Ok, so I know what you’re thinking “he’s going to tell us how great buying is and that renting is just throwing money away.” There may be a little bit of that, but in all honesty not all people should own a home.
I got to thinking about this after reading this article from Trulia (http://info.trulia.com/index.php?s=43&item=113). Today home prices in Sacramento are at such a low price that from a straight monthly cost approach, buying a home may be cheaper then renting. As well, the tax breaks that come with owning a home are very helpful. (For example, this year my wife and I paid $9,500 in interest which is a tax write off). So, a group of people who I would say are at a very good position to buy a home are married filing jointly making $137,051 or higher and single filers making more then $82,251. That would put you in the 28% tax bracket (at least in 2010). At that rate a tax break would be helpful, that’s not to say that all people wouldn’t want a lower tax rate. (As a libertarian I don’t believe in an income tax in general, but that’s for a separate post).
Now, my may have just made the case for owning a home and in all honesty the tax break is the key selling point for owning a home.
HOWEVER, if you (like me) don’t know which side of the hammer to use and have absolutely no idea how to do any sort of home repair renting may be a better idea for you. When, for example, our water heater goes out (it hasn’t yet, but it will they always do) we will have to buy a water heater (~$150) and then pay someone to come out and put it in for us (I don’t know how much that would cost, but I’m sure it’s not cheap). Same goes for all major appliances they can get very expensive especially ranges, air conditioners and refrigerators. There are home warranty companies that sell a warranty on all those major appliance that cost about $350 and $45 when someone comes out.
So, now after making the case against owning a house (for some people) I realized that my argument is not that strong. So, actually there is a reason to rent and that is if you think home prices will continue to fall it may be worth waiting. I can honestly tell you, I do not know where prices will go and most don’t because if you did you would have a lot more money.
So on only my third blog post I have not been able to form a good argument to even convince myself of what I was arguing for. I plan to update home prices towards the first of every month, so we can follow along together to see which way prices are going.