Comments on: That Damned Rent vs. Buy Question

By: PK

PK — Wed, 20 Aug 2008 14:51:02 +0000

Great article!
A little backstory on Dinkytown.net. It’s a local company for me here in the Minneapolis area, and Dinkytown (www.dinkytownusa.com) is a local neighborhood by the U of MN campus. I’m sure that’s where the name came from.

By: frugal

frugal — Fri, 02 Jun 2006 19:49:30 +0000

Yeah, after I entered your numbers into my own calculator on my website at http://www.1stMillionAt33.com/java_codes/rent_buy.html. I got a break-even number of some 8 years too. My java calculator gives you a table of how different things such as tax benefit and mortgage balance evolved over the years of home ownership. I find that more helpful to visualize how rent vs buy is better.
I think the biggest question is still how much homes will appreciate. If one can believe that homes can appreciate 6% year after year, then one should believe that the salary in general can increase close to 6% year after year too. With outsourcing in this global economy, I think that may be a little bit difficult to achieve.

By: MyMoneyBlog

MyMoneyBlog — Sat, 23 Apr 2005 23:19:20 +0000

The eternal question: Rent vs. Buy?

At least for me it is. Jim from Blueprint for Financial Prosperity lays down his results in this interesting article. Looks like he’s going for it! He also introduced me to Dinkytown.net, home of tons of neat financial calculators. I remember running …

By: Jonathan

Jonathan — Sat, 23 Apr 2005 02:45:41 +0000

Oh, and thanks for the link and good luck!

By: Jonathan

Jonathan — Sat, 23 Apr 2005 02:45:23 +0000

I remember using one of these calculators and came up with the exact same conclusion as you – it all depends on how much the house will appreciate. I don’t necessariliy think that there is a housing bubble in my area, but I do think it will definitely taper off as interest rates will probably rise a LOT in 3 years. Tough decision (I’m currently renting as well)…

Jonathan@MyMoneyBlog

By: Brian

Brian — Tue, 19 Apr 2005 23:09:08 +0000

Jim- One thing I often see left out of the bubble/boom question is a more realisitic (at least in my view) middle-ground: I think a lot of areas will experience a flat price stagnation as incomes catch up to housing prices over the next 3-5 years. I don’t know specifically about your area, but I live in Minneapolis, where the general consensus is we are ~10% overvalued, and it appears that home prices have started to stagnate. Just my $0.02 and by no means an expert opinion, just another scenario. I do believe, as the 1st responder pointed out, the value of owning a home has a lot to do with the non-financial issues. A primary home should be looked as a valuable asset for your mental health first and your financial health second. Now a good appreciation rate doesn’t hurt your mental health…..

By: jim

jim — Tue, 19 Apr 2005 18:38:31 +0000

My agent told me that the seller agent and the seller are getting together tonight to “ratify” (legalese for accept) one of the offers. I’m honestly hoping for them to pick another one because today I started looking more and there are comparable homes (at least visually on the outside) selling for $20k less in marginally worse neighborhoods. I think I’m in a win-win situation in terms of happiness anyway.

What’s the name of that lender? I’m curious… and if you can get anything for referring me, by all means let me know how I can hook you up. The rates seem very competitive.

By: risk

risk — Tue, 19 Apr 2005 18:01:08 +0000

I like canton more. would be great if it’s between park and water but closer to the park. City’s taxes are much higher. Just take closing for example, it’s 1.5% and 1% (plus the state transfer tax but first time home buyer is waived). Higher premium in auto insurance too

let me know what happen to your bid. The lender is great if you do settle with them because they refund a lot of fees. say appraisal, flood, credit report, etc. No Processing Fee, Underwriting Fee or
Application Fee.

but if you don’t settle, you need to pay the fees they incurred. Their rate is decent too. just checked, if you’re going conventional, as I see here, 30 yr fixed, 1st is 5.75 with a quarter of a point and 5.875 with no point. the 2nd, if you do 80-10-10 is 15yr fixed 5.99%.

By: jim

jim — Tue, 19 Apr 2005 12:33:11 +0000

Allegedly a garage commands a premium of like another $20k according to my agent (that might be high, my memory’s not good). I thought about the city, like a Federal Hill area, but my girlfriend isn’t too high on it because of the crime factor. What’s the lender with less closing fees? The buddy up factor isn’t huge, just something I thought was interesting.

Allegedly I’ll hear today what the deal is with my offer… nowadays, at least in the Columbia area, the winner has offered more than the asking price (5k). I’ve had a friend who bid on a single family home last November who lost his first offer by nearly $30k…

By: risk

risk — Tue, 19 Apr 2005 03:55:33 +0000

maybe I’m too greedy… I want a garaged townhouse under 320k… I’d like southern exposure too. With all the new deveopments in the city, I wonder how city living may work out for me (single no kids). btw, I know a lender with much less closing fees, but swallowed since it’s not a local credit union that you wanna buddy up with

let me know how you bidding goes. I don’t know nowadays whether the bid winner is offering at or above the asking price. I hope it’s below, but that may just be my wishful thinking

By: jim

jim — Tue, 19 Apr 2005 02:05:17 +0000

Oh really? Yeah, everything seems to be in that $300k-$320k range huh? I put in an offer today on a property… maybe I get it, maybe I don’t. If I do, I’ll just have to deal with buyer’s remorse and wondering if I offered too much.

Drop me an email if you have the change, jim at bargaineering.com

By: risk

risk — Tue, 19 Apr 2005 01:38:52 +0000

I’m in the same area. looking in the same range of townhouses as you do. $260k to $320k budget is very tight to get a good-looking townhouse in Howard county. I haven’t bought any because I could not find anything good with that buget. I also wonder whether a $1000 rent is comparable, from my estimate, shall in the range of $1200 to be fair

By: Tim

Tim — Wed, 13 Apr 2005 14:46:48 +0000

3% is more reasonable for closing costs. I know you were going for ballpark figures but little things add up and the costs add up that you don’t really plan on…so always add some margin into the mix…

By: jim

jim — Tue, 12 Apr 2005 19:54:36 +0000

That’s a very good and important point, one I haven’t overlooked. The first and easiest thing to quantify and analyze are the financials, which is why I checked some of it out first. I think the pride of ownership will be significant for me.

By: Jason

Jason — Tue, 12 Apr 2005 18:25:14 +0000

Also keep in mind that buying a house is a life-style decision. Owning is quite a bit different than renting – I would not presume to say it is better or worse – that is up to you. (full disclosure – I own and would never rent again) My point being, though it certainly is a huge financial decision with financial repercussions for many years to come, it is not JUST a financial decision. So many factors are not quantifiable: pride of ownership with owning, ease of calling the landlord when something breaks when renting, ….