Today I noticed that some of my friends were referencing this site at http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0 where it essentially has a calculator to try and mathematically tell you if it makes more financial sense to rent or buy a home. From what I saw, it seemed like everyone that was using it in my social circle was expressing how it makes so much more sense to rent and that the banks and real estate agents have sort of brainwashed us all to think that owning is better.
The one thing I was confused about with this calculator was that it seemed like it favored renting even with some really skewed numbers I did just for testing as you can see here:
Generally speaking, if the house literally was like $30,000 and you intended to live there for 40 years I really don’t see how realistically it’s not better to own it. I know the main way this calculator was leaning towards renting is that it mentions how renters don’t have to pay for monthly expenses associated with owning a home.
This is one of those things where I think focusing on the numbers only can’t really tell you what’s best. As an example, I am pretty sure there is a huge difference between how you can remodel a home that you own versus one you are renting for example. If anything, I think in terms of people owning a home and how it makes no financial sense revolves more around people trying to buy things they truly can’t afford. For example, buying a million dollar home if the total yearly income is less than $30,000. I would agree there that entities like a bank essentially sell people into the idea that there are easy ways to get expensive things they can’t afford.
Maybe it’s just me, but if you intend to buy a home then you need to plan for ways to get that thing to either make money for you such as renting parts of it to others or that the conveniences it provides you helps to save a substantial amount of time and money overall. Put it this way too where if renting wasn’t so profitable for many they would be doing it. I personally still think renting only makes more sense if you have a really short term goal such as if you are intending to move within a year.