people did the math (taking taxes, repairs, interest, etc.) into account, the benefits would likely come out even. A house isn't an automatic and guaranteed profit, nor is it always a good investment. The past weeks issue of Forbes had a pretty good read on this.

If you rent you're likely in an apartment, or maybe a townhome.

If you want four walls of your own, you need to be in a house, and renting a house isn't usually much cheaper than paying the mortgage on said house.

Now if you can't get approved for a mortgage, then that's different.

@Coles_Law: To clarify, I agree with you. I'm just saying, the ROI is probably more like 0.5% or less.

Also I have been able to take a deduction for property taxes. I have just started to take the write-off for property taxes about four years ago. Before that I used the standard deduction because it was more than my actual costs.

I cannot see how this was not a good investment.

Since I have homeowners Ins. it is a super safe investment, or a super safe place to live.

I'm pretty sure the scientific term for those people is 'idiot.'

Have half the population run out to buy gold and watch what the price does. That increase? Not a coincidence.

One counter argument is that inflation increases the cost of rent, but not a mortgage. Right now $1,200 mortgage might seem like a lot, but 15 years from now it might be really like $600 today.

I've never bought the home is an investment bit. Thats only true if you're willing to sell, take gains, and put whatever is left towards a smaller house. That seems to only happen to empty nesters, everyone else sells their existing house only buy a more expensive home.

EITHER WAY, your money is going to pay interest and property tax.

@balls187: Wait-so the last month I spent crocheting my T-bill jacket was all for naught?

I've been in my first home for about 5 years and can say owning a home is OVERRATED. So much bullshit. Yard work, and worrying about HVAC, and having to save so you're ready when the next thing fails. Then again, my home was built in 1942 so repairs were expected.

Sure the tax benefits are nice but when you figure in your property taxes its a wash. Its nice to come home and know this place is mine (well at least a percentage of it is) but I caution any younger perspective home owner to be prepared for some serious effort.

@knacko: True, but the WSJ didn't account for property insurance or taxes.

"Tax deductible" doesn't mean you subtract it from the amount of taxes you owe. You just subtract it from the income you report, so you only save around 20 cents on the dollar. The article overlooks that because the savings for homeowners are negligible.

That said, buying isn't for everybody.

@humphrmi: I don't think I've ever written the word "orangutan" until now. And I think if I would have been tasked to do it, I would have spelled it "oranguTANG". Thanks for saving me from an embarrassment down the road.

Sorry for going off topic. You made a very insightful post.

If you add tax advantages to the imputed rent you couldn't have found a better investment as of late.

There is also the benefit of having and paying on a mortgage from a credit standpoint.

Also, unlike Megalomania's viewpoint, once you pay off your home you will have more money to invest. That is a position you will never have as a renter.

Well,yeah,it can become an investment-over time-,but anyone buying a house to sell for more later is really speculating,not investing. With crazy high transaction costs,ongoing maintenance and ever increasing taxes,a housing dollar has to work mighty hard to return itself.The people that make the most on their house seem to be the ones that stay there 20 years or more,and even then,inflation eats up a lot of their "profit" . I have always told my kids that a house is a place to live first and foremost,a mild tax shelter and inflation hedge second,and an investment only if people are bidding the price up above what is reasonable (A couple of years ago,in my subdivision,the cost of existing 10 year old homes cost more per square foot than new construction. Weird,but true).When dumbasses are paying more than a house is worth,you should be a seller,not a buyer.

Isn't "Shelter" pretty important in the hierarchy of needs? Like, next to "Food"?

Nobody buys food thinking they're going to get a high ROI. People buying houses thinking they were investments are the very people who caused and will continue to cause real estate booms and their corresponding busts.

Try this: go rent an apartment for 20-30 years. At the end of your last lease, go ask your landlord to give you back every dollar you ever paid him. If he refuses, ask for 75%. Then 50%. Then 25%. Then 10%.

"But renting is cheaper"

You still pay taxes, insurance, and ROI (effectively, principle) on an apartment. The only difference is interest, which is tax deductible in a home mortgage. Something that the article interestingly overlooks. And when you own, the tax portion is also tax deductible - an expense that you pay but don't get to deduct (your landlord gets to do that) when you rent.

So for something that you are going to have to do anyway - live somewhere - ownership is a far better deal than renting. Comparing houses to treasuries is like comparing apples to orangutans.

One side, people who own homes, vehemently defend their decisions.

The other side, people who rent, vehemently defend their decision.

If you look at strictly an vehicle to making money, a home is not a good investment. Then again, neither is renting. Both have their upsides, and both have their downsides.