why buy a house?

 My wife and I are debating whether we should buy a house / condo /
townhome or just rent for a longer period..

We have been renting for over 5 years now.. and getting close to being
bored living in apartments..


BUT, when I do calculations, it never seems to make financial sense to
buy a house..


On a ~ 200k house inside / close to the loop, one pays ~ 3k / yr or
higher in taxes plus at around 6% mortgage, the interest alone is ~
$12k / yr. So an expense of $ 15k per year.. (I am keeping the
principal repayment out of this as this is applied towards reducing the

loan amount and so not an expense)


Minus.. the interest deduction from one's income.. Roughly $4k saving
(at a 33% tax bracket)


So recurring expenses of about $ 11k. ($15k  minus $4k) (plus
maintenance costs if in a condo/ townhome..et al)


I am keeping the one time closing cost out of this for now..


So in effect.. Rougly, I am talking about paying $1000 per month even
when I own a home..


I agree that this comes with the potential benefit of appreciation..


If I rent, I will be paying $1k / month towards rent..
If I own a home, I will be paying $1k / month towards interest /
property taxes..


Now if I add in the one time closing costs into the picture, ~ $15k..
then it does not make sense for me buy a home unless I plan to stay
there for at least 3 - 5 years..


So.. I am requesting advise from all existing homeowners..


Why not rent a great place for $1.5k / month with all amenities taken
care of by the apartment folks rather than own and pay more?


I appreciate any and all comments.. Thank you..


Tom

 

I think you've got it figured out.  Unless you are gambling on high
appreciation, renting makes sense if you are staying in an area for
< 3 years.  If you're planning on staying in the same area for a decade,
then you're usually better off buying because property taxes will
probably not climb as fast as rents and the house will probably
appreciate over the long term.  

 
Tom wrote:

 
<snipped>

I agree -- unless you plan on staying for several years, by all means rent.
(I might suggest that you consider renting for $1k/month and save your
1/2k/month for a down payment on a house/condo *or*
stocks/bonds/CDs/whatever rather than spending it.)

 

Yeah, you get a lot more control with your own place.


You dont see too many ever regret buying instead of renting.


You pay that anyway, its included in your rent.


Yes, but everything you pay in rent is gone forever.


Nope, $12K/year, actually.


Actually $8K


You pay that with rent too.


$670, actually.


And buying is a form of forced saving too, you dont get
to waste the money on frivolous stuff thats gone forever.


Actually $700


Really depends on whether its possible to flip it for a very decent
capital gain. That can be relatively easy with some property.


Because you dont actually pay more, and
its a form of forced saving even if you did.


There's plenty who are now 50+ that now regret
that they took your short term view in the past.

And bugger all who regret having bought too.