Re: Buying vs renting

I would say that Risk and Volatility are not given enough value in this 
discussion.  As far as I can see in S&P long term charts, real-estate 
values are much more stable (at least where I live in Southern California).


On 02/28/2018 11:33 AM, Lucas Gonze wrote:
> This conversation has been surprising.
>
> The USA Today articles represent a pretty solid consensus. Home values rise
> more slowly than the stock market, therefore you should grow your net worth
> by moving assets over. I expected the hardcore rationalism in FoRK culture
> to reflect this.
>
> Instead, not a single person is living in accordance with it.
>
> Arbitrage opportunity? Or is original math wrong, and how?
>
>
> On Wed, Feb 28, 2018 at 8:09 AM, Lucas Gonze <[email protected]> wrote:
>
>> That all makes sense but the last part. His friend's estate would have
>> been worth more if he'd taken the month by month savings and put them in a
>> stock index fund.
>>
>> On Feb 28, 2018 7:24 AM, <[email protected]> wrote:
>>
>>> I've read the responses and the best example I have is the following:
>>>
>>> My father joined the US Navy straight out of High School along with
>>> his best friend.  They both served in the USN for 20 years and both
>>> retired with full benefits. They both got married at around the same
>>> time and they both had 2 kids.  They both were rotated around the
>>> country every 2 years.  The major difference is my father always
>>> bought and sold a private home (every 2 years) when changing duty
>>> stations.  His friend always stayed in on-base family housing paid
>>> for by the USN.  When they both retired to their original home town,
>>> my father had bought his home outright ($185,00.00).  He didn't have
>>> a monthly house payment for a 1600 sq/ft house on a wooded 1 acre lot.
>>> His friend also bought a similar house ($165,000.00) 5 miles away on
>>> similar property and had to pay $1024.00 month out of his
>>> retirement,  (which my father  didn't have to do).  My father, with
>>> the savings, was able to  buy a boat and RV, his friend just scraped
>>> by.  When my dad died his estate was worth approximately $425,000.00
>>> and when his friend died, his estate was worth around $35,000.00.
>>> I find this was the best argument for buying over renting (when
>>> renting was free in this situation).
>>>
>>> Regards
>>>
>>> Sent from my IBM Selectric III
>>>
>>> ----- Original Message -----
>>> From: "Friends of Rohit Khare" <[email protected]>
>>> To:"FoRK Rohit Khare" <[email protected]>
>>> Cc:
>>> Sent:Tue, 27 Feb 2018 22:00:27 -0800
>>> Subject:Re: [FoRK] Buying vs renting
>>>
>>>   > On Feb 27, 2018, at 3:03 PM, Marty Halvorson <[email protected]>
>>> wrote:
>>>   >
>>>   > Despite Tom's excellent thoughts on the subject, my observation is
>>> this: All the money spent renting is benefiting only the owner of the
>>> rental unit.
>>>
>>>   Presumably you get use of the unit you are renting. The common
>>> fallacy of renting as “throwing away money” is predicated on the
>>> renter and the owner having an identical cost basis for the same
>>> place. This assumption is rarely true. Renting is often a way to split
>>> the difference between your cost basis to buy and the owner’s lower
>>> cost basis. In such cases, there is literally no way for you to come
>>> out ahead by buying the same place no matter how you try to explain
>>> the numbers unless you are loaded with cash (which is probably a bad
>>> investment of said cash). And this is the case more often than not in
>>> the US.
>>>
>>>   I find the arguments that some people gain emotional or psychological
>>> benefits from buying more compelling than arguments for financial
>>> benefits. Of course, the calculus is a bit different if you plan on
>>> living in the place you buy for the rest of your life. Admittedly, I
>>> have not gotten to the “last place I am going to live” stage yet.
>>>
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