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Location: The Raider Nation._ Our band kicks brass
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Quote:
Originally Posted by Hopes
But she's renting to avoid taxes, not to get a better feel for the city before she buys. That's not a sound financial reason to rent.
I agree with everything you said about taxes and renting. Landlords are like any other kind of business. None of them pay taxes. That is a cost that is passed on to the consumer. People should remember that when politicians start talking about raising corporate taxes to make them pay "their fair share".
Coming to a new area though, I would rent for 6 months, no more than a year to get a feel for the area. I would also have to have a good reason to relocate too. There needs to be a reason to be drawn here. What is that reason?
I've done the math and the nickel and diming is in PA not VA. I would have about the same monthly mortgage for a 500K house in Pitt., and a 600K here. The reason is that when the taxes are folded into the monthly mortgage it is so much more.
Approximately 14K for a 500K verses approximately 4K for a $600K house. Now you add the wage tax of 1% (added on to the low 3.07% PA state tax) and your up even more. The extra 2% we pay on income tax (6% total) + the small car tax usually doesn't make up the difference (10K+) in property tax in PA, unless you are making big big bucks.
BUYING OR RENTING
The way I look at it is that (given the 500K example) I will pay a lower rent than a mortgage on a house there and the only way I could possibly see a return on a home investment is if I keep it for a very long time . . .even then 10 years x the extra 10K I'm shelling out = 100K . . so the house would have to increase by 100K. I'm thinking I put that 10K in the stock market and make a better return. Actually Boylocke is correct that I would rent also, because we are not sure where we will live and it's a bit complicated to figure out neighborhood, schools etc. You all and this forum has definately helped. I wonder what the rents really are for a 4-5 bedroom house in the burbs.
I've done the math and the nickel and diming is in PA not VA. I would have about the same monthly mortgage for a 500K house in Pitt., and a 600K here. The reason is that when the taxes are folded into the monthly mortgage it is so much more. Approximately 14K for a 500K verses approximately 4K for a $600K house. Now you add the wage tax of 1% (added on to the low 3.07% PA state tax) and your up even more.
Remember, that the 10k and the local income tax is a federal tax deduction.
Quote:
Originally Posted by smuckerd
The extra 2% we pay on income tax (6% total) + the small car tax usually doesn't make up the difference (10K+) in property tax in PA, unless you are making big big bucks.
That's what I've been telling you. People of higher incomes do enjoy the benefits of Pennsylvania taxes. And the larger the mortgage, the larger the deduction in mortgage interest on federal taxes.
Also, when you do your calculations, remember to factor in that you're losing your current mortgage interest deduction on your Virginia home since you'll be losing what you already deduct if you rent here.
Quote:
Originally Posted by smuckerd
I'm thinking I put that 10K in the stock market and make a better return. .
Depending on the investment, it's certainly possible.
Quote:
Originally Posted by smuckerd
I wonder what the rents really are for a 4-5 bedroom house in the burbs.
There are four to 5 bedroom houses that rent for between 1.5k and 2.5k per month (give or take depending), but they aren't as nice as what you're looking to find. Don't get me wrong---they'll be fairly decent houses, but a 500k house in this area is one heck of a nice house. But if your standards are much lower, you certainly might save money renting. I can't argue with that. I just assumed you were coming here hoping to maintain or increase your standard of living, not lower it by living in a lesser house.
And if you're willing to rent a lesser house, why not just buy the lesser house outright and reduce your tax burden that way. Then you can take advantage of the tax deductions instead of flushing your money down the toilet in rent when you could be applying it towards your mortgage. Even if you sell it a year or two later and you don't make much of a profit, you'll get your money back whereas with a rental you'll never get your money back because it will just be gone.
If the position presented to your wife by CMU is a 'great opportunity' I would think that her increased income would offset whatever losses you seem to think you'll have in property taxes here---especially when you factor in the points I've been trying to make. I can't imagine that you would be considering a move to Pittsburgh for her to earn less than a 10k increase in income.
As a result, it seems you simply don't want to come to Pittsburgh, and you're looking for whatever reason you can to tell your wife to turn down the job offer. Maybe I'm wrong, but I can't imagine why else you're not considering points others are making. You're losing deductions you currently have if you come here and simply rent. You didn't factor things like that into your calculations.
Whatever your decision, we'll all gladly help you find whatever information you need---even if you simply want to rent. Afterall, it might be hard to pick a neighborhood, but it will be wise to at least pick your school district because you won't want to move your childrens' schools twice if you decide to own after renting for a while.
