[KevO]

Thanks to the foundation of oil price and energy hikes which have been the crux of the sub prime credit crunch (In other words this is the peak oil effect) - It is now better to sell your home and then rent than to keep paying a mortgage.

Example. Assume you have a house worth £200,000 of which you have a £100,000 mortgage over 20 years.
You'll be paying around £750 per month so £9000 per year.
Rent is from £400 to £700 per month for what would be a 200K property so at worst it would be £8400 per year.

So you sell, bank the 100K and rent at £700 pcm.
Your 100K will make you approx £6600 interest per year. Y
our rent is £600 a year less than the mortgage you're paying so you are already £7200 better off in the first year alone.

Since you don't have to pay for improvements or repairs on a renter then that could be 20% more. And as the interest will be higher on the amount in the bank the 2nd year, you just get richer!

NOW. Add to this the fact that your £200K house will definitely drop by a minimum of 15% in the next 18 months meaning a further loss of 30K (or a saving if you sold and now rent) - so for the first time since WW2, the way to make money from houses is to rent them NOT buy them as long as you sell quick and be prepared to put the house on at 5 to 10% less than the agent advises to beat the stagnation and the predicted 30% crash. Better to sell now at 10% below the market (advised and not selling) value that to have to sell at a 30% plus crash.

Good Luck but don't tell everybody!

[Twilight]

Residential real estate, UK. Just completed. The latest in urban living. So new, so cutting edge, it is still a car park on Google Earth. Not only almost empty, but buyers are reselling their units before they are fitted out and there is talk of suing the property developer.

Nearby, another dozen avante-garde blocks are going up and ground was being leveled for another last week.

What would I offer to live in a small apartment in a 48-storey glass skyscraper?

Maybe the same £400 per month it costs to rent two miles away.

This living arrangement has no brighter future than car-centred suburban sprawl.

[KevO]

$this->bbcode_second_pass_quote('Twilight', '
')What would I offer to live in a small apartment in a 48-storey glass skyscraper?

Maybe the same £400 per month it costs to rent two miles away.

[Kingcoal]

I was thinking about selling my house, banking the money and renting for a couple of years. It really amounts to buy and selling stocks (buy low, sell high, cash out and wait until prices start rising again, repeat process.) It's easier and far less disruptive to just play that game in the stock market than to play with real estate unless you are a professional at that game.

It comes down to a personal decision. I've gotten used to living in a single family house and all the privacy and whatnot that goes with it. It's hard to give up the castle.

[Tyler_JC]

It really depends on the rent/buy ratio.

I'm currently living on campus at a university in the Boston area and my friends off campus frequently complain about the high cost of renting a house off campus.

The houses they are renting are valued at around $500,000. Their rent is only around $2,000 (split among the four people who live there).

Property taxes run around $500 a month for a half million dollar house.

That leaves the owner with $1,500 a month. That means that if the mortgage is greater than $250,000, they lose money.

Moreover, these houses need to be maintained, insured, and renovated.

Also, is property owner is able to find renters for every single month of the year, including summer time when thousands of people leave the area to go home? Probably not.

That pushes the maximum acceptable mortgage on these properties to about $150,000 on a $500,000 house.

If they wanted to buy the house and put 20% down (pretending that college kids could do this... ), the cost of ownership excluding the down payment could easily be nearly twice as expensive as the rent.

Why anyone would want to buy a house around here is beyond my comprehension...

[Twilight]

$this->bbcode_second_pass_quote('Tyler_JC', 'W')hy anyone would want to buy a house around here is beyond my comprehension...

[mmasters]

Been telling this to people for years as I'm sure many others here have. Had a girl last week I was telling this to at work and she said she disagreed with my opinion and voiced that housing was going to go up so she's not selling.

[roccman]

$this->bbcode_second_pass_quote('KevO', 'T')hanks to the foundation of oil price and energy hikes which have been the crux of the sub prime credit crunch (In other words this is the peak oil effect) - It is now better to sell your home and then rent than to keep paying a mortgage.

[threadbear]

$this->bbcode_second_pass_quote('Kingcoal', 'I') was thinking about selling my house, banking the money and renting for a couple of years. It really amounts to buy and selling stocks (buy low, sell high, cash out and wait until prices start rising again, repeat process.) It's easier and far less disruptive to just play that game in the stock market than to play with real estate unless you are a professional at that game.

It comes down to a personal decision. I've gotten used to living in a single family house and all the privacy and whatnot that goes with it. It's hard to give up the castle.

[Twilight]

What if termites ate your money?

I see your point. If you own a place outright and are inclined to believe the banking system is at risk of complete meltdown, it would make sense to forego the opportunity to make a quick buck. Especially if you see it as a place to live and its paper value holds no meaning for you.

I understand you might also have to be careful about property tax in the US? No sense in moving if that is likely to shoot up.

[Tyler_JC]

In order for property taxes to increase faster than 2.5% a year in my town (and the whole state for that matter), the voters must approve it. And they haven't approved a tax hike in about a decade...

It varies from state to state but the tax revolt of the 1970s/1980s put a limit on the rate at which taxes could go up.

But fees can go up on a moments notice. I'd expect to see a major decrease in the quality of town services and a major increase in "fees" if property values crashed.

Fortunately, our properties are generally WAY under appraised by the tax collectors so it would take a huge crash in prices to fall below that level and justify a revaluation.