Renting is ALWAYS financially more beneficial over time than owning

no it's not. just like any other asset, you can buy at unusually low priced times and sell at higher times. in terms of primary residence that's not a very good wealth advancement strategy, but it may very well beat rents, depending on many factors.

timing real estate markets really isn't so hard. there aren't that many huge increases, or huge decreases. the bottom and the top are hard, but the middle high and the middle low aren't tough.

I'm willing to listen to other points of view, but my math and analytics works very clearly and you'll have a hard time I think proving anything different than what I said.

Peterxx, not if you pay cash for your apartment and then live in it for 20 years.

peter: many flaws in your argument

luchias: never pay all cash in a comparison. you're losing the 2 imbedded long term advantages ..leverage and tax bennies.

patient09 can you please elaborate on those?

Wife and I are considering our next step after renting for the past 6. We missed out on a lot of upside since 2003.

Anyway, this analysis is crazy, it doesn't work and makes no logical sense whatsoever. Plus the whole idea that something ALWAYS is XYZ is like an abdication of an ability to think.

no, watching yankee game. Look up any one of the 15 threads over the last year on rent/buy mathematics.

The problem with this is that ignores valuation. Don't buy the stock market over 15x normalized earnings and don't buy real estate over 15x gross rent. Obvious a dollar in the stock market was better in 1988, and a dollar in real estate was better in 1998.

peter, it's like most assets, sometimes it works in your favor, sometimes it doesn't. if we had stayed in seattle childless with our first gorgeous $65k 900 sf pre-war one bedroom (stained glass, claw-foot tub, view of olympic mountains, very trendy location, renovated lovely and timeless kitchen, could walk to work) with extraordinarily low common charges, it would have been HUGELY beneficial to renting, even with increases in taxes.

To me, I think it is a shame that people in the real estate industry who own property would propogate lies such as this just to boost demand for their rentals.

luchias, think like an investor. never overextend, but always use your money wisely. it's why i had credit card debt when chase was offering me a lower rate for debt than they were offering me for savings. now they're not, and i paid off the debt.

This argument is so pathetically lame. Purchased well (cap rate > mortgage rate) and taking leverage into consideration, your return on equity for real estate is much greater than for stocks, without margin calls. However, the bubble has kept cap rates < mortgage rates and therefore the sound long-term buying opportunities have not been there since 2000-2001. And the fact of the matter is that the data show that stocks do not generate enough of a return over bonds to justify their volatility.

Your assumptions are false. The S&P had an annualized return of 6.46% over the last 15 years, while the Case Schiller 20-city index went from 98 to 150. This period includes booms and busts for both homes and the S&P 500.
Now recalculate with actual numbers.

IT WONT MATTER...After Labor Day Chops will wipe out ALL Positive Real Estate Calcs..SIT on Sidelines and wait for the Foreclosures and especially SHORTSALES to come in YIPPIE !!

What makes this proposal so fucking irrelevant is that you can decide between the two at various points in time. Yes, stocks on average rise at a higher rate. The average is irrelevant. Stocks were a bubble in 1999. Real estate was a bubble in 2007. These numbers don't account for the fact that equity can't be levered 10 to 1...Just don't be an ass and buy real estate when its got a cap rate of 3% like now.

you know, this is what is getting to me. we've reduced everything and everyone to averages. no individualized analysis of a situation, no time for that. the comments that riversider made about the FHA program just proved to me the opposite. sometimes you use public programs to help the middle class with highish incomes but low payments and low ltv and you have great default success. sometimes your concerns extend to enabling other people to achieve home ownership, and the default rates aren't superb, but the program works. sometimes you give government loans to joe the plumber and his extended family because you need to keep the economy afloat. i don't have any problem with a program that usually slightly underperforms but has insurance and doesn't do horribly and fills a social need and may even remediate social harm, even though that program may not have done well 100%. i have a hell of a big issue with WaMu and Countrwide, and of course the government's insistence the the GSEs buy huge amounts of toxic shit, which riversider will probably proclaim is because they had bad ltv standards. they did, but...

those are all different situations, with different default rates for different types of loans.

peter: I will throw you this bone based on your assumptions. If you could do all 3 as you assert:
1. borrow 30 yr fixed rate at 6%.
2. invest excess annual cash at short rate of 8% and continue for 30yrs.
3. invest initial saved down payment with a compounded, deferred tax, rate of 15% for 30 years.

you might be on to something sexy....this world doesn't exist, never has.

that was really ot, wasn't it? although only sort of.

p09, i like sexy.

