CFAH

Feeling blue or left behind because you’re a lowly renter in the Bay Area? Don’t. The New York Times echoes our insight, debunks a number of home-owning myths, and reaches the following conclusion: In the Bay Area, renting might be more financially savvy than buying. Yes, even accounting for the over-hyped “mortgage tax decuction”…

To determine the cost of renting, the Times analysis added monthly rent and renters’ insurance. For owning, the analysis included typical costs for home insurance, major repairs, property taxes and mortgage payments, as well as the tax deductions they create.
Renters were given credit for a small return – about 4 percent, after taxes – on the money they could have invested in bonds or stocks instead of spending it on a down payment and closing costs. Buyers received credit for the portion of the mortgage they were paying off, as opposed to the interest costs.
Add it all up – which The New York Times did, in an analysis of the major costs and benefits of owning and renting, including tax breaks – and owning a home today is more expensive than renting in much of the Northeast, Florida and California. Only if prices rise well above their already lofty levels will home ownership turn out to be the good deal that it is widely assumed to be.

So renters rejoice and celebrate your financial wherewithal. Hell, make it blow-out by tapping into that extra $2k a month you’re saving in insurance, property taxes, and maintenance. Just be sure to send us an invite.
? Is It Better to Buy or Rent? [NYT]

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