Bloomberg News Svc: Renting Beats Home-Buying Remorse After Meltdown

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Renting Beats Home-Buying Remorse After Meltdown: John F. Wasik
Commentary by John F. Wasik


Oct. 14 (Bloomberg) -- Unless you want to stay in a neighborhood for life, renting a home may make more sense.

With more foreclosures and huge inventories of unsold homes looming and mortgage rates held down by the government, the housing market may not stabilize for years.

It’s no longer a given that you will build home equity. The housing debacle may have depressed housing prices for a generation in all but a handful of areas.

Am I spouting American housing heresy? After all, can’t you still build wealth by simply buying a home and holding it? And with 30-year, fixed-rate mortgages dipping below 5 percent, isn’t your buy signal flashing “go”?

A rent-versus-buy decision is a complicated one. You will need to make some blunt assumptions and do some in-depth homework on the neighborhood in which you want to buy.

The first layer of your decision-making is the duration of your investment. If you are fairly certain you are going to be in a neighborhood for an extended period -- say you have a young family, like the local schools and have a secure government job -- check the “buy” category and calculate ownership costs. ...........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601039&sid=asM_ogBdfqA0