Sabathia looking strong! nice throw by Swisher..2-2

Has anyone considered the possibility that the original post was a spoof and that right now peterxx is kicking back in front of the the TV, drinking a beer and getting a laugh every time he hits 'Refresh' on his laptop?

side: agree, i was thinking same 5 mins ago...thinking luchias and peterxx is one and same..started debate to get us to think for him. It's all good....keeps us strong "Everyday I sit in this room getting softer, Charlie squats in the bush getting stronger!"

lol, the "analysis" is so complex looking, but it is all really simplistic and WRONG.

p09, we could never share the love than has no streeteasy name, or so i suspect. not following so closely this year, but HUGE mariners fan. and not fair weather. although i should know more, so maybe i am fairweather.

i was at that 13ish inning mariners/yankees game years ago (mid 90's) in the bronx. the one where the mariners prevailed in the playoff series but they lost oh so badly (painfully). it's hard to be an out of town fan, and that subway ride home, in retrospect, should have convinced me that my goal in life was to be wealthy enough to hire a car to take me home from yankee stadium.

this entire post is a horsecrap exercise in baiting posters. peterxx is an alias for some regular. There are so many flaws by stating ABSOLUTES that it is a waste of time. Jack be nimble, jack be quick, jack choose asset classes, including cash, based on flexibilty -- not absolutes. or just be a JACKASS....

Guys, girls, whatever - NO, this is my analysis and I've spent time with it. I've also tested this at lower returns for the S&P and it has a wide margin as you can see above by the relative benefits for the assumptions I started with. If you believe different assumptions, ok no problem but try it out. And if you don't agree with it at all, well, I seriously disagree. But if you disagree with me, show me something that supports YOUR case.

Vanilla is always better than Chocolate.

i think that was 1999 AR...Mariners had one of the best all time records in baseball, lost in the playoffs to our boys anyway...ichiro's first season?

yeah, right, sure, go.

p09, it might be worth your while to contact me.

aboutreadyse. gmail.

somebody already had aboutready? who could have been so stupid?

oh esb, such a source of potential, such a continual source of disappointment. it's my home town, and i actually grew up a fanatical sonics fan and a uw huskies football devotee. i was spoiled early, and let down since.

but i don't think that was 1999. that was a few years earlier. the mariner's beat the yankees in the playoffs, but didn't go further. 1995 maybe? i could look it up, but i'm just sort of trying to get over the possibilities

ar: i've done that visiting team fan subway ride of shame before. worst was a 1999 ALCS game that the yankees won with an extra innings walk-off homer in a game the red sox had led 3-0 at one point. i'm not sure a car home from the stadium would be enough. might need a helicopter

1995 the mariners beat the yankees in the playoffe in seattle, 5 game series.

misread your post, though you said the mariners eventually lost the series, not won it

esb - mariners' great regular season followed by playoff flop was 2001. yes, also ichiro's first season

ar - yes, 1995

best part about being a Sonics fan would have been knowing that the X-Man was on your side. Remember the scene in Singles, when the guy is with Kyra Sedgwick and looks up at the X-Man poster in her bedroom and says "Steve, don't cum yet". Good stuff!

Peter, Ed Easterling wrote a good book called Uncommon Returns. Long term (20-yrs) returns in the stock market a very dependent on valuation at the entry point. There are many periods of time for which the expected return (based on a histogram of rolling 20-yr experiences) is very low. Conversely, the appropriate measures for real estate purchases as discussed on this board ad nauseum, would produce fantastic equity returns with leverage.

All this said, your case is great in a world where you only have $1 to invest for 50 years and you need to decide right now whether it goes into stock or real estate. Earnings generally rise more than rents over time. In other words, your analysis is good for nothing.

yes, esb, that would have been it. and i think seattle was down 0-2.

sidelinesitter, you know then. wow, and in that time period, the mariners were the Yankees' pains in the asses. their spoilers.

they always hate the red sox, of course some years more than others. but they really f'ng hated those guys from the northwest. i so miss edgar martinez. his chant was ed gar, ed gar. but after time it always seemed to be also gar ed, gar ed.

and only seattle had jay buhner shave your head for free admission day. and just the best f'ng ads on earth.

