Renting forever

[Radiance]

I am seriously considering renting for life and setting aside money for savings.

Look at this titles available at:
Renting vs. Buying: The Realities of Home-Ownership * Get Rich Slowly

Wall Street Journal: Your Home Isn’t the Nest Egg That You May Think It Is
New York Times: A Word of Advice During a Housing Slump: Rent
New York Times: Is it better to buy or rent? (graphical calculator)
The Motley Fool: The Worst Investment Ever
SmartMoney.com: Renting Makes More Financial Sense Than Homeownership
CNN Money: Stocks vs. Real Estate
Priced Out Forever: Renting vs. Purchasing

Can anybody talk me out of it?

[LivingAlmostLarge]

Honestly it really depends on where you live. In some areas it makes sense, mostly HCOLA, but in LCOLA, I think you come out ahead by buying.

[Radiance]

Honestly it really depends on where you live. In some areas it makes sense, mostly HCOLA, but in LCOLA, I think you come out ahead by buying.

What is HCOLA? I looked it up but still confused.

[red92s]

What is HCOLA? I looked it up but still confused.

High cost of living area

[Radiance]

oh, I am in South Florida, this must be a HCOLA.
Which, according to LivingAlmostLarge would support my preference to rent...

[Broken Arrow]

High Cost Of Living Area. And of course, the opposite is Low Cost Of Living Area.

Yeah, I think renting has their place, and I think some people will indeed get out further ahead renting, but not always.

I too think it depends on the area, not just personal preference. Definitely something that I think everybody should sit down and crunch the number for themselves, and not just assume that one way is better than the other....

[illinigamer]

Can anybody talk me out of it?

In general, I don't think it is necessarily bad to make the decision "I will not buy in the forseeable future." However, I don't think it is a good idea to decide "I will never buy." In fact, I don't think it is good to ever decide "I will never do X." It makes more sense to be flexible because, after all, we live in dynamic world and the decision that is best now may not be best in the future.

Furthermore, I don't think decisions like this should be made based on general statements. Rather, the details of each individual situation need to be taken into account. The statement "It is always good to buy because if you rent you are throwing money away," got a lot of people in trouble. In my opinion, blindly accepting the opposite statement without looking at the details of your specific situation can be just as bad.

[KTP]

Doesn't it eventually have to balance out? I mean, if renting is cheaper than buying, then either the price of rent will eventually go up, or the cost of buying will go down.

Or are the landlords doing this out of the kindness of their hearts or something?

[shultice24]

In general, I don't think it is necessarily bad to make the decision "I will not buy in the forseeable future." However, I don't think it is a good idea to decide "I will never buy." In fact, I don't think it is good to ever decide "I will never do X."

Hard to argue with that logic!

The really attractive thing that I like about renting is how mobile you are (depending on how long your lease is sort of). If you wanted, you could pack up and move anywhere in a heartbeat without worrying about a 6-figure liability to get rid of. I don't know your personal situation, but if you're young and single, it feels especially good to have that freedom.

[Radiance]

if you're young and single

Well, I am young... at heart! I am 39. But I feel like I am 26

I am separated, I do like the mobility still. I have not decided that Florida is the state where I want to raise my son who is now a toddler. And his dad feel that way too so moving is in the 'foreseeable' future.

I agree that one should never say never. !!

I think that since I want the mobility and I am a disciplined saver I can go on renting and reduce my potential homeowner expenses (such as home maintenance and repairs) while building a retirement fund without counting with a real state asset or a reverse mortgage.

KTP, renting is tipically cheaper by month than buying, otherwise nobody would rent. When they say "own for the same amoutn you spend on renting" they mean the mortgage payment, no the HOA, taxes and insurance, and home maintenance!

People buy because they want the pride of ownership and it is understood as a good investment. It does have savings such as car insurance discounts, etc. Even with the tax savings, renting is cheaper month by month.

Plans need to be flexible, but it is good to have one: I do see me buying for the pride and stability in 20 years or so. And it would need to be my retirement home, big lot in the middle of the bunnies, that is the dream.

So far I don't see homeownership as a dream of mine for the next coming years....unless I a missing something

[KTP]

I always thought the main reasons people rent were:

A) They did not yet have enough saved up to qualify for a home loan

B) They just moved to an area and were unsure where they wanted to purchase

C) They know they will only be in an area for a few years

D) They are reaching an age where they cannot perform the maintenance a home requires

You can throw out A, because in recent years the government forced banks to make loans to everyone. B, C and D still seem to be valid though.

[QueenOphelia]

Where are you going to invest the money you aren't using for a down payment/monthly mortgage payment? Unless you do high risk stocks...I don't see how you can possibly get the same ROI as when you eventually sell a 25-40 year old house.

Also, how much will you have left to invest each month after you pay rent? Will it be as much as what you pay in rent?

Buying real estate historically is a sound investment if you plan on staying in your home for a long period of time. Anyone who bought a home prior to 2000 has certainly made a nice return.

Going forward...I think it will eventually be a solid investment again...you just need to ride out this economic downturn.

[feh]

KTP, renting is tipically cheaper by month than buying, otherwise nobody would rent. When they say "own for the same amoutn you spend on renting" they mean the mortgage payment, no the HOA, taxes and insurance, and home maintenance!

People buy because they want the pride of ownership and it is understood as a good investment. It does have savings such as car insurance discounts, etc. Even with the tax savings, renting is cheaper month by month.

Of course, the money spent on mortgage/taxes/maintenance is going toward an investment. Money spent on rent is simply gone.

[DC Metro Crab]

Radiance, it sounds like you know what you want. The title implied that you were set on renting forever, but your last post reflects your flexibility in the matter. Renting and buying is not pure numbers, there is a large emotional component involved. Sounds like both the numbers and personal preference are in favor of renting in your case, go for it!

[Mjenn]

I wouldn't say we are planning to rent forever, but we had planned to buy a place this fall, but decided instead to keep on renting.

Reasons were:

1) Where we live (not the US) housing prices haven't fallen very much and have almost completely recovered to their 2007 high. Before that they rose 20% per year. --- I still think we are in for a bit of a dive, or at least not very much growth in value for the next coming years.

2) Rent control - This is country wide here, and means that rent is quite low - and has not risen as quickly as housing prices and will take a while to adjust. This also makes it VERY hard to actually find a rental apartment, but we managed that.

3) The condos we were looking at buying had HOA's of close to what we are going to pay in rent. Instead of paying a mortgage on top, we will continue to pay ourselves.


4) In our rental agreement we have heat, hotwater and cable included and the rent is still very reasonable. No surprises and can carefully budget each month. This would also be included in the HOA fee, but they can raise that easier than a landlord can increase rent.

5) My husband is an academic which means we might have to move every now and then, we now have more flexibility and can even sublet our rental without any penalties.


No real reason to buy and hopefully when everything settles down, our downpayment will have doubled in sized....