Renting better than buying home in Seattle (rental, condo)

[usernametaken]

https://www.seattlepi.com/news/artic...d-15071414.php

Seattle ranked No. 1 on the list for having the highest price-to-rent ratio among large cities with populations of over 350,000. Seattle has a price-to-rent ratio -- which indicates the "relative affordability of buying compared to renting" -- of 27.5.

[eugene_b]

My wife and I have been going back and forth about rent vs buy over the last couple years and with the current prices of both we just can't justify buying. No matter how I run the numbers on this, it makes sense to buy only if you are betting that Seattle will become the next Manhattan in the future (which is not impossible of course).

[Ruth4Truth]

Originally Posted by eugene_b

My wife and I have been going back and forth about rent vs buy over the last couple years and with the current prices of both we just can't justify buying. No matter how I run the numbers on this, it makes sense to buy only if you are betting that Seattle will become the next Manhattan in the future (which is not impossible of course).

It can make sense to buy, if you get a place with a potential rental unit of some sort. Then you get free equity, courtesy of your renters. Still, the way RE values are increasing by leaps and bounds, you can eventually end up taxed out of your home. But you'd still have that rental unit to mitigate that, so...it could be doable. Just saying.

That's the only way I'd ever buy, anywhere. It's kind of a safety net, a hedge against runaway costs, runaway taxes, whatever.

[Gaylord_Focker]

Certainly seems less expensive

[myname_isborat]

Going to be interesting to see what happens when a real bear market hits tech stocks. There has to be headcount bloat out there. We are still a good year out from that assuming what is happening now is just temporary, but I will have the popcorn ready.

[StealthRabbit]

If you can rent monthly for less than 1% of price of home... Rent and go buy a property somewhere else that you can rent out for for 1%, use your positive cash flows to cover your rents wherever you live... Seattle, Osaka, Sydney, Stockholm, San Diego, San Juan...

[eugene_b]

I explored both of these options - both buying house here and renting out some part of it or buying house/condo in a different market and renting out the whole thing. After reading, crunching numbers, as well as fishing out a few people who did this, I didn't come up with very promising results. The tl;dr version is that you either take on landlord duties: fixing stuff, dealing with reduced privacy, finding new people once they move it, cleaning up once they move it, dealing with occasional legal issues, etc. etc.. Or you hire a company to do it and barely break even. I came to conclusion that it's essentially a flavor of "buying fixer upper" - sounds great in theory but in practice, if you were to boil it down to fundamentals, it's essentially like getting yourself a second job but with a lot of extra steps.

These all are pretty smart and good options if "owning a house" is the end goal of itself and you just want to do it for the sake of it. Or if you are seriously into fixing things or landlording. But purely money-wise, I wasn't able to find it as a screaming good deal, unless I am seriously missing something. Yes, renting is expensive but as far as I can tell - I am pretty much getting the value I am paying for right now.

[eugene_b]

Originally Posted by myname_isborat

Going to be interesting to see what happens when a real bear market hits tech stocks. There has to be headcount bloat out there. We are still a good year out from that assuming what is happening now is just temporary, but I will have the popcorn ready.

That would be a very very interesting scenario. It really depends on a lot of things - how much people are overstretched, whether this bear market will happen at all, etc.. But if it does happen and if tech people are overly optimistic about their RSUs and job security, there is definitely a potential for a disaster here.

My personal take on it is that if experiences like this are representative (who knows, maybe it's an outlier), I'd call it extremely extremely overstretched.
https://www.city-data.com/forum/57323616-post21.html
Having $500k of liquidity and tossing it to buy a 1.45mil house leaves me with a question of what the plan is going to be if stocks plummet and/or one or two people lose the job.

[87112]

Expedia is laying off

https://www.geekwire.com/2020/expedi...ail-employees/

This is rare news to me, I have not heard of a tech layoff for years in the Seattle area.

[leastprime]

^probably about concerns of the ncoronavirus affect on travel.