patrick.net

It all depends on the location.

if the rent is $2500 monthly as you said and the house only costs 150k then it would seem that buying makes sense if there are people looking to rent. the rent/buy ratio is nowhere near that good in ny neck of the woods.

at 150K to buy verses 2500/mth to rent, buy two for crying out loud. When you mess up one, just move into the other while the cleaning crew fixes up the first for you. I worry that any place that has sales for 150K verses rents for 2500/mth must also come with a heavy crime rate. Saving money only helps if you stay alive long enough to retire.

How much would the 150K house rent for?

No. I can make a big downpayment but I am not doing so! Save your cash for the rainy day or invest where it grows....

What is most popular in the US at the moment, renting or buying?

The trend is leaning towards renting over here as so many home-owners are now struggling (or being evicted) - nobody wants to get on the "property ladder" as it only leads down these days.

topcoates says

nobody wants to get on the "property ladder" as it only leads down these days.

Yes, trouble is, most people in the Bay Area still haven't realized this. Until they do, bottom is a "looong way down from here".

dunnross says

topcoates says

nobody wants to get on the "property ladder" as it only leads down these days.

Yes, trouble is, most people in the Bay Area still haven't realized this. Until they do, bottom is a "looong way down from here".

Last group into the Ponzi scheme normally suffers the largest losses. After this wave of buyers, all I see is calm seas. Good luck with that to all the recent buyers.

Cash in this economy can provide so much ROI on wall street and similar investment vehicles that spending it onto real estate seems almost like taking a huge loss.

I usually advocate not paying interest to the bank, and we did buy our place with cash... but that was years ago. I think it's very different now.

RentingForHalfTheCost says

at 150K to buy verses 2500/mth to rent, buy two for crying out loud. When you mess up one, just move into the other while the cleaning crew fixes up the first for you. I worry that any place that has sales for 150K verses rents for 2500/mth must also come with a heavy crime rate. Saving money only helps if you stay alive long enough to retire.

Well, it's kind of tomato/tomato (potato/potato?) since when I move out part of me wants to have a nice enough place that I'll enjoy it. Rentals in Oaktown seems to command a 2K-3500, for either a house or a loft, or failed condos-turned-apartments (which seem surprisingly nice!).

My street has a house that is not nearly as nice as mine, not a foreclosure or short-sale, has some upgrades that seem tolerable, and a quick turnaround time.

It would be really easy to move there!

I'm in the same boat of sorts - altho in Oregon not CA. We rent for about 800+ a month and the houses we would consider buying are going for 50 to 80k (yes the low end). So 5 years of rent almost pays for a house - same as 30k/150k.

And we have enough cash in the credit union(s) to buy such a house three times over.

I still wont buy.

First, I have to move to find work every year or two.

Second, yes the house prices are lower, but they are not really the kind of place I would want to live in for the rest of my life (I want a place in the country on acreage for that).

Third house prices are still dropping and show zero signs of levelling out. I watch a bellweather house we used to rent that zillow had at 242k when we lived there in 2007. A nearly identical house around the corner just sold for $135k and I expect that price to be 100k within 18 months. Zillow dropped its zestimate by 10k in the last 45 days or so.

Fourth - house price curves COMPRESS as the crash goes on - this means that the price diff between a really nice house and a crappy house gets narrower - instead of 200k/100k nice/crappy you get 75k/50k - so not only do the prices drop, but you get more for your money as time goes on.

On the flip side, if you were sure you were going to have a job for the next 5 years (and I cannot for the life of me think of anyone who can say that with any surety) and you did not mind the price dropping another 50% or you were willing to become a landlord later on, then you'd do ok to buy.

And PS - the idea that there is ANY WallStreet investment that is viable / safe went completely out the window with the MF Global fiasco. The only safe place I can think of is pure cash or as close to it as you can get. The stock market will see 666 again, the bond markets can ONLY go down from here, and anyone who thinks Bernanke has a handle on all this is severely delusional.

But hey, it's your money to lose if you want. LOL

In general, the saying goes that you should not pay off a house with cash right away simply because its "performance" will not match what the same money would do in various other investments. Plus- I personally would not want that much money tied up on a house out of my pocket right away to begin with.

Not yet. For 3 years, I have been hoping to leverage my Texas property into a home I actually live in. Still on this blog.

My observations from the lower end:

1.) Continuous junk inventory at too high a price, 1st or second floor, no view, 1 bathroom, missing appliances, etc. This is repeated over and over on a daily email basis.

2.) Not one green flag to say I'm not buying a depreciating asset.

3.) Obvious market control.

I like the one on Midvale better. Much larger lot and the converted garage screams man cave. An outdoor sink, now that's livin'.