In your neighborhood, how much cheaper (%) per month is it to rent than "own"?
Hint - for those looking to call bottom in housing, there's your key number...
July 07, 2008
HousingPANIC Stupid Question of the Day
Subscribe to:
Post Comments (Atom)
76 comments:
Paying about 1000-1500/month less via renting.
My situation is unique because we live in a loft that is owned by an art foundation so the rent is subsidized. We pay about 1/2 of the market rate, which is still 40% cheaper then buying.
So basically prices have to fall off a cliff for me to get any benefit from buying. One of my neighbors is a realtor and he rents, even though he owns rental property.
We expect the fall to come soon now here in Portland, OR
By the way it rains here EVERYDAY and its cold even is summer...so don't come here...you wouldn't like it!
I live in San Diego. The house next door sold for $387,000. With 20% down that would be a payment of $1906 a month plus taxes.
My new lease is $1825 and if I go monthly $1925.
My neighbor was having difficulty selling because we live on a busy road.She was going to wait a couple of weeks and then if she didn't get an offer she was going to sell to me for $350,000. I'm not sure who I was happier for when she got an offer, her or me. It wouldn't be easy to say no to $350k
In my neighborhood in New Orleans, the cost to rent is about equal to the cost to own.
In No. VA I could probably get one of the delusional homedebtors on my street to part with their mid 80's vintage fire traps for just about the same as I am paying in rent. But I don't want to join the housing elevator.
"Hello Mr. Tyler, Going Down?"
YO post some more funny shit already
austin Tx.
I believe you can get nearly TWICE the house via renting, than purchasing.
But there are some caveots. There seems to be a lot of people looking for rentals, so the supply seems tight.
And many would-be-landlords are emotionally attached , meaning some landlords are asking for rent prices based on their underlying mortgage payments, not on the average rent price of the neighborhood.
So it's a hustle to find a good rental, but it's much better than the crushing mortgage on a $350k shitbox in south or east austin.
Why is it that the nicer neighborhoods (say La Jolla, Del Mar, Coronado in San Diego) have not gotten price punished? Do they have a sustainable price bottom or will they too experience retracings? And when?
MAYBE 1-2% in some areas
Yup, you read that right. I'm in Kansas City - actually a suburb: Olathe, KS. In Johnson County, KS you can rent a decent apartment for about 800-900 bucks, and that's a 1 bedroom unit.
Sure there're cheaper places out there - that is, if you don't mind having your house broken into consistently, $hitty roads, bad schools, and generally poor conditions. Justhead on over to Independence, MO or Kansas City, MO and pick yourself up a nice place.
If you want to live in Johnson County, KS, a house on my block RENTS fro 1,250-1,400 per month. that's a 3 bed, 2.5 bath, 1,400 sqft with a finished walkout basement, 2 car garage, and fenced back yard.
I'm lease optioning smaller 3 bed homes in JoCo for about 1250/month - and I have a stack of applications on my desk. When you've had a bankruptcy or foreclosure, good luck getting an apartment. At least I'll work with bad credit buyers and treat them fairly and let them build equity towards the property while they clean up the credit.
Indy Mack going to report further losses and cutting more of its work force.
Not counting taxes and the inevitible maintainance costs, we're saving about $1500 a month by renting. Factor in the rest, and it's about $2K/month.
Not even close to bottom.
1500 to rent vs 2500 to buy a 1 bedroom condo in nice part of LA. still a way to fall. down about 10-15% so far
NoVa/Alexandria Fairfax County. 80's style THs no garage. At bubble height sold in the mid 400k range.
Assuming prevailing asking prices of 400k, 20% down, 6.5% fixed, 5k in property tax & 500 USD insurance per year the monthly PITI is ~2500k.
I rent it for 1850/month. So I realize ~25% savings monthly.
End units rent for ~2k/month, some interior units rent for as low as 1700/month. Anyone who bought at bubble peak has a greater delta. But my LL has a positive cash flow of ~300-400 USD monthly, as she bought 20 years ago at 158k.
