patrick.net

ch_tah says

ChrisLA says

I would imagine the article isn’t talking about CA where you can see 3 identical houses next to each other, one for 599, one for 399 and one for 199 and wonder what will happen once interest rates go back up.

Are you full of crap again? Or can you provide some addresses?

I'll do once you stop salivating.

klarek says

Because practically every reason you present or defend re: home ownership is crap that NAR puts in their commercials.

That's not remotely true. What usually happens is someone, particularly, a permabear takes an article like the one at the beginning of the thread and pulls out a tiny snippet while ignoring important parts of the article and then calls the whole article crap. It's annoying to see.

klarek says

I just have some particular allergies and would rather not do it for the house I’m renting.

Interesting, just like Schlizor, you don't want to do things because you are in a rental, which leads me to believe you would do it if you owned. Yet, you and he, keep bashing the concept of homeownership pride and the like.

By saying it's a trade-off versus a benefit is now using semantics. Having back to back emergencies as a homeowner means I'll have to eat the cost. It also means, I don't have to call my landlord and wait to see if he cares enough to take care of it immediately or not. You want your hand held (or your garden tended to); I'd rather have control. I'm still not sure why your way is right, and my way is wrong.

corntrollio says

We clearly have different value systems. I grew up with rooms with white walls and can tell you the color of the walls had very little to do with my happiness or sadness. :)

I doubt it impacts any child's happiness. What will make them unhappy is if mommy and daddy bought so they could paint the walls, end up in a stressful situation due to a job relocation and decreasing property values, engage in nightly fights, and end up getting a divorce. THAT will impact a child's happiness, not something trivial like daddy needing to ask the landlord before painting a wall, or having to paint it back when they move.

I actually feel sorry for somebody who thinks their position as a homeowner makes their child happy. It makes me angry that such a narcissistic and naive mindset could be planted by a criminal enterprise, much like how DeBeers convinces people that "diamonds are the ultimate symbol of love".

I'd say that people deserve better than this, but they've clearly proven by falling for it that they don't.

corntrollio says

Anyway, I think the point is that people have different reasons to buy, and different people see value in different things. Some people hate having landlords, but maybe they’ve always had crappy landlords. Who knows?

Exactly. I'm not sure why Klarek and others can't understand that.

ch_tah says

Exactly. I’m not sure why Klarek and others can’t understand that.

Well, I personally think using a cheap paint job as justification for making the biggest purchase in one's life deserves mockery, but I can leave that personal preference out of a logical argument when needed. I don't think Klarek objects to the concept, but rather the marketing around it, although I don't speak for Klarek.

klarek says

I doubt it impacts any child’s happiness. What will make them unhappy is if mommy and daddy bought so they could paint the walls, end up in a stressful situation due to a job relocation and decreasing property values, engage in nightly fights, and end up getting a divorce. THAT will impact a child’s happiness, not something trivial like daddy needing to ask the landlord before painting a wall, or having to paint it back when they move.

A scenario similar to yours could happen to a renter too. Out of curiosity, are you speaking from experience or are you just making crap up?

klarek says

corntrollio says

We clearly have different value systems. I grew up with rooms with white walls and can tell you the color of the walls had very little to do with my happiness or sadness.

I doubt it impacts any child’s happiness. What will make them unhappy is if mommy and daddy bought so they could paint the walls, end up in a stressful situation due to a job relocation and decreasing property values, engage in nightly fights, and end up getting a divorce

What can also affect a childs happyness is when the parents end up in a stressful situation due to having to move every 2 years and not having a stable place to live. New friends, new school.

In general, all these arguments are useless because in any situation there can be positive or negative outcome.

Rent vs Buy discussions are therefore quite pointless. We all want the same. A nice place to live to raise our family. If you can achieve that via renting, great. If you can achieve it via buying, great. Ultimately, we all would like to own a house not because NAR is telling us but because when you own something you feel like you have achieved that stability. When I paid off my first major car, I loved the idea of "no matter what happens, this car is mine." I know that a 30 year mortgage is far from really owning but we all know how fast life passes you by. Those 30 years will be over one day and if that's the day when you can say "I own this house, its mine and no matter what happens, I will always have a place to live".

