On Tuesday, 11 June 2013 at 21:29:49 UTC, Walter Bright wrote:
On 6/11/2013 2:19 PM, Steven Schveighoffer wrote:
Define financially better off :)
You have mo' moolah. Is their any other definition?
And this is not even a fair conversation, because there are so
many variables to
consider.
I'd like to pop that default conception that buying is
financially better than renting. It's only true if real estate
values appreciate faster than inflation plus taxes plus real
estate commissions, which is hardly a sure thing.
(A lot of people overlook property taxes and capital gains
taxes when they make these calculations. I know one guy who
cashed in his stock options and bought a house with the
proceeds, only to be forced to sell it a year later because he
couldn't pay the upkeep and taxes on his salary.)
I can't even recall anyone remembering that selling a house
costs you a 6% commission to the real estate agent. Poof! There
goes a big chunk of your profits right off the top.
Housing prices have to go up a lot to counter all that.
In my experiences renting in the UK, a lot depends on the local
conditions.
For example, low quality housing situated near a university is a
fantastic investment as a landlord: There is very little domestic
demand for those properties as the academics don't want them and
nor do the better paid admin staff, so the prices stay low.
However, the rental demand is intense, inexperienced and
inflexible, keeping rents very high.