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Old 12-03-2007, 10:13 PM
 
19 posts, read 64,147 times
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I've noticed in looking at houses in and around CS that there are many homes that have rental rates significantly below what a mortgage payment would be on the home if it were to be purchased directly. Can anyone from the area offer any insight to the rental vs housing markets?

We are planning to rent when we first relocate to CS just to get a better feel for the different neighborhoods and make sure we are where we really want to be before purchasing, but don't want to get accustomed to a $1500 rental payment and not be able to afford to buy a comparable house a couple years later. I'm from the Twin Cities (MN) area and there is a much smaller rental home market here than there appears to be in CS. Thanks for the help!
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Old 12-04-2007, 04:41 AM
 
Location: Las Flores, Orange County, CA
26,346 posts, read 80,765,097 times
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Shoot from the hip 20 second response: If you are for sure going to move to COS, the renting at first is a good idea. The home prices are going to be whatever they will be. The general feeling is that they won't go up within several years and more likely (as gathered from news sources, business web sites, etc.) they will go down a bit or level out. Renting for the reasons you mentioned (making time to learn the neighborhoods) is a good thing. Other than not having the tax break and having to move twice, the only risk is buying later while the housing prices go up now - which doesn't seem likely.
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Old 12-04-2007, 05:00 PM
 
Location: Colorado Springs, CO
2,221 posts, read 4,652,297 times
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One of the better indicators that a market is overpriced and bubblicious is when equivalent rents are significantly below the cost of buying. We're moving to COS in the next 6-12 months, and I have been watching prices closely. Capitulation--the process where buyers realize that nobody is buying for what they're asking, followed by widespread price cutting--has just begun in the $400-600K market. And it has a good long way down the hill to ride.

A lot of that has to do with mortgage availability. All of a sudden (gasp) banks want 20% down payments again, actual verification of actual income, and they won't any longer loan $500K to a family making $50K a year. The pool of available buyers at yesterday's elevated prices has shrunken significantly due to family incomes no longer qualifying for the suicide loans that supported those elevated prices (and a dearth of families with money saved for a down payment), a large percentage of the historic pool of potential move-up buyers that would need to sell their overleveraged house right into the teeth of this market in order to buy another, and the fact that most other qualified and otherwise unencumbered buyers (like me) are going to continue the buyers' strike while we watch the train wreck unfold.

I don't think buying in the next 6 months is a good idea in any event...take those months in a rental to look around and get it right, and you'll be in a better position when you get to a decision.

Regards

Bob

Last edited by Bob from down south; 12-04-2007 at 05:12 PM..
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