Miss Money

Miss Money is my anonymous personal finance blog. I will divulge my career opportunities, income, expenditures, savings, and debt. My goals include moving my net worth from "negative" -$45,500 to -$33,000 in one year, get out of credit card debt and improve my FICO credit score from 656 to 750.

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Location: South Carolina, United States

Thursday, August 18, 2005

Renting not so bad??

I came across an interesting article today that put an interesting supply-and-demand spin on renting instead of owning. Basically, the thesis is that when the housing market booms, demand for rental housing decreases, lowering the pricing. Interesting and demonstrably true no doubt.

Does it make me want to give up on owning a home so that my money goes into equity and not down the drain??? Not really.

The entire article, from the Philadephia Inquirer is linked to the title, but you'll have to register with that newspaper's site to read it.

Here's the pertinent quote:
Over a lifetime, owning almost certainly pays off. With a fixed-rate mortgage, principal and interest payments stay flat for 30 years, while the owner's income and the home's value probably grow.

A homeowner will eventually own the home, eliminating those principal and interest payments. The property can be sold or remortgaged to raise money for retirement, or it can be a valuable asset left to heirs.

Rent for a lifetime and your housing cost will continue to grow as rent increases with inflation. And you'll never build that equity.

Renting isn't so bad
But renting for a while isn't all that bad, especially now. Low mortgage rates have driven housing prices up and led many people to buy second and third homes as investments. At the same time, many former renters have been able to buy.

Result: An increase in rental-home supply and a decrease in demand. That causes rents to stay flat, or even to drop. In the Philadelphia region, the median home price has gone up 60 percent since 2000, but rents have increased just 12 percent, according to Torto Wheaton Research of Boston.

1 Comments:

Anonymous YoungMiser said...

Renting isn't especially bad when markets like Boston, LA, or San Fran are really over heater. Rent until the market cools off and then start shopping

-Tim
YoungMiser

August 20, 2005 9:37 PM  

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