Here in Suburban Detroit, I closed on a 1300 square foot condo where everything, including PITI and Association Fees is $900. My 850 square foot apartment is $907/month.
own 1500-2000
rent 900-1500
I'm in central/south Denver (border of Wash Park and Bonnie Brae). It really varies by old vs. new and condo/townhome vs. SFH. For the really old and tiny bungalows, you're looking at about a 33% premium (this treats principal and interest payments the same -- it's about half the premium if you count principal payments as forced savings rather than a non-recoverable expense). New condos/houses are probably running close to 100%.
If you can find the real sweet spot -- old-but-bigger-and-nicer single family homes, then the ownership premium is actually pretty low. Maybe 10%-15%. But older, bigger, nicer homes in decent shape are REALLY hard to find on the rental market -- frankly, they're hard enough to find to buy. I would like to think that our house falls in this category (3/3 with a study, 2500 square feet, triple lot, 100 years old but fully rehabbed between 2000 and 2006), and our aftertax monthly outlay is about $2150. Judging by Craigslist, the rental market looks like it would bear $1800-$2000. If you call it $1900, you get a premium of 13% or so -- but again, that include $300-400 that we are paying towards the principal, so it is arguably forced savings.
In Seattle, 80k won't even get you a 20% down payment on a studio condo. ?!?!?!? Why people do this to themselves is freaky. We rent for $950, 2 bedroom 2 bath 1100 sq. ft, 2 garage parking, 2 storage units, 200 sq ft deck, in a beautiful, close-in neighborhood. Similar smaller conco units in Seattle in same neighborhood go for at least 399k. People are seriously stupid to buy these crap boxes.
It is about 50% cheaper to rent here. I base that on very similar condo units for sale in the area. And the rent is very expensive -- SoCal beach area.
50%
about the same when you take into account the tax deduction
Seattle.
would have to pay more than double the rent to buy one of these cheap-ass, "looks good in the pictures" downtown condos.
You should realize that owning carries with it a certain prestige in our culture, something I call a "status premium".
Sure, a rental is shelter as a Honda Accord (what I drive) is a car. But in our culture of ostentation and pretense, you want to impress or feel a class above the other guy. So you buy a Lexus or in the case of shelter, a dwelling. Both the Honda and the rental provide the utility of their function but the Lexus and owning a dwelling give you that plusstatus, albeit at a price far above what's necessary.
That situation has only worsened over the last 30 years, particularly the last 10.
Of course, I don't need to point out what ideology/political party promotes such vapid wealth-worship and social climbing, do I?
There are some townhouses in my Westchester County NY town that are renting for $2,700/month - that's dropped from $3,200/month because they couldn't rent at that price. The cheapest one I could find for sale was $487K - so a 30 yr mortgage at 6.15% + $250 cc + $525/month in tax (this includes the 30% tax break - since real taxes are $750/mo) costs $3,148.55 or 15.3% more to buy than to rent (not including my 20% deposit). My calculations don't include a tax break for my mortgage because if I took out that mortgage it would cost $854,478 over the cost of the loan + my original 20% deposit of $97,400. So my fabulous $487K townhouse really costs $951,878 unless I have the cash to pay for it. And by the way, the taxes on these babies jumped from 6-8K to 10-12K in the last 6 years - I lowballed it at 9K
I hate to say this ,but people will pay 10% to 30% more per month than rent to own .
While being able to afford homes is based on qualifying (at least now it might be ),it has always been true that people will shell out more monthly to own .
The opportunity for lower prices abound because of the supply and demand issue right now in which lenders and weak sellers have to sell .Further, the amount of qualified buyers will keep the supply issue high and bring the prices way below comparable rents for a while in many areas .
The over supply of housing ,combined with foreclosures, is just mind-blowing .
I'm just saying that under more normal market conditions (where every other house isn't a foreclosure or weak seller ),buyers are willing to pay more to own than rent . Sure, the rental ratios are a standard measure of where home prices should be close to ,but people in general will pay more to own .In the future, many people will get deals that will go below rental ratios because of the over-supply of foreclosures .
