Own or Rent?

[FatOne]

That's a difference of $500 a month for renters. You now take that saved money and put it into a RSP and get a return of 10% compounded over 35 years. You might make $300,000.

6000 a year for 35 years at 10% is over 1.6 million. Are you seriously telling me that you have so little pride that you wouldn't even check your facts?

Your example is flawed, and the fact to brought out that stupid self serving propaganda graph means I am just wasting my time argueing with you. I already showed it was heavily flawed but obviously you are too stunned to figure it out. The only thing more retarded than you posting that chart again, is me even bothering to post something serious on terb.

Did you know the Dow Jones went up 10 fold in that time period, not counting dividends. Of course if you look at the 10 years before that, it is a different story, but again, you are not capible of understanding that.

 

[Brandon123]

I like your analogy, however, it is a bit flawed. First of all, you cannot buy a home in Canada with no money down. Now take $25,000 as a down payment into this equation. And take the $25,000 with the $500 each month over 35 years at a 10% return. What figure do you get now? Sorry I don't have a calculator.

You can't buy a house now with zero down but 5 yrs ago you could.

 

[FatOne]

I like your analogy, however, it is a bit flawed. First of all, you cannot buy a home in Canada with no money down. Now take $25,000 as a down payment into this equation. And take the $25,000 with the $500 each month over 35 years at a 10% return. What figure do you get now? Sorry I don't have a calculator.

2.38 Million
Assuming FV(10%;35;6000;25000) is the right formula to use in open oriface. I could be wrong.

 

[Brandon123]

6000 a year for 35 years at 10% is over 1.6 million. Are you seriously telling me that you have so little pride that you wouldn't even check your facts?

Your example is flawed, and the fact to brought out that stupid self serving propaganda graph means I am just wasting my time argueing with you. I already showed it was heavily flawed but obviously you are too stunned to figure it out. The only thing more retarded than you posting that chart again, is me even bothering to post something serious on terb.

Did you know the Dow Jones went up 10 fold in that time period, not counting dividends. Of course if you look at the 10 years before that, it is a different story, but again, you are not capible of understanding that.

My bad, your right FatOne. All i need to do is put aside $500 a month for 35 years and I will be rich when I retire. Why even buy a house. All home owners are stupid and should listen to a Fat guy and they can retire rich, thanks for solving the retiring problem FatOne. I will go on the news tomorrow and tell everyone how they can retire rich and that they don't need to buy a house, they just have to take a fat guys advice and rent instead.

Plus people lost their homes investing in the stock market. Yes another brillant idea. "How to retire rich by FatOne". Don't own, rent instead and take all your hard earn money and invest it in the stock market. It's very safe, trust a Fat Guy. In Conclusion, 65% of the population must be retards and FatOne is a genius...

 

[Brandon123]

I agree that people have the choice to buy or rent and that their is nothing wrong with renting. I have many friends that rent because they can't afford to own a house but to say renting is the same as owning in the long term does not make sense. Plus, you can always rent out your basement to help pay down your mortgage faster. Rich people make money work for them, they don't work for their money. Renting does not make any money for me, owning will in the long term.

 

[wazup]

There is no benefit to renting that I can see. If you own a home, eventually you will pay it off and live rent free, if you rent you will be paying rent for the rest of your life.

I'm one of those dumb guys who may end up losing his home from the fucking stock market, fuck fuck fuck etc.

 

[Brandon123]

There is no benefit to renting that I can see. If you own a home, eventually you will pay it off and live rent free, if you rent you will be paying rent for the rest of your life.

I'm one of those dumb guys who may end up losing his home from the fucking stock market, fuck fuck fuck etc.

Sorry, to hear about your situation. Good point wazup. If you retire at age 65 and live to age 75, that's ten yrs of rent free, except for taxes and insurance. You can sell your house and buy a condo and take the difference you made and retire better off.

 

[Rockslinger]

If you retire at age 65 and live to age 75, that's ten yrs of rent free, except for taxes and insurance.

It's actually better than that. In the Beaches (I hate calling it the "Beach") fully paid up houses are pass from generation to generation. This means that the next 20 generations of Brandons will never know the meaning of the word "mortgage". However, the stark reality is that the property taxes will probably spiral to $1 million a year to finance the rich pensions of retired City of Toronto workers.

 

[zardoz]

Last 35 yrs look good for me in the United States. Prices increased 9x it's original price.

http://therealreturns.blogspot.com/2005/08/us-median-house-price.html

http://en.wikipedia.org/wiki/File:M...es_Sold_in_United_States_1963-2008_annual.png

What about last 10 years? you said owning is good both SHORT term and long term. If 10 years is not long term investment, there is something really wrong. Basically you are saying if you buy, be ready to sit on it for at least 30+ years before you realize any gain. What if you have to move?

 

[zardoz]

I agree that people have the choice to buy or rent and that their is nothing wrong with renting. I have many friends that rent because they can't afford to own a house but to say renting is the same as owning in the long term does not make sense. Plus, you can always rent out your basement to help pay down your mortgage faster. Rich people make money work for them, they don't work for their money. Renting does not make any money for me, owning will in the long term.

