Renting vs Buying, Foreclosures and Job Growth across 50 US Cities

* My home.

* A large financial investment.

Changing one affects the other. I'm skeptical that life circumstances will magically align so that when it's a good time for me financially to sell my home, it will also be a good time for me to change location (or vice versa).

So I rent.

I bought an apartment in San Francisco in 2001 and frankly, it was one of the best decisions I've ever made. Before I did so, I calculated out the cost difference of renting vs. buying. After taxes, my living expenses were only a few thousand dollars more a year to buy vs. renting.

If I want to move, I don't have to sell my place, I can simply rent it out. Given current rates, I can do so for more than my monthly mortgage payment. Not only that, but my property is worth about 40% more than what I paid for it. I can actually use my equity in my house to finance another home and flip one to a rental.

Maybe purchasing isn't for everyone, but it certainly is for some. In the end, it depends on your finance situation and location.

This "statistic" wouldn't happen to come from a company that earns its revenue primarily through the buying and selling of houses, would it?

Most Americans should rent, especially in today's dark economy. The average American is unskilled, has not saved for retirement and lives paycheck to paycheck. Such a person should avoid big purchases because accumulating debt is a gamble on future earnings.

It can be used to evaluate renting vs buying decision for home buyer. If the likely rent for the house you are buying is close to or over 1%, buying has more advantage. If it's far below 1%, renting costs less.

In the US, people often own their own homes. Rarely do they own homes that other people live in. Apartments are typically owned a single owner/landlord (condos are different). Owning is a common dream, less so in cities (particularly New York).

In the UK, home ownership and the property market is an obsession. It is a common topic of conversation. People are heavily invested in their properties and often seek to buy more of them. There is a strong attitude of "if I don't buy now I'll never be able to afford to live here", particularly in London and the Southeast (less so now I suspect). The North and West are somewhat different. The market is highly speculative.

In Switzerland, the property market is essentially controlled. There is little real estate speculation. Transaction costs are high. Capital gains taxes on properties can be brutal, which strongly discourages speculation. Renting is not frowned upon. For tax reasons, people often buy houses and never pay them off. In Switzerland you get a tax exemption for interest but you also get deemed income from the effective rent the property is worth.

In Australia, owning one's house is a cultural obsession. People often end up owning multiple properties. There are few apartment buildings owned by one owner (it's much more like the American condo system).

I think of all the systems I've personally experienced, I like the Swiss system the most. It treats property as something you need to live not a financial instrument to speculate on.

That system isn't applicable everywhere however. Switzerland is unique in that it is fairly affluent, has a small population and very restrictive immigration. So somewhere like the US has >40 times the population so even excluding immigration, domestic movements of people can be incredibly large creating market pressures in places like New York that Switzerland will simply never experience.

Some years ago I saw an article (I'm sadly unable to find but the topic is covered elsewhere in depth) in the UK which showed that the rate of home ownership was inversely proportional to economic growth. The idea was that home ownership reduces labour market flexibility (which it clearly does). I don't know if the trend still holds up.

In Australia for example a family home can easily cost $1 million in Sydney. If the household income is $200,000 and that family wishes to move to, say, Melbourne and buy a new house they'll pay $20-50,000 in realtor fees and $50,000+ in stamp duty on buying the new house so they need to make back nearly $100,000 of after-tax income just to break even.

Sadly stamp duty is a cash cow for state governments in Australia so isn't going anywhere anytime soon. Yet I think it's a real problem. Transaction costs need to be relatively low. Financing requirements need to be relatively to limit rampant speculation, particularly in overheated markets.

I am more then willing to invest in any city on that chart if I know some or better, all of these: - population is increasing - employment is increasing - income is increasing - the neighbourhoods I'm buying show pride of ownership - public transit improvements (highway, LRT, subway) - supportive government (proactive business development office)

Though this infographic is very cool/informative, buyers should concentrate more on the future then the present. Just because it's cheap isn't sufficient reason to purchase. And if you want to live in an area with a negative outlook renting IMO is best.

Chipotle is 50 cents more expensive across the board here. Damn.

If I look at my friends parents who live in some nice parts of London, there is zero chance they could afford to rent the houses they live in now, the ones they bought 30 years ago.

I'm thinking of the US marketplace, but I suspect it will hold up in similar areas as well. Houses can/will be illiquid at times.

However, unemployment ranges from 9% to 17%... I'm not sure how pleasant or safe that would make the neighbourhood.