Real estate: Buying now cheaper than rent in Tucson (short sale, foreclosed)

[swbell6]

Originally Posted by iflyjetzzz

Step back and think about this for a while. If buying was truly cheaper than renting, large companies would step in, buy up a ton of houses and then rent them out for a profit. That's not happening because 1) home prices continue to decline and 2) there is more to the cost of home ownership than simply paying the mortgage.

Iflyjetzzz - Where have you been? That's exactly what the big companies - and small investors - are doing right now: snapping up distressed properties in order to generate income or to fix and flip. Think about how much money you've lost in the stock market!

While averages and medians reveal overall trends, they don't tell the whole story. If you could buy a decent house for, say $85k, why wouldn't you? It is cheaper than renting and you get to deduct the mortgage interest and real estate taxes.

Believe me, the market for the lower-end, distressed houses is hot right now.

[swbell6]

Originally Posted by Boompa

These Articles are written by Real Estate """Proffessionals """ to rev up sales. They are pushing the 1% down or 3% down that led to many of these forclosures. I don't see Tucson as bad as the East Valley or West Valley of Phoenix.

Dude - The reporter who wrote the story works for a newspaper and is not a real estate broker. Did you even read the story? Geez.

[actinic]

Originally Posted by cheesecurd

All I know is we bought a move in condition home last month for $179,000 with 85% cash down, and the monthly expenses on our mortgage, insurance and HOA fees is $375.42. Where in tucson can you rent a 2000 square foot home in a wonderful neighborhood (Oro Valley) for $375.42 a month?. We intend to live in this home for 10-20 years I bet in the end we come out at least even money.

With the amount you put down out of pocket you could of used those funds to rent anywhere.

[cheesecurd]

Originally Posted by actinic

With the amount you put down out of pocket you could of used those funds to rent anywhere.

TRUE, but afterwards WHAT would I have to show for all the rent money I spent?

[iflyjetzzz]

Originally Posted by Jalhop

Renting out houses entails risks that owner-occupieds don't take. Namely, the risks that the place will be trashed (possibly destroyed by meth) or that the tenant will leverage the law to stay rent-free. Buying can certainly be cheaper than renting for owner-occupieds, even as large companies remain on the sidelines.

Valid points.

Originally Posted by swbell6

Iflyjetzzz - Where have you been? That's exactly what the big companies - and small investors - are doing right now: snapping up distressed properties in order to generate income or to fix and flip. Think about how much money you've lost in the stock market!

While averages and medians reveal overall trends, they don't tell the whole story. If you could buy a decent house for, say $85k, why wouldn't you? It is cheaper than renting and you get to deduct the mortgage interest and real estate taxes.

Believe me, the market for the lower-end, distressed houses is hot right now.

With home prices continuing to decline, you've got to cherry pick your houses. And don't think you can't get burned. If the previous 'owner'/renter decided to dump a bag of concrete down the shower drain/toilet, the home is a total loss. You'd have to open up the slab to fix it and the home will never be the same if you do that.
The reward's not bad but there are huge risks.

Originally Posted by cheesecurd

TRUE, but afterwards WHAT would I have to show for all the rent money I spent?

If your $179K home falls by 17% this next year, you will have lost $30K in equity. That's $2500/month. Wait a year and perhaps you could buy your house for less than $150K.
Not possible? Talk to buyers from 2007, 2008, 2009, and 2010.
This trend won't last forever but right now there's no bottom in sight.

... and you haven't answered my question on all of the fees/costs/etc on top of $179K when you bought your house. That's your true cost. And were these rolled into your mortgage?

[cheesecurd]

Originally Posted by iflyjetzzz

Valid points.



With home prices continuing to decline, you've got to cherry pick your houses. And don't think you can't get burned. If the previous 'owner'/renter decided to dump a bag of concrete down the shower drain/toilet, the home is a total loss. You'd have to open up the slab to fix it and the home will never be the same if you do that.
The reward's not bad but there are huge risks.



If your $179K home falls by 17% this next year, you will have lost $30K in equity. That's $2500/month. Wait a year and perhaps you could buy your house for less than $150K.
Not possible? Talk to buyers from 2007, 2008, 2009, and 2010.
This trend won't last forever but right now there's no bottom in sight.