Dependent upon what type and size apartment you are renting. I would say at it's a least half the cost to rent than own, and that's not counting loss of equity, repairs, or special assessments.
My large 1bd/1.5 bath would be $1.500 more to own
Indianapolis - one of the cities the NAR says cannot go down in price, cause it never went up in price...anyway, renting is higher than pmti.
A 2 BR apt in a nice part of town, with a garage, is a grand, btw.
To Anon at 11:13 PM,
Could you tell me which suburb/neighborhood you live in? I'm very curious because I plan on moving to Seattle in a couple of years. Thank you!
Here in Wash DC I'm renting at 42% of the cost of owning. DOES not include property tax, maintenance, or insurance. So prob more like 37%.
I work in finance and I'm finding that it's much easier to spot a bubble than an equally undervalued asset.
My house in Chandler, AZ, 20 miles from downtown Phoenix, would probably sell for $240K. It would probably rent for about $1200/mo or $14400/year.
So it's about a 18-to-1 purchase to rent. Given that the property tax is so cheap here, at the moment it is probably a little better to buy.
Of course, when I bought the thing, that ratio was more like 10-to-1.
The X-factor is appreciation/depreciation. If the thing loses 15K this year, which is very possible, renting would be the way to go.
Tucson:
I pay a high rent (for Tucson): $1500/mo, but the house was on the market for $499k last year (would appraise over $400k still). If I put 20% down on another house and paid the equivalent $1500/mo on mortgage (piti), I'd be looking at a dump around $260k. To buy my current rental at 400k I'd only have 10% to put down, and would be paying well over $1000 more per month than my rent, perhaps almost double.
I'm in South Florida and looking around for my next rental. Low mid range stuff is only somewhat better than buying. But I am looking at mansions and even water front. Asking price around 5 million and rent only 4,000 to 5,000 thousand a month. OK??? !!! get my drift. I am living like a multi-millionaire and I'm an only 100k + per year millionaire. bwahahhaahaha. I love the housing panic.
creditmeltdown.blogspot.com
It is 1000 per month cheaper to rent than own in Mountain Park Ranch, Ahwatukee, Phx AZ
I sold, now I rent....thank you HP!
Renting in Northern VA--its HALF of what it would cost to own the same place.
This is going to get ugly folks...the market here has easily another year or two to go!!
$3600 - 4200 to own, vs $1800-2400 to rent here in Alameda.
It's not cheap here, but much better than owning a crackerbox for 569K.
House next door to us is smaller and needs repairs. It sold for 340,000 last week. I rent my place for $795. Can't beat that.
PS I live in Raleigh, NC
I live in a 1100sq ft condo in downtown Vancouver, Canada with a view of the ocean and one block from the beach (which considering it rains 10 months of the year is a limited benefit). Listing prices are approx. $650,000. Condo fees are $350 a month. Taxes probably close to $3,000 per year (guess)
I pay $1800/mo in rent all in.
The house prices haven't crashed here but all of the stories in the news have the same flimsy MSM arguments from the USA circa early 2006. You know the ones - "Inventory is growing but the economy will keep housing prices high")
Here in Green Bay, Wisconsin, I have seen some nice 3 bedroom ranches sell for $50,000. Probably cost about $500 to $600 a month to rent it.
Not long ago a house in an older section of town sold for $32,000.
50%
Keith, in South Florida I would feel comfortable estimating that the cost of renting is 33% to 50%+ cheaper than 'owning'. In my case, that doesn't include the 27% drop in value of the average house in the last year ( about $125,000).
So, not only would you be paying twice as much to 'own', you'd have lost six figures in a YEAR.
And it's gonna get worse.
I live in Chicago and for a one bedroom I am paying $670 per month with heat and water included. And yes, I live in the North Side to boot! I did the math and in order to "own" a similar property, I would have to fork over $1200 to $1600 per month!!!!
