Renting vs. Buying in San Diego (Vista, Linda: sale, real estate, 2014)

[djxpress]

I've been looking at this calculator and plugging in numbers to see whether or not it would be financially wise to rent right now vs. purchase a new home: http://www.nytimes.com/interactive/2...abt=0002&abg=1

I'm curious what others think? In my case, I'm not sure where I want to live (downtown condo, or house in the burbs) and I have been through underwriting with loan approval of $360k and putting 20% down (total amount around $450k).

Now if I rent, it would only be for a year or two to see how I like downtown. But an added benefit is that the market may drop (or it could keep going up). However, rents are also at historical highs and I'd be looking at paying $2k+ (plus deposit, pet rent, pet deposit, parking space, etc.) - this would amount to about $2500/month for a 900 sf unit in Cortez Hill.

Thoughts, opinions? Renting or buying in San Diego in this housing environment.

[shmoov_groovzsd]

Can you get more flexible lease terms? I would rent but just still be diligent with the house hunt.

So you are willing to rent downtown but not in the areas you might buy? Your range was from Linda Vista to Eastlake with buying but no compromise for renting anywhere else?

[djxpress]

I wanted to rent downtown to see if I'd (and my dog) like the lifestyle or not. I already know I can handle the suburbian lifestyle. The one place I'm looking at let's you break the lease with 30 days notice and pay one extra month. Plus they're giving one month free rent, so it's a wash if I break the lease early. It's the moving I hate.

[Dr. Clean]

Originally Posted by djxpress

I've been looking at this calculator and plugging in numbers to see whether or not it would be financially wise to rent right now vs. purchase a new home: http://www.nytimes.com/interactive/2...abt=0002&abg=1

I'm curious what others think? In my case, I'm not sure where I want to live (downtown condo, or house in the burbs) and I have been through underwriting with loan approval of $360k and putting 20% down (total amount around $450k).

Now if I rent, it would only be for a year or two to see how I like downtown. But an added benefit is that the market may drop (or it could keep going up). However, rents are also at historical highs and I'd be looking at paying $2k+ (plus deposit, pet rent, pet deposit, parking space, etc.) - this would amount to about $2500/month for a 900 sf unit in Cortez Hill.

Thoughts, opinions? Renting or buying in San Diego in this housing environment.

my thoughts are very few people in the area buy a home with plans of possible selling it within a few years unless it was an investment property. i just bought my brand new condo in san diego, and it wasn't cheap or easy to getting in ut, not to mention the difficulty finding one within your income range that meets to your lifestyle desires and location preferences. at $360K, you would be surprised what the market has to offer at that amount.

[sfosyd]

Honestly, in your situation I would rent. Things seem absolutely crazy in SD right now without the fundamentals to back it up.

I bought a condo in Cortez Hill about 4.5 years ago for right around 150k and Zilllow and recent comps indicate it has more than doubled in value. Can things really go higher? I'd say no, but I've been wrong before ;-)

I got an email from Redfin today that a 408 sq foot condo just sold for 205k in a sketchy area of North Park. Seriously? 408 sq feet? Those are Manhattan prices and spaces, I have friends who have bought studios in that size and range in Manhattan. Utterly insane.

https://www.redfin.com/CA/San-Diego/...4/home/5378804

A worry is whether interest rates will rise. Can you find something cheaper than $2500 a month? I'd save as much as you can during the time you rent. If this is your first home, or if you haven't owned in two years, remember you can withdraw up to $10,000 from your IRA without penalty for your purchase so put away as much as you can there.

Good luck and don't jump into anything.

[1AngryTaxPayer]

Historically prices never go down for long.

[djxpress]

Originally Posted by sfosyd

A worry is whether interest rates will rise. Can you find something cheaper than $2500 a month? I'd save as much as you can during the time you rent. If this is your first home, or if you haven't owned in two years, remember you can withdraw up to $10,000 from your IRA without penalty for your purchase so put away as much as you can there.

Good luck and don't jump into anything.

Basically from my sale (closed Friday) I will have $110k that is being deposited. I'd like to rent, but I would want to invest this money for the year I'm renting. I need to figure out what to do with the money that will give me good gains, but not too risky (another topic all together!).

The downside of renting, is if I break the lease, I will have to give 30 days notice, plus one month of extra rent (effectively $4k out the window).

I'm not worried about interest rates rising too much, though that is a concern since a 1% interest increase would raise a monthly loan payment by approximately $200 on a $360k loan.

Maybe I should just bite the bullet and try to buy downtown now...these decisions are so tough, especially in San Diego's real estate environment.

[JohnAlt]

Originally Posted by 1AngryTaxPayer

Historically prices never go down for long.

They also aren't as out of whack with fundamentals "historically".

[JohnAlt]

Originally Posted by sfosyd

Honestly, in your situation I would rent. Things seem absolutely crazy in SD right now without the fundamentals to back it up.

I bought a condo in Cortez Hill about 4.5 years ago for right around 150k and Zilllow and recent comps indicate it has more than doubled in value. Can things really go higher? I'd say no, but I've been wrong before ;-)

I got an email from Redfin today that a 408 sq foot condo just sold for 205k in a sketchy area of North Park. Seriously? 408 sq feet? Those are Manhattan prices and spaces, I have friends who have bought studios in that size and range in Manhattan. Utterly insane.

https://www.redfin.com/CA/San-Diego/...4/home/5378804

A worry is whether interest rates will rise. Can you find something cheaper than $2500 a month? I'd save as much as you can during the time you rent. If this is your first home, or if you haven't owned in two years, remember you can withdraw up to $10,000 from your IRA without penalty for your purchase so put away as much as you can there.

Good luck and don't jump into anything.

I agree with most of this except the part about worrying about interest rates. Buyers ultimately set the price, and higher interest rates mean less is available for principal, meaning lower prices.

[JohnAlt]

Originally Posted by djxpress

I'm not worried about interest rates rising too much, though that is a concern since a 1% interest increase would raise a monthly loan payment by approximately $200 on a $360k loan.

Why would the loan necessarily still be $360k in a higher interest rate environment?