RENT or BUY - in the next 12-18 months? Need your advice.

[smydovro]

I would say it depends on where you are looking to end up. I am in Bucks County and I think that we haven't seen the bottom yet. Now is a good time to sell and a bad time to buy here. Prices in my neighborhood have gone down at least 10% but the prices were so inflated 2 yrs ago that they are still relatively expensive. We are looking to sell now and move out of the area but I would wait for a little while and see how the market looks. There are houses being put on the market here everyday and many, many foreclosures. 2 years ago there were bidding wars on every house. Now many houses just sitting for weeks. Definitely, a buyers market and I think this trend will continue for quite some time.

[sarago11]

We are going through the same situation right now - trying to decide whether to rent or buy. I have to agree that the Northeast is a different market than the rest of the country. We put our house on the market and it sold within 5 weeks for a good profit. We had a hard time deciding whether to rent or buy, but we want to live in a house because of our kids. The first rental house we looked at was so dirty and horrible we were really put off by it. Renting a house is expensive too.

We've decided to buy in Glenside and even though we may only be there for 3-5 years I think it'll be a good investment. If you buy in a strong neighborhood the prices will not go down and chances are you'll make a profit when you sell. Atleast until then your family will enjoy a good house, yard, and school district. We're hoping it works out well!

[pphillipp]

We, too, were having the same problem - rent or buy, knowing we only have a 2-year guarantee of being in the Philly area - but decided to rent. I own my current place in NYC, and was thinking of selling it, because renting just always seems like money out the window. Also, mortgage rates are relatively low now, as are prices, and it seemed we might get a good deal. However, our final decision had very little to do with trying to predict the housing trends because, while we can all make educated guesses, no one really knows what's going to happen. Who, for example, could have predicted the huge upswing in prices up to 2007?

In the end, our decision to rent was based purely on the fact that it seemed crazy to buy in a city we didn't know, until we actually got to know it. We realized that after living in the Philadelphia area for a year, we are far more likely to be able to make an informed decision as to where we might want to be, which areas suit us, and which offer the best vaule. I shudder to think where I might have wound up in NYC, had I just jumped into buying a place, knowing very little about the city and its surrounding environs. And the very dynamic of "rushing" to buy something often leads to poor decisions, as they are often made under stress.

[orrmobl]

To anyone thinking of buying for less than 10 years, please reconsider. Until a few things happen, real estate prices will continue to slide:

1. Backlog of homes for sale, including all those new homes, is sold down
2. All the foreclosure fallout cycles through the banking and home sales markets
3. Job layoffs from all the companies impacted by increasing fuel costs and decreasing consumer confidence have also cycled through the foreclosure processes and forced sale of homes
4. Rent prices increase to meet the declining mortgage costs so that on a 12 month comparison the ratio, around here at least is 10-12.5 vs the current 14-15
5. Home prices decrease (new homes are being built smaller and will cost less) and salaries will increase until home affordability comes back into line with historic averages.

Long and the short of it is that it's going to be a while unless the economy takes off after the election, we get out of Iraq, gas prices suddenly plummet, and pigs fall from the sky.

Prices will bottom out in the next year or couple of years, then skitter along the bottom for another 5-10 years.

So, again, only buy if you want to be settled for a longer term...you can get awesome rental properties in great school districts and still pay less than a mortgage for a like property. And you avoid closing and maintenance costs. You can bank that money and buy when things are a little better...granted interest rates may go up but you can't ignore the disparity of income to home prices - that has to be reduced for the market to function properly.

Hotpads.com has a "heat map" that shows various metropolitan areas and gives the rent to mortgage ratio and whether to buy or wait based upon that ratio. Check it out.

[pphillipp]

Thanks for the advice.

[vizanje]

Originally Posted by orrmobl

To anyone thinking of buying for less than 10 years, please reconsider. Until a few things happen, real estate prices will continue to slide:

1. Backlog of homes for sale, including all those new homes, is sold down
2. All the foreclosure fallout cycles through the banking and home sales markets
3. Job layoffs from all the companies impacted by increasing fuel costs and decreasing consumer confidence have also cycled through the foreclosure processes and forced sale of homes
4. Rent prices increase to meet the declining mortgage costs so that on a 12 month comparison the ratio, around here at least is 10-12.5 vs the current 14-15
5. Home prices decrease (new homes are being built smaller and will cost less) and salaries will increase until home affordability comes back into line with historic averages.

Long and the short of it is that it's going to be a while unless the economy takes off after the election, we get out of Iraq, gas prices suddenly plummet, and pigs fall from the sky.

Prices will bottom out in the next year or couple of years, then skitter along the bottom for another 5-10 years.

So, again, only buy if you want to be settled for a longer term...you can get awesome rental properties in great school districts and still pay less than a mortgage for a like property. And you avoid closing and maintenance costs. You can bank that money and buy when things are a little better...granted interest rates may go up but you can't ignore the disparity of income to home prices - that has to be reduced for the market to function properly.

Hotpads.com has a "heat map" that shows various metropolitan areas and gives the rent to mortgage ratio and whether to buy or wait based upon that ratio. Check it out.

Excellent info and advice. We like others on this list are going through a similar situation of evaluating rent vs buy. I would be cautious of buying too quickly because one has been made to believe that it is "better" to own than to rent. Me and my wife go through this all the time, she is always convinced owning is better, because that is what she was taught her whole life. It's a great idea, if you are going to live in the house for the full term of the mortgage, plus years after it's paid. But in todays job market, those days are much less common than the past.

[bryson662001]

Originally Posted by orrmobl

But I will bet you any amount prices will continue to decline. .

Did anyone listen to Jay Lamont this morning? According to his analysis of data from Trend for the 1st 6 months of ‘08 compared to the 1st 6 months of ‘07.….for the 5 counties in PA and 5 counties in NJ that they include in the Philly metro…….volume of sales is off about 23% and the median price of residences sold is completely flat…….didn’t go up and didn’t go down. The most rural area, Berks slipped a little but was countered by appreciation in other areas. He doesn’t bother with “days on market” because it isn’t consistent and is about to be replaced by some other way of measuring that information.
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