It is a downright shame that most people won't even think for themselves. Most of my co-workers are saying "oh now is a great time to buy a house, you will get a good bargain". So some friends and family I know did buy a property even though I tried to convince them via facts.
Blogger PatFriedl said...
MAYBE 1-2% in some areas
Yup, you read that right. I'm in Kansas City - actually a suburb: Olathe, KS. In Johnson County, KS you can rent a decent apartment for about 800-900 bucks, and that's a 1 bedroom unit.
Sure there're cheaper places out there - that is, if you don't mind having your house broken into consistently, $hitty roads, bad schools, and generally poor conditions. Justhead on over to Independence, MO or Kansas City, MO and pick yourself up a nice place.
If you want to live in Johnson County, KS, a house on my block RENTS fro 1,250-1,400 per month. that's a 3 bed, 2.5 bath, 1,400 sqft with a finished walkout basement, 2 car garage, and fenced back yard.
I'm lease optioning smaller 3 bed homes in JoCo for about 1250/month - and I have a stack of applications on my desk. When you've had a bankruptcy or foreclosure, good luck getting an apartment. At least I'll work with bad credit buyers and treat them fairly and let them build equity towards the property while they clean up the credit.
July 07, 2008 9:59 PM
Anonymous gwk said...
Dude, who the hell are you kidding? Really, I live in Kansas City and you would be lucky if you got $1250 to $1400 per month for a single family house. The average income is still not sufficient to pay that sort of rent, even in Johnson County. There are good rental deals out there and renting in Kansas City still is a better option than "owning".
Anonymous Anonymous said...
In Seattle, 80k won't even get you a 20% down payment on a studio condo. ?!?!?!? Why people do this to themselves is freaky. We rent for $950, 2 bedroom 2 bath 1100 sq. ft, 2 garage parking, 2 storage units, 200 sq ft deck, in a beautiful, close-in neighborhood. Similar smaller conco units in Seattle in same neighborhood go for at least 399k. People are seriously stupid to buy these crap boxes.
My sister lives in Seattle and I live in Chicago. In 2005 she along with her husband bought a 2900 square foot condo for 890K because according to her "real estate never goes down in value, God isn't making any more land you know". Once she said that, I knew she was a lost cause.
In parts of the IE in SoCal it can be cheaper to own than rent. Prices in areas like Perris, San Jacinto, Moreno Valley, Wildomar prices have fallen 50% to 60% from peak. You can quite easily buy a decent home for $150k, it would rent for about 1200/mo. You can get real nice one for $200k ~ $250k but rent on those would not be much more than the $150k house (maybe 1500/mo). Yea, I know YOU don't want to live there (nor do I) but for a young family just starting out they ain't that bad. Way better than Compton, Pico Rivera or any other gang infested LA hell hole.
Wow, I can tell from reading these comments that things have alot more to fall in the LA area.
I live in Pasadena. In the much less than nice parts of Pasadena, smaller, very plain places are selling for $400-$450/square foot. So my 1200 square foot apartment, if it were a house, would go for $480k-$540k.
Mortgage, assuming 0% down (I don't put anything down to rent) would be around $3,600 to $4,200 to own. I pay $1,300 a month.
So it's about 1/3rd the cost to rent as to own. Plus I have a pool in my complex and a maintenance guy who fixes anything I need.
I'd buy but I'm too busy taking vacations with the money I'm saving to look. My rent is less than 6% of my household income so just being smart and waiting for the fall. I actually like the freedom of renting...cant beat it.
Don't worry though, with Indy Mac going under (based in Pasadena) and my area being near ground zero for Alt-A and Option Arms, we'll catch up with the rest of you in about 18 months or so.
237% more to buy than rent (10% down), but will fall.
RE listings have doubled and sales have halved, supply will meet demand in spring/summer. Dopes are taking houses off market to rent as 6%ers are telling the sheep that rents will rise, once again rentals have doubled, supply meet demand.
