Rent vs. Buy: The Eternal Debate

Rent vs. Buy: The Eternal Debate

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The white picket fence. Space for entertaining. Acres of land to call your own. These were characteristics of the American
dream home. But is it still a dream worth chasing? Should you buy a home or rent? We’re here at the White House at 6 Woods Lane
in Easthampton Long Island. You could own this place for the list price
of $12.5 million. With a 30-year fixed rate mortgage 3.991%
interest, you’d pay nearly $47000 a month, and that’s not including closing costs, home
ownership insurance, or property taxes. Now, this kind of place might be a little
pricey for you, but the same principles apply at much lower levels when you’re considering
whether to rent or buy a home. Now, before I break something in here, let’s
get back to the studio. To buy or not to buy? That is the question. We polled our YouTube audience, and they had
a lot to say. One person said owning a house should not
be thought of as an investment. More like something between an asset and a
liability. Someone else shared a pretty common sentiment
these days that student loans would prevent them from ever buying a home. Another said abolish private property altogether. But, okay. A majority of you think ownership is the way
to go, and who can blame them? People think of buying a home as part of the
American dream. The driver of middle class wealth. A sound investment vehicle. Renting a place is less romantic. Throwing money away every month on a place
to rest your head and keep your stuff, but that calculus is changing. To help us run down the reasons why you may
want to rent and not buy, I spoke to financial planner Roger Ma. Let’s talk about renting versus buying. Sure. So, can you tell me why renting is not throwing
your money away? Well, I think the flip side is why is buying
not wasting money? And I think that’s a myth that when you buy,
a lot of your money is building equity, but that’s just not the case. Your monthly payment, and the upfront, and
the backend cost of buying are wasted money as well. You’ve got mortgage interest, homeowners insurance,
property taxes, potentially homeowners association fees. Not to mention the huge closing cost on the
front end and the back end. If you don’t plan to stay in the same area
for at least five years, it probably makes more sense to rent, and that’s because of
those large closing costs. You need to give your home a sufficient amount
of time to potentially increase in value. I feel like the generation now growing is
maybe more likely to be on the move. Definitely. Between the ages of 22 and 40, the average
person changes jobs every one to two years, so they’re changing a fair amount. So, I think having the flexibility to change
jobs could be reasons to rent instead of buy. And that’s okay. There’s no shame in renting, and if you look
around the United States, depending on where you live, it might actually be more affordable. ATTOM Data Solutions publishes a yearly affordability
index of buying verse renting, and in most places, 59% to be exact, real estate prices
are outpacing rentals. In fact, in all 18 of the most populous counties
in America, it’s more affordable to rent than buy. Lets be real. For a lot of people, the choice of renting
verse buying may not even be yours, especially if you’re young. I talked to Bloomberg reporter Patrick Clark
about the unique problems facing potential home buyers. Let’s talk about the unique hindrances that
maybe new home buyers might face. There’s not enough homes they can afford. Right? Sure. That would be a big problem. At the very most basic, there’s an affordability
gap. A decade after the foreclosure crisis, we’re
still building homes. Not just of where they were at the peak bubble
madness, but still below the number of new homes that we were adding in the mid ’90s. The construction that is happening has skewed towards the high end. That is sort of pressured on the other side
by maybe age, people growing older and maybe not moving out of their homes. There’s two different ways you can get listings,
right? You could build new homes or you can have
homes that were already occupied hit the market. There’s some question of whether people want
to stay in their own homes and “age in place”. Older people staying in their homes longer
is an issue, so there’s some gridlock in the housing market. This generation is now saddled with more burdens
than previously was the case. Like way more. There’s more than $1.5 trillion of student
loan debt outstanding. Yikes. The deck is certainly stacked against this
generation. But that long standing elusive goal of home
ownership seems so tempting. All in all, I’d have to put it this way: If
you have your heart set on home ownership, nobody’s going to stand in your way. But you probably don’t need to sweat it too
much either if you don’t. That was probably expensive.

4 thoughts on “Rent vs. Buy: The Eternal Debate”

  1. If you have student loan or any other debt that you believe prevents you from owning a home you can always buy a fixer upper in Florida where the law will not allow creditors to put a lien on your home. I just put up a video of the $41k home I fixed up in Daytona Beach and my property taxes are only $182 a year.

  2. American are literally eating each other to survive, student go to college then get a job working as a slave just for paying college debt and rent. The rich get richer the poor get poorer

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