Hopes,
Excellent advise & I think I am trying to find reasons for my wife to not take the job . . . actually, I was looking for reasons for Pittsburgh to be our next home after she became aware of the opp., but don't want to make a move and then make another move to the place where we have been talking about (Raleigh, NC) for some time. This opp. came up, but Pitt. wasn't one of the cities we were looking at and this is where the dilema is. Understand? I'm trying to get an education and assessment on Pittsburgh within a couple week's time.
I hear you about the buying, but my other fear is that if I do have to sell in a year or even two, the economy won't be strong enough in Pitt to actually sell and make a profit or even sell at all. We are still mulling over this tough decision.
actually, I was looking for reasons for Pittsburgh to be our next home after she became aware of the opp., but don't want to make a move and then make another move to the place where we have been talking about (Raleigh, NC) for some time. This opp. came up, but Pitt. wasn't one of the cities we were looking at and this is where the dilema is. Understand? I'm trying to get an education and assessment on Pittsburgh within a couple week's time.
I hear you. Just be forwarned that the education system in North Caroline is in severe distress. There is a shortage of teachers in North Carolina because they don't pay well and the classroom atmopshere is impossible for teachers. The children just simply do not have the basic skills to teach them. Pennsylvanians who go to North Carolina to teach come running back to Pennsylvania with horror stories of how difficult it is to be a teacher there.
You're concerned with providing your children with a good school district, and I think I'm not far from the mark when I tell you that North Carolina's best school districts are going to be the equivilant to our some of least desirable school districts. Those property taxes you are paying in Pennsylvania for schools really does make a difference in education. You might have decent edcuation in Virginia without property tax, but that's not going to be the case in North Carolina. They simply don't have or chose to not put money into their school system.
Sure, the cost of living in North Carolina is definitely comparable to the cost of living in Pennsylvania---but at what cost when the school system is a disaster and you have children to educate?
I'm not trying to push Pennsylvania on you. I just want you to be truly informed. I'm not making this up about North Carolina's education system. There are people who are in North Carolina who think they have a good education system, but they have nothing to compare it to. They might have experience in some substandard school in Phili---but that's not a comparison to a Pennsylvania school district in an affluent area which is where you will be living based on the type of house you're wanting to buy.
Quote:
Originally Posted by smuckerd
I hear you about the buying, but my other fear is that if I do have to sell in a year or even two, the economy won't be strong enough in Pitt to actually sell and make a profit or even sell at all. We are still mulling over this tough decision.
I don't recommend moving to North Carolina until your children are out of school unless you can afford to pay for private school there.
I understand your concern about reselling your house. But the houses I see sitting on the market are the substandard houses. There is wealth in Pittsburgh----a lot of wealth. They don't have a problem selling their houses. It's the middle classes that suffer when the economy gets in a rut, not them.
If you're truly concerned, buy a house for 300k+ instead. That price range still buys a very nice house in Pittsburgh. You really can't know what you can get unless you come here to see. Don't go to a realtor and say you're wanting to pay 500k. See everything that's available in your preferred school district. The houses in the best school districts in the best areas of town will always be able to sell.
And Pittsburgh's economy isn't in the ground. It's relatively stable compared to the rest of the country because it doesn't have huge BOOMS. You know that booms mean busts eventually----just look at SanFran. You just don't know when those booming economies are going to take a turn for the worse. My girlfriend is living in Maryland and the housing market is terrible there right now. That not really the case here in Pittsburgh because we didn't have that huge bubble in real estate values. As a result, people don't have a problem selling their homes if they are in a good area and in good condition.
One last note. The Allegheny County Real Estate website is a wealth of information. I think more potential buyers would be wise to start utilizing it when looking for a home. It's the counties tax assessement website. When you find a house you're interested in buying, go look it up on the Allegheny County Real Estate website. You'll be able to see what year the seller purchased the house and how much they paid for the house. That's priceless information when it comes to making an offer! You'll also be able to see the comparibles and what the houses in the neighborhood have sold for also throughout the past few years.
I hear you about the buying, but my other fear is that if I do have to sell in a year or even two, the economy won't be strong enough in Pitt to actually sell and make a profit or even sell at all. We are still mulling over this tough decision.
