- Downtown Class A Office Building Vacancy Has Doubled in the Last 3 Years, Finds CBRE [Realty News Report]
- It’s Cheaper To Own a Home Than To Rent in Houston, Finds Trulia [Houston Chronicle]
- Conroe Tops Census Bureau List of Fastest-Growing Texas Cities [The Texas Tribune]
- Renewable Biofuels Inks Lease for Headquarters in Hines’s New Office Building San Felipe Place [Houston Chronicle]
- Patterson-UTI Energy Expands New HQ by Nearly 30% at Remington Square II [Houston Chronicle]
- Los Angeles-Based Sichuan Restaurant Chengdu Taste Has Quietly Opened on Bellaire in Chinatown [Culturemap]
- López Mexican Restaurant Plans To Open Second Houston Location Later This Year in Richmond [HBJ]
- Sneak Peek at a 3-Bedroom Home in Briarmeadow/Tanglewilde To Be Featured on HGTV’s ‘House Hunters’ Tonight [abc13]
Photo of City Hall: Russell Hancock via Swamplot Flickr Pool
Headlines
Once again the Rent vs. Buy article that fails miserably in realities of life. Almost nobody puts 20% down, they seem to completely miss maintenance and repair costs, and didn’t even touch on 10% loss when you’re selling a home (6% stealertor commission, title policy, etc.)
“And in some markets small changes – a higher interest rate, less money down or a neighborhood’s characteristics – may make a rent versus buy decision too close to call.””
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So basically every large metropolitan market?
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@CS: the drumbeat does get off-putting very quickly but it doesn’t hurt to remind folks that in apples to apples comparison it’s always better to stick your neck out and take the chance to buy if you have the means and stability (yes, very few). However, it should always be followed up in asteriks that buying a home is not a sound investment and shouldn’t be the overwhelming bulk of your lifetime savings like here in the US. Lifestyle expansion and homeownership is a very slippery slope.
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I’m just glad we’re fortunate to have such a vast array of home types and ages here in Houston where renting can always be justified against buying.
If you plan to stay in a home for 7-10 years or more then by all means it is cheaper. It always has been and it essentially comes down to “appreciation” (inflation). That is the same reason why people buy rental property; let the renters pay the mortgage and then pocket the appreciation profits and hopefully more …. if this isn’t the case then there would be no reason to own rentals
The new Lopez restaurant will be facing off against El Capitan in the strip center on the other side of the parking lot. At stake will be the hearts and minds of the Mexican-food-loving residents of Long Meadow Farms and environs. Will there be enough margarita love to allow both to survive?
I love this comment on the chron article about renting:
“Stop it Nancy. You are cracking us up with the continuous horse manure regurgitated from Trulia. 42 percent cheaper to own a home in Houston? Are you kidding! Only a fool would believe that nonsense, particularly when you can go to the latest HAR press release and see that the median price of a single-family home was $228,000, not the $175,934 cited. Trulia was only off by $52,000 or roughly 30 percent! And that’s before you get to the property taxes which are also understated by Trulia. “
Conroe fastest growing city…..Those ultra-conservative, republican, radical “Christian” white people have to go somewhere to escape the ever expanding diversity they so loathe of the big city.
The central argument of the pro renting camp is that you come out better in the long run renting because you can put the money you save by renting into a better performing investment. The problem with this argument is that people are generally terrible at saving money. Any argument about building wealth by renting and putting the extra money in another investment generally fails because people just don’t do that. Renters are not better at saving and investing than homeowners. They will generally just spend any money they save by renting. And that is one of the main benefits of home ownership. You are forced to make the investment. So, it really doesn’t matter whether you could have done better investing in equities because people just don’t do that when they rent.
Funny someone should mention property taxes. The two income tax reforms being bandied about Congress both remove the deduction for real estate taxes. While there are still not enough other details to fully evaluate the plans (e.g. where the tax brackets might be located), I am surprised that there are no crowds of torch and pitchfork-wielding realtors in the Nation’s capitol.
“Stop it Nancy.” Should be on a T-shirt and sold at the Swamplot store.
There are a lot of intangibles in the rent vs. buy decision that aren’t really reflected in the numbers. Renting gives you flexibility should you want to move at some point in the future without incurring huge transaction costs, but in return for that flexibility, you’re exposed to price uncertainty. Someone with a fixed-rate mortgage has a very stable housing cost exposure (with the exception of maintenance and, to a lesser extent, taxes).
Renters aren’t exposed to repair and maintenance costs, but in return, they give up the ability to customize their living space.
Also, in Houston at least, the rental market for single family homes is very thin, and can be quite expensive when compared to purchasing a similar property.