I have noticed that house owners have never told me "biggest mistake in life was buying this house" (I am not talking about subprime idiots who got their ass handed to them by buying something they never should have bought). I have heard from many perma renters though "I wish we bought 20 years ago".

ch_tah says

That’s not remotely true. What usually happens is someone, particularly, a permabear takes an article like the one at the beginning of the thread and pulls out a tiny snippet while ignoring important parts of the article and then calls the whole article crap. It’s annoying to see.

The whole article was crap. You opted to defend the crappiest part of the crap article.

ch_tah says

Interesting, just like Schlizor, you don’t want to do things because you are in a rental, which leads me to believe you would do it if you owned. Yet, you and he, keep bashing the concept of homeownership pride and the like.

I did plenty of things when I owned. Keep your assumptions pegged to your wisdom of the trade-offs of home ownership: as few and thin as possible.

ch_tah says

By saying it’s a trade-off versus a benefit is now using semantics.

Schlizor tried to tell you that like 20 posts ago, and you thought it would be better to argue rather than pondering it for a second to realize he was right.

ch_tah says

Having back to back emergencies as a homeowner means I’ll have to eat the cost. It also means, I don’t have to call my landlord and wait to see if he cares enough to take care of it immediately or not.

That's why you word your leasing agreement carefully. If his response is unreasonable, and you can prove it (for instance, the invoice on the replacement purchase he made for whatever broke was more than 24 hours after he acknowledged the problem), then you have a claim against him. In the same way, if you knew of a potentially damaging defect in the house and neglected to tell him, he would have a claim against you if it were included in the rental agreement.

I'm starting to think that home ownership is really attractive for failed renters. In fact, just to come full circle with my point in the last paragraph, I booted a tenant/roommate for violating our lease agreement. I was the cruel evil landlord who didn't understand his needs or some bullshit, so rather than manning up to what he did, he impulsively bought a house at more than 8 times his annual salary. You know what the first thing he did when he bought the place? He exercised his new-found euphoria as a homeowner and painted the walls a hideous dark-blue color. His theme was "the house of blues", which it was, right up through the bank's repossession.

ch_tah says

I’m still not sure why your way is right, and my way is wrong.

I didn't say your way is wrong. Your rationale is bizarre, and based on platitudes, sentiments, and feelings similar to that of a 6 year old with a new bicycle. Why do some people view the biggest purchase in their lives based on emotions? Do you get emotional when you buy a car? What about a toaster? CD? Sandwich? Pack of gum?

Call it a rejection of being penny-wise/pound-foolish, but I believe that the more expensive a purchase you make, the more thought you need to put into it, and the LESS emotional you need to be. Be emotional with your children. Realize that their smiles have absolutely nothing to do with you being a homeowner and everything to do with them being cared for, and around people they love.

corntrollio says

ch_tah says

Exactly. I’m not sure why Klarek and others can’t understand that.

Well, I personally think using a cheap paint job as justification for making the biggest purchase in one’s life deserves mockery, but I can leave that personal preference out of a logical argument when needed. I don’t think Klarek objects to the concept, but rather the marketing around it, although I don’t speak for Klarek.

Not just that, but the notion that a renter in unable to paint their own walls. I suppose that falls in the marketing you're referring to. My current lease says I can do anything I want to the house, as long as it's returned to its original condition unless stipulated otherwise from my landlord. I can paint the entire house, walls, ceiling, doorknobs, whatever. I just have to make it not look hideous when I move out. Owning actually isn't a whole lot different. If you don't want to deter sellers, you better paint those hideous walls back to a neutral color.

SubOink says

I have noticed that house owners have never told me “biggest mistake in life was buying this house”

Your sample size doesn't mean it's fact. While I may have never heard that specific phrasing, I do know people whose house has been an albatross because they can't move, and so this limits their job possibilities without having a massive commute or taking a massive loss. Some of them took losses -- some because they were willing to buy a house as consumption and some because they "just wanted to buy." I honestly don't know very many perma-renters -- a lot of renters either will buy in the future or have bought previously. I'm sure there are some in San Francisco, but that is also often where buy vs. rent can be way out of whack because of rent control -- it is to your advantage to be a perma-renter.

SubOink says

Those 30 years will be over one day and if that’s the day when you can say “I own this house, its mine and no matter what happens, I will always have a place to live”.