Just like the US but a year and a half behind.
Dopes!
We rent for $950, 2 bedroom 2 bath 1100 sq.
---
Way to live the good life!! My senior year in college I lived in a 2 bed/2bath 1250 sq ft apartment with a roommate. So congrats, you live the lifestyle of a college student. Woo hoo!
I live in San Diego. The house next door sold for $387,000. With 20% down that would be a payment of $1906 a month plus taxes.
My new lease is $1825 and if I go monthly $1925.
------------
So you are actually much worse off. Of that $1906, there is $400ish in tax savings. There is also $300ish in principle payback. Meaning the actual payment is more like $1200 vs. your $1825.
The renters here always seem to forget about the tax deduction and principle payback. But I suppose then that's why you are renters and always will be. Enjoy paying the mortgages for my two rentals.
For a decent apartment in Lisbon, Portugal, rent is more expensive than mortgage payments. This is irrelevant tough, both mortgage and rent are inacessible for the avergae citizen and the city now has less population than in 1930.
I live in San Diego. The house next door sold for $387,000. With 20% down that would be a payment of $1906 a month plus taxes.
My new lease is $1825 and if I go monthly $1925.
------------
So you are actually much worse off. Of that $1906, there is $400ish in tax savings. There is also $300ish in principle payback. Meaning the actual payment is more like $1200 vs. your $1825.
The renters here always seem to forget about the tax deduction and principle payback. But I suppose then that's why you are renters and always will be. Enjoy paying the mortgages for my two rentals.
Way to cherry pick!
He's pretty close as far as I'm concerned. However, we must take into consideration the following factors.
1. Some people don't really benefit from the tax write off.
2. You are paying more interest in the early years of the loan but yes, you are correct about the equity build if a 30 year fixed is used...unless that 387k house turns into a 300k house.
3. Rent doesn't require a 20% down payment ($77,400 in his example)
4. Renters don't incur maintenance or insurance costs (other than paltry rental insurance).
5. Was that 387k house a relative deal for the area? Was it a short sale/ foreclosure? Are other houses priced accordingly so that the same deal could easily be replicated or are the other houses listed at 500k+ still.
6. Renters don't have to sell and pay 6% to move.
Lots of factors to consider. However, when it comes to certain areas (beachfront for an extreme example) there will always be a premium paid to own. My guess is that the range could be up to 50% more in prime locations. Less in "lesser" locations.
In the "hood"? It's hardly worth buying at rock bottom prices as an investor because who wants to be a slumlord?
FWIW...I'm not even beachront myself but in my situation it cost almost 2.8 to own based on zero down and current interest rates.
Asking prices have fallen from 3.3x in the last year.
There's still money on the table as there are plenty of rentals to choose from and I'll bet that my LL would rather keep me here than raise my rent and watch me walk leaving him with an empty unit.
The key for the renters is to actually SAVE the difference between the "rent" and "own" cost and apply it towards their down payment ultimately.
That's how you get ahead of the game by renting right now.
Pretty simple. No?
------------------
Assuming prevailing asking prices of 400k, 20% down, 6.5% fixed, 5k in property tax & 500 USD insurance per year the monthly PITI is ~2500k.
I rent it for 1850/month. So I realize ~25% savings monthly.
-------------------
And if you take into account the tax savings of over $600 a month, it REALLY cost $1,900 a month - right where your rent is. I actually put the numbers in my spreadsheet to get exact numbers and came up with a monthly cost of $1,720...less than your rent. No, I didn't include maintenance costs.
Don't worry, I'm still a doomer, I just don't like improperly calculated comparisons. :)
Anonymous said...
I live in San Diego. The house next door sold for $387,000. With 20% down that would be a payment of $1906 a month plus taxes.
My new lease is $1825 and if I go monthly $1925.
------------
So you are actually much worse off. Of that $1906, there is $400ish in tax savings. There is also $300ish in principle payback. Meaning the actual payment is more like $1200 vs. your $1825.
