"We all grew up with the adage, 'Why rent when you can buy?' But timing is everything, and with the historic rates of appreciation over the last several years, home ownership has certainly paid off handsomely for those who bought five, 10 or 20 years ago. But that was then - and this now. The days of double-digit annual appreciation are over. However, that doesn't mean you should give up the idea of moving to a modern, luxurious, .... What is does mean is that you have options you may have not considered. options like renting instead of buying. The monthly mortgage payment on a condominium that even approaches the level of luxury of The Palisades would far exceed the amount you pay in rent. Invest in savings as you see fit. "It made my day to see this full page ad in the Washington Post Real Estate section.
Sunday, June 26, 2005
"Why Buy When you can Rent?"
"Why Buy When you can Rent?" That was the the headlines of the a full page ad in today's Washington Post Real Estate section. In smaller font it continued "The current real estate bubble has turned the old adage on its head." Brilliant. The ad was for some luxury aprtments in Bethesda, MD (surburb of Washington, DC). The ad continues:
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Very true. I am single, age 38, income $50K, lifelong renter. Wish I could go back in time and have bought in '98 or so. But, accepting the here and now, renting is clearly my best bet for the near future.
ReplyDeleteI'm saving $10K a year... hope to buy something around the year 2010 when prices have come back down to historical mean, and when I'm no longer competing with people willing to take out crazy-ass loans (which I'm not willing to do).
Read this report by the IMF.
ReplyDeletehttp://www.imf.org/external/pubs/ft/weo/2003/01/pdf/chapter2.pdf
Too funny!
ReplyDeleteI love the part stating that the days of annual double-digit appreciation are over, but with the assurance that I still have options for living in luxury!
(Does this mean that my lifestyle hasn't been left embarrassingly behind everyone else's by my lack of owning overvalued real estate?? Really? I can still look cool too? I'm sooo there...)
Seriously though, I rent in San Diego, and also enjoy some of the most disconnected differences between rental prices and mortgage costs in the nation. Buy? No Thanks. I'm sitting out this round. I prefer bubblewatching as a spectator, rather than as a player.
Nice spin by the ad agency. Thanks David for the best laugh I've had all day.
You are welcome. Come back often.
ReplyDeleteI've lived in the San Francisco Bay area since 1981 and currently rent. I haven't seen so many available rentals in great locations. Talk about a 180 degree turn from the dot-com days. I make $65,000 a year and been stashing 25% of my take home pay into mutual funds, bonds and oil related stocks. I've made over 65% on the energy related stocks. I refuse to even consider buying a house in this market. The housing market reminds me of the dot-com days when people were chasing tech stocks. If and when the housing market goes bust I'll just watch the stock market and if necessary move my money onto defensive positions. To me renting is the best choice. I pay less for housing and take the money saved to build up assets and save for retirement. Perhaps, when the housing market corrects and prices come down to a more reasonable level I'll consider buying. If that's becomes the case I'll do it the old fashion way-put down a decent down payment and get a 15 year fixed mortage. I won't have to touch my 401K, RothIRA and will still be able to leave money in my non tax deferred brokerage account. Never put all your eggs in one basket-housing is no exception to that rule.
ReplyDeleteSo true, in NY rents have been almost flat for 5 years while buying has gone nuts! Even when you take the build-up of equity into account, it's hard to break even, at least in my world...
ReplyDeleteI really do want to buy something, but right now I'll only do it if I see a real bargain. I know prices will still continue to trend up but I think there will be some window of opportunity soon. Of course, I thought prices were crazy 5 years ago and decided to wait, which in retrospect was not such a great idea!