Even among Baby Boomers, I know very few people who have lived somewhere for 30 years. Maybe people's grandmas, but their houses were not really inhabitable for other people any more ("deferred maintenance" to put it kindly). :)

SubOink says

Rent vs Buy discussions are therefore quite pointless.

Definitely not pointless. Especially if anyone uses the i-word -- investment -- in reference to a home purchase. Rent vs. buy is an important factor in whether housing is heavy consumption or not.

SubOink says

Ultimately, we all would like to own a house not because NAR is telling us but because when you own something you feel like you have achieved that stability.

Alternatively, some of us are more confident in our financial situation. I don't see living in a long-term rental as "unstable," , especially when my other financing activities are doing quite well. That sounds like a personal preference, not more, not less.

SubOink says

Rent vs Buy discussions are therefore quite pointless. We all want the same. A nice place to live to raise our family. If you can achieve that via renting, great. If you can achieve it via buying, great. Ultimately, we all would like to own a house not because NAR is telling us but because when you own something you feel like you have achieved that stability. When I paid off my first major car, I loved the idea of “no matter what happens, this car is mine.” I know that a 30 year mortgage is far from really owning but we all know how fast life passes you by. Those 30 years will be over one day and if that’s the day when you can say “I own this house, its mine and no matter what happens, I will always have a place to live”.

But what if the government takes it away through adverse possession or a meteor hits it! Then you'll realize, it wasn't really yours. Yeah, or some crap like that! :)

ch_tah says

A scenario similar to yours could happen to a renter too.

How so? Renting doesn't lead to being underwater. It doesn't trap a person or his family in his house. It doesn't restrict his movements and ability to take on a better job. In fact, the only situations I've ever heard of where a couple split because they were renting is because one side demanded they buy, the other side wouldn't relent, and their problems escalated from there. That could just as equally be attributed to the problem of owning, and people's general stupidity about the "benefits" of owning, but in these particular cases the spouses wanting to rent were completely vindicated.

SubOink says

What can also affect a childs happyness is when the parents end up in a stressful situation due to having to move every 2 years and not having a stable place to live. New friends, new school.

I wasn't aware of a law that had passed which states that upon termination of a lease, the lessee cannot stay in the same school district.

klarek says

How so? Renting doesn’t lead to being underwater. It doesn’t trap a person or his family in his house. It doesn’t restrict his movements and ability to take on a better job.

A renter can just as easily lose his/her job or be forced to relocate. There's no doubt that a "tradeoff" of owning is lack of mobility. That doesn't mean a couple renting is in any better shape than a couple that owns. I've never advocated purchasing when a couple is not able financially. If we follow the rules of Klarek in purchasing, the house should be rentable if you are forced to relocate, so you shot your own hypo in the ass.

SubOink says

What can also affect a childs happyness is when the parents end up in a stressful situation due to having to move every 2 years and not having a stable place to live. New friends, new school.

That could happen for both renters and homeowners. "Owning" a home means you're paying rent to the bank for most people unless you just so happen to buy outright with cash. I know more than my fair share of people who bought and were forced to relocate for various reasons within a year or 2.

SubOink says

I have noticed that house owners have never told me “biggest mistake in life was buying this house” (I am not talking about subprime idiots who got their ass handed to them by buying something they never should have bought). I have heard from many perma renters though “I wish we bought 20 years ago”.

I know my fair share of people who've told me they wish they hadn't bought. In fact, one of my friends who owned for 5-6 years said he will never buy a house again.

corntrollio says

Alternatively, some of us are more confident in our financial situation. I don’t see living in a long-term rental as “unstable,” , especially when my other financing activities are doing quite well. That sounds like a personal preference, not more, not less.

Precisely. I will agree that I would like to own my house, but when I say own- I mean I OWN the house free and clear. That means buying it for cash. Most people choose to spend 30 years paying the bank plus interest. They also pay 30 years of property taxes and upkeep. The only difference is that it'll take those who used a bank 30 years to "own" their house. It'll take me the time it takes to open a suitcase and sign a piece of paper.

edvard2 says

It’ll take me the time it takes to open a suitcase and sign a piece of paper.

Yes, as long as you ignore the time it takes for you to save the money to buy. You've already said you've been renting your current place for 8 years. How many more until you buy (in cash of course)?

corntrollio says

Nothing wrong with bubbles — you would include bubbles in price increases, so why can’t I include them in price decreases?

