Renting a house is a terrible economic move; buying is the only way that makes financial sense. 

Or is it? As the housing market is changing, long-held perceptions about the infallible prudence of home owning are also shifting. What was once perceived to be akin to flushing money down the rental-tubes may actually be a sound financial choice for some of us.

Common knowledge says that money paid toward a mortgage is an investment, while money paid toward renting is never seen again. But here’s where common knowledge needs to take a closer look:

Depreciation – Home values are still declining and the investment many people counted on may not pay off. To top off the current decline, some economists  are heavily criticizing the common belief that homes appreciate in value (though they concede that land can). A study done in 2006 found that, depending on maintenance, homes actually tend to depreciate between 2 and 2.5 percent a year, while only appreciating at an annual .75 percent after the depreciation and cost of upkeep. So while investments in well-maintained homes with great locations do gain value, many are losing value yearly— even before adding the burst of the housing bubble into the equation.

Mortgage vs. Actual Cost – One of the greatest perks of renting is that when a hidden leak leaves the bathroom wall rotting from the inside out, you don’t have to pay the massive pluming and repair costs (with the possible exception of losing your deposit). As a home owner, you’d better hope home owner’s insurance covers it! And of course you have to pay for this home owner’s insurance, as well as property taxes and closing costs. Paying down principle and interest isn’t all it costs to own a home; and those without a good fiscal cushion probably won’t be able to afford the real cost of home ownership. 

Flexibility - Renting offers unbeatable flexibility for people who aren’t in an area for the long haul. If a job opens up in another state, or you simply feel like a change of scenery, all you have is a relatively short lease to deal with. On the buyers’ side, this is a rough time sell a house, should you need to move quickly. Back to the idea of “investment,” renters also have more financial flexibility to invest elsewhere than do home owners. So which is right for you? Should you be looking in the classified ads, or the real estate mags? This is the most understandable Rent vs. Mortgage calculator.I found. Scroll down on the Web page for helpful definitions of the calculated variables.