Homes May Be Pricey... But We Made Forbes List of Best Cities To Go From Renting To Buying (real estate, apartments)

[normie]

Here's a list I did not expect to see us on....

The DC metro area (including Northern VA) made Forbes' list of 10 Cities To Go From Renting To Buying. The article noted that the spread between what you spend on renting and what you'd pay each month for a mortgage--is far narrower right now than its 15-year average. Also, they said economists predict a significant home-price hike in five years. (The way I'm reading it, what they're saying is rents are high, and for what you're spending on rent you might as well get a mortgage).


Ten Cities To Go From Renting To Buying - Forbes.com

[CAVA1990]

Rents are relatively high here which just as you suggest explains much of the story. In places like coastal Southern California rents are considerably lower than monthly mortgage payments. I'm kind of surprised the tighter mortgage requirements haven't had a bigger downward impact on home prices around here (not that I'm complaining).

[normie]

Originally Posted by CAVA1990

Rents are relatively high here which just as you suggest explains much of the story. In places like coastal Southern California rents are considerably lower than monthly mortgage payments. I'm kind of surprised the tighter mortgage requirements haven't had a bigger downward impact on home prices around here (not that I'm complaining).

A million billion Californians are moving here right now. They're buying houses like pan caliente. I guess when you're used to the price of houses in Southern California, Nova seems like a bargain.

I'm not really sure why Nova rents are so high. Supply and demand, maybe?

[lchoro]

That's what happens when you take a window of time that barely covers one real estate cycle and slide it over the 2001-2007 period that encompasses the bubble. It gives more weight to the recent period that make it appear that you're getting a bargain. They could've said the same thing in 1990, but housing prices didn't bottom until around 1997. If you want a valid analysis of historical valuations, you have to use a period of about 30-34 years that covers at least two real estate cycles.

[athousandlogins]

Yes, it's true. We could absolutely get a decent townhouse in a lovely neighborhood for the rent we are paying now. Rent here is as high as a mortgage payment. No argument there.

But until a downpayment on a $300 - $400K townhouse falls from the sky on us, the question is really irrelevant. Look, I have awesome credit. But because I'm a SAHM and my husband got his Ph.D. so he didn't start making non-grad-student wages until he was 30, we also have almost no cash. We can walk into a rental with a first month's rent and security deposit. We need tens of thousands of dollars, even with an FHA loan, to buy a house. And we don't have wealthy parents who can hand it to us. The monthly payment on buying versus renting is actually *irrelevant* until we have the money for a downpayment. Even if it becomes MORE expensive to rent month-to-month, we have no choice. We will continue to rent because we have no other option. And there is no such thing as entering the market on a tiny starter condo when you already have 2 kids.

I can't imagine we are the only people in this situation.

[athousandlogins]

Okay, I am obviously way too bitter to talk about this subject in a reasonable manner. Sorry!

[Guamanians]

Originally Posted by lchoro

That's what happens when you take a window of time that barely covers one real estate cycle and slide it over the 2001-2007 period that encompasses the bubble. It gives more weight to the recent period that make it appear that you're getting a bargain. They could've said the same thing in 1990, but housing prices didn't bottom until around 1997. If you want a valid analysis of historical valuations, you have to use a period of about 30-34 years that covers at least two real estate cycles.

You make an excellent point! It's similar to the global warming hype that we have seen over the past few years. Now, I do think that the article brings up a good point, specifically the high rent prices. I remember reading the Wash Post in 2005, and there was an ad for apartments that said... "why buy when you can rent"
I chuckled because I KNEW they were right. I believe that the reverse will occur, and people will jump back into the market when rent becomes TOO HIGH. For now, I think (I hope) that home prices will drop another 10% so that we can stabalize that sector W/I the next few years...

[normie]

Originally Posted by athousandlogins

Okay, I am obviously way too bitter to talk about this subject in a reasonable manner. Sorry!

No problem. I was in a similar boat for years and know the feeling... and I think many, many people in Nova have the same situation. You need doctorates or multiple degrees for so many of the jobs here... but as you noted, getting those degrees has a downside. (Eventially it pays off, but in the meantime it's frustrating.)

[Margery]

Originally Posted by athousandlogins

Yes, it's true. We could absolutely get a decent townhouse in a lovely neighborhood for the rent we are paying now. Rent here is as high as a mortgage payment. No argument there.

But until a downpayment on a $300 - $400K townhouse falls from the sky on us, the question is really irrelevant. Look, I have awesome credit. But because I'm a SAHM and my husband got his Ph.D. so he didn't start making non-grad-student wages until he was 30, we also have almost no cash. We can walk into a rental with a first month's rent and security deposit. We need tens of thousands of dollars, even with an FHA loan, to buy a house. And we don't have wealthy parents who can hand it to us. The monthly payment on buying versus renting is actually *irrelevant* until we have the money for a downpayment. Even if it becomes MORE expensive to rent month-to-month, we have no choice. We will continue to rent because we have no other option. And there is no such thing as entering the market on a tiny starter condo when you already have 2 kids.

I can't imagine we are the only people in this situation.

Have you checked out the VHDA (Virginia Housing Development Authority)? They have a program that allows you to use the $8000 tax credit as part of the downpayment and you can finance the rest of the downpayment and closing costs. I am not going into detail here but it is a program for purchasing Virginia homes for first time homebuyers and the interest rate is 5.125%. It is worth the time it takes to read the info on the website.

[Caladium]

IMO the most important sentence in the article was "economists predict a significant home-price hike in five years." There are lots of cities with high rents (many that are higher than ours). What's significant about Nova is that the home prices are expected to soar.