I'd prefer not to include them in increases or decreases. And I specifically stated in my post that excepting bubbles, buying is better.

corntrollio says

You are selectively picking years for Houston, which got slaughtered even without considering inflation:

Kind of. You said anytime in the 80s so I picked a year in the 80s. But, you have to really try to find any point for Houston where buying doesn't win.

one of my friends who owned for 5-6 years said he will never buy a house again.
Just out of curiousity, could you name they city they live in? They must have been hit hard by depreciation to say something like that...

Coogan99 says

But to answer the question: 15 year period ending today.
Assume you had a 30yr mortgage @ 8.4% 1994 to 2001
refi #1 7.0% 2001 to 2005
refi #2 5.6% 2005 to today

I think you could do better for most of that time period, but no big deal.

Coogan99 says

Case Schiller is up from 78 -> 125 = 3.2% annual home price appreciation
S&P 500 annualized 1994-2010 6.58%, lets call this opportunity cost
http://en.wikipedia.org/wiki/S%26P_500

The only money subject to the opportunity cost is your down payment. But the rest of your methodology doesn't make sense. Your house isn't a pure investment--it's your shelter. We're comparing buying vs. renting. You need to find the total cost of renting for 15 years vs. the total cost of owning for 15 years.

edvard2 says

I know my fair share of people who’ve told me they wish they hadn’t bought. In fact, one of my friends who owned for 5-6 years said he will never buy a house again.

5-6 years...bought in 05-06? Yeah, I'd be pretty bummed too.

tatupu70 says

And I specifically stated in my post that excepting bubbles, buying is better.

No, you said:

Look at any 15 year period in history and tell me when renting wins.

I gave you 4 answers at minimum and could find more probably. You take your market as it comes, so it's silly to exclude bubbles from consideration, positive or negative.

Do you have an example of a 15-year period where there was no bubble (per your condition, not mine), and housing returns (including total cost of ownership) outpaced inflation + T-bills? In order for housing to be an "investment," it needs to have a higher return than the risk-free rate to compensate for its risk.

It's probably hard to find a 15-year period where there was no bubble at all. Even for something like the 1950s, you had the post-WWII boom and in the 1960s you had the lowest interest rates ever until recently. That suggests to me there was some bubble/bust effect there, although we don't have as great statistics from that era.

Coogan99 says

First - to clarify - when I say its almost never cheaper to buy than rent, I mean if you look at individual properties today, and estimate what they could rent for.

And I think it's impossible to say that. Most important is your timeframe--if you plan to live there for an extended period, buying almost always wins. Then, of course, location. In some areas of the BA, it is clearly better to rent. But the BA is more the exception than the rule anymore. The last numbers I saw for the US in general had the rent ratio at ~10.

corntrollio says

No, you said:
Look at any 15 year period in history and tell me when renting wins.

Actually, I said:

tatupu70 says

Buying at bubble prices never make sense. Otherwise, assuming you won’t be moving any time soon, it almost always makes financial sense to buy. Look at any 15 year period in history and tell me when renting wins.

Notice, where I said "otherwise"?

corntrollio says

I gave you 4 answers at minimum and could find more probably

lol--you gave me 4 and I showed you were wrong. Let me know when you find one that is actually true.

corntrollio says

Do you have an example of a 15-year period where there was no bubble (per your condition, not mine), and housing returns (including total cost of ownership) outpaced inflation + T-bills? In order for housing to be an “investment,” it needs to have a higher return than the risk-free rate to compensate for its risk.

I'm not saying housing is an investment. I'm saying buying beats renting. Those are two very different conditions. Buying housing purely based on appreciation potential is not an investment I would ever make.

ch_tah says

Yes, as long as you ignore the time it takes for you to save the money to buy. You’ve already said you’ve been renting your current place for 8 years. How many more until you buy (in cash of course)?

My point being that there's more than one way to buy a house and my method of doing so leads to the same outcome. Technically, I could buy right now in just about any other housing market free of the coasts. At this point I see little reason to do so as my job pays well and I'm comfortable renting. Nothing lost.

tatupu70 says

lol–you gave me 4 and I showed you were wrong. Let me know when you find one that is actually true.