... and you haven't answered my question on all of the fees/costs/etc on top of $179K when you bought your house. That's your true cost. And were these rolled into your mortgage?

We are not thinking in the near term! As I stated in my post we plan on living in the home 10-20 YEARS. Who cares if the home value drops even 50% we got the home to live in not for a investment!. As to your fee question, I have NO IDEA what any of the fees are my wife takes care of all that stuff. But I will say we are happy with what we got and in life that's all that's important. We have more than adequate funds to enjoy the rest of our lives in comfort and security and to have all that at the young age of 54 is a wonderful thing these days!.

[Jalhop]

Originally Posted by iflyjetzzz

I understand homeowners' rationale for saying that it's smarter to buy than rent. But when pencil is put to paper, the numbers favor renting.

The numbers for Tucson favor renting for owner-occupied only if you're right about the downward trend continuing. I believe that housing trends are possible to predict. However, as prices fall the bottom becomes more likely; i.e. a continuation of the fall becomes harder to predict. That's true even if there are tons of foreclosures in the pipeline.

You may be right that Tucson has further to fall. I'm sure though that many reasonable people will be confident of a further fall when the bottom happens, if only because the bottom always looks the bleakest from one angle.

[Kimballette]

Originally Posted by cheesecurd

While the perception of homeownership has taken some lumps since the onset of the recession, a real estate website says buying is now cheaper than renting in most major U.S. cities, including Tucson. Real estate: Buying now cheaper than rent in most major cities

This is the topic of this thread. If you'd prefer to discuss investment strategies, take it elsewhere, as this is the Tucson relocation forum. Thanks.

[vjsoto]

On the low end: Let's say you are paying $650/month to rent an apartment and are thinking about buying a house. You have decent credit score (750), and are on the market for a $70,000 house on a 15 year fixed rate loan. Assuming you can put $14,000 (20%) down on the house and lock in a 3.0% rate, your monthly principal + interest would be ~$385/mo. Tack on another $130/mo for homeowners insurance, property tax, and mortgage insurance, and you are still saving over $100/month compared to your previous rent. Considering that there is a huge selection of $70k (and less) houses on the market right now, and considering the availability of very low mortgage rates, it's easy to see how you would save some money.

Whether or not you actually save money is of course dependent on how much house you want to buy. Yea, you won't save a penny if you move from $750/month rent into a $200,000 house, but there is the potential for big savings if you move into a sub $100,000 house.

Now I know iflyjetzz would whine about potential loss in value over the next year (he obviously has a lot of negative opinions regarding the housing market), but if you aren't planning on relocating in the next 15 years, wouldn't it be nice to OWN a house and never have to pay rent again? Who cares what the market does.

There are obviously some bad reasons to buy a house:

Not planning to live in the house for more than 5 years.
Buying the house as an investment (even house flipping might be a gamble at best).
Plan to build a meth lab in your house.

Other than that, I say take advantage of the market and buy!

[iflyjetzzz]

Originally Posted by vjsoto

Now I know iflyjetzz would whine about potential loss in value over the next year (he obviously has a lot of negative opinions regarding the housing market), but if you aren't planning on relocating in the next 15 years, wouldn't it be nice to OWN a house and never have to pay rent again? Who cares what the market does.

Don't kill the messenger. My apologies if you are personalizing my posts. I merely try to take existing data to form my opinions on future trends - I understand that I'm delivering a message that most do not want to hear.

How about the cost of a new air conditioner/refrigerator/stove/hot water heater/painting the house? There are some complex rent vs own calculators on the internet. Make sure that all expenses are included in your analysis.
My wife and I plan on buying a home sometime in the future. There will be a day in the future when it will be much more economically wise to buy a house rather than rent.

As for the $70,000 pricetag, I loaded the following criteria into tarmls.com:
Single family home
$40,000 to $70,000
1000 sf minimum
No older than 1990

There are quite a few desirable houses at that price point. So I agree with you that it's possible that buying a home in that price range for less than renting and the home value will probably not decline as much as higher price points. So the math may work out that it's better to buy in that price point.