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URL:  http://boards.fool.com/renting-makes-more-financial-sense-than-25890805.aspx

Subject:  Re: A personal tax question… Date:  9/11/2007  4:53 PM
Author:  khaar Number:  95809 of 121313

Renting Makes More Financial Sense Than Homeownership

I am, again, thrilled that so many people prefer to live in the huge cities on the coasts (and a few other key places throughout the country) than in some of the more out-of-the-way places inland. But it amazes me that people will repeatedly debate the wisdom of buying a house vs. renting while living in an area where the cost of living is (from my perspective) outrageous. If you want to increase your net worth, choice of places to live seems at least as important as whether to buy or rent.

Since, according to the author, the monthly payment (including insurance & taxes) plus utilities/monthly rent ratio is currently 19/1, I should rent a 3-bedroom place for $100/month? (And I'm not even considering the 2.5 acres and 2400 sq. ft. that we have to play in.) Even here, even if we include the not-so-great portions of town, I think that'd be a bit hard to find!! Yet I see nowhere that the author qualifies his statements.

Teachers here (Carlsbad, NM) start at $35K, top of the scale (MA+45hr, 17 years) is $72K. For engineers, starting salary is closer to $60K, getting into the lower $100's in about 10 years. A decent older house (3-bdrm, 1400 sqft) will run you $100K-$150K to purchase. Taxes are negligible (under $1000/year), although insurance is high (hail damage--probably $1500/year). State income taxes run about 7% of gross income. I would guess that the ratio of monthly payment to monthly rent locally is somewhere around 5 (ours is maybe 2).

To the OP and anyone else, there is no one-size-fits-all answer. Learn to use a spreadsheet and run your own numbers--otherwise you're just guessing.

Kathleen
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