>> Crazy tax incentives. Mortgage interest is tax deductible in the US and capital gains from selling your home is largely tax-exempt. As part of the current fiscal stimulus plan, many first-time home buyers even qualify for an outright gift from the government of $8000 just to buy a house.
Even this nay not be a valid reason for buying against renting. This would just lead to more buying power for buyers and raise the selling prices of the homes till a good fraction of the tax/gifts actually disappears.
If the market were 100% rational, which includes rational decision making, having access to all needed data, etc., then buying and renting would end up being equal except for transitory effects. Since however, more people are inclined to buy due to various myths, renting should actually be better than buying for those who realize that those are just myths. This is because the myths would raise the prices of buying artificially beyond what they should be in a rational market.
However, even this is not necessarily true since there are still more factors coming from myths and human irrational behavior, unavailability of the needed data, etc. because of which the problem becomes way more unpredictable to solve rationally even for those who are rational.
My conclusion has been that you must therefore look at your specific case, and the locality you are living in and figure what is better for you. Here [1] is the most complete and sophisticated buy-vs.-rent calculator that I have seen, which takes all important quantifiable things into account. The issue of course again is that you have to feed in your own future predictions about where the market is going to make a wise decision out of it.
Even this nay not be a valid reason for buying against renting. This would just lead to more buying power for buyers and raise the selling prices of the homes till a good fraction of the tax/gifts actually disappears.
If the market were 100% rational, which includes rational decision making, having access to all needed data, etc., then buying and renting would end up being equal except for transitory effects. Since however, more people are inclined to buy due to various myths, renting should actually be better than buying for those who realize that those are just myths. This is because the myths would raise the prices of buying artificially beyond what they should be in a rational market.
However, even this is not necessarily true since there are still more factors coming from myths and human irrational behavior, unavailability of the needed data, etc. because of which the problem becomes way more unpredictable to solve rationally even for those who are rational.
My conclusion has been that you must therefore look at your specific case, and the locality you are living in and figure what is better for you. Here [1] is the most complete and sophisticated buy-vs.-rent calculator that I have seen, which takes all important quantifiable things into account. The issue of course again is that you have to feed in your own future predictions about where the market is going to make a wise decision out of it.
[1] http://michaelbluejay.com/house/rentvsbuy.html