Originally Posted by Splinemodel
Perhaps, but you're missing the major point here: I hypothesize that, in most areas, the opportunity cost of renting and investing outside of real estate is -- and will likely continue to be -- more financially wise than is home ownership.
I don't think that's accurate at all. It's not been the case over the long term, historically speaking.
In support of this, they are called "the baby boom" for a reason. There are larger numbers of people in that age bracket than there are in the age bracket below, and as a result the housing vacancies will cause the market to be more supply-driven than it had been previously.
That's really just a supposition on your part. There's no evidence to support it actually happening. Secondly, you're really hung up on the term "baby boomers," as if they are the only ones causing the demand for housing. Families are now headed by generation X parents, who have created their own
baby boom. Evidence of this is the growing school populations in many areas. In fact, much of the growth has been fueled by those who are now in their 30s and 40s. Boomers haven't been demanding bigger and newer housing for a good 10 years, just by function of their ages. Yet growth has still happened.
There's no smoke and mirrors or doom and gloom. I offer a further hypothesis that suburban land values will be hit especially hard, due to rising energy costs and the popularity of city living among generation x and post-x professionals (feel free to check the figures), but these are not central to the argument.
I think you're reading your own press, so to speak. While urban living has become more popular, the suburban lifestyle is still desirable to millions of Americans, including generation x and post-x. I think you're overestimating the impact this will have. Moreover, how much harder can suburban land values be hit? You're not going to see some wave of people leaving the suburbs. There is still demand for housing.
I invite you to take a gamble on real estate. The appreciation that makes home ownership financially viable, in general, will not occur at the kinds of rates that are required to make home ownership a more sensible investment than other alternatives, should you buy at today's prices. That is all my message has ever been. You can track-back through this thread and verify that if you choose.
I realize you believe that, but it's the reason you believe it I take issue with. Either way, home ownership is still a good financial decision in most areas of the country. You're looking at this solely from a financial perspective as well...which is not all that factors into the equation. In many places, one cannot save/invest enough on the difference between renting and ownership to support your position, especially if we take housing needs
For example, I'd have to spend at least
$1,400 a month in rent to get a 2 or 3 bedroom town home in my area. That would save me about $200 a month. However, I'd lose a huge tax deduction in the process (as in about $12,000 a year) and not build any equity whatsoever. The rate of return on the money I was "saving" would have to be huge just to make up for the lack of equity and tax deduction.
In other areas, there is more disparity between rent and housing prices, so perhaps then it would make sense to rent.