another rent vs buying, opinions appreciated - Page 2 - City-Data Forum

Lookout Kid · 02-10-2009, 10:23 AM

My wife and I bought a place in the Spring 2005 when all of the most reputable real estate pundits were still uncertain about a real estate bust (a "soft landing" was just starting to be discussed), and the market still seemed to be rocketing upward. We didn't have kids at the time, and were uncertain that we would be able to have kids. But, we figured that if we did have kids we could stick it out for a few years if need be. Our original plan was to stay in the place for five years--which we thought would protect us from a downturn.

Flash forward to 2009. We now have a child, and our condo is crowded. Our once sleek minimalist interior has been invaded with colored plastic toys. However, we can't sell our place and move to larger digs because we would have no down payment left to put into the new place because of the drop in real estate values. We are not yet "upside down" on our mortgage, but after closing costs and paying a realtor we would walk away with almost nothing. Our original five year timeline, which seemed generous in 2005, is now only a year away--and we will not be able to sell our place in 2010 without a quick jump in price (or some other gain in equity, like paying more against our mortgage).

What's the moral of the story? Buying can be a LONG TERM proposition, and you are on the hook financially no matter what the market does. I would only buy a place if you're certain you can stick it out through thick and thin. In my situation, our condo is a bit cramped with three of us, but it's a generously-sized 1400 SF 2-Bedroom, and we can make it work for as long as we need to. Our new timeline is to move out before our daughter goes to Kindergarten in 2013. If the market tanks further, we may have to rent it out and move to a better school district as renters ourselves. But this is not the so-called American Dream, and really isn't the life we anticipated for our family.

zeppman · 02-10-2009, 02:27 PM

Thank you for the insight everyone. A lot of things I either haven't thought of, or thought wasn't going to be that much of an issue until now. Looks like renting will be my choice, just hope I can find a decent place come october.

Being a newbie to the whole real estate thing, is this a renter's market? I've heard, "Yes because people who can't sell their houses/condos are renting them out" but I've also heard, "No, because no one can afford or wants to buy, so more people are renting... driving rent prices up.."

long101 · 02-10-2009, 03:06 PM

Quote:

Originally Posted by zeppman

Thank you for the insight everyone. A lot of things I either haven't thought of, or thought wasn't going to be that much of an issue until now. Looks like renting will be my choice, just hope I can find a decent place come october.

Being a newbie to the whole real estate thing, is this a renter's market? I've heard, "Yes because people who can't sell their houses/condos are renting them out" but I've also heard, "No, because no one can afford or wants to buy, so more people are renting... driving rent prices up.."

I dont really think its ever a "renters market" or not a renters market. Just because of the reasons that you said. Other people may tell you otherwise but I dont know. Im sure areas could be more "rentable" because of options and what not.

Lookout Kid · 02-10-2009, 03:18 PM

All numbers I've seen over the last two years point to rising rents in the city--for residential properties. Business rents are sinking, and vacancy is up.