Wednesday, May 27, 2009

Buying vs Renting a home

When it makes sense to rent :
(Money Magazine) -- In 2004, Tim Jones bought a little piece of the American dream: a modest three-bedroom home in Bend, Ore., that went for $218,000. Three years later he married and was ready for phase two of the dream: trading up. But instead of buying, he and wife Elise pocketed the $100,000 profit from the sale of their house and rented bigger digs.

Smart move. Today Jones, 36, estimates their old place would sell for only $230,000. Meanwhile, he and Elise, 37, have been paying $1,250 a month for their rental, the same as their total costs for the smaller house. "I'm not building equity, but nobody around here is," says Jones.

With home prices expected to continue falling in most areas this year and to flatline for several years after that, many people are joining the Joneses in rethinking the merits of home ownership - for now.

As a renter, you won't wind up throwing away money on eroding equity. And there's plenty of inventory to choose from, as owners who can't sell seek to rent their condos and single-family homes.

You'll pay less for the same space too. U.S. rents dipped in the fourth quarter of last year, according to the Census Bureau, and real estate research firm Property & Portfolio projects they will fall again in 2009.
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