Skip to main content
No. of Recommendations: 0
When I moved to Houston in 1981,

I'll see your 1981 Houston and raise you a 1974 Huntington Beach. Modest 3 bed, 2 bath house in a non-descript tract cost about $40k. With a 30 year loan at 6%, the monthly payments would have been around $240. Add taxes, insurance and maintenance, and you're probably near that $400 a month apartment rent.

So over the next 33 years you can make the same investments as the Houston renter.

30 years later, the mortgage cost drops to zero, although the taxes, insurance and maintenance have probably increased to perhaps something about that $675 a month for the Houston apartment.

So monthly outflow is about the same for housing.

While oil engineering jobs are scarce in Orange County, there were a lot of aerospace engineering jobs available over that time frame. Those engineering salaries also saw something close to a 4 times increase. So over time, the cash available for investing was about the same and the accumulated investments would therefore be the same.

Except that the homeowner has, well, a home. Worth $500k or so.

Once again, home ownership vs. renting is not an easy decision. Crystal balls are very handy. And home ownership CAN be a better choice than renting.

The reality is that homes generally go up in value at about the rate of inflation. Some will do better than inflation, some worse. I think the key to home ownership is a long-term commitment to staying in that house. Conventional wisdom says don't buy unless you plan to stay put at least 5 years. I'd say you need 10 to 15 at a minimum to make a home purchase a good choice. Less than that and renting is probably the safer route.

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.