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Buy or Rent a House - Today's Market

mike23w said:
you're telegraphing.

people that say 'trust me' are the least trustworthy people around. if you were really trusthworthy, you wouldn't need to tell me.

it's kind of like people that say "i'm not an asshole but ....", then they act like an asshole.
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mike23w said:
you're telegraphing.

people that say 'trust me' are the least trustworthy people around. if you were really trusthworthy, you wouldn't need to tell me.

it's kind of like people that say "i'm not an asshole but ....", then they act like an asshole.
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Renting avoids direct asset risk, and provides portability. But unless you have rent control you can count on rent increases, while the same drivers for a home owner will be increasing equity.

It comes down to time value of money. If you intend to stay in the same place long enough it will almost always be a better decision to buy. Whether you pay cash or take out a mortgage shouldn't matter in the decision.
 
Archimedes said:
Not at all. I'm just smart enough to know that its a seller's market right now and prices are inflated everywhere. I was merely responding to the dated idea that there are nice homes to be had for $200k if one is just willing to move out of California. That's a joke right now.
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It is true, and you've already admitted to only looking in the Western states-seems silly to make a blanket statement while ignoring a huge swath of the country.

That and "decent neighborhood" is entirely subjective.
 
One of the biggest misnomers I come across in the industry is the lack of thought in all of the intangibles of owning a home.

What is the emotional and psychological benefit of actually being a home owner for you and your family? There are only a few things in life in which people TRULY work and save for-- a house is usually high on that list.

Being a home owner can sometimes offer a visceral amount of LIFE satisfaction that no amount of money can buy. Perhaps thinking about this, some will go to no ends to being a home owner.

Additionally, there a mistake when people try to "time" the market. The mistake isn't that they are trying to time the market, but instead that there is a rudimentary thought process revolving this logic. Many people become fixated on ONE particular variable (housing values) without taking in to account all the other variables that can move.

If housing prices fluctuate, so are other parts of the market. Waiting now might yield you lower housing values, but then interest rates could be higher which, over 30 years, can be tens of thousands of dollars.

There is often mentioned the idea of the time-value-of-money, but they fail (or maybe never knew) to realize that the most valuable dollar is the dollar you currently have in your pocket. If you used your cash to buy a home, you didn't "waste" or "lose" money... you are now a home owner. Generations literally die for their kids to own a home.

The idea of investing your money now is short sighted. A domino affect can occur over the many years that you think you can build on your money. Sure, there will be growth, but that growth is diminished by a myriad of events including inflation and any other non monetary scenarios that can arise in life.

Quantifying being a home owner for your family vs the all mighty $ sometimes isn't the best. More consideration should be taken then just focusing on looking at the numbers. This is something that is unique to you and your family. The word home-value is a label that can mean many things to people. Clearly, as seen in here by some, being a home owner is just a number to them.
 
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SNsMoto said:
The word home-value is a label that can mean many things to people. Clearly, as seen in here by some, being a home owner is just a number to them.
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It's hard not to think of it as a number as most people spend their life savings and then continue to pay a mortgage every month for 30 YEARS.
 
My experience: I was moved to an area for a project, assured it would be approx 5yrs so I bought instead of renting. I didn't want to move into someone else's dirt so I bought new. The market had cool a bit when I got in and has been flat since (I didn't buy in the BA).

5 yrs later I want to move but by then I have a 5yr old lived in property with 5yr old appliances, 5yr old carpet, cabinets, paint, shower stalls...

New comparable size and location properties are sell for similar to what I had paid. No way I'd buy a 5yr old place for what I paid when I can get brand new for same $.

To sell I face realtor costs,depreciation, renovation, carry cost until sold, the difference in mortgage payment over rental rate, proper tax.

In a flat market the cost of owning vs renting for me was approx a bit over $100K. That difference by itself would have paid rent for 5yrs.

So if you expect the to be in the home for a similar time frame as I was and expect that maybe the current market a bit hot and due for a cooling off, rent is likely the more economical.
 
caideN said:
It's hard not to think of it as a number as most people spend their life savings and then continue to pay a mortgage every month for 30 YEARS.
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Twas not directed at you, but more so to give another point of view.

With how you just worded it, if you feel it's that grueling to own a house, then perhaps you've answered your own question.
 
the fact that most people won't be with the same employer and in turn won't be in the same location for 30 years..or 15 even (with very little paid off if you look at the amortization schedule) for an amount that large makes the risk that much greater. I feel as if most people in the BA spend that type of money just because they don't really understand what that type of home can really be bought for a much smaller amount elsewhere. Being the townies that most people are they've never even gotten out, and if they have not for a significant amount of time, they just spend the money because that's the thing bay area people do.

