Renting: Really Cheaper than Buying?
I know I’m going to raise a lot of eyebrows with this one. So let’s just add one more to the rent versus buy debate column. No. In my eyes, renting is not cheaper than buying, even if on the face of it, it seems that way.
Sacramento has enjoyed some of the lowest rents in California. But that has changed recently. With more foreclosures on the way (and a lot of these happen to be investment properties) and loss of interest in the case of landlords, there are lesser homes on the rental market, which has driven rents up this last year. I believe they will continue to rise in 2008.
Compare that fact to the mortgage amount - fixed for 30 years. Inflation pretty much ensures that the $1500 or so in payments will be remain the same (which will SEEM like less money in the future) while your rent will keep up with inflation.
Also, at the end of 30 years, that mortgage amount will vanish and in its stead will be an owned asset worth a certain amount, which if you want to sell and downsize, you can do so!
Here’s a good calculator for rent vs. buy you should look at and decide: is renting really cheaper than buying?