Check again. Those 4 are clear losses when you consider cost of ownership: again LA 1982-1997, OKC in the CNN article, Houston in the CNN article, Japan. Take your market as you find it.

You can parse your own language any way you want, but that one sentence was pretty unambiguous and unqualified. You gave a challenge, and I accepted it. And even above you concede that it might not be true in the Bay Area.

I'm not really interested in a pure buy vs. rent discussion, as it has been rehashed many times, and I've given my own nuanced opinion on the issue numerous times. There are times when either is a benefit, and there are times when either makes sense; not everyone is a good candidate to be a homeowner, and ownership doesn't make sense for everyone.

ch_tah says

A renter can just as easily lose his/her job or be forced to relocate. There’s no doubt that a “tradeoff” of owning is lack of mobility. That doesn’t mean a couple renting is in any better shape than a couple that owns. I’ve never advocated purchasing when a couple is not able financially. If we follow the rules of Klarek in purchasing, the house should be rentable if you are forced to relocate, so you shot your own hypo in the ass.

I wasn't talking about a loss of job, I was talking about the stress created by being stuck and missing a good job opportunity.

"Honey, you should take the job."
"I can't. We can't sell this place without taking a substantial loss."
"It's worth it for the job though, so let's do it."
"You also said it would be worth it to own, and it's your fault we're in this position."

Just a simplified portrayal of what's been going on and will continue to go on in millions of households throughout the country. A house becomes a financial shackle, whether the value falls or remains flat. People who are lured to it use guilt tactics to convince their spouses to jump in (ask anybody who is married to someone from China, you're bound to get into a fistfight if you argue against home ownership), using the same bullshit emotional plots discussed above. This can create resentment in the same way that we resent NAr's bullshit tactics being used on the public.

Just throwing this out there as a possibility:
-K married a Chinese woman
-Chinese woman forced K to buy a home
-After a while, Chinese woman grew tired of his depressingly, negative attitude
-Chinese woman gets a divorce and takes half of house which forces a sale of K's house
-K's attitude grows increasingly negative towards homeownership and apparently Chinese people (regarding housing)

Close? :)

corntrollio says

You can parse your own language any way you want, but that one sentence was pretty unambiguous and unqualified

You're kidding, right? I copied the entire post whereas you took a single sentence out of context and I'm the one parsing language??? Come on.

corntrollio says

Check again.

OK, hang on.......... Nope, you're still wrong.

corntrollio says

I’m not really interested in a pure buy vs. rent discussion

Then why the heck did you reply to my post??? I clearly stated my contention that buying beats renting over almost any 15 year time horizon. How could you interpret this to mean that I thought housing as an investment beats the stock market???

ch_tah says

Just throwing this out there as a possibility:
-K married a Chinese woman
-Chinese woman forced K to buy a home
-After a while, Chinese woman grew tired of his depressingly, negative attitude
-Chinese woman gets a divorce and takes half of house which forces a sale of K’s house
-K’s attitude grows increasingly negative towards homeownership and apparently Chinese people (regarding housing)

Close?

LOL!!

edvard2 says

Precisely. I will agree that I would like to own my house, but when I say own- I mean I OWN the house free and clear. That means buying it for cash. Most people choose to spend 30 years paying the bank plus interest.

And how are you going to achieve that if you don't have rich parents and are paying rent every month as much as somebody else is paying a mortgage. If you tell me that you will save money while renting to the point where you can buy a house outright in cash than I could say - You could have also had a mortgage for 30 years, still save that same money but instead make extra payments and pay the house off over 5-7 years or whatever shorter time period.

If you can buy for the same amount than rent, why waste time renting and throwing it out? The argument that interest is like renting is not correct because the interest portion of a mortgage is way less than a rent check. When I compare my mortgage to somebody renting, I am including Interest+ Principal + Prop Tax - Deductions. If I only compared what I am actually throwing out (the interest) then I would be WAY better of than renting. Like $600/month or so in my case.

And if you are in the line of work where you have to constantly move or relocate than DUH! ...buying is not for you. It's like getting married. If you want to have a different girlfriend every week...don't get married, obviously. But let's say you do find somebody that you could envision spending the rest of your life with, then...get married.

tatupu70 says

I copied the entire post whereas you took a single sentence out of context and I’m the one parsing language??? Come on.