Being stuck in a mortgage for a 3/4-1 mil dollar home for 30 years that you'll never be able to pay off early is stupid. I don't care which way you slice it.
 
954Rider said:
Seriously though, if anyone knows of good value 1br apartments anywhere in the bay for $1500 please let me know. I need central AC, washer/dryer, and not have to worry about my car being broken into.
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Being a motorcyclist for me it would have to include a garage. Then the options get thin. Probably looking at Richmond or Pittsburg, it surprising hard to find.
 
SNsMoto said:
Twas not directed at you, but more so to give another point of view.

With how you just worded it, if you feel it's that grueling to own a house, then perhaps you've answered your own question.
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I am just saying its a long commitment. Any middle class that want to buy in the great SF/Peninsula is going to be 'grueling.'

I understood your post as if just buy a house and be happy. No worries about payments and the cost of ownership.
 
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Recently moved out of a 2bd condo in South San Jose for $1900 a month. Was nice too. Right next to the pool, one neighbor, carport. Nice area.

Decent house is gonna cost 2800-3600 a month to rent.
 
JesasaurusRex said:
the fact that most people won't be with the same employer and in turn won't be in the same location for 30 years..or 15 even (with very little paid off if you look at the amortization schedule) for an amount that large makes the risk that much greater. I feel as if most people in the BA spend that type of money just because they don't really understand what that type of home can really be bought for a much smaller amount elsewhere. Being the townies that most people are they've never even gotten out, and if they have not for a significant amount of time, they just spend the money because that's the thing bay area people do.

Being stuck in a mortgage for a 3/4-1 mil dollar home for 30 years that you'll never be able to pay off early is stupid. I don't care which way you slice it.
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Why would I ever want to pay off my 3% mortgage early?
 
mlm said:
Why would I ever want to pay off my 3% mortgage early?
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Why wouldn't you? "Inflation"!!! :laughing

For one, inflation is lower than your 3%, that's the number one reason...i'll humor you anyways.

Two, if you're married, the first $12,400 of your annual mortgage interest are not really deductible since you're giving up your standard deduction to do so.

For a 750k mortgage at 3.5% over 30 years the annual interest only drops to 12,400 dollars right around the 20 year mark (the same as the standard deduction). At 20 years you've paid $400k worth of interest, with 250k of that interest having absolutely zero impact on your tax savings since the fed was going to give you that anyways.

That's why

I understand that investing that money can net you a greater amount than paying the 3% annually. Once again, i said if you don't have the means to pay off early because then you obviously don't have the means to invest additional funds else where.

From an investment standpoint i can see the risk/reward. From just a living stand point the risk greatly out weighs the reward imo.
 
Archimedes said:
Yeah, it's just not true right now, unless you're talking about really shitty places to live. There is no such thing as a decent house in a decent neighborhood for $200k in any major metropolitan area in the U.S. right now. I wish there was.
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You can buy a nice house, in a nice hood, for $250k all day long in nice parts of Cincinnati for example.
 
JesasaurusRex said:
Why wouldn't you? "Inflation"!!! :laughing

For one, inflation is lower than your 3%, that's the number one reason...i'll humor you anyways.

Two, if you're married, the first $12,400 of your annual mortgage interest are not really deductible since you're giving up your standard deduction to do so.

For a 750k mortgage at 3.5% over 30 years the annual interest only drops to 12,400 dollars right around the 20 year mark (the same as the standard deduction). At 20 years you've paid $400k worth of interest, with 250k of that interest having absolutely zero impact on your tax savings since the fed was going to give you that anyways.

That's why

I understand that investing that money can net you a greater amount than paying the 3% annually. Once again, i said if you don't have the means to pay off early because then you obviously don't have the means to invest additional funds else where.

From an investment standpoint i can see the risk/reward. From just a living stand point the risk greatly out weighs the reward imo.
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The itemized deduction includes being able to deduct property taxes, which are close to $10K on an $750K property ;)
 
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mlm said:
I'll just address the easiest fallacy in what you just posted. In addition to mortgage interest, the itemized deduction includes property tax.
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you forgot that it also includes state income tax, amongst other stupid sh*t

yawn

you're the one choosing to buy a house in a location with a ridiculously inflated "value" to pay that property tax on and also buying in a state with a ridiculously high income tax

You either want to talk numbers or you don't

You're not saving sh*t by not paying down your mortgage, no matter how many times you want to tell yourself that. The fallacy is all yours.
 
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