5 Reasons Renting Still Beats Buying a House

Jack Hough of Smart Money weighs the pros and cons of renting versus buying a house, and concludes that renting is better. He gives 5 reasons:

1. Houses produce lousy returns, while stocks produce good ones

2. House prices have further to fall

3.Many houses for sale today seem designed to waste money

4. Big houses are targets for future taxes

5. Neighborhoods are changing in unpredictable ways

As a renter and a former buyer (twice), I tend to agree with him.  What do you all think?


From the Upcoming ueue, submitted by Geekazoid.

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It really depends - for families with kids and two incomes it makes more sense to own but the price should be right. Single folks and couple without kids should rather rent and save (invest) as much as they can, that's the key. The rent is a lot less than the mortgage interest + taxes + utilities + improvements.
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When people tell others to BUY A HOME, they really need to explain that this also means you have to pay the following:

1. Homeowner's insurance
2. Property taxes
3. Landscaping and lawn service
4. All home repairs (roof, plumbing, leaks, structural, etc)

When something breaks, I pick up the phone and call my landlord. I love that! But I love being able to pickup and leave if needed as well.

I rent a nice 3 bedroom/2 bath single family home in a nice neighborhood for $800 all INCLUSIVE except for cable/internet. No HOA, PMI! etc. My total monthly bill expense (cable/internet/cell phones) is $1050 a month! That's it!

I don't understand why some homeowners feel the need to "belittle" renters (see mjgolli post). To each its own and I enjoy my take home pay vs monthly bills and my bank accounts are also! LOL
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I rent a beautiful 5500sf house in one of the nicest neighborhoods in Salt Lake City for $2700/month.

I prefer to rent for the following reasons:

- zero maintenance. Instead of spending my weekends at Home Depot I can go do what I like. I place a huge premium on my free time. When something breaks I just call the property management company and the problem gets solved. No cost, no hassle.

- Easy to bail. If crappy neighbors move in next door or if a career opportunity comes up somewhere else I can relocate without having to sell anything.

- No debt. A mortgage is debt. My debt load is zero - I like it this way.

- The only thing I really like owning is cash. With the money I save on renting I can bank far more cash than I would if I had to pay for home ownership.

- Its a myth that owning a home is the American Dream. George Bush and his cronies pushed the whole mortgage crisis based on the fallacy that owning a home is the American Dream (remember the "Ownership Society"). Again, I'd rather own cash.

- I view housing as a living expense, not an investment. My investments pay me interest - my investments don't suck money out of my wallet.

- Housing values are likely going to be flat for 5-10 years anyways. The price run up between 2001-2006 was totally unsustainable. The market needs to stay flat to catch up with itself.

- I get much more bang for my buck renting. My current house would cost $5-6k in monthly mortgage payment. Instead of paying that amount I can bank an additional $3k/month.

- You never really own a house. Even when you're done paying the mortgage you still need to pay the government 'rent' (i.e. property taxes).

I understand the arguments for owning. And in some cases I can see good upside to owning. But I for one would rather rent until I can buy a house outright and avoid hanging a 30 year albatross around my neck (i.e. mortgage payments). Big debt in the worst economic climate of a generation is bad news.

BTW, to determine a 'good' rental price I multiply the monthly rent by 200. If that is less than the value of the house then its a good rental value. In my case 200x $2700 is $540k. Even in this market, the house I rent would sell for over $750k - so its a good bargain for me.
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In our expensive area of California, I rent a 10-year-old granny unit for $950 a month. My fiance pays $2650 a month on an interest-only mortgage for a 30-year-old ranch house that is only slightly larger. My commute is three miles, his is 16. My neighborhood is much nicer and has better access to stores and cultural amenities. I have no maintenance responsibilities, and my utility bills are much lower. Of course renting is better!
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