Jimmy- I love you to pieces, but I’m convinced there’s something wrong with your analysis.
Do you include the value of having shelter, ie the “rent”.
Obviously one should purchase wisely- desirable location, etc.
RE has obvious advantages: there’s only so much land, so many good school districts, etc. Home building has not kept up in many places with population growth.
One of the great advantages is leverage. If you buy with 10% down, and the house goes up 10%, you have a 100% profit, usually without a lot of risk.
And tax advantages: a couple is forgiven 500K of profit; an investor can be forgiven millions with a 1031 exchange.
I could go on, but I think you owe it to your readers
Hi Terry... I love your comment and was actually hoping to hear from when I was crafting it. I have an offer for you... what if you write a guest column on your views of owning real estate and I'd love to publish it? It would be a great counterpoint to my stated views.
To answer your first question, yes, I implicitly factor in the value of having shelter and agree that is necessary in a financial analysis. In my piece, I suggested that I ignored property taxes, maintenance, and insurance as they represented (more or less) the "rental value" of Diane making visits to Chip Chop.
What about rising rents? Rents went through the roof here in Maine. Airbnb decimated the long term rental market since shrinking inventory led to higher rents. Then the pandemic brought wealthier out of state folks here, making it harder for locals to successfully bid on a home. So more would-be buyers had to stick with long term rentals, increasing demand. With rents spiraling out of control, are you still confident renting is the more prudent financial move?
Hi... There's a lot going on in that question... (1) short-term rentals removing some long-term housing stock, (2) the pandemic pushing remote workers out to less expensive and more desirable areas to live, and a similar dynamic you didn't mention, (3) the work-from-home phenomenon increasing demand for larger living situations to give workers a private work area in the house.
While they all are probably true, they don't change my view because these pressures drive up the prices of both renting and owning homes. Over the medium- to long-run ,rental prices move pretty reliably in lock-step with purchase prices for condos and homes so these dynamics shouldn't financially favor one option more than another.
Jimmy- I love you to pieces, but I’m convinced there’s something wrong with your analysis.
Do you include the value of having shelter, ie the “rent”.
Obviously one should purchase wisely- desirable location, etc.
RE has obvious advantages: there’s only so much land, so many good school districts, etc. Home building has not kept up in many places with population growth.
One of the great advantages is leverage. If you buy with 10% down, and the house goes up 10%, you have a 100% profit, usually without a lot of risk.
And tax advantages: a couple is forgiven 500K of profit; an investor can be forgiven millions with a 1031 exchange.
I could go on, but I think you owe it to your readers
to give another POV.
Hi Terry... I love your comment and was actually hoping to hear from when I was crafting it. I have an offer for you... what if you write a guest column on your views of owning real estate and I'd love to publish it? It would be a great counterpoint to my stated views.
To answer your first question, yes, I implicitly factor in the value of having shelter and agree that is necessary in a financial analysis. In my piece, I suggested that I ignored property taxes, maintenance, and insurance as they represented (more or less) the "rental value" of Diane making visits to Chip Chop.
What about rising rents? Rents went through the roof here in Maine. Airbnb decimated the long term rental market since shrinking inventory led to higher rents. Then the pandemic brought wealthier out of state folks here, making it harder for locals to successfully bid on a home. So more would-be buyers had to stick with long term rentals, increasing demand. With rents spiraling out of control, are you still confident renting is the more prudent financial move?
Hi... There's a lot going on in that question... (1) short-term rentals removing some long-term housing stock, (2) the pandemic pushing remote workers out to less expensive and more desirable areas to live, and a similar dynamic you didn't mention, (3) the work-from-home phenomenon increasing demand for larger living situations to give workers a private work area in the house.
While they all are probably true, they don't change my view because these pressures drive up the prices of both renting and owning homes. Over the medium- to long-run ,rental prices move pretty reliably in lock-step with purchase prices for condos and homes so these dynamics shouldn't financially favor one option more than another.