If you’ve been wondering if you should be renting rather than owning, consider this expert’s view.
Palm Coast, FL – November 1, 2011 – If you’ve been wondering if you should be renting rather than owning, consider this expert’s view. If the constant media drum beat of negativity toward home ownership has you wondering if you’re crazy for buying a home instead of renting, you’ll feel better after reading Liz Davidson’s Forbes Magazine blog, The Next Mortgage Crisis.
"Today, there’s another mortgage crisis in the works – that is, NOT having one – choosing to rent when you can afford to buy; choosing to forgo building equity in a home as a major source of retirement security – something that may be more necessary now than ever before with a soft stock market and low interest rates."
If rents rise at the pace of current inflation (3.2% a year) the renter will pay $900,000 for housing over 30 years, while the home owner will pay $540,000 because his payment continues to be $1,500 a month.
Meanwhile, the renter has paid nearly twice as much to keep a roof over his head for 30 years, has given up $400,000 in retirement assets, and has to continue paying rent during retirement.
"If Americans don’t recover soon from their pessimism around home ownership, we predict another fallout from the financial crisis will surface many years from now when a nation of renters tries to retire. They won’t have equity in their homes. Their paychecks will be stretched to the limit, not leaving room for saving and investing for retirement and other financial goals such as college funding. Instead of their expenses reducing through retirement, they will look straight down the barrel of increased rent payments for the rest of their lives."