But I think most of the time, once you take property taxes into account, you’re not really ‘throwing away’ as much money if you rent.

I live in the UK and we have to pay council tax whether we rent or not. But the housing prices here are so crazy. We can rent a much, much nicer house than we could afford to buy and the rent is much lower than a mortgage payment would be. Since we invest our savings, we’re making money on that where we wouldn’t if we owned (since we wouldn’t have that savings — and if we did, it would be offset by the interest on the mortgage anyway). A lot of people still do not understand why we choose to rent and not buy, but our reasons are pretty much the same as yours. I love that we can just pick up and move anywhere (with 2 months notice) if we want to! ;D

My oldest brother who owns a house, did the math and told me that unfortunately, he has had 0% REAL rate of return on owning his home (not nominal), and unless you want a home for personal reasons, you’re better off not buying it, and renting instead.

Regardless, just because history says something is HISTORICALLY going to go up, it doesn’t mean it will. That’s why it’s called “history”, so I can acknowledge that buying a home MAY generate good returns (see: Singaporean housing market from the past 20 years), but you are pretty much making a statement that it is a GUARANTEED investment and you are building your equity with it.

I’m trying to say you can do the same thing by building equity in the stock market too.

It’s a crapshoot whether you rent and invest on the stock market or buy a home. You cannot tell me that if I buy a home i am guaranteed to have a higher rate of return than if I were to put my money on the stock market instead….especially taking into consideration how much it costs to maintain a home in Canada, as they are all pretty much made out of chipboard and wood.

There is no such thing as a guaranteed investment, and housing is no different. Period.

It’s true that with the fall of the housing market a lot of people are upside down in their mortgages so taking a short term view of this picture does give some credibility to your essay but property ownership is considered a long term investment and twenty years from now this picture can and should be quite different!

Historically home ownership is the safest equity investment a person can make, check publications like the WSJ if you don’t want to take my word for it. Not only does it offer you an opportunity to develope personal wealth with strategic planning, you’ll have pride in ownership, privacy, the ability to live as you choose within your property and even some tax benefits.

To make it plain and simple: At he end of a thirty year period if you rented all that time you would have expensed XXXXX dollars and end up with ZERO to show for it.

In owning property you would accumulate equity to sell…

Now the fun part… my girlfriend and I currently live for FREE as I rent a few of the rooms at $500 each.  This covers all my expenses and positive cash flow.  Although, living with housemates has its challenges, it is not permanent.  In one year I plan to move out, rent the room I currently occupy for $600 and buy a new home with the money I am saving now and use the extra rent to pay part of my new mortgage.  Now THAT is how you build equity!When it comes down to it you are either ready to buy a house, or you are not.  And this is both in terms of what you have saved, and the lifestyle you are ready to have… BUT don’t think for a second that there is only one way to own property.  If there is a will there is a way.  And with a little ingenuity and some sweat anyone with half a brain can and SHOULD own a home.-Zach

$2775/month mortgage (with 20% down) including taxes, maintenance, etc. minus $575/month for rent = $2300 / month difference.

$2300 * 12 * 20 = $552,000 savings over 20 years…but then presuming you’re going to buy a house to live in the rest of your life, vs. renting the rest of your life, you have to factor in the rent FOR THE REST OF YOUR LIFE and not for just 20 years like your mortgage (yes, you pay taxes, maintenance, etc. forever in your house too)…meaning for the remaining 50 years you live (buy house at 30, pay off in 20 years, you’re 50, live another 50 years or so) you are paying more in rent than maint & taxes…maybe $300/month:

$300 * 12 * 50 = $180,000 extra costs (presuming rent never goes up, etc.).

Then you have to decide if you think the house will be worth that $372,000 difference (plus interest, compounding, all that good stuff) 70 years from now…

It is certainly not $17,000,000 different…I am sure there are some flaws here (as I wrote this off the cuff) but it should point out some of the concerns above.

If so, then yes, housing is more reasonable, but be careful, “nice” homes close to everything even in Dallas are expensive. I know because I just moved from there. I moved there specifically for the cost of living.

I grew up believing in the American dream that to own a house is a symbol of self independence and success. Someone mentions that "you are alway in debt until you own your own home .. ." WRONG!!!! Unless you pay off your house the instant you buy it, it's a huge debt/mortgage. You are basically renting from your bank with the luxury of MAINTAINING it yourself that's all!

Try not paying rent for several months, and the bank (aka landlord) will kick you out.

So FB, you don't have to explain yourself, I am so on the same boat with you about renting,

You are very smart at a young age, keep living your life style, not many people can have your kind of lifestyle, and we envy you.
I am working on selling my house, but it's a tough market. . . .

I hadn’t taken the psychology into account of going from renting > buying.

What you’ve said is absolutely true from my own observations. Many friends who have rented for many years, scrimping and saving, splurged on a huge home.

Others, don’t save much at all, but are (as you’ve said) forced to save into a home via a mortgage.

I wonder what we’d do if we were to buy a home — I am not sure that we will, but I am also not going to rule out that we won’t.

All good food for thought. Thank you so much!!

However, I noticed that when people rent, they tend to “live below their means”, like in a small apartment, but once they decide to buy, they oftentimes buy a mansion that’s bigger than what they need and thus stretch their finances.

My quick rule of thumb – if rent is more than interest + property tax + maintenance, buy; otherwise put your surplus income into the stock market.