Yes, your first two sentences were qualified, your third wasn't. Even if your third sentence was implicitly qualified because of the first two, how do you know whether you're buying into a bubble or not for the next 15 years without a time machine? The idea that you could or should exclude bubbles doesn't make sense, except in hindsight.

tatupu70 says

I clearly stated my contention that buying beats renting over almost any 15 year time horizon.

Once again, you misstate -- you said "any 15 year period in history." If I was really being a smartass, I would have pointed out that property values may have dropped during periods other than in the 20th or 21st century in various locations around the world. :) You know, during wars and plagues and various other events.

If you're going to make a ridiculously broad statement like that, I can call you on it, while still finding the overall argument not that interesting. No one makes a pure buy vs. rent argument, although I would likely suggest that people should more strongly consider buy vs. rent in their determinations, whereas you might disagree.

What so many people here don't see is that renting is nothing else than a 0% down, lifelong loan with a slowly increasing interest rate and no chance of having any equity ever. The "freedom" argument is a total wank because if you have a family, 2 kids and need to move it
#1 costs a lot of money to move
#2 very stressfull and timeconsuming to pack up a whole house and move

so nobody just moves just like that in reality. And then what, find another rental? For less?

When life turns against you, you are screwed either way.

SubOink says

What so many people here don’t see is that renting is nothing else than a 0% down, lifelong loan with a slowly increasing interest rate and no chance of having any equity ever.

But that's not universally true. In the Bay Area, it can be cheaper to rent than to buy. A disciplined person can put away the difference and be far better off.

If you're going to talk about equity as the reason to buy a house, you necessarily have to talk about forced savings. If the return on housing is as low as it has been shown to be over the long run, then equity is just forced savings. This makes sense if the calculation make sense, but the calculation has to make sense. "zomg you will have no equity ever" is more of an emotional argument than a logical argument, because it requires more thought and more facts.

People often move in 5-7 years anyway, especially when they do something boneheaded like buy a "starter house," so the moving argument isn't as compelling as you're making it. I've known "owners" who have moved every 4 years or so because they work in apolitical positions in political jobs (e.g. city government, but not an elected or appointed position) and often have to move on to the next city when there's a regime change. There's no one good answer here. Some of them bought houses, but it didn't always make sense.

Why can't people stop making false absolute statements and instead make nuanced intelligent arguments? Is that too much to ask?

corntrollio says

The idea that you could or should exclude bubbles doesn’t make sense, except in hindsight.

Not really. Many, many here realized the US was in a bubble in the mid 2000s. Look at price/rent ratios. Look at historical price trends. Anyone who was really looking could have figured it out.

corntrollio says

If you’re going to make a ridiculously broad statement like that, I can call you on it, while still finding the overall argument not that interesting

I guess, but I would expect you to find an example that supports your premise (that I'm wrong). Really, I would expect you to find many such examples as I said "almost always". Even if you were able to find a few examples where renting wins over 15 years, it still wouldn't disprove my statement.

In any event, you clearly didn't understand the rent vs. buy argument when you "called" me on it based on your subsequent post. Which is OK. Just don't pretend that you showed me to be wrong.

corntrollio says

Once again, you misstate — you said “any 15 year period in history.

And for the record. Here is my original post since you keep misrepresenting it.

tatupu70 says

That’s a completely ridiculous statement. Buying at bubble prices never make sense. Otherwise, assuming you won’t be moving any time soon, it almost always makes financial sense to buy. Look at any 15 year period in history and tell me when renting wins.

tatupu70 says

I guess, but I would expect you to find an example that supports your premise (that I’m wrong). Really, I would expect you to find many such examples as I said “almost always”.

That would be true if you had actually said "almost always," but as we know, you keep quoting yourself not saying that. Thanks for that, btw! :)

But you can't prove your statement is right, and I have shown at least 4 examples that your statement is wrong, some of which were on a nominal basis, which is quite incredible. I could find more, but what's the point? Even 1 is enough to prove an "always" statement wrong (as "find any 15 year period" is, logically).

I doubt you could even find the data to prove your statement even if you had said "generally" instead of "always." While finding housing price data is easier to come up, rent data is a lot harder to come by. It's fairly easy to show the return from housing being very very low.

