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As far as stability of ownership, yes, it takes longer to move when you want to, but no, renting does not mean you have to move every few years. I know people who have rented the same place for 20 years.
If I was going to compare the rent I started paying this year to a mortgage I could get if I bought this year, I would still be doing better than owning.
NuttBoxer saysIf I was going to compare the rent I started paying this year to a mortgage I could get if I bought this year, I would still be doing better than owning.
Rents are ultimately tied in some form or another to what people would pay for a mortgage.
Nuttboxer - The correct analysis is what are you paying relative to a mortgage from 16 years ago? I bought in 2003 and for the first 7 to 8 years paid more than rent, but now my mortgage is $5-600 less than current rent.
Again, if you're into the flexibility of long-term renting then that makes sense. Plus owners will always have the cost of maintenance and taxes which never go away. However how much longer do you plan to live? Compare your monthly rent costs for the next 45-50 years relative to a mortgage that would have stayed flat for 14 years, then dropped to $0 for the next 36 and the difference can be staggering.
Yes, clearly if you do the calculation incorrectly, renting may appear to be cheaper over any timeframe
Renting can never work out better than owning in California over any 10 year period, and never will in our lifetime.
Rents are ultimately tied in some form or another to what people would pay for a mortgage.
The correct analysis is what are you paying relative to a mortgage from 16 years ago?
Compare your monthly rent costs for the next 45-50 years relative to a mortgage that would have stayed flat for 14 years, then dropped to $0 for the next 36 and the difference can be staggering.
I omitted all the additional costs of ownership when I made my statement. So the only thing that could have possibly appeared cheaper was buying.
I have done better, and done so for 17 years.
$0 meaning I no longer have to maintain my home, or pay property taxes?
Rents are based on salary, mortgages are based on salary + government subsidies + interest rates + NRA scams. I never paid anywhere close to $2,000 until the past two years. My story isn't uncommon in any way except that I haven't closed my mind off to renting as a good financial decision. Doesn't sound like you've entertained that possibility for a long time
It's all dependent on market whim. Yes, starting your own business often takes serious up front debt as well, but at least the success of that investment is tied directly to the work you put in.
Third, the house itself is a giant money pit, continually depreciating, requiring upkeep.
Fourth, there are much better investments outside of housing and stocks, so your view is too narrow.
So yeah, there are smart reasons not to buy if you're in certain situations. Glad I held my cards and didn't sell that company stock just to buy a crap shack in the bay area.
joeyjojojunior saysRenting does offer more flexibility, but almost always costs more over longer time frames.
It hasn't caught up to me until year 16. I've only started paying something close to a mortgage this past year.
I feel like I should be living a better lifestyle given where I'm at in my career, but CA just squashes that.
As a rule of thumb, I tend to think that CA = higher cost of living (mostly housing costs), but also usually higher salary. Depending on a person's job, I have this gut feeling that a person who makes decent money (not struggling) might actually accumulate net worth faster in CA than in other states due to the typically higher wages, and that a good portion of the higher living costs go into your home equity, which is still your money if you choose to unlock it one day. CA RE seems to appreciate faster too. I haven't run any numbers to back that up, though. And, I think it's clear that if you currently have a much higher paying job offer there, that it makes sense to take it and at least rent for now.
Yes, everyone should consider avoiding acquisition of an asset that has consistently increased in value over time. Especially in very desirable markets. It makes no sense whatsoever to purchase a home for your family. And no, you are not being overly paranoid about losing your job. Everyone is getting laid off these days. The labor market is absolutely terrible. Unemployment is rising very fast. The new presidential administration does not want to focus on economic nationalism, jobs, growth, or any of that. This admin wants to ship all of the jobs to China, who they have claimed is a very fair trade partner.
Life Sucks!
What do we do guys? What do we do?
However, in a rising property environment, which is the majority of the time in CA, you are in a race to save 20%. When prices are rising $100k a year, it makes sense to prioritize buying asap, then focus on your other goals.
After buying I built a more aggressive portfolio. Also got a lot more money into Roth retirement accounts and HSA.
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Well, my family and I are considering leaving San Diego area and moving to Phoenix. We've never owned a home and I have always felt CA is just way too expensive to buy even though I make an executive salary. Now that I'm considering a job in Phoenix making even more money than in San Diego, we're looking at finally buying a big, fine-ass house with a pool for around $800K with 20% down.
Questions:
- Do you think I'm stupid for buying because a recession could be coming? Should I rent instead? Seems like Phoenix house prices haven't come close to recovering from the 2006 peak.
- If I buy a house, what lender should I use? I've considered SoFi because it's easy and online, but is that a mistake?
- Should I get a buyer agent? What if I find the house I want on my own through Redfin?
- Any other tips for a first-time homebuyer?
Thanks everyone.
#housing