The renters here always seem to forget about the tax deduction and principle payback. But I suppose then that's why you are renters and always will be. Enjoy paying the mortgages for my two rentals.
July 08, 2008 11:22 AM
-------------
Um taxes, insurance & upkeep/maintenance alone negates the tax benefits you speak of making renting a better deal. Plus one must remember that the downpayment would be invested elsewhere earning the renter additional income the homedebtor has lost by "owning", not even considering the potential depreciation over the last couple of years that has eliminated that 20% in most markets.
Sorry I've owned two homes & I've rented many places and honestly right now for most markets renting is the way to go.
Anonymous said...
We rent for $950, 2 bedroom 2 bath 1100 sq.
---
Way to live the good life!! My senior year in college I lived in a 2 bed/2bath 1250 sq ft apartment with a roommate. So congrats, you live the lifestyle of a college student. Woo hoo!
July 08, 2008 11:18 AM
----------
Yes, but to "own" it costs 2.5k /month plus condo fee, so the "owners" are prematurely experiencing a retirement lifestyle that consists of generic brand cat food. Congrats!!
Anon said:"The renters here always seem to forget about the tax deduction and principle payback. But I suppose then that's why you are renters and always will be. Enjoy paying the mortgages for my two rentals."
-----
Ha! The reason we forget about the tax deduction is because it ends up being a wash after paying increasing property taxes, insurance and maintance.
There is no worries about natural disasters taking out your nest egg from flooding, earthquakes, tornados, and especially fires set by FB's torching their 'dream home' and burning down entire neighborhoods in the process.
I imagine it's getting harder to sleep peacefully thinking about equity evaporating on a daily basis, not to mention curb appeal desintegrating in your once 'charming' neighborhood....
No thank you. Renting in this environment is the way to go.
san diego right?
ok, again its the high end stuff. thats where the big savings. I live in south FL and live it up for 10s of thousands less per month than owning. same can be done every where. I am looking at other areas of the country to rent a mansion just to exp the life style. I am a traveling sales guy. I 100k + multi millionaire. anyway here are links to san diego. a 3 million dollar home for 5,000 a month. Bwhahahaha!!! I love the housing panic.
http://www.realtor.com/search/listingdetail.aspx?ctid=969&typ=40&sid=768c956854fc49f08ae53e1151afe8c3&sdir=0&sby=2&pg=10&lid=1098130950&lsn=98&srcnt=463#Detail
http://www.realtor.com/search/searchresults.aspx?zp=92130&typ=1&sid=40ad51c438434b9b886fe1c707bc6cfa&sdir=0&sby=2&pg=3
Rent a million dollar Fake value Pent house over looking the ocean 3/2 - 2400 sq ft- Direct ocean front. Rent it for $2400 which is what the bank renter pays in taxes and association. He makes nothing towards his mortgage. Then he has to pay mortgage out of his pocket. Aproximate savings a month $8,000 and I have no market risk. It probably has fallen by 25% in value.
Orlando Fl, Bungaloe in the area where the mayor lives. I pay for850 sf rent $900/m. houses go for $250 k PMI plus taxes = $1,700/m plus the shitbox needed new central HVAC unit not my problem. Every weekend my neighbors are repairing their 1920's houses, yet their properties continue to depreciate. I guess they like to impress the squirrels.
$1750.00 a month cheaper, and that is according to Ginnie Mae's own Rent vs. Buy calculator. http://tinyurl.com/6htx86
They include "appreciation" and property taxes in the mix. It wouldn't take negative appreciation numbers though so, that $1750.00 is based on 20% down 6% interest, 1% property taxes and 0% appreciation. Ginnie Mae told me i should rent because I would save $105,000.00 over 5 years. No Brainer...
I ran the numbers when I moved for a new job and was looking at a house to rent. I put a deposit on the house but, a Realtor™ was handling the rental and jerked me around for 10 days on it. i actually think she was trying to start a bidding war on the rent. She kept telling me "there is allot of interest in that house, it will go quick." I tried to explain to her that she wanted a deposit for the Broker and that as far I was concerned it was already taken and no one should be interested in it. I don't she got the whole point of the deposit.
