To rent or to buy a house, some more evidence of my unpopular thesis …

I discussed this topic in a previous post and I received a number of emails telling me how crazy I was even speculating that, at the current juncture, it may be more convinient to rent than to buy a house.

This week The Economist runs a piece where they make the same exact claim. House prices are so high and rents are so low all over the world that renting might, indeed, be better. Even considering the low interest rate environment, it would seem that the house prices are out of step with reality, very much as equities where in the 90’s.

It is all a game of expectations. The harder things to estimate are the future house price gain and the interest rate/gain you can get by investing the difference between rent and mortgage payments. By using difference estimates, you get difference answers. My own opinion is that the probabilities weight against buying an house at this time. Here is a spreadsheet to help you out: .

There are other considerations: I bought a house not to get killed by my wife :) But I’ve been able to limit the expense and I avoided investing more money in real estate.