[quote=precix]Strictly from a financial viewpoint it is about opportunity cost. I sold my house in Los Angeles in 1999 for a decnet gain before moving to San Diego for a job change and immediately saw that it was less expensive to rent than to own in most all parts of San Diego (even in 1999!). We rented a small 3 bedroom/2 bath house on the hillside in Bay Park with a view of the bay for $1600. In the 2001 the owner offered it to me for $495000 to buy. What a joke…but some fool bought it. Considering the condition it was in I’d say that it is probably worth around that now after nearly 10 years. I more than tripled my net worth through alternative common sense investments during this last 10 years (even with the recent market swoon of the last two years). That certainly wouldn’t have happened if I had bought real estate instead.
That said, the “I want to be free of mortgage payments” is just a excuse for not being able to manage your assets proactively.[/quote]
I was trying to figure out how much better off we would have been if we rented instead of buying.
My first problem is that I cannot figure out how many times we have increased our net worth because when we first bought our net worth was negative.
We have continually owned property in San Diego since 1996 (currently one rental house, in Bay Park coincidentally).
Since ~ 2000 our net worth has increased by a factor of 6x (was nearly 10x at the peak). Since we are currently about 1/3 cash, 1/3 property, 1/3 stocks I guess we will be back down to 3X net worth gain when stocks go to zero and housing declines another 50%.
But your point is correct…
A little mathy exercise I did suggests that we would be even further ahead if instead of putting 25% of our income away, that we rented instead of owned and put an extra 7% of our income away (7% of income is about the average difference between renting and owning for the neighborhoods we’ve lived in over the past decade).
But I am not good at managing my assets proactively so I would have probably just lost that to the stock market swoon anyway.
