The Absolute Insanity of Not Buying a Home When You’re Young

[PC]

If you’re young—under 40 or so—and have been heeding all the personal finance advice spewing forth from some of the most popular columnists and bloggers over the last few years about how owning a home doesn’t make financial sense anymore, I’m afraid you’ve been duped.

Absolutely, positively, undeniably duped.

http://advancedriskology.com/rent-vs-buy-insanity/

[elguapo]

That article misses one large costs of home ownership that renters do not directly pay, insurance. Then it assumes neutral gearing for the landlord, where are you going to find a house in say, Auckland, that you can rent at your cost?

It also ignores the fact that a rent vs. own decision is very much dependent on the lifestyle and local property prices. The maths for a young single person in downtown Auckland would be very different to a young couple with a kid in Hamilton. There is no broad brush right or wrong, it's what's right for the individual at the time.

Your lovely theoretical example is just as much bunk as some of the ones seen from the other side.

[Glizzle]

It also ignores the fact that a rent vs. own decision is very much dependent on the lifestyle and local property prices. The maths for a young single person in downtown Auckland would be very different to a young couple with a kid in Hamilton. There is no broad brush right or wrong, it's what's right for the individual at the time.

making sure you buy the right house and just buying a house are two totally different things, This was a article about renting or buying of course people have different equations but if one Single person has the option to buy or rent in what eva market, over time buying its better to buy. Life style doesn't even come into it.

[Wayne]

It has been shown that people who enter retirement renting or paying a mortgage are very disadvantaged compared to those who own outright.
Life time renting is setting the country up for big problems in the years to come.

[Glizzle]

I think that's the biggest thing that's been lost, the kiwi dream shouldn't be to own property but to own property outright.

[klauster]

Just wondering where that experience comes from that a house is similar to a golden egg laying hen. If you separate the mortgage payments the cost for owning or renting are matching your lifestyle.

If you freeze your money in a mortgage or saving account – where is the difference when you retire? As Wayne said “setting the country up for big problems” – look around demolished street lights, vandalized rentals,… the problems are already there - looks to me like behavior problems.

[Neongreen]

Generally speaking, inflation means that your mortgage bill is going to go lower over the years, and your rent will go up over the years.

Prices will need to be very out of wack and inflation will need to be very low before the above rule means buying isn't ideal. We are closer to that point than ever before, sure, but this is why I bought.

[Wayne]

Just wondering where that experience comes from that a house is similar to a golden egg laying hen. If you separate the mortgage payments the cost for owning or renting are matching your lifestyle.

If you freeze your money in a mortgage or saving account – where is the difference when you retire? As Wayne said “setting the country up for big problems” – look around demolished street lights, vandalized rentals,… the problems are already there - looks to me like behavior problems.

Remember the idea that people who own outright are better off in retirement comes from studies of real people in real situations.
Owning can be more expensive that renting.
So if you took the differance and saved that (invested well) then you may survive retirement.
But people don't do that - often.
They spend the differance.
So in retirement that have the same costs and lower income - not a good recipe.
I have always (from a young lad) viewed owning your own home as compulsory savings.
Funny it turned out that I am a habitual saver and would have saved anyway.

[klauster]

Wayne, that is exactly the point – if you do nothing, you end up with nothing.

Countries with a social infrastructure (you pay in lifetime long and you get sufficient retirement support) do that for you. How much you get depends on how much you have paid. Look at the examples in Switzerland, Austria or Germany – renting is NOT a second option, it is a lifestyle option in.

[Wayne]

I know it and you know it but ...
So you are saying that saving should be regulated by the government?
Like compulsory super or something?
Maybe compulsory Kiwisaver?

[klauster]

I would not compare Kiwisaver with a social infrastructure.
Also nobody won’t to see the “don’t care” people living on the street.

But give me an example for something that works and is regulated by the govt, because the govt is re-active, not pro-active.

[Glizzle]

You cant change human nature, there will always be the have and have nots.
Alot of people don't realize that you need to sacrifice who you are to become who you want to be.

[Wayne]

Alot of people don't realize that you need to sacrifice who you are to become who you want to be.

Wow man - that's heavy

[Perry]

..... there will always be the have and have nots.

That little bit of philosophy has it nailed. The social engineers
cannot or will not see that. Even when robots comes to do all
the menial or dirty work, there will still be the poor, the middle
class and the well-off. Utopia, there we come.