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At the current rate of rent inflation in any desirable market, within 5 years home ownership will be cheaper than renting. Within 10 years you will be far ahead of the game, and by 15 years the mortgage is retired. The "average break even time" is just a rule of thumb to discourage transients from tying themselves down to home ownership when buying and selling will just cost them money.
Any downturn in the housing market chases all the speculators and nervous nellies off. They move to rentals and the increased rental demand inflates rental rates.
Depending on the rate of rent increases and what they are paying in rent, it may be cheaper to just buy a cheap place.
I am sure when houses where $15k they where saying the same thing, lol.
Actually over most of history rent has not gone up faster than inflation. So no they would not have been saying that, if they understood the nature of fiat currency.
Except if they have to sell in the first few years and didn't experiance much if any appreciation? Yeah that's a problem
At least they have options. I have moved to different states several times and have always owned a home since graduating. Sometimes I did move and rent out the house because of market conditions. Time, patience and smart decisions have cured everything in a positive way.
Now having said that, I am not stupid to think anyone today can do what I did in my situation and I do realize what the young are up against. I think about what I paid for tuition, job market, cost of housing etc... and it was a piece of cake compared to today.
At least they have options. I have moved to different states several times and have always owned a home since graduating. Sometimes I did move and rent out the house because of market conditions. Time, patience and smart decisions have cured everything in a positive way.
Now having said that, I am not stupid to think anyone today can do what I did in my situation and I do realize what the young are up against. I think about what I paid for tuition, job market, cost of housing etc... and it was a piece of cake compared to today.
If I thought being a long distance LL were so easy and also profitable, I would have already bought a cheap house somewhere in a distant land while stuck living in a HCOL area for grad school.
At least they have options. I have moved to different states several times and have always owned a home since graduating. Sometimes I did move and rent out the house because of market conditions. Time, patience and smart decisions have cured everything in a positive way.
Now having said that, I am not stupid to think anyone today can do what I did in my situation and I do realize what the young are up against. I think about what I paid for tuition, job market, cost of housing etc... and it was a piece of cake compared to today.
Funny how everything is cured in a positive way for owners and a negative way for renters.
Except if they have to sell in the first few years and didn't experiance much if any appreciation? Yeah that's a problem
Renting has always been a better option for transients. You don't buy a home until you are ready to settle in one place.
The exception might be if you are going to move away and come back. My brother was transferred by his company to Europe for 8 years, so he sold a lovely home overlooking Puget Sound. When they transferred him back, the house had doubled in value and he couldn't afford anything comparable. He would have been far ahead of the game to turn it over to a rental management company, but hindsight is always 20/20.
Depending on the rate of rent increases and what they are paying in rent, it may be cheaper to just buy a cheap place.
There is no fixed value for real estate, though construction costs put a price floor under new structures. Generally, "The more you pay the more it's worth." Sale price sets the appraisal price, not the other way around. It's not uncommon to find assets that are undervalued. Part of the trick of home ownership within a budget is identifying when a home is priced too low.
The problem with rent is that it is renegotiated frequently. Rent can be raised annually, or in some cases even more often. A house payment is set on the sale date, assuming you don't get suckered into an ARM. It may cost you more than rent, and typically is does, but rising rents will pass you by until your mortgage looks like an incredible bargain.
You also have the option of fixing the place to match your needs and desires. We all trade money for lifestyle, and home ownership is, in some ways, more flexible than renting a place that belongs to somebody else. In other ways, it's much less flexible. If you are a gypsy, buy a caravan.
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