Dug out this interesting article from NY Times, which is an interactive graph - to help one understand when "Buying is better than renting" and the actual savings involved.
Dan Reeves also clarifies on some myths about it, specifically-
- in US - mortgage interest is tax deductible (I guess here in India, there's a yearly cap on it), but is more-or-less equiv to property taxes, so there is not real savings/cost.
- look at the savings margin between maintenance fees on a house - vis-a-vis - savings from rent - a house will typically eat 1K per month
- housing in the US has yet to bottom, very few places will see appreciation
-- if you look at owning as an investment vs renting - investments have to give you a rate of return.
- look at rent ratio (if available) to help you decide
Other issues include:
- deal costs - including real estate agent's commission (Freakanomics, anyone?)
Incidentally, here's, BoA's, own calc on this.
Dan Reeves also clarifies on some myths about it, specifically-
- in US - mortgage interest is tax deductible (I guess here in India, there's a yearly cap on it), but is more-or-less equiv to property taxes, so there is not real savings/cost.
- look at the savings margin between maintenance fees on a house - vis-a-vis - savings from rent - a house will typically eat 1K per month
- housing in the US has yet to bottom, very few places will see appreciation
-- if you look at owning as an investment vs renting - investments have to give you a rate of return.
- look at rent ratio (if available) to help you decide
Other issues include:
- deal costs - including real estate agent's commission (Freakanomics, anyone?)
Incidentally, here's, BoA's, own calc on this.
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