Is it better to buy or rent?
- Thread starter halfnote19_IHB
- Start date
biscuitninja_IHB
New member
Nice calculator! its a little bit pessissmestic, but it sure gives you a nice good idea of years to break even.
-bix
-bix
Trooper_IHB
New member
That's neat Halfnote, thx. I plugged my numbers in and gave home appreciation as 3%. It said, "Buying is better than renting after 20 years"....meaning, if I bought now, it wouldn't be until 2028 that the investment made sense. Just wow.
My rent $1500
purchase price $380,000
rate 6.125
taxes 1.25
estimated average appreciation 3%
My rent $1500
purchase price $380,000
rate 6.125
taxes 1.25
estimated average appreciation 3%
freedomCM_IHB
New member
and how many years if average appreciation is -20%/year?
BLUE FIRE_IHB
New member
Trooper said:
Yes, and it is also interesting to note how drastically the outcome changes with a change of just one percentage point in estimated average appreciation...
IrvineRenter_IHB
New member
BLUE FIRE said:
Yes, this is also why most people overpay: they believe sustainable appreciation rates are higher than they really are.
flmgrip_IHB
New member
it also shows you that there is so many factors to consider that it is almost impossible to make a good prediction of what is better...
25inIrvine_IHB
New member
Long term averages for apprecation is 1% over the inflation rate right? I thought I read that somewhere here. So like 4% appreciation, 3% inflation rate. This is of course not based on what the market is now, but in more of a non-bubble market. Like maybe what it will be like after this and when I will be actually looking to purchase.
IrvineRenter_IHB
New member
24inIrvine said:
Yes, the very long-term rate of house price appreciation (going back to 1890) is 0.7% over inflation. Since 1983 (a date that corresponds to the bottom of the first bubble and when interest rates stabilized) houses have appreciated at 1.4% over the rate of inflation. Since interest rates have been steadily falling from around 10% to around 6% during the last 25 years, part of the "extra" appreciation is due to declining financing costs. Also, this is over the measured rate of inflation as reported in the CPI, not the real inflation we all face.