I think you are right to be concerned about this... in a normal market I believe Pittsburgh gains around 3% a year -- in one year won't recover your fees, and you would take a loss. I would think you'd have to hold on to a house for four years to break even... And this is NOT a normal market.
However -- *I* am not in PA -- I'm in CA.... and real estate is not my forte. I'm just agreeing with you....
I think you are right to be concerned about this... in a normal market I believe Pittsburgh gains around 3% a year -- in one year won't recover your fees, and you would take a loss. I would think you'd have to hold on to a house for four years to break even... And this is NOT a normal market.
However -- *I* am not in PA -- I'm in CA.... and real estate is not my forte. I'm just agreeing with you....
But his wife will have increased income. I know it's a reasonable concern, but nothing is worth throwing money into rent. The money he would pay in rent would be all money lost. And that money would be greater than the money he pays in fees too.
But his wife will have increased income. I know it's a reasonable concern, but nothing is worth throwing money into rent. The money he would pay in rent would be all money lost. And that money would be greater than the money he pays in fees too.
If you'd read my other posts on the SF board about home ownership in California, you would be SHOCKED I even said to rent!!
I get the feeling you are in real estate or study the real estate market, so my caveat stands that you would know more than me. There's Pittsburgh as a whole statistically, and then there's specific neighborhoods.
I know out here in California, there are specific neighborhoods that are nigh on impervious to real estate ups and downs. The Castro district was written up in today's Chron as being one of those areas -- one house up for sale actually got multiple bids and went for 250K over asking.
You would know which of Pittsburgh's neighborhoods are like this.
Now -- if the OP chose an area like that there is a greater chance of not losing anything. If that neighborhood has an increase of 5-7% annually, then buying there is a great idea. Especially if he can find a house that hasn't been updated or merely needs a good cosmetic makeover. He will make his money back.
But if he chooses Rochester/Monaca, my old stomping grounds, I would think the appreciation factor is far far less.... and he will lose money. And a lot of money if he has to get out quickly for whatever reason, and then has to pay mortgage on a house that isn't selling and he isn't living in, AND he hasn't stayed in for 24 months for the capital gains tax requirements.
However -- he has to have a roof over his head. So even if the OP rents, he's not really throwing money away. He's living his life.
If the OP sells his house where he is and takes that money and invests it well in some good not too aggressive mutual funds or bond funds (because of the possible short term factor in needing the cash, he won't want to go aggressive, because that's more a long term outlook with more risk) he will very possibly out-earn the annual appreciation on the very cash he'd lock up in a house.
If you'd read my other posts on the SF board about home ownership in California, you would be SHOCKED I even said to rent!!
There's a first time for everything!
Quote:
Originally Posted by Tallysmom
But if he chooses Rochester/Monaca, my old stomping grounds, I would think the appreciation factor is far far less.... and he will lose money.
It's very unlikely he's going to choose a depressed area like Rochester/Monaca. He's interested in a half a million dollar house.
Quote:
Originally Posted by Tallysmom
If the OP sells his house where he is and takes that money and invests it well in some good not too aggressive mutual funds or bond funds (because of the possible short term factor in needing the cash, he won't want to go aggressive, because that's more a long term outlook with more risk) he will very possibly out-earn the annual appreciation on the very cash he'd lock up in a house.
But there's money he's just dumping into rent that he won't be able to recoup.
And you're assuming he has equity in his current house.
If he keeps it really safe with saving bonds and certificate of deposits, he'll only annually earn 6k per 100k. Let's say he has 300k equity, that's only 18k per year. But he wants to rent a house that costs 3k in rent per month which costs him 36k per year in rent.
Heck, I don't care what he does. I just think it's really unwise to rent long term simply to avoid property taxes. Especially considering the fact that the Pittsburgh housing market IS stable compared to other parts of the country.
Here's an April 18th, 2007, newspaper article explaining how the Pittsburgh real estate market remains stable while the rest of the country is in a decline: http://www.pittsburghlive.com/x/pitt.../s_503224.html It is actually SAFER buying real estate in Pittsburgh right now than other parts of the country.
Pittsburgh just don't have those booms and busts other areas of the country have that make their real estate markets more volatile than Pittsburgh. That goes for the economy too. We don't have huge booms in our economy and we also don't have huge busts in the economy. An outsider looks at Pittsburgh and thinks that the economy is too dangerous because it's not booming, meanwhile, the economy here is actually more stable by definition.
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I can't believe I'm gonna take a pro-rent side...
