Name: No, Renting Isn't Throwing Your Money Away
Uploaded: 2019-06-18T04:18:52.000Z
Duration: 5 min 27 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

These were characteristics of the American dream home.

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.

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.

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.

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.

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.

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.

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.

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

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.