As many homeowners across the United States continue to battle the real estate downturn, several writers have debated the longstanding notion that buying is a more prudent economic choice than renting. While one would have been hard-pressed to find a homeowner netting 10 percent annually in the early 2000s with a case of buyer’s remorse, the issue is worthy of exploration.
According to James Altucher of Formula Capital, who was quoted in a recent article published by www.yahoo.com, owning a home has “never been a great investment. Housing went up a dismal 0.4% annually vs. 8% for the stock market from 1890 to 2004,” (“Home Economics: The ‘American Dream’ is a Scam …”).
Both data and anecdotal evidence suggests that renting apartments in NJ and nationwide may be the right financial decision for the masses.
In a second Yahoo article, author Troy Adkins noted that proponents of buying a home “typically make the case that if you rent, you are throwing a significant amount of money down the drain. Unfortunately, these same people tend to overlook the significant costs of owning a home,” (“When Owning Your Home Doesn’t Pay”).
Though homeownership is an easy target these days, with values plunging and foreclosures rising, Adkins made several points that should be regarded by those seeking homes and apartments in NJ.
Consider the following:
- Adkins pointed out that the interest expenses associated with a mortgage over the life of the loan are often two and three times that of the home purchase price. “The cost of interest expense alone may be greater than what you will have to pay in order to rent a comparable place to live,” wrote Adkins (“When Owning Your Home Doesn’t Pay”).
- Many homeowners celebrate their ability to deduct interest and property tax expenses from annual income taxes owed. For most people, Adkins proposed, “these tax breaks are of nominal value because the amount of interest expenses that most people incur are of somewhat similar amounts to the standard deduction afforded to them by the federal government,” (“When Owning Your Home Doesn’t Pay”).
These are just two examples of how renters of apartments in NJ can derive an actual financial benefit over their home-owning counterparts. When one factors in additional expenses of insurance, property taxes and the overall investment risk associated with owning a home, renting appears to be a very attractive option.
