>"Haven" and "dream" (and, lest we forget, "mausoleum") are your words
>not mine. As Jordan has demonstrated, most of the time switching from
>a normal (non-rent-controlled, shitty landlord) apartment to a
>comparable home makes smart economic sense to a lot of working folks,
>especially if they like the town they live in and expect to stay there
>5-10 years.
Capital gains can make it pay, but only if you buy at the right time and only then if and when you actually sell it and get to realise those gains. In other words, when you no longer need a house to live in.
Which reminds me of the line from an old song - "You'll get pie in the sky when you die. That's a lie"
Though I would have to say that you also get a lot more control over your life and a lot more security by buying, as opposed to renting. Especially here in Australia where the residential tenancy laws are backward even by American standards.
But the purely financial aspect of home ownership just doesn't stack up, without the capital gains that of course you can't actually realise without sacrificing ownership. Just look at the figures. Say a house is worth $200K, the interest you would have to pay on that would be at least $15k, then there's rates and taxes, let's say $1.4K, maintenance at least $1.5k, insurance maybe $0.6k, we're up to $18.5k already on these very conservative figures. Now those are the rough and ready numbers that apply in my neck of the woods, works out about $350 a week its costing you to own that house. You could rent that same house for at least $100 a week less around here.
The landlord doesn't get his profit from the rent he can expect to collect. He gets it, if and only if he has judged the market correctly, from the eventual capital gain when he sells and from the tax concessions on his LOSSES in the meantime. (Negative gearing.) That's OK, he can sell it, he doesn't need it to live in. The owner occupier can't have their cake and eat it too.
As for the notion that if the landlord's costs go up he can simply put the rent up to recoup the losses, well only if he was charging below what the market would bear to begin with. (The mythical generous landlord.) In the real world, the landlord is already charging the market rate and if his costs go up it comes out of his profit.
But I wouldn't expect the mathematical logic to convince anyone. This is, after all, a semi-religious debate.
Bill Bartlett Bracknell Tas