Renting vs. Buying in San Diego

[nmnita]

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 take on this and that is all it is: if you are unsure about living downtown certainly you should rent for awhile, but if you are holding out, hoping property values go down, you said it yourself, they could very well exculpate and the interest rates are creeping up. Suddenly the home you wanted for X dollars a month in mortgage will be out of your price range.

There is no one answer fits all, there are options and it sounds like you are weighing them carefully.

[djxpress]

Originally Posted by sacite

There may be bonds that mature in a yr and pay up to a 5% coupon rate, which is tax exempt. If you you think about it, doing that for just 2 yrs while you decide could earn you $10k just for letting the government use your money.

What type of bond offers this rate? Everything I've seen (money market, CD, bond) offers less than 1% on $100,000 for a one year term.

[Pedro2000]

Originally Posted by 1AngryTaxPayer

My neighbor cleared 550 grand selling his house in 2006. He lived in it 30-40 some years. I'm already up 400 grand from what I bought my house at in 98.

This only works if you move out of the area or you bought some other 2nd house/investment property years ago. Because if you stay in SD, your house sold for more money, but you need to buy another house that went up the same. So yeah, great you buy something for $500K, sell it for 950K. But now you have to go and buy another house for $950k. Unless you plan on leaving SD.

[Cardiff Kook]

Originally Posted by Pedro2000

This only works if you move out of the area or you bought some other 2nd house/investment property years ago. Because if you stay in SD, your house sold for more money, but you need to buy another house that went up the same. So yeah, great you buy something for $500K, sell it for 950K. But now you have to go and buy another house for $950k. Unless you plan on leaving SD.

Yep, I guess unless you sell a large house and make a big profit and then downsize and buy something smaller for a lot less $$$ then its kind of a wash if buy something comparable to what you sold

[sacite]

Originally Posted by djxpress

What type of bond offers this rate? Everything I've seen (money market, CD, bond) offers less than 1% on $100,000 for a one year term.

I don't know if there are any (didn't look). That's why I preferenced with "maybe". I do know that the 5 yr state/fed bonds were around 4.5% when I was looking about a yr ago. You could always buy those and then sell after a yr, if necessary. That was one option that I considered myself.

[1AngryTaxPayer]

Originally Posted by Pedro2000

This only works if you move out of the area or you bought some other 2nd house/investment property years ago. Because if you stay in SD, your house sold for more money, but you need to buy another house that went up the same. So yeah, great you buy something for $500K, sell it for 950K. But now you have to go and buy another house for $950k. Unless you plan on leaving SD.

I do. At some point we had to decide on whether to pay off the house or keep payments low. I don't want to retire here. I'd like to retire without having to work while I retire We'll cash out and buy something with cash. Haven't decided where yet.

Or, may sell and travel by RV or really downsize. I want a cabin in Big Bear and live by TT here in the winter. Kids will be out and we'll just be rattling around this big ol house for no reason.

[JohnAlt]

Originally Posted by 1AngryTaxPayer

My neighbor cleared 550 grand selling his house in 2006. He lived in it 30-40 some years. I'm already up 400 grand from what I bought my house at in 98.

Is there a point somewhere or are you just patting yourelf on the back?

Just looking at overall market behavior during those years I would guess you were "already" up more than you are now back in 2005 and were "already" up some number quite a bit less than that by 2010. The 400 looks good compared to your neighbor's 550 given the much shorter ownership time, and to me is just more evidence of a bubble.

Of the two of you, only your neighbor has actually realized a gain.

[metoque]

Originally Posted by sacite

Totally innacurate. Yes, there were all sorts of crazy loans offered during the bubble that people could not afford to keep up with. And brokers were not even bothering to verify income. So yes, there were a lot of people with horrible credit, no real stable income who were buying properties they shouldn't have.

But now you must prove your income and your bank deposits. The stability of your income will be scrutinized. Your credit will be scrutinized. The people that are buying with 3% down are first time home buyers with stable income. They arw by and large responsible people that want a place to live AND an investnent.

Not to be saracastic, but a home has been most people's primary investment since homes have been built. Home ownership IS a big part of most people's retirement plan, and it's always been that way. Kufos for the OP being diligent enough to save 20% to put down, but a lot of people are not in the position to do that. My parents sure weren't. They were able to buy with 3% down 15 yrs ago and the home has since appreciated nicely. That equity hss allowed them to retire. Hard for me to see that as anything but positive.

Wrong again. If there's no skin in the game, people just walk away and foreclose if their house is under water. This has been proven over and over.

[1AngryTaxPayer]

Originally Posted by JohnAlt

Is there a point somewhere or are you just patting yourelf on the back?

Just looking at overall market behavior during those years I would guess you were "already" up more than you are now back in 2005 and were "already" up some number quite a bit less than that by 2010. The 400 looks good compared to your neighbor's 550 given the much shorter ownership time, and to me is just more evidence of a bubble.

Of the two of you, only your neighbor has actually realized a gain.

Isn't is obvious?

Mine was luck. The point was historically housing here may dip but has never remained stagnant. As a short term investment I know many have gotten burned but I wish I had bought 2 or more when I bought one. I can't think of anything here that would have been a better investment.