Uh Ed, have you spent some time recently traveling around Conroe? It’s not ultra white but I only think of those things when people like you notice color.
@Gisgo: You can be assured that NAR and NAHB have their lobbyists on overtime trying to kill the elimination of the mortgage interest tax deduction and same with the property tax deduction. The call to arms to membership won’t go out until they are really worried that those items might make it through committee.
I live in Montrose, my block, in a deed restricted neighborhood has seven original duplex’s from the (1920’s to 1940’s), six of them are owner occupied, and the other unit is rented out, The rent pays for all the property taxes, etc., I love Montrose.
@ Old School: Some homeowners are financially irresponsible; some renters are financially irresponsible. In both cases, a lot of folks just sort of go along with (or strive toward) what they think are society’s norms. OTOH, I would suspect that a substantial and disproportionate number of people whom are genuinely interested in an honest and comprehensive rent vs. own calculus are capable of being financially responsible.
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The other thing (which seems to have been subject to a generational shift) is that the basic premise of investment is that any amount of savings/investment above the level which is necessary to smooth consumption over time and provide for exigencies must have an ROI that exceeds a personal discount rate. On account of that people are mortal and government/institutions/corporations are not, the discount rate will be positive and not really very close to zero. However, risk-adjusted rates of return on investments have been near-zero for a long time now. If you have extra cash on hand, then taking a vacation to [wherever] this year looks a lot better than putting it off to next year, and you probably should do it.
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@ Gisgo: Only about 1/4 of homeowners are eligible to take advantage of the mortgage interest deduction. Neither households that are ineligible to itemize or households that must subject themselves to the alternative minimum tax are eligible. From a policy perspective, it really doesn’t make a lot of sense to have this; from a marketing perspective, this is something that Realtors and homebuilders throw around a lot, and very irresponsibly, to justify home ownership.
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@ Angostura: Actually, I’d argue that renting provides a wider set of housing choices for most people. It’s very very easy to find a wide variety of studio apartments or one- and two-bedroom apartments near any given urban employment center, in a “good” school district, or even in a small town. People that want to scale their residential footprint to precisely meet their needs can do so, even as they change from year to year. If those same people are set on home ownership, on the other hand, then there are *many* circumstances where those needs won’t be met or where they can’t be met at a comparable cost or without some kind of an unwieldy workaround. OTOH, if you’re looking for a rental in just the right neighborhood (say, Boulevard Oaks yes, Southampton no) or you want something that’s architecturally striking or especially large…well okay, that’s where the prospect of renting probably isn’t especially attractive or easy — perhaps even to the landlord, who may have been thrust into that situation for reasons that were not ideal. But in the grand scheme of things…come on. Seriously. Let’s keep it in perspective.
@Niche: There was a big study on the difference in economic outcomes for African Americans and whites. The study was very careful to measure apples to apples. When they looked at people with the same education and same employment/income, African Americans still came out behind whites. The difference in wealth accumulation was consistently attributable to home ownership. Yes, some Dave Ramsey devotee can live in a tiny apartment, squirrel away all their dollars in a perfectly balanced investment portfolio and come out way ahead of the average homeowner. But the vast majority of people will not do that. Owning a home will almost always produce a better result in terms of wealth building than renting.
If you scroll down to the actual Trulia rent vs buy calculator, they do include some helpful information in the disclaimer at the bottom…”You should not take any action on the basis of the information provided through this calculator. ”
It’s rather disturbing that Houston’s largest newspaper would give Trulia’s ridiculous conclusions the time of day, but they keep doing it, again and again. I can only assume the business editor is continually out to lunch. Actually, I have called them several times. They don’t seem to care.
Local Planner; Niche- Just to clarify, no one proposes to eliminate the mortgage interest deduction, just the real estate tax deduction, and the deduction of state income taxes as well. The federal government says it is tired of encouraging states to levy high taxes by allowing these state tax deductions. Said states are, and this is completely irrelevant and coincidental of course, heavily Democratic.
Aaron, it’s the Houston Chronicle….. Nothing more than a teen magazine operating under the guise of journalism.
@ Old School: I do understand that you’re saying that the most correct advice you can give many people is not always the best advice you can give them. People are fallible. Yes. They have biases built into how they perceive themselves as a part of society. They may have family issues that are hard to disentangle from their own financial situations and lifestyles. You can have two different people with what appear to be the same financial circumstances and have it where you’re giving them different advice. But…it’s not clear that your study supports that argument as it may or may not address the underlying causes of differences in homeownership rates; I won’t comment on it without going through it. And if you provide me with a link, I will do just that.
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As for Swamplot…this is a real estate blog, not some consumer-facing sales-driven website, and I’m always going to strive to zero in on the most correct answer.