patrick.net

Still not even close in San Fran itself, though I admit that in far suburbs it can make sense to buy now. Places like Antioch, Pittsburgh, and parts of Oakland.

See for yourself:

http://patrick.net/calculator.php

Thanks. I still want to read the Trulia report later to see what kind of optimistic assumptions they must have been using.

One thing that articles like this never seem to take into consideration, is that they are only talking about this months monthly payment. When you rent, at worst you put down 1st month + security deposit as collateral, and sign into a twelve month contract. That's the extent of your risk/outlay

When you buy, you are married to the motherfucker for 15/30 years! The length of the contract, and the DP alone are exostential risk factors. What if,,,,,,house prices fall further, what if the economy sours and you lose your job.

It is much more complex a financial situation, then to compare monthly rent vs monthly mortgage payment. Aside from everything else financial, that you can pontificate over on paper, there's the unknowns and the non-financial aspects of the equation

So you go to a subdivision, with two identical houses side by side, one guy just got an fha mort for 30yrs at 150k, and is paying 1k per month for his mort+escrow, while the neighbor is paying 1500 per month. On paper, it appears to be 500 cheaper to buy, for those that can only see the intermediate level of implications, however, there's a reason for the chazm, and the 500 premium the renter is paying, is for (good) reason

Pittsburgh

Pittsburgh or Pittsburg? ;-)

I'm sure Pittsburgh is much cheaper than Pittsburg.

You're right. I meant Pittsburg.

You're right. I meant Pittsburg.

I know, I was just being a smart-ass! I'm a Pittsburgh area "native," so I took notice. Usually people forget the "h" when spelling the city in PA.

If I remember right, there's also a Pittsburg in Kansas.

errc says

When you buy, you are married to the motherfucker for 15/30 years! The length of the contract, and the DP alone are exostential risk factors. What if,,,,,,house prices fall further, what if the economy sours and you lose your job.

Yep. That's why I'm renting, even though it's actually cheaper to buy where I live. I'm essentially paying "real estate investment insurance" to my landlord. I pay him to take all the risk.

TO Errc. You got it wrong on your scenario. You mention you are married to the MF for 15/20s? Not true at all. Most people move every 6-7 years as homeowners. Also, how about selling the home if needed or maybe you might want to rent it under your scenario and make a profit of $500 per month? Your move in costs as a renter are about the same as a down payment (3.5% of the purchase price ) for an FHA loan. Also you can deduct your $1000 per month payment as a homeowner and your property taxes. Meaning you actaully are saving another few hundred dollars a month possibly and as a renter you cannot do that. Then you mention what if you lose your job, or the economy sours or housing goes down in price?

All good questions... But if you lose your job and do not pay your rent it is a lot easier for a Landlord to kick you out than a bank can. A landlord can get you out in 60-90 days. A bank has to file papers nd go thru a lot more and there are ways to stay there for up to 2 years without paying at all or longer. Look at alll the people who have not made a payment in 2-3 years and still live in their homes.Hundreds of thousands of people are doing that.

You say what if the economy sours? I think that happened over 5 years ago and it is still soured! If prices go lower so what? You only paid $150k for your house you mention and your payment is only $1k per month and you can dedcut it from your taxes... If you are not selling what does it matter? You have cheap monthly payments and are owning the home.

If you are renting the landlord can tell you Hey Bob...Sorry to tell you but I am selling tomorrow and you got 30 or 60 days to move? If you are waiting for the perfect situation where prices are low, economy is stable, your job is secure forever,You have absolutely no risk it will never happen. Plus being a renter all your life is a dead end street. All you have after 30years of rent are 360 rent receipts....meanwhile you paid off 2 houses for your landlord.

This was on USA TODAY money section front page last week, with a glaring 771 number / savings per month by buying! figure in the headline. I read through it, but it was clear that it in no way shape or form applied to me since my rent is 575 a month and includes everything except my ISP service. My thoughts were, wow, wish I could save $771 a month by buying a house, but I'm more likely saving $771 or more a month by renting instead. I don't remember the article mentioning the bay area.

Don't forget San Jose in your numbers!

http://www.trulia.com/for_sale/San_Jose,CA/2p_beds/1p_baths/CONDO_type/0-250000_price/

All of those places are cheaper to buy than rent. Average cost would be about $1300/month for a 2bedroom condo, vs renting ghetto version $1500+

$200k for a two bedroom? Red states take better care of their residents. They also don't send 30 cents of every dollar they collect from state residents in taxes to the Feds, unlike the crooks in Cali.

pkennedy says

Don't forget San Jose in your numbers!

http://www.trulia.com/for_sale/San_Jose,CA/2p_beds/1p_baths/CONDO_type/0-250000_price/

All of those places are cheaper to buy than rent. Average cost would be about $1300/month for a 2bedroom condo, vs renting ghetto version $1500+

Any condo in San Jose/around San Jose that has a $1300 mortgage/200k is in a bad neighborhood. I rent a 900sf condo in decent neighborhood in SJ and they seem to be selling for about 300k and the hoa is $350 a month so your monthly payment + hoa is about $2200 which more then they rent for.

anon12366 says

$200k for a two bedroom? Red states take better care of their residents. They also don't send 30 cents of every dollar they collect from state residents in taxes to the Feds, unlike the crooks in Cali.