During all of this found an apartment 2 blocks closer to town for $250.00 less a month, had heat, HW, and Cable included and was almost as big.
With energy costs what they are now I am so glad the Realtor™ jerked me around. I am so glad I won't be filling the oil tanks (yes that is plural) in that house this winter.
Oh, and I didn't have to pay the "commission" to her of 1/2 a months rent for all of her "hard work".
@veritas_faust- Aha! "don't come here", huh? Keeping all the goodies to yourself! I'm on the next flight to Portland for some of that subsidized rent!!
Mike in KC said..
Dude, who the hell are you kidding? Really, I live in Kansas City and you would be lucky if you got $1250 to $1400 per month for a single family house.
I think "PatFriedl" needs to put down the crackpipe, I appreciate kansas is a big place and all, but when plots are given away for free to build on, it doesn't look good for housing as a whole.
http://www.atwoodkansas.com/free.html
and
http://www.rookscounty.net/free_homesites.htm
IM AMAZED THAT PEOPLE ARE TALKING SUCH HIGH PRICES AND COSTS TO OWN, AND KEEP AND RENT WHEN I BELIEVE THE GOVT NUMBERS THAT SAID AVERAGE INCOME PER HOUSEHOLD IS 54,000 WHEN I THOUGHT WITH ALL ITS EXCLUSIONS AND THE FACT THAT IT SAID IT TOOK 2 PEOPLE AS AN AVERAGE HOUSEHOLD (FAGS ANYONE AS GOVT POLICY)?? 27,000 AS ANERAGE WAGE? AND ECT............SEEMS IRRATIONAL...........THE AVERAGE HOUSE ABOVE 108,000 OR 99 PERCENY OF THE HOUSING STOCK ABOVE AVERAGE?
Toledo, Ohio - asking rents (800-1100/mon) are more than my Mortgage ($770 on a 15yr fixed). Add Tax and Insurance and it's just a bit more expensive to buy.
Your Mileage may vary.
THE WHOLE THING REEKS OF REBELLION?
Yes, the tax deductions were nice when I owned. I now make Bush economy wages, so I do not worry about taxes so much. But the upkeep of the house was costly. Houses tend to be money pits, no matter how old. I liked doing the work myself, so there were opportunity costs. Basically, I owned my house for five years in boom times, so I just had my payments returned to me when I sold. In other words, the best case scenario was that I got free rent for five years, but I paid double the rent for the that. I now take the 50% difference and put it in the bank. If I get S&P returns, I will be much farther ahead.
ASSUMING THAT CRAP HOUSES ARE WORTH 200,000 AND THAT FOOLS WILL BORROW THE MONEY TO BUY ONE WHILE SELLING THEMSELVES INTO SERVATUDE AND SLAVERY AND NOT REVOLT THEN.................AND THAT THE PUBLIC WILL ALLOW THEMSERLVES TO BE SCREWED AGAIN AND AGAIN AND AGAIN
I live in Socal, so it is impossible to find a place to own for my rent. There are no mortgages for $900 w/a sane 20% down, although I could rent a room in a McMansion for $600 and get the benefits of a pool, large kitchen and common areas for less.
I wouldn't be able to set the a/c where I wanted, and I wouldn't be able to d/l from the net at will, so I pay a premium of $350/month for privacy and independence.
In this week's Los Angeles Business Journal, Happy Days are Here Again in the housing market. Dolores Conway of USC says that there isn't much more room for prices to fall before the mortgage rent equation evens out.
She leaves herself some wiggle room with the following quote, reserved in one tiny paragraph at the end of an otherwise bullish housing article:
"If the bottom falls out of the economy and we have significant job losses, then everything will come down: home prices, rents, everything. That could take quite a while to work through."
Is the condo market bouncing back?
The original article is quite a riot. It sounded like it was printed in 2005 or 2006.
