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  • The white picket fence.

  • Space for entertaining.

  • Acres of land to call your own.

  • These were characteristics of the American dream home.

  • But is it still a dream worth chasing?

  • Should you buy a home or rent?

  • We're here at the White House at 6 Woods Lane in Easthampton Long Island.

  • You could own this place for the list price of $12.5 million.

  • With a 30-year fixed rate mortgage of 3.991% interest, you'd pay nearly $47000 a month.

  • And that's not including closing costs, home ownership insurance, or property taxes.

  • Now, this kind of place might be a little pricey for you, but the same principles apply at much lower levels when you're considering whether to rent or buy a home.

  • Now, before I break something in here, let's get back to the studio.

  • To buy or not to buy?

  • That is the question.

  • We polled our YouTube audience, and they had a lot to say.

  • One person said owning a house should not be thought of as an investment.

  • More like something between an asset and a liability.

  • Someone else shared a pretty common sentiment these days that student loans would prevent them from ever buying a home.

  • Another said abolish private property altogether.

  • But, okay.

  • A majority of you think ownership is the way to go, and who can blame them?

  • People think of buying a home as part of the American dream.

  • The driver of middle class wealth.

  • A sound investment vehicle.

  • Renting a place is less romantic.

  • Throwing money away every month on a place to rest your head and keep your stuff, but that calculus is changing.

  • To help us run down the reasons why you may want to rent and not buy, I spoke to financial planner Roger Ma.

  • So, can you tell me why renting is not throwing your money away?

  • Well, I think the flip side is why is buying not wasting money?

  • And I think that's a myth that when you buy, a lot of your money is building equity, but that's just not the case.

  • Your monthly payment, and the upfront, and the backend cost of buying are wasted money as well.

  • You've got mortgage interest, homeowners insurance, property taxes, potentially homeowners association fees.

  • Not to mention the huge closing cost on the front end and the back end.

  • If you don't plan to stay in the same area for at least five years, it probably makes more sense to rent, and that's because of those large closing costs.

  • You need to give your home a sufficient amount of time to potentially increase in value.

  • I feel like the generation now growing is maybe more likely to be on the move.

  • Definitely.

  • Between the ages of 22 and 40, the average person changes jobs every one to two years, so they're changing a fair amount.

  • So, I think having the flexibility to change jobs could be reasons to rent instead of buy.

  • And that's okay.

  • There's no shame in renting, and if you look around the United States, depending on where you live, it might actually be more affordable.

  • ATTOM Data Solutions publishes a yearly affordability index of buying verse renting.

  • And in most places, 59% to be exact, real estate prices are outpacing rentals.

  • In fact, in all 18 of the most populous counties in America, it's more affordable to rent than buy.

  • Let's be real.

  • For a lot of people, the choice of renting verse buying may not even be yours, especially if you're young.

  • I talked to Bloomberg reporter Patrick Clark about the unique problems facing potential home buyers.

  • Let's talk about the unique hindrances that maybe new home buyers might face.

  • There's not enough homes they can afford.

  • Right?

  • Sure.

  • That would be a big problem.

  • At the very most basic, there's an affordability gap.

  • A decade after the foreclosure crisis, we're still building homes.

  • Not just of where they were at the peak bubble madness, but still below the number of new homes that we were adding in the mid '90s.

  • The construction that is happening has been skewed towards the high end.

  • That is sort of pressured on the other side by maybe age, people growing older and maybe not moving out of their homes.

  • There's two different ways you can get listings, right?

  • You could build new homes or you can have homes that were already occupied, hit the market.

  • There's some question of whether people want to stay in their own homes and "age in place".

  • Older people staying in their homes longer is an issue, so there's some gridlock in the housing market.

  • This generation is now saddled with more burdens than previously was the case.

  • Like way more.

  • There's more than $1.5 trillion of student loan debt outstanding.

  • Yikes.

  • The deck is certainly stacked against this generation.

  • But that long standing elusive goal of home ownership seems so tempting.

  • All in all, I'd have to put it this way: If you have your heart set on home ownership, nobody's going to stand in your way.

  • But you probably don't need to sweat it too much either if you don't.

  • That was probably expensive.

The white picket fence.

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B1 US renting rent home buying buy ownership

No, Renting Isn't Throwing Your Money Away

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    April Lu posted on 2019/06/18
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