Who won in the end?

floridaman

I remember many years ago there was talk of the homeowners vs renters war. It spread across multiple forums, streets and cities. The hiccups started in 2007 it's now 2015 so who won?

chucknorris

floridaman wrote: »

I remember many years ago there was talk of the homeowners vs renters war. It spread across multiple forums, streets and cities. The hiccups started in 2007 it's now 2015 so who won?

In that war, there was only ever going to be one winner, it is nonsense to claim in the long run (obviously some people choose to rent because of short term/other scenarios) renting is cheaper.

mwpt

chucknorris wrote: »

In that war, there was only ever going to be one winner, it is nonsense to claim in the long run (obviously some people choose to rent because of short term/other scenarios) renting is cheaper.

I think we had a brief debate about this before. I really need to get my spreadsheet in order and make it public on google docs.

Renting can very well be cheaper if interest on mortgage and opportunity cost exceeds capital growth you may have had using the deposit and any money saved by renting on other investments.

There are most definitely scenarios where renting the same property over 25 years can work out financially better than buying it. After 25 years, your accrued wealth will be enough to buy the property and have some change left over.

I'm not saying that is likely, or not, but it is certainly easily possible.

Mistermeaner

I would say it's not the end so we don't know yet.

Generally ownership I think prevails. Especially if you bought long ago.

Nowadays if you're on benefits / tax credits of any kind then renting probably prevails, you get to live in a far better property than you could otherwise afford.

In years to come ownership will prevail if your kids can benefit when you die but if the tax man grabs that (or if I'll health depletes its value) then you may have been better squandering your money on hookers.

chucknorris

mwpt wrote: »

I think we had a brief debate about this before. I really need to get my spreadsheet in order and make it public on google docs.

Renting can very well be cheaper if interest on mortgage and opportunity cost exceeds capital growth you may have had using the deposit and any money saved by renting on other investments.

There are most definitely scenarios where renting the same property over 25 years can work out financially better than buying it. After 25 years, your accrued wealth will be enough to buy the property and have some change left over.

I'm not saying that is likely, or not, but it is certainly easily possible.

You know, its like my wife says, don't argue with those that just don't know, just be thankful that they exist, they are paying for your forthcoming retirement. So thanks.

Did I not mention 'other scenarios' myself?

chewmylegoff

floridaman wrote: »

I remember many years ago there was talk of the homeowners vs renters war. It spread across multiple forums, streets and cities. The hiccups started in 2007 it's now 2015 so who won?

I believe history tells us that skynet wins the war.

mwpt

chucknorris wrote: »

You know, its like my wife says, don't argue with those that just don't know, just be thankful that they exist, they are paying for your retirement. So thanks.

Was it something I said?

chucknorris

mwpt wrote: »

Was it something I said?

What you said, gives away your inability to understand. Under 'normal' circumstances it is a no brainer.


Pause for breathe, am I really trying to explain this? (I must be mad).


The only way renting would be cheaper (over the long run) is when someone's personal circumstances prevent or dampen them from buying. Like when I arrived in London, as a graduate in 1990, I didn't know if I was going to stay in London (buying is along term thing) or which part of London I wanted to live in. But this is just one example of why it isn't always wise to buy.

wotsthat

I remember the game of renters vs owners. An odd game where everyone was an owner or wanted to be.

mwpt

chucknorris wrote: »

What you said, gives away your inability to understand. Under 'normal' circumstances it is a no brainer.


Pause for breathe, am I really trying to explain this? (I must be mad).


The only way renting would be cheaper (over the long run) is when someone's personal circumstances prevent or dampen them from buying. Like when I arrived in London, as a graduate in 1990, I didn't know if I was going to stay in London (buying is along term thing) or which part of London I wanted to live in. But this is just one example of why it isn't always wise to buy.

I'm not trying to be intentionally antagonistic, but that statement is completely dependent and shaped by your experience.

So, up front, let me state again so that you don't think I'm being intentionally obtuse or illiterate : I actually agree that for most people, given how I think all the variables are going to play out, it is financially better to buy than to rent.

But the caveat is that those variables have a huge impact on that decision. You have many rental properties, you run a business in it, you must have models which show how things could be different right?

I really will draw up a shared spreadsheet on this and we can discuss it civilly and you are welcome to point to flaws.

In the meantime, this guy is pretty smart and thinks along similar lines:
https://www.khanacademy.org/economics-finance-domain/core-finance/housing/renting-v-buying/v/renting-vs-buying-detailed-analysis

Btw, he now owns a house.

EDIT: Unsure what you mean by 'normal' circumstances. You mean normal HPI of 5% pa, or 10% pa? Or interest rates at what %? Sorry, I just don't know what normal means in this case.

mayonnaise

chucknorris wrote: »

What you said, gives away your inability to understand.

You can take mwpt out of hpc, but you can't take hpc out of mwpt. :rotfl: