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I was ready to buy a house last June (and still am for the right house/at the right price). But after reading the attached article and some simple calculations....I realized renting is the smartest move financially in this crazy, downward spiraling market. Housing Crash Continues, Bubble Pops
I'm really loving this!!! VIVA AMERICA!!!
I was ready to buy a house last June (and still am for the right house/at the right price). But after reading the attached article and some simple calculations....I realized renting is the smartest move financially in this crazy, downward spiraling market. Housing Crash Continues, Bubble Pops
I'm really loving this!!! VIVA AMERICA!!!
Be careful. Generalities never have worked in RE.
It is possible to buy here with 6% interest...but renting is now over 10%. So it is cheaper to buy here than rent.
The only thing you have to deal with though is that sales prices are still decreasing. So it may be cheaper to buy later. But then you have to rent in the interim...and if you wait too long it may no longer work.
its all timing right now... mortgage rates can flip on a dime and not just by a little bit either.... property values are very slow to respond to any turn around but not so with rates....they flip long before there are any visible signs the economy is getting better.
rates rose 1/2% just this past week after bottoming out at the lowest ever
a 1% rise in rates on a 30 yr fixed has about the same effect as if a 200,000 home went up 20,000
Last edited by mathjak107; 01-22-2009 at 03:23 AM..
I was ready to buy a house last June (and still am for the right house/at the right price). But after reading the attached article and some simple calculations....I realized renting is the smartest move financially in this crazy, downward spiraling market. Housing Crash Continues, Bubble Pops
I'm really loving this!!! VIVA AMERICA!!!
Location: Halfway between Number 4 Privet Drive and Forks, WA
1,516 posts, read 4,591,875 times
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Yes, Patrick.net is a good read. I've even submitted some articles for his site that were posted there. Make sure you utilize his rent vs. own calculator. In my area, it was better for me to buy than rent. So I did. Closed Sept. 2008.
I found that NYT rent-vs-own calculator to be absolutely fascinating. The startling fact is that with flat home values (never mind the MASSIVE drops that have been seen recently), we would need to hold onto a home for DECADES in order for buying to make sense. I'm convinced--we're renting until it becomes more clear what is going on with home prices.
Location: Halfway between Number 4 Privet Drive and Forks, WA
1,516 posts, read 4,591,875 times
Reputation: 677
Quote:
The startling fact is that with flat home values (never mind the MASSIVE drops that have been seen recently), we would need to hold onto a home for DECADES in order for buying to make sense.
Flat? As in historically flat? Or do you mean flat as in the past 2 years flat? Everything everywhere has been flat in the past two years more or less (declining in many markets). You need to look at historical appreciation for your area to probably determine better.
When I keyed in the numbers for my area and the house we just bought, it said I was better off "buying" than renting if I planned to stay for two years. Our historical appreciation is 3-5% a year. I used 3% as the conservative input for the calculator.
It depends on your area.
Blanket statements can be misleading.
Flat? As in historically flat? Or do you mean flat as in the past 2 years flat? Everything everywhere has been flat in the past two years more or less (declining in many markets). You need to look at historical appreciation for your area to probably determine better
I figure that any appreciation rate will be a total guestimate. I mean seriously, what does a "historic" rate mean in the context of a historically weird housing market. But it looks to me like homes in the area that we are looking could fall 10% in a year. So if we're totally optomistic and assume that the Obama plan creates a miraculous economic turnaround, maybe homes only drop a total of 15-20% before bottoming out, and then rising at a "historic" 3% rate. So if you figure in that 20% drop early on, the overall appreciation rate over 15 years will be around 1%. Is that close enough? I'm sure the math gets a little fuzzy when you try to figure in an early large drop and subsequent small gains.
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rent vs. own calculator
