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Originally Posted by OkieSnuffBox
One thing your failing to bring up when owning vs renting and I do believe a home is a liability, because anything that costs you money is a liability.
I bought my home here in OKC almost 5 years ago. The payment is the same then as it was when I made the first payment. The fancy downtown apartment I rented when I first moved here at the beginning of 2017 is roughly $300/more per month than January 2017. And most properties like that go up each time you renew your lease.
But I also don't have to replace the AC unit if it goes out, or pay the deductible if a hail storm trashes my roof.
And as far as I gather, many people will buy a home vastly too expensive for their income just because the bank will loan it to them. That's one of the few things that keeps me in Oklahoma. I purchased a nice, completely renovated home in a quiet neighborhood, for $156k. So my month payment is only about 22% of my take home, vs the 30-35% gross banks will lend you. And that doesn't include my fiance's salary.
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If someone buys then it is an asset with the potential to be in investment, and if it was mortgaged then it is a liability, yet it still can be an investment.
Rents do go up, but so does property taxes, expenses and repairs, etc. It seems like having a fixed mortgage would be better than a growing rent, but the historical data shows renting on average is still cheaper than a mortgage. Most people don’t need to raise rates to match the value of their homes. They would rather have a reliable tenant or risk having a vacancy than to maximize their profits. If someone only paid $1000 for their mortgage, and they are renting it out, the home could maybe sell in the future for a $2k mortgage, but maybe the owner is fine renting for $1500 because it is a $500 profit and guarantees it won’t be vacant. Unfortunately for renters, the vacancy rate is at historic lows, so owners have had the confidence to raise rents, which subsequently raises property values, which can raise rents more, and that continues until people can’t afford to rent, so they room together and vacancies raise, and the market stabilizes.
These two videos discuss how renting and investing can result in similar or more or less income compared to owning.