Comments on: Time magazine vs. bankrate.com on the housing market http://totalcandor.com/blog/2008/03/time-magazine-vs-bankratecom-on-the-housing-market/ A Conversation About Income, Wealth, and the Steps in Between Sun, 22 Apr 2012 14:08:55 -0700 http://wordpress.org/?v=2.8.5 hourly 1 By: Michael http://totalcandor.com/blog/2008/03/time-magazine-vs-bankratecom-on-the-housing-market/comment-page-1/#comment-3408 Michael Thu, 06 Mar 2008 13:09:28 +0000 http://totalcandor.com/blog/?p=146#comment-3408 True enough Adam. Even if you concede every mathematical assumption in Time's analysis, you can still come to the opposite conclusion. That's because there is one implicit assumption built into their analysis: The person choosing to rent will spend the same amount each month renting as she would have had she bought a home. But that's unlikely. Many people, when renting, do so to be able to save for a down-payment. As such, their monthly rental payment is lower than their mortgage would be. Second--and this is a big one--there's no additional maintenance and real estate tax expenses from renting. Time leaves this out of the analysis completely, choosing to focus on the fact that you will be living in place you don't like as as a renter. That may be true, but in their mythical environment of a known 10% decline, I'll take the less expensive short-term housing option and buy lower a year from now. True enough Adam. Even if you concede every mathematical assumption in Time’s analysis, you can still come to the opposite conclusion. That’s because there is one implicit assumption built into their analysis:

The person choosing to rent will spend the same amount each month renting as she would have had she bought a home.

But that’s unlikely.

Many people, when renting, do so to be able to save for a down-payment. As such, their monthly rental payment is lower than their mortgage would be. Second–and this is a big one–there’s no additional maintenance and real estate tax expenses from renting.

Time leaves this out of the analysis completely, choosing to focus on the fact that you will be living in place you don’t like as as a renter. That may be true, but in their mythical environment of a known 10% decline, I’ll take the less expensive short-term housing option and buy lower a year from now.

]]> By: Adam http://totalcandor.com/blog/2008/03/time-magazine-vs-bankratecom-on-the-housing-market/comment-page-1/#comment-3363 Adam Thu, 06 Mar 2008 02:08:46 +0000 http://totalcandor.com/blog/?p=146#comment-3363 Good points here. I also read that article and, as a potential first time home buyer who has not saved a large enough down payment yet, thought about Time's comparison from another perspective. If their assumptions were true, and the mortgage payment were the same a year from now (due to falling prices and rising rates), you would be no worse off waiting the year and saving more money. Good points here. I also read that article and, as a potential first time home buyer who has not saved a large enough down payment yet, thought about Time’s comparison from another perspective. If their assumptions were true, and the mortgage payment were the same a year from now (due to falling prices and rising rates), you would be no worse off waiting the year and saving more money.

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