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Politics : Ask Michael Burke
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To: benwood who wrote (62996)6/22/1999 8:40:00 PM
From: Freedom Fighter  Read Replies (2) of 132070
 
Ben,

I suspect that over the long haul there is a close relationship between rents, incomes and the cost of home ownership - including non mortgage expenses like taxes, maintenance, repairs etc..

The renter does not put up a down payment, closing costs etc... So he gets a return on that investment that in some way offsets rent increases. He also increases his income.

There are ways of valuing real estate that look at the after tax cost of both ownership and renting and the return on investment from owning a place and renting it out compared to alternatives. I am far from expert on this but I would guess that those that are do a pretty good job of it.

It's an interesting discussion and obviously there are different points of view on whether housing costs can tell us something that rents alone cannot. I think they do. I think the biggest argument against it is that housing prices tend to be more volatile than rents.

Wayne
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