So sure about that? The "Red" State I grew up in had exorbitant retail taxes on everything: Around 10% overall. That's considerably higher than most states.

Also- while 200k sounds cheap to us here in Cali, the median wage in a lot of those red states are also really low- as in it was around 40K per family where I'm from. 200k suddenly doesn't sound "cheap" anymore...

edvard2 says

So sure about that? The "Red" State I grew up in had exorbitant retail taxes on everything: Around 10% overall. That's considerably higher than most states.

Regressive taxation is the route to prosperity.

mike2 says

You got it wrong on your scenario. You mention you are married to the MF for 15/20s? Not true at all. Most people move every 6-7 years as homeowners.

So why sign a contract based on 15/30 years? That has significant mathematical results and is the reason banks/wealthy people are willing to loan money for mortgages. That's the point being made about being "married to the MF." Your wallet is married.

If you think about the object of sales, there is a logical result that asks, "How can I get someone to spend most of their money with me?" The answer has been, "Sell them a mortgage."

taketheplunge says

Thanks. I still want to read the Trulia report later to see what kind of optimistic assumptions they must have been using.

10% home price appreciation from here on out! We will catch up with Phoenix and Concord. The bay area is not that much worse than them places to live. It might actually be a tiny bit better IMHO. ;)

I'm buying those places in San Jose and renting them for $1700 or more. They cost under 200K. HOA's are around $300 and taxes at $150 range. If I went for the 300K units, I could probably get $2200 for those. Not as great, but pretty decent still.

pkennedy says

I'm buying those places in San Jose and renting them for $1700 or more. They cost under 200K. HOA's are around $300 and taxes at $150 range. If I went for the 300K units, I could probably get $2200 for those. Not as great, but pretty decent still.

Tenants refuse to show you real ids and pay you in cash every month. That might get old pretty quick. Good luck. You will need it.

Still not even close in San Fran itself, though I admit that in far suburbs it can make sense to buy now. Places like Antioch, Pittsburgh, and parts of Oakland.

See for yourself:

http://patrick.net/calculator.php

Don't forget highly desirable areas of Richmond, San Pablo, Pinole, and Vallejo. :)

pkennedy says

I'm buying those places in San Jose and renting them for $1700 or more. They cost under 200K. HOA's are around $300 and taxes at $150 range. If I went for the 300K units, I could probably get $2200 for those. Not as great, but pretty decent still.

What are you smoking? Where do you find these deals? They don't even exist in San Jose or any place in the Bay Area or shall I say the Real Bay Area. It's much cheaper to rent than to buy in the Bay Area. Don't give people the wrong idea. :)

RentingForHalfTheCost says

Tenants refuse to show you real ids and pay you in cash every month. That might get old pretty quick. Good luck. You will need it.

Actually his tenants are 1) an engineer for Apple, 2) a CPA for one of the big 4, and 3) an IT for VMWare. So far, they have been paying like clockwork with direct deposit each month. He gives them $3 off for the direct deposit fee. Too bad, the sucker can only buy one more rental property. :)

anon12366 says

$200k for a two bedroom? Red states take better care of their residents. They also don't send 30 cents of every dollar they collect from state residents in taxes to the Feds, unlike the crooks in Cali.

One can go to Modesto or Patterson and get a 4 or 5 bedroom house for $200k or less. Not all part of CA is bad.

E-man says

2) a CPA for one of the big 4

What would you consider the "big 4"?

I don't know what trulia/sf chr. people are smoking these days. I entered my own numbers into patrick's calculator, and I get this;

Renter after 7 years: -209,896 Owner after 7 years: -460,292

pkennedy says

Don't forget San Jose in your numbers!

http://www.trulia.com/for_sale/San_Jose,CA/2p_beds/1p_baths/CONDO_type/0-250000_price/

All of those places are cheaper to buy than rent. Average cost would be about $1300/month for a 2bedroom condo, vs renting ghetto version $1500+

Yah, for that great price it is nice to know you are surrounded by some serious sex offenders. Just don't have any kids and if you do, keep them inside at all times. Great condos and prices. I wouldn't live there for free.

Always forget to hit the "Upload Image" button.

pkennedy says

Don't forget San Jose in your numbers!

http://www.trulia.com/for_sale/San_Jose,CA/2p_beds/1p_baths/CONDO_type/0-250000_price/

All of those places are cheaper to buy than rent. Average cost would be about $1300/month for a 2bedroom condo, vs renting ghetto version $1500+

Here is one of your neighbors.

Darrell In Phoenix says

pkennedy says

All of those places are cheaper to buy than rent.

Nonsense.

Renting is a fraction of total ownership costs at current inflated asking prices of resale housing.

Absolutely, true and I got $3k/mth that proves it. Not some wacky view of how to interpret a graph, bar, or pie chart. Or some organization that only spews out a bias opinion and has repeatedly lied about the data. You owner preachers keep pumping, nothing beats field work. I'll watch your chest beating with a skeptic eye and let my own savings rate be the judge. I am years away from even contemplating buying in the BA. I'd even contemplate renting two homes before buying at this point. That is how silly it has become here. Time will be a rude awakening for many.

"289(a) PRIOR CODE - SEXUAL PENETRATION OF VICTIM WITH FOREIGN OBJECT BY FORCE."

Just another day in the RE biz.