So Rhino88, what do you propose? Buying is superior to renting now?

86, sorry

why did you have to copy and paste stevejhx's post peter? Take in mind that the post you copied and pasted was written right before the DOW plummeted 40%.

sorry peterxx, but i think the majority of people just thought your post was wrong. rhino certainly doesn't think buying right now (unless he had a come to jesus moment or some drugs that i don't know about) is a good idea.

some think your post is at least partly correct. and you can find them on a number of threads. while i absolutely appreciate the effort of your post, if not the conclusions, it seems to be from someone who has spent zero time here, or has spent more time and wishes to appear disingenuous.

your mathematical models, quite frankly, suck.

ar: so did you ever go for the free ticket on jay buhner day?

have to admit i only follow the mariners when they have a player putting up hall of fame numbers - Griffey and A-Rod back in the day, and now I watch ichiro's stats religiously. i lived in japan during his first first season (with Orix). No rock star ever got that much attention. he was about 18 years old and the press was on him like he was tiger woods, bono and some supermodel all rolled into one.

lol, like I'll take your word for it. You haven't contributed anything here other than what you think of the Seattle Mariners.

also, what do you mean the "majority" I've only seen a dozen or so opinions and no one even tried to give a new model or a new working theory

also, for those of who did not notice, the original psot was copied/pasted from a post stevejhx wrote 16 months ago. Hmm, I wonder how anyone who took his advice and invested in the stock market is doing today:

http://www.streeteasy.com/nyc/talk/discussion/3410-real-estate-is-a-bad-investment

you haven't contributed anything either peter, unless you count copying and pasting an old post that has been disproved countless times.

If stevejhx believes the same thing, I'd say he's a pretty bright guy

peterxx, what about the tax benefits of owning property?

You don't get tax benefits from owning property.

You only get a tax deduction off of your interest expense on a mortgage. So this assumes you are borrowing, which is likely but not always, and that you are actually making money. That "tax benefit" goes away if you aren't working, even if you still "own" the property.

The _President, what do you believe? Show me. Provide your analysis.

"2) The S&P 500 increases at a real rate of 15.0% per like it has done year to date this year."

Really? How much has the S&P increased from this time last year? DId you even read steve's post or did you just copy and paste it?

"You only get a tax deduction off of your interest expense on a mortgage."

WRONG. You also get a deduction off your property taxes and maintenance.

Yes but you have to PAY property taxes first

And you don't get a deduction on your maintenance.

sidelinesitter, i've got stunning strawberry blond hair. you don't f with my hair. although something in me would have loved to have done it back then. sadly, though, i press my hand over the orb and it's really bumpy.

but there were always some women doing it. you go girls.

In any case, there is so much difference between renting and owning that you are playing with pennies.

S&P is up 15% this year. And I'd hardly say that this is a good environment, so that speaks pretty strongly. But again, there is so much difference even if you use a lower S&P it works out well.

So instead of analyzing the small margins, show me your calculations and show me how the opposite of what I say is true.

"And you don't get a deduction on your maintenance."

In a co-op you do.

Yes but then you don't get separate real estate taxes deduction.

You are playing with pennies.

Prove me wrong. Or else talk about the Mariners or something else/

isn't a tax deduction a benefit to the property owner?

If the property owner has a mortgage. And if the property owner has a job.

But it isn't big anyway, and no matter what wouldn't change the magnitude of my analysis.

peterxx, maybe you should review the thread? some of us who have been chatting about this shit forever sometimes go off on tangents that are personal. forgive us. it's been a long time for some of us, and even for others we get to know each other, and some personal interaction isn't abnormal.

and i did give a fairly detailed response, no? have fun dealing with alpie instead.

You can' talk about your tangents, I have no issue. You could set up a separate discussion, but I didn't even say that until just now. What is aplie?

I'm alpie.

there are too many variables...what about improvements taht make the property worth more? what abouut change in neighborhoods that can make a property go up in value dramatically?

