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Claeren · 01-13-2008, 11:22 AM

It is funny that buying is ALWAYS better and you can 'never lose on real estate long term' when real estate has probably bankrupted more people in the world than ANY other thing?!

Renting v. buying (and most other questions in regards to real estate) have EVERYTHING to do with timing.

Timed right, even marginally right, and real estate is one of the best investments you can make.

Timed wrong, even marginally wrong, and it can be one of the worst investments you can ever make.

Renting, beyond offering flexibility to move about, is also about staying out of a bad market until a better market presents itself.

I have a friend who paid ~$289k for a downtown (Bridgeland) condo in Calgary a year ago at the height of the boom - at what SEEMED to be a FANTASTIC price at the time. The unit one floor below them just sold for $259k after sitting on the market for 2 months. My friend would have been FAR FAR FAR better renting for that year, saving the difference between rent and the mortgage payment, and then buying today. Factoring in an extra ~$6000 in downpayment and the $30,000 savings over 25 years? It is not even close.

Lots of people will time it the opposite way, and lose out due to renting though...

Perhaps the most interesting thing is that the market almost always moves in large dramatic shifts after years of inactivity. You can rent for 20 years of stagnant market, buy a house right before an upwards shift, and have been far better off than someone who owned that entire time (More cash flush, less downside exposure, more life-flexibility, less maintenance/tax/etc.) The leveridged equity shift was worth more than the slowly accumulated after-bank-interest equity in the actual house. The real reason buying is likely better is that (despite peoples confidence to the contrary) timing the market is so incredibly difficult, that by buying you are guarenteed to be in the market when prices shift dramatically upwards in a 1-3 year period.

Claeren.

01-13-2008, 11:22 AM	#61
Claeren Franchise Player Join Date: Jul 2003 Location: Section 218 Exp:	It is funny that buying is ALWAYS better and you can 'never lose on real estate long term' when real estate has probably bankrupted more people in the world than ANY other thing?! Renting v. buying (and most other questions in regards to real estate) have EVERYTHING to do with timing. Timed right, even marginally right, and real estate is one of the best investments you can make. Timed wrong, even marginally wrong, and it can be one of the worst investments you can ever make. Renting, beyond offering flexibility to move about, is also about staying out of a bad market until a better market presents itself. I have a friend who paid ~$289k for a downtown (Bridgeland) condo in Calgary a year ago at the height of the boom - at what SEEMED to be a FANTASTIC price at the time. The unit one floor below them just sold for $259k after sitting on the market for 2 months. My friend would have been FAR FAR FAR better renting for that year, saving the difference between rent and the mortgage payment, and then buying today. Factoring in an extra ~$6000 in downpayment and the $30,000 savings over 25 years? It is not even close. Lots of people will time it the opposite way, and lose out due to renting though... Perhaps the most interesting thing is that the market almost always moves in large dramatic shifts after years of inactivity. You can rent for 20 years of stagnant market, buy a house right before an upwards shift, and have been far better off than someone who owned that entire time (More cash flush, less downside exposure, more life-flexibility, less maintenance/tax/etc.) The leveridged equity shift was worth more than the slowly accumulated after-bank-interest equity in the actual house. The real reason buying is likely better is that (despite peoples confidence to the contrary) timing the market is so incredibly difficult, that by buying you are guarenteed to be in the market when prices shift dramatically upwards in a 1-3 year period. Claeren. Last edited by Claeren; 01-13-2008 at 11:25 AM.