I rent a 2/2 apt. with garage for 875/mo. The house we would like to buy currently goes for $375k which would be 3k/month (or 2400 with the tax deduction). Some guy has been trying to rent the same place for $1600 on craigslist for about a year now. no bites.
To those attacking patfriedl,
I think she is telling the truth.
A smaller 3br house in a decent neighborhood would rent for about $1000 a month. But a lease-to-own situation could raise the going price quite a bit. Doesn't the down payment come from the excess of the monthly payment over the going equivalent rent?
By the way, I also live in Olathe, and our house's payment is about $1070 - spawned by two mortgages which total 90% LTV. Equivalent rent would be about $1100. Prices are dropping very slowly here.
We sometimes ponder selling and renting, but I have to believe inflation will be roaring soon (heck it already is), and fixed interest rate mortgages provide about 75% protection from inflation.
Those were interesting free lot offers in western Kansas. But you have to build a house and then live there, where there are few jobs.
Tulsa - Here it is cheaper to own than to rent. In fact I am buying foreclosed properties and renting them out. Never had a bubble here due to steady 2-4% annual appreciation.
Bought a duplex for $50K $400 monthly note. Rented both sides out for $600 apiece.
Luckily the banks don't seem to distinguish between Oklahoma and California and are selling houses at 50% of market rates.
The selling market is soft this year but I can buy for less than construction prices.
Thank you housing bubble.
PS last year I lived in Boston - what a nightmare. Sorry to everyone who lives on the East/West coasts.
"Of course, I don't need to point out what ideology/political party promotes such vapid wealth-worship and social climbing, do I?"
You mean Democrats?!? There are lots of union boys with construction trucks and vans parked in their driveways in the suburb where I live...and once a week, another one goes up for sale.
A place that would have a loan payment of ~$820 in my neighborhood rents for $1100. My loan is $680 because I bought before the bubble.
Maintenance costs money...but I've lived in rentals that kept getting worse with no maintenance. I could have kept moving to stay in nicer places, but what good is that with a family?
The way I figure it, I'm 10 years into a mortgage and 20 years from being mortgage-free. Maintenance, taxes, etc. all balance against paying rent forever. Even temporarily, it's like not investing for retirement for a few years - it really costs in the long run.
I laid out the long-term calculations once, factoring in mortgage interest, maintenance, taxes, etc. I figured break-even at 60, progressing to coming out ahead owning by a couple mil at 90.
For me, it isn't about the monthly payment - it's where I end up in 50 years.
On what planet do you people live with these maintenance costs? I owned a 2500 sq ft house for 5 years. In total, over 5 years my costs were mabve $7500 for maintenance and repairs. On the other hand I saved about $25K in taxes.
I rent now because i sold at the peak. But jeez, maintenance and repairs are for the most part negligible expenses.
Anon said...
For me, it isn't about the monthly payment - it's where I end up in 50 years.
In 50 years time I'll be dead, it wont matter whether you have a headstone of a 20ft high marble angel carved by Michelangelo himself or a plain white cross cobbled together from 2 old bits of picket fence.
That aside, there are no absolutes, someone who bought their house 20+ years ago will obviously (provided they didn't heloc the hell out the place) be streets ahead against renting. The same cannot be said for anyone who bought in the last 4 years with a no deposit, no doc interest only ARM.
We live on the UES in Manhattan. Our rent payment is about 50% less than what we'd pay if we were to buy a place. It's pretty crazy up here. The funniest thing is that many folks who own still can't grasp why we don't want to buy yet. With all the new buildings going up and all the folks getting fired on Wall Street, you'd be crazy to buy now.
Here in Greenwich, CT,(as well as most of lower Fairfield County) there is no comparison between renting and owning: we pay just over 2k a month, whereas to buy the cheapest house on the MLS (probably a piece of crap: advertised as having "great potential"!) it would run around 3k a month-if we had 45-55k to put into 10% plus closing costs.
Post a Comment