So eastsidebroker, you disagree with the answer/conclusion or the model/analysis or both?

ok
so aplie/President are you and aboutready in agreement or not?

"also, for those of who did not notice, the original psot was copied/pasted from a post stevejhx wrote 16 months ago. Hmm, I wonder how anyone who took his advice and invested in the stock market is doing today:"

Yes, and a few posts down the same thread steve pointed out that people who posted rebuttals had fallen into his trap, that is, his spoof on flawed arguments on SE.

BTW, peter didn't leave steve after the original post. This is pure stevejhx: "You only get a tax deduction off of your interest expense on a mortgage. So this assumes you are borrowing, which is likely but not always, and that you are actually making money. That "tax benefit" goes away if you aren't working, even if you still "own" the property." eastsidebroker walked right into that one.

Also peter's tone of "Every aspect of every argument that I make is perfect and anyone who disagrees in the slightest is wrong and I will stay up and post all night if that's what it takes to get the idiots to agree [or, more likely, to shrug their shoulders and say, ok steve, whatever, and go away to do something else while steve keeps posting] that I was 100% right all along, because after all there are only two ways to look at any question, my way and the wrong way" is all steve. All peter needs to do is to ask, where's spunky? and the spoof will be complete.

peterxx sorry. just feeling a bit burned out on these issues, but not your fault at all, assuming you're new.

i've never really seen some social commentary absolutely overcome a viable thread. some buy/rent, which is your idea, maybe, but be careful what you wish for.

but this is a community based on more than just your question, and asking us to be respectful is OK, but you have to realize we have hashed this issue to shit and beyond over the last few years. so feel free to ask, but please also be respectful if a few of us are interestedin having some fun as a sideline benefit of talking about real estate.

i disagree with your conclusion....it is too absolute, you can not say that renting always make more sense than buying. it may sometimes make more sense, it certainly doesnt always make sense. what about people that bought in what were marginal or worse neighborhoods in 1986 and sold them in 2006? they must have made fortunes.

for a moment earlier i thought that ar and i were going to pull off a full hijack and get this thread off its inane beginning and onto a real subject - baseball. unfortunately it didn't quite take. there isn't enough baseball on SE, by the way.

i love baseball (more accurately i love the yankees) and thinking about the 1995 alds made me cry

what's spunky?

ar / esb - one more time, THIS IS A SPOOF THREAD. peterxx is trying to get a rise out of you. and it's working.

sidelinesitter, if you think otherwise, show me. You can't show me because you know what I say is true.

ok peter, whatever

on a more important note, esb, excuse me but what is this all about: "thinking about the 1995 alds made me cry"? Overly dramatic, no? 2004 ALCS I could see. Or last year - I mean something is seriously wrong in baseball world when the Rays are making the playoffs and the Yankees aren't. That just isn't supposed to happen. And thankfully it won't this year.

you don't even try. I guess that's assumed in your name.

sidelinesitter, i'm fully a believer that the sports in a city affects its viabiltiy.

sport on. peterxx didn't really attract any real commentary because his math and analyses were such shit.

so, not that i usually condone taking over threads, that's been some of the best. i just feel guilty all the time, which is really strange because i can swear up a storm with no problem but i dont' like to take over someone else's thread.

aboutready, the asides are fine. It doesn't change the math or analysis and you haven't indicated why they are "such shit". So talk baseball, and when you want to come back to the whole point, come back with something substantive instead of just swears.

ok, let's see what i posted earlier, in this thread.

about 2 hours ago
ignore this person
report abuse peter, it's like most assets, sometimes it works in your favor, sometimes it doesn't. if we had stayed in seattle childless with our first gorgeous $65k 900 sf pre-war one bedroom (stained glass, claw-foot tub, view of olympic mountains, very trendy location, renovated lovely and timeless kitchen, could walk to work) with extraordinarily low common charges, it would have been HUGELY beneficial to renting, even with increases in taxes.

and this, which wasn't a-one on point given my mood, but probably was nonetheless both relevant. so fuck off.

