Renting vs. Buying in 2012

Real Estate Agent with KW Elite

Lancaster PA, buying vs. rentingIf the media has you confused as to whether you should buy or rent you may want to read Liz Davidson’s Forbes article about the subject. The Next Mortgage Crisis. Davidson, the CEO of financial education company Financial Finesse, argues that renters set themselves up for financial failure in retirement:

“Today, there’s another mortgage crisis in the works — that is, NOT having one — choosing to rent when you can afford to buy; choosing to forgo building equity in a home as a major source of retirement security — something that may be more necessary now than ever before with a soft stock market and low interest rates.”

Her cautionary tale compares the consumer who buys a $300,000 home and has a $1,500 monthly mortgage payment with the consumer who rents.

“If rents rise at the pace of current inflation (3.2% a year) the renter will pay $900,000 for housing over 30 years, while the home owner will pay $540,000 because his payment continues to be $1,500 a month.

If his house appreciates 1% a year, the home owner heads into retirement with $100,000 in equity in addition to the $300,000 he paid for his house. The home owner does have to keep paying housing expenses like property taxes and insurance, but the monthly mortgage is paid off.

Meanwhile, the renter has paid nearly twice as much to keep a roof over his head for 30 years, has given up $400,000 in retirement assets, and has to continue paying rent during retirement.

And this doesn’t even include the tax benefits. The US government essentially subsidizes your house payment by allowing a mortgage interest and property tax deduction on Schedule A of the 1040.  Any points you pay when you get the loan can also be deducted.  Then an amazing thing happens: the IRS allows a tax exclusion on the sale of a primary residence.  Owners who live in their property two out of the past five years, who have equity and sell their primary residence, receive a maximum capital gain exclusion of $250,000 (if married $500,000.)  Where else can you get a tax break on an investment and then receive the proceeds tax free? I can’t think of another investment like it.”

That about sums it up, doesn’t it? With mortgage rates incredibly low and a large inventory of homes to choose from, now really is the time to buy.


Posted by


Michael J. Perry



1280 Plaza Blvd. , Lancaster, PA 17601

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Longtime West Lampeter resident and Lancaster County Realtor!


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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Ron Chastain 05/21/2012 11:03 PM
  2. Diane Daley 05/21/2012 11:14 PM
Home Buying
Delaware Valley Region
New Jersey & Pennsylvania -- Realtors/Loan Officers/Title Clerks/Real Estate Lawyers
The Economics of Real Estate
Pennsylvania Professionals
Lancaster PA Real Estate
lancaster pa real estate
lancaster pa home buying

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Ed & Tracy Oliva
West USA Realty - Arizona - Fountain Hills, AZ
The Oliva Team Arizona Agents

Mike:  This is some good Info for all,keep up the good work and good luck in 2012 with your business,  E

May 21, 2012 10:58 PM #1
Diane Daley
Caron's Gateway Real Estate - Northumberland, NH

Very nice information to share, I will re-blog this to give it more exposure. Thanks for sharing.

May 21, 2012 10:59 PM #2
Ron Chastain
Keller Williams Realty Atlanta Partners - Mc Donough, GA
What ever it takes

Nicely put...thanks for sharing. I will re-blog as well.

May 21, 2012 11:09 PM #3
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Michael J. Perry

Lancaster, PA Relo Specialist
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