However, what I can say is that your statement should be generally true if you replace "always" with "generally" because renting should be the price of owning plus a reasonable profit in the long-run. The profit should make renting more expensive, because that profit pays for transaction costs, illiquidity, risk, short-term commitment, fees for service (e.g. if the landlord provides a gardener, the gardener should be making a profit, etc. However it's not *always* true, as you stated, and you can't know a bubble except in hindsight -- that's where the risk comes from.

You did say that buying is "almost always" a better decision than renting, which is also wrong, since renting can be good for various purposes. There are many reasons to rent which I've pointed out in other threads. Not everyone is a good candidate for homeownership, and the most recent housing bubble shows that quite well.

tatupu70 says

Not really. Many, many here realized the US was in a bubble in the mid 2000s.

This doesn't contradict what I said. You are talking about a 15 year period. Did you know in 2001 that there would be a housing bubble in 2005? Did you know in 1998? Did you know in 1993? Did you know in 1990? If so, can I have what you're smoking? It must be good stuff.

"You could have also had a mortgage for 30 years, still save that same money but instead make extra payments and pay the house off over 5-7 years or whatever shorter time period."

And why would anyone do that knowing that they have to pay for maintenance?

"If you can buy for the same amount than rent, why waste time renting and throwing it out? The argument that interest is like renting is not correct because the interest portion of a mortgage is way less than a rent check. When I compare my mortgage to somebody renting, I am including Interest+ Principal + Prop Tax - Deductions."

You do know that the mortgage deduction is going to go on the chopping block...right?
http://blogs.wsj.com/developments/2011/05/18/whats-the-future-of-the-mortgage-interest-deduction/
There's no logical reason to reward high end housing with a credit. If we are to promote housing it would help to support more affordable rather than high end. We have 19 million empty homes in the country..there's no reason to support new construction.

"And if you are in the line of work where you have to constantly move or relocate than DUH! …buying is not for you. It’s like getting married. If you want to have a different girlfriend every week…don’t get married, obviously. But let’s say you do find somebody that you could envision spending the rest of your life with, then…get married."

Define "constantly". Many employers move it's just a fact of life. The average person has at least six different employers in their life. Higher home ownership leads to higher unemployment because the worker base cannot move.
http://tinyurl.com/66nbdro Let's say you put you money in a mortgage and pay it off. You bought the house after going to school so 30+22 you are 52 years old..now you get laid off..ok now what? Put your house on the market? How fast can that happen? Now with renting you can pack up your stuff and go..you used a service rather than a product..you don't have to worry about reselling the product.

"What so many people here don’t see is that renting is nothing else than a 0% down, lifelong loan with a slowly increasing interest rate and no chance of having any equity ever. The “freedom” argument is a total wank because if you have a family, 2 kids and need to move it
#1 costs a lot of money to move
#2 very stressfull and timeconsuming to pack up a whole house and move"

But people aren't having the same size families as they did before. Cost alot to move? According to whom? Time consuming? Yeah if you have a house..if you have an apartment you don't.

Everything these days has been made smaller and lighter. Have a ton of books? Kindle, big PC? Laptop..tons of music? ipod. huge stereo ? Bose..tons of clothing? Space bag, cable tv? netflix, cable internet? wifi. The idea of having a place to impress others or "entertain" is gone.

To note a fair amount of celebrities live in NYC. Cindy Lauper lives in an apartment...so does Ralph Nader. They do so mostly because of rent controls but they also aren't stupid. Why buy when you can rent? Why be responsible for more things?

You also don't have the liabilities. Let's say it's january and ice has frozen on a walk on your house. You go though the garage..uh oh someone selling some crap slipped on it and is now suing you..or this could be wet leaves in the fall..can't happen when you rent. I had a pool growing up in the suburbs. As nice as it is to say you can have your own swimming we also had to keep our eyes like a hawk on it. Had to lock it up and put up the ladder. OK why? Well pools are more likely to kill than guns. I wouldn't ever want a pool again just due to the liabilities. White flight ended years ago.
http://www.npr.org/blogs/talk/2008/07/the_end_of_white_flight.html
Suburbs are now seen as boring remote areas with no night life, few services and everything being a significant drive away.

"so nobody just moves just like that in reality. And then what, find another rental? For less?"

