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In United States
Registered Feb 12, 2010
SiO2's most recent comments:
- On 28 Feb 2014
Bitcoin exchange Mt. Gox goes dark in blow to virtual currency,
I can't tell which comments are sarcastic and which are real. Maybe in addition to "Like" and "Dislike" flags we need "Sarcastic" and "Genuine".
- On 28 Feb 2014
GOP Tax Reform Looks Great...Except for Urban Liberals,
My proof are my taxes since Obama took office, and I am (upper) middle-class.
What law did Obama pass that raised your taxes?
There is an increase on investment tax for those with agi more than $250k. I can imagine that someone living in the Fortress might think that $250k annual income is middle class.
However, they would be wrong.
(this is not class envy or anything like that, just a factual statement. )
- On 26 Feb 2014
If it's cheaper to rent than to own, will people still buy houses?,
During the hight of the insanity of the housing bubble, it cost nearly double to own a house than to rent it (assuming a conventionally amortized mortgage, which nobody was using).
This sentence implies that the OP is including the principal repayment in the monthly housing cost. Which of course is incorrect. Think about it - if I owe $500, and have $100 cash, then my net worth is $-400. If I pay the $100 to my lender, then my net worth is still $-400. It's moving money from one pocket to another. The cost of housing is ITI + maintenance +- appreciation/depreciation, not PITI.
There's plenty of reasons to rent - flexibility to move (voluntarily or not), forecasting depreciation, insufficient cash flow to make the P part of the payment. But it's important to at least make the analysis correctly.
To the bigger question of whether or not people will buy when it's cheaper month-to-month to rent. Yes, of course, some will depending on circumstances. In 1994 I rented a house for $1800/mo that would cost about $350k (in SJ). In 94 the interest rate on a 30 year was about 7%. So, annual cost = 350k* 0.07 + 350k * 0.011 (tax) + $800 (insurance). $24,500 + $3850 + $800 = $29,150. Throw in another $3k/yr for maintenance = $32k. Rent was $21.6k. of course, no brainer to rent, right? Except that this house is now worth about $1m and now rents for around $3500 or so. And had I bought it in 94 I'd be paying relatively low property tax.
Circumstances were such that I couldn't buy then. But someone who did has done better than renting even though it's cheaper month-by-month to rent.