meteparozzi

The New York Times has posted a calculator for determining which is a better value over time based on a number of factors.

Since this can sometimes become a point of contention for those advocating simple living, I thought it might be useful as a reference point. Also, it's an excellent way of determining which may be best for you based on your situation.

Buying Versus Renting - NYTimes Calculator

Dahon.Steve

I really couldn't figure out how it worked beause it seemed too simplistic leaving out many cost factors. No one can really predict how much a home will appreciate over 30 years. Look what happened over the past 5 years! Homes have appreciated so much, it's off the charts and now it ended. Who knows when homes will start appreciating again like they did in the past 5 years?

scottyk

Or depreciate. Home values are actually down for the first time in 40 years. This is because of the whole sub prime thing.

jamesdenver

I don't think home ownership, or ownership of anything else has a bearing on "simple living" I said in the simple living megathread that simple living is a state of mind, and not allowing material posessions to govern you rather than the inverse.

There's positives and negatives of home ownership, and many factors depending on the individual. I bought a home three years ago, did some improvements (by myself), gained a lot of equity and have a great rate. I don't ever plan on taking my equity to go buy a boat or build an addition. (Being upside down oweing on a house AND debt is probably the ultimate in UNsimple living), but I like the financial "cushion" my home provides and plan to use it someday for retirement.

I get letters every week from companies begging me to cash out my equity and take a lump some of cash. Then I'd owe exactly what my house is worth, and should my house go down in value (certainly a possibility), I'm screwed.

That's why we have so many foreclosures and you hear about so many problems. People are buying more house than they can afford, and teetering on the edge of what it's worth. I think predatory lenders are sharks, but anyone buying a house knows what they can afford, and can easily calculate rising interest rates if they have an ARM.

Artkansas 

It depends on where you are. Around here, the appreciation hasn't been that great.

bragi

I does leave out a lot of cost factors, esp. association fees if you have a condo, or occasional big repairs, and you're right, there's no way to predict year-to-year appreciation, but I still think it's sort of useful as a ballpark estimate. And if you've owned the house since before the bubble years, your average rate of appreciation is probably not too far off the mark for the forseeable future; in the long run, real estate is not a losing proposition, as long as the population increases and the amount of available land remains the same. Historically, as an investment, houses have been unexciting but safe over time. (As long as you're cautious about the financing...) And of course, if you're not throwing money at a couple of cars, you can afford more house, live better now, and be even better off in the future...