I agree poeple have choice buying or renting, and usually people decide it based on their circumstances more than as an investment. I would own a house if I know I'm going to live in it for more than 20 years. People who bought house in Canada in the last 10 years were lucky, not so if you were in US or Japan. Owning a house can be a good investment if you were lucky, but if you are expecting to always profit from it, then don't. Like if you are buying a 2nd or 3rd house just as an investment vehicle, I do not reckon this is a good time. But if you need a place to live, and know you are going to live there for a long time, like if you just got married, house is also a symbol for the marital union, so by all means. But if you are just going to buy it and expect its value to go up in the next 5 years or even 10 years, good luck!.

 

[W3bster]

Look at the graph from 1973 to 2008 and see how much houses increased in value over 35 yrs. It increased on average 7x it's original price.

http://www.wheretrustbegins.com/4a_custpage_9237.html

Should factor in also that everything around you nominally increased in price about 5x in that time frame.
I am not an expert on any of this, but I think owning or renting in the short to mid term is virtually the same thing--you are "throwing away" money into a black hole for utilities/maintenance/insurance/etc.
Owning a house for the long term (the above time frame 1973 to 2008) coincidentally hedged you from the ravages of inflation. That house that was worth $80,000 in 1973 and is at $400,000 in 2008 only kept up with the rate of inflation...you are not richer in real terms. You gained nominally, but that 400k in assets is the equivalent wealth of 80k in 1973. What feels a bit warped to ponder is if you rented instead, and just saved up 80k that you put under your mattress or in a cash account in 1973 (you were well off) and then take it out in 2008...it only has around 20% of the purchasing power it had in 1973. Probably more drastic sounding if you look at it as losing 80% of the purchasing power.

 

[stinkynuts]

It's actually smarter to rent than buy.


http://khanexercises.appspot.com/video/renting-vs--buying-a-home

The guy who made the video is a math and finance genius, with multiple degrees (BS, MS) in math and engineering from MIT and an MBA Harvard business.

 

[zardoz]

There is really no simple answer which one is better: Renting or Owning. It all depends on timing and personal needs. If cost of owning is cheaper and housing price is increasing, of course it is better to own. But right now, as of this moment, cost of owning in Toronto or Vancouver is greater than cost of renting, and the price is very likely to decline, then it makes no sense to own unless it's for personal reasons such as marriage or running a grow-op. The smart thing to do is to rent in a time of housing bubble, wait for the correction then and only if you plan to keep the house for more than 20 years, then buy it. That is the only safe way to invest in housing market. Otherwise it's all gamble.

As an extreme example, if a property costs $1 million to own, and $3k / month to rent. I'd rather invest $1 million else where and use the interest / income generated from that investment to pay rent for life and still have left over money. Even with 4% GIC, you get $40,000 a year in interest. With dividend stocks you can get more. If you buy the house for $1 million, you'd have to pay mortgage interest plus maintenance and property taxes. The only incentive to own a $1 million dollar house is to hope it will become 1.5 million in a couple of years. This is the kind of thing that has happened in southern california before the US housing bubble bust, and is currently undergoing in Vancouver. So if you want to join the flock of Canadian housing bubble, be my guest.

 

[The Options Menu]

I rent, stay within 1 km of the nearest subway stop, and won't live North of Lawrence, West of Dufferin, or East of Pape. The mortgage on a condo that is smaller, better finished, and has the same # or rooms is about equivalent to rent, but those other fees generally come in at 1/3 or rent... More than I want to pay unless the market deflates a good bit and I can get in near a bottom. Could theoretically do a townhouse, but my savings. A detached property, in the areas I actually want to live, is just unattainable on my own.

Personally, I'm happy to rent. No maintenance. No maintenance cost. No utility bills. The only insurance you should have is contents insurance. All taxes are included. It leaves me with money to burn, money to save for the short term, and money to save for the long term. Property is all well and good, but it's not free (as in time and / or money) and it's not a liquid asset, and there's a very good chance it's currently overvalued. But to each their own as I like the city proper, and have no live in SO or children.

 

[phail]

why buying a house is a bad investment. a balanced view of both sides.


http://ca.finance.yahoo.com/persona...s/1474/why-buying-a-house-is-a-bad-investment

 

[GotGusto]

I don't look at my house as much of an investment. Whether it's a better or poorer investment than renting is inconsequential to me.

I live in a nice house because I enjoy it. Pride in ownership pays psychological dividends beyond many purely financial investments. When I pay my mortgage I'm buying more bricks on my home rather than paying rent to a landlord. I like that. My house is MINE and it's my sanctuary in an insane world.

Will I get money when I eventually sell my house? Sure, but that's not the reason for buying the house.

When I invest, I invest to make money. My house a separate issue.

 

[dv8]

very interesting topic, thanks for all the input.

 

[larry]

When you're a renter, your neighbours don't respect you. You have no community ties, no future to think about. Generally, owners hate other owners who rent (i'm talking about houses). If you rent an apartment in a low/high-rise, that's fine. But how do you pit up with the fools running in the halls, the rapper next door, the drug dealers in the stairwells.

The main reason to buy is to pick your neighbourhood. Not have it pick (on) you.

 

[Rockslinger]

The main reason to buy is to pick your neighbourhood. Not have it pick (on) you.

The problem sometimes is that the neighbourhood changes in a bad way because "undersirables" (no, not lesbos and porch people) move in and your house gets devalued.

 

[larry]

The problem sometimes is that the neighbourhood changes in a bad way because "undersirables" (no, not lesbos and porch people) move in and your house gets devalued.

block-busting is happening. you need to be flexible and get out early. family men have it tough cause usually the wife doesn't want to move.