Quote:
Originally Posted by steveosnyder
With 7 years total in your house, assuming a 30 year mortgage and minimum payments, you will more than likely have paid off 10-20% of the value of your home (depending on if the value went up or down). If you include the property tax, insurance, money you spent on upgrades, etc.etc.etc. you may have been better renting for the last 7 years and investing the difference.
Just a thought before everyone thinks home ownership is a "good investment".
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Using today's values, the sweet spot for this is somewhere just after the fifth year. And generally this is done using a condo comparison because that's usually where people start - are you better off owning that 850 sq ft two-bedroom or renting it?
And it's incredible how well the comparison translates across markets within the city. Even while adjusting for things like condo fees and environmental efficiency (things like heating and cooling), it's nearly the same everywhere you go; if you stay just past five years you'll be ahead owning.
But if you *don't*, it's an absurdly favourable position to rent. Regardless of whether it's a house or condo, staying only a couple years is the equivalent of burning money while assuming a ton of risk.
And the argument that you're able to find a sweet deal and do a bunch of renovation work to increase the value doesn't hold up to scrutiny. You'll be behind. It's not as simple as calculating the payback period and comparing a sale price from one year to another. Once the costs and rates of return are calculated, you're almost guaranteed to be behind. Unfortunately, markets are relatively efficient when it comes to assigning value.
Other than realtors pushing the idea of ownership as beneficial, I have no idea how the myth of ownership persists under anything but very specific conditions. We just simply aren't seeing the increases in values we once did...
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