Absolutely. It is cheaper for me (and you) to rent than buy. But I also live in San Jose. Generally, it’s cheaper to buy. Even figuring in (as Trunk said) "home insurance, property taxes, and home owners association fees " it is still often cheaper. However, NYC, SF, SJ and a few other markets are very strange.
Not necessarily. If you look in the phonebook, you can find independent ones: they don’t actually do the buying and selling, just advise you on a per-hour basis. Worth doing occasionally, in my opinion.
It’s frightening how weak the language in that article is.
By the time the article was published in September 2005, the value of renting had well surpassed the value of buying, especially in places like New York. Unless you make some unreasonable prediction, like continuing the house price increases of the past five years out for another five or ten. For them to suggest that renting is only now barely on equal footing is irresponsible.
DrDeth, Historically, that’s true, but in the past five years, the whole country has been caught up in the real estate bubble. It’s much worse in SF, NY, etc., but that doesn’t mean it’s a good idea to buy in most markets. It’s just not as bad an idea in some.
I’ll have to crunch the numbers, but it seems to me that with the price of real estate in New York/New Jersey, I wouldn’t be owning the home, the home would be owning me.
Fortunately my GF bought in at the right time so we actually are living pretty cheap for New York City area.
Most of the advise has already been given.
I’ve stuck my money in a no-risk 9 month CD that pays just under %5 interest until I figure out what to do with it.
I have some additional money in a Vanguard no-load S&P500 index fund that has done pretty well.
I used to dabble in picking individual stocks but that ended…badly.
I do invest in my employers ESPP program (Employee Stock Purchase Program …uh…program) which pays me a %15 discount on stock I purchase ever 6 months. So it’s like making %15 on whatever I put into it.
But right now I’m kind of in the same boat trying to figure out where to invest tens of thousands of dollars (which sounds like a lot except until you consider NYC housing prices).
Fuck it. Maybe I’ll go buy a plasm HDTV.
But we could agree that renting is not a wise investment strategy…
2% above inflation (and potential cash flow) is better then handing out money and never getting it back.
Grey market cars, Hookers and Booze.
How about ETF’s rather than mutual funds. Put most of it into QQQQ, SPY, and DIA. Keep some of it for speculation. If you want income, buy some dividend producing stocks.
If the housing market tanks badly enough, it is entirely possible to be left owing a piece of property who’s value is less than that of the mortgage.
Mortgage interest, closing costs, and homeowners insurance are also situations where you are handing out money and not getting it back. Without significant appreciation, if house prices are high enough and rents low enough, your net worth/year will increase faster by renting than buying. (Assuming of course you save the difference between a rent payment and a mortgage payment and don’t spend it on plasma TVs.)
So while no one would refer to renting itself as an investment strategy, putting your money into something with less risk and more growth potential than an overpriced house can be an excellent strategy in some markets.
Long term, you might want to put the max every year into a Roth IRA. The growth is not taxed until it is withdrawn, at age 65. At your age, the limit is 2500 a year, I think. You can turn it over, diversify any way you want, and since the compound earnings are all tax deferred, you get a very good total return.
Tris
/nitpick A Roth IRA uses post-tax monies. You withdraw it tax-free.
Giraffe, msmith537, you’re right. I’m basing my opinion on the fact that if you were to go the route of owning a piece of property, that you’re not going to buy into the bubble, that you’re going to do your due diligence, and buy a property with the potential for profit. Not simply buying any over priced home, just because it’s the thing to do. Of course that would be silly. DD is key here.
GOD I HOPE SO!
Brother just had a house sold out from under him. He researched and agreed with his agent that the house was slightly overpriced so he offered $8,000 less than asking price. Owner sold it…for $25,000 MORE THAT HE WAS ASKING FOR!
I’m looking too, trying to be fiscally responsible…we just can’t do it. We can’t keep up with people willing to overpay tens of thousands of dollars for a house.
You could have done better than that. Next time, check out the best rates using www.bankrate.com.
An interesting nitpick, since no where in my description did I suggest anything other than that. In fact, I specified that the growth is not taxed until withdrawn.
Tris