Very Practical Course

In my Con-Sci Fm. Res. Man. course we have been problem solving the opportunity costs associated with renting and purchasing homes. There is also the option of owning a cooperative or condominum. Manufactured homes and mobile homes are also options. Mobile homes depreciate in value, while most other homes will appreciate in value. While renters pay out less in the long run annual income taxes and appreciation usually causes homeownership to be the better deal. However, there are other opportunity costs to think about when buying.

For a person or couple who live in area where they have low job security, the cost's associated with moving and reselling must be taken into account. Furthermore upkeep, insurance, and property taxes of a home can vary (especially because of natural phenomena like Ohio wind storms) depending on location and other variables. Condominiums and Cooperatives are two forms of home ownership which the grounds and maintence fees are flat rate. Since the opportunity costs can vary from location to location, by seller, and by personal needs and desires, there is no option which is perfect for everyone. Each individual has there own living opportunity cost.

What I am learning in Personal Finance class reminded me of the homework problem we did in Economics with the piano maker who had the opportunity to either rent out his building and move to another building or keep making pianos in the same building. I recall we had to determine which decision was beneficial to the piano maker by considering economic and accounting factors. The example is a good representation of how a personal real estate decision can be made by weighing the financial facts, opportunity cost, as well as the accounting factors.