[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]
Totally agree that it’s all about opportunity cost. I know someone who bought their first home (3 bed/2 bath) in 1997 for ~$160k. Mortgage came out to be about $1200/month. Rent of a 2 bed/2 bath apartment was around $900-1000/month in the same area. They then refi to a lower rate a few years ago and now their monthly payment is ~$800/month. The cost of rent in that same apartment now is ~$1400/month. That’s the opportunity cost I’m talking about. If they didn’t buy their house, they would be paying $600 more a month for a much smaller place.
In regarding to your net worth tripling, can you tell us how much such house was going for in 1999? It would also be helpful to know how much such house is rented for today. That way, we can run our own calculation to see how much $ you saved from renting vs buying over the last 10 years, which would contribute to your tripling of net worth. I’d have to call BS on:
[quote=precix]That certainly wouldn’t have happened if I had bought real estate instead.[/quote]
