Rent vs Buy in 92071>Question Details

HappyinSantee, Other/Just Looking in San Diego, CA

How can a home and an apartment of similar size that cost the same per month before taxes be classified as an area that it's preferable to rent?

Asked by HappyinSantee, San Diego, CA Sun Jun 6, 2010

My home is 1350 sq feet, total cost of mortgage, insurance, taxes is 2450/month. A similar size apartment (not even a house) is essentially the same cost per month per month. Just the deductions for taxes and insurance would seem to make it better to own than rent. When the interest deduction is figured in (23 years left on current mortgage) it seems like a no-brainer to own.

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6
Hi,

Of course it's a better value to own, dollar-for-dollar. But then again......would you think that if you had just lost $50,000 of a downpayment due to declining home values? It's all an individual decision. You can pay the same per month...yet one year you are gaining value and equity, the next? you've lost all the money you put into the property.

It's always best to think it through carefully and consult your CPA. Evaluate your lifestyle, finances and needs...then you are in a position to decide what's best for you and your family.

Karen
1 vote Thank Flag Link Sun Jun 6, 2010
That would be a good argument for owning. However, some people are not in a position to buy even though they can afford to pay $2400 a month in rent. Things have tightened up quite a bit regarding getting a loan. Job changes, bad credit, banruptcy, no money for a downpayment, things like this can keep someone from getting a loan.

Also, some just prefer to rent over owning. Some would rather let the apt. complex take care of repairs and maintenance issues. Either they don't have the time or just don't want to deal with it. A lot of times it just comes down to preference.
1 vote Thank Flag Link Sun Jun 6, 2010
If you like to move around a lot, you rent. Equity is definately a no brainer. In old england property ownership was a measure of wealth. If you have 23 years left on your mortgage with the rates dirt cheap you could move to a 15 year and save a ton.
1 vote Thank Flag Link Sun Jun 6, 2010
Thanks for all your answers, but I was referring to the article in the newspaper citing the Trulia survey that indicated my area was in a rent vs own ratio of 20, indicating that it was better overall financially to rent. I was questioning that survey validity.
0 votes Thank Flag Link Wed Jun 9, 2010
Hi Happyin and others,

One thing that I haven't seen addressed here is that some people really don't want to own a home! They don't want the responsibility of maintenance, the risk of depreciation, or even being tied down to a property. For those people it is always a better choice to rent and let the land lord take care of all of the details. One call to the land lord takes care of anything that could go wrong.

scott@scott-schroeder.com
0 votes Thank Flag Link Tue Jun 8, 2010
perhaps there are other factors in play. Declining house prices, low employment possibilities, extreme unemployment numbers, rising taxes (I know prop 13), or other factors beyond just the monthly payment.

However, from what you said above it seems to not make sense to say it if preferable to rent for the long term. It does take close to 7 years to break even at flat prices with amortization and realtor costs added in. That does not included any maintenance of lifestyle choices..
0 votes Thank Flag Link Sun Jun 6, 2010
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