Wednesday, September 14, 2005

More on the "Capital Loss" question

One other thing to point out about this analysis is that renting is a capital loss spread out into monthly payments over the years. If you buy a place and then have to sell it, the capital loss is an all-at-once hit that could be impossible to take.
In looking at a prospective purchase this way, the point really isn't whether or not NOW is the right time to buy. If you buy a home with a standard mortgage and live in it for a long time, now is always the right time to buy, even in a bubble market.
But the reality of today's market is that for most people, prices are out of reach right now, making renting the only option in the short term, and sometimes a less money-losing option in the short term, even if you will always lose by renting over the long term.

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