Which is cheaper to live in?
1. House bought in 1950, now fully paid off.
2. Identical house next door, bought in 2007, financed 100%.
Answer: ignoring taxes, the cost is the same.
By living in house 1, you forego selling it for what the buyer of house 2 just paid for his house. Alternatively, you forego the rental income from renting it out (which, in normal times, provides a rational return to your purchase price or has a reasonable resemblance to a mortgage payment).
Huh? The question is “Which is cheaper TO LIVE IN”. Both of the options the econ. prof lists (sale or rental) entail NOT LIVING IN THE HOUSE. I don’t get it, but of course I don’t have a PhD in economics.
But definitely agreed that selling and renting is a good option for those who can. Probably won’t find too many that disagree with that around here!