about 2 hours ago
ignore this person
report abuse you know, this is what is getting to me. we've reduced everything and everyone to averages. no individualized analysis of a situation, no time for that. the comments that riversider made about the FHA program just proved to me the opposite. sometimes you use public programs to help the middle class with highish incomes but low payments and low ltv and you have great default success. sometimes your concerns extend to enabling other people to achieve home ownership, and the default rates aren't superb, but the program works. sometimes you give government loans to joe the plumber and his extended family because you need to keep the economy afloat. i don't have any problem with a program that usually slightly underperforms but has insurance and doesn't do horribly and fills a social need and may even remediate social harm, even though that program may not have done well 100%. i have a hell of a big issue with WaMu and Countrwide, and of course the government's insistence the the GSEs buy huge amounts of toxic shit, which riversider will probably proclaim is because they had bad ltv standards. they did, but...

those are all different situations, with different default rates for different types of loans.

you've got to be joking. when we find something so lacking in methodolgoy as your analysis we're happy as pigs in shit.

we're a bit tired, at least some of us. we've been fighting the same damned fights forever. i'll still fight, but i'd like to know if anyone shares my interests as well. how arrogant of you.

When did buying an apt or a house become 100% based on financials. I get it, the RE market may go up, it may go down, but its nice to own your place, Finances are important but its not a stock, its where you live--big difference. And no--I'm not a broker

that's easy. it became based on financials when prices surpassed incomes by so much. actually it didn't really then, when certain underwriting standards were also applied, but not to conforming loans.

AR, peter is a troll just trying to start an argument w/o believing it. This is that crystal moment when Alpie is right ... peter just lifted an old stevejhx threadstarter. I recognize the overstated subject line ... who could possibly forget it?

I recommend letting this one die.

zzzzzzzzzzzzzzzzzzzzzzzzz

Ok Peter, your analysis is based on one decision for a lifetime, and it is completely dependent on the starting point. I understand that economists simplify life so as to construct models for decisions. However, yours is so oversimplified so as to make it useless. Here is my model ->

Invest 100% of your 401k in stock. However, shut off the contributions when the S&P is trading above 15x Shiller normalized EPS and use that money to pay down your mortgage. The mid 1990s were an opportunity to buy real estate, with cap rates > 10%. The late 1990s were an opportunity to grow a brain and realize the real long term returns on a 40x EPS entry point into the stock market were negative.

ah, i just wanted to keep talking about baseball.

sidlinesitter, i was young had never seen the yankees do so well and was more emotional about sports than i am now

hmmm, hasn't it been proven that this analysis is ALWAYS RIGHT? http://www.streeteasy.com/nyc/talk/discussion/3410-real-estate-is-a-bad-investment?page=1
Thanks THE_Presiden for finding the original.
This made the Original Original Poster into a complete laughingstock still to today.

Imitation and flattery....

Not really 454MN - if you do what housing bulls do and pick their start and stop dates, and had invested $1 million in C in March, you'd have almost $6 million now.

Housing is NOT an investment.

I can't help but draw the conclusion that much of the bear argument is rooted the frustration of not being able to own. The incessant arguments, justifications, analysis and even bullying is aimed outward but the deeper goal is personal affirmation, catharsis, whatever.. Those who are renting and happy with their "life choice" wouldn't bother trying to convince others of their brilliance.

After a Bumpy Ride, Back at Square One

By FLOYD NORRIS
Published: August 28, 2009

IN the last eight years, home prices in the United States have almost exactly kept up with inflation. But it has been a wild ride.

http://www.nytimes.com/2009/08/29/business/economy/29charts.html?ref=business

Actually UWSmynabe, most of the people calling the "analysis" above or the original analysis extremely stupid are also anti-buying right now. Really all this comes down to is someone had a really really dumb analysis, and you don't do your side any favor by supporting horseshit.

columbiacounty/454MN - is that really YOU!!!

What's your problem?

it depends on the bear.

aboutready - I am slowly discovering you offer the most compelling bear points of view here. Thoughtful and insightful, without the nastiness (mostly!)

its the second time I have seen the term "horseshit" apply to my comments in the last couple of days. The other was compliments of columbiacounty. coincidence? hmmm

Ok UWSmynabe, please englighten us about the rest of your points of view.

i don't think cc is the type to take on another handle. this sounds like another poster trying to sound like another poster, if you get my point. i'm usually slow to catch on, but i think that's the point of this thread.

thankfully it gave us such a lovely opportunity to talk about baseball, so the mischief was quite worthwhile.