Well yeah I've seen it done. Starting a bidding war on rents is easier than a house because there's no bank involved in a rent.

corntrollio says

That would be true if you had actually said “almost always,” but as we know, you keep quoting yourself not saying that. Thanks for that, btw!

Seriously? This is getting ridiculous. Again here is the original post:

tatupu70 says

That’s a completely ridiculous statement. Buying at bubble prices never make sense. Otherwise, assuming you won’t be moving any time soon, it almost always makes financial sense to buy. Look at any 15 year period in history and tell me when renting wins.

Now, slowly, read the 3rd sentence. Do you see the "almost always" in there?

corntrollio says

I have shown at least 4 examples that your statement is wrong, some of which were on a nominal basis, which is quite incredible

What the hell are you talking about? You have shown nothing that indicates renting was better than buying over any of those time periods. If I missed it, please paste it again.

corntrollio says

It’s fairly easy to show the return from housing being very very low.

Of course it is. Housing appreciation generally follows wage inflation. Nothing more. I would never say otherwise. How does that in any way contradict my statement?

corntrollio says

However, what I can say is that your statement should be generally true if you replace “always” with “generally” because renting should be the price of owning plus a reasonable profit in the long-run.

Actually you miss the main reason why owning beats renting. Owning(with a mortgage) is a great inflation hedge.

corntrollio says

You did say that buying is “almost always” a better decision than renting, which is also wrong, since renting can be good for various purposes. There are many reasons to rent which I’ve pointed out in other threads. Not everyone is a good candidate for homeownership, and the most recent housing bubble shows that quite well.

And that's why I said that you need to be planning on remaining in the house for a relatively long time. What other reasons did you have?

corntrollio says

This doesn’t contradict what I said. You are talking about a 15 year period. Did you know in 2001 that there would be a housing bubble in 2005? Did you know in 1998? Did you know in 1993? Did you know in 1990? If so, can I have what you’re smoking? It must be good stuff.

Of course it contradicts what you said. Are you purposely playing dumb? Buying BEFORE a bubble is good. Why would you need to know a bubble is coming? The only thing you need to worry about is buying DURING a bubble. When prices are out of whack. Otherwise, you're fine.

SubOink says

And how are you going to achieve that if you don’t have rich parents and are paying rent every month as much as somebody else is paying a mortgage. If you tell me that you will save money while renting to the point where you can buy a house outright in cash than I could say - You could have also had a mortgage for 30 years, still save that same money but instead make extra payments and pay the house off over 5-7 years or whatever shorter time period.

Easy. Combined we make a very generous dual income. We're also the cheapest cheap-skates you'll ever meet, drive 2 crappy old extremely high mileage cars, buy bulk groceries, and get our furniture from the street. We rent a house and share it with 2 other people. Its a big house and we have a lot of space. Our rent is around $1,300 in an area where houses are still sitting around with $500k+ price tags. We save, invest, and spend as little as possible and have been doing this for 10 years. Doesn't take long to save up enough to buy a house that way. In Texas, NC, TN, GA, or most any other state a decent house can be had for $150k. Maybe even less if the economy keeps going down the crapper.

We'll move outta' the Bay Area, buy for cash elsewhere, have plenty in retirement and savings. Sure- all told it would've taken us 15 years to do so. But its worth it. We'll be semi-retired before 40.

edvard2 says

We’re also the cheapest cheap-skates you’ll ever meet, drive 2 crappy old extremely high mileage cars, buy bulk groceries, and get our furniture from the street

Okay, if you like living like a rat and never enjoy life then ok - that is definitely a way to get there. Only problem is, if for some reason you don't make it and crap out earlier...then you lived like a cheap ass and saved and saved for nothing. I had a friend that was like that...died of cancer with 49...had SO much money saved, plans to buy a house in cash, retire early...too bad he never got to enjoy one cent of his money...

Not for me...

edvard2 says

"For example, where I currently live a lot of the work has to be done by a qualified contractor. You also need to get a permit in many cases as well. In many cases even small changes have to get approved. Then there are many areas that have restrictions about what you can do to the outside of your house- even down to what sort of colors you can paint it and where you park your cars. The list goes on and on...”

Just curious, do you live in Irvine, CA? It almost sounds like it!

There are a wide variet of anecdotes here. I guess different strokes for different folks based on those...