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Do the NYT on it before you make such a swift determination. I bet it is cheaper to own if you plan on being there for 10+ years.You may be right, but who knows how long I'll be here. I'm not a dentist with my own practice nor do I work for the government where I know I want to retire. I'm a corporate executive with less job security and with also a desire to jump companies if something much better comes along. I don't want to be under water because I bought at a peak, which is my biggest fear, and I don't want to have to wait 10-15 years to break even on selling my house.
Strategist saysYou will be renting for a long long time.Talk to someone who bought in 2005.
I don't want to be under water because I bought at a peak, which is my biggest fear
just any guy saysStrategist saysYou will be renting for a long long time.Talk to someone who bought in 2005.
My gardener did. He bought a house with no money down, stayed free for more than 2 years before they kicked him out. Lucky bastard.
If the 2005 buyer could afford it, in most places he is above water now.
30 year clock to freedom.
Calculated against inflation? Guessing not.
somecrappynumber says30 year clock to freedom.
If freedom can only be purchased with 30 years of slavery, it's not worth shit. 30 year originated for vets, 15 used to be standard. For responsible people, 15 is still standard.
As such, if you examine your words, I think you will agree with others that you very well could be renting for a long time - perhaps forever. I am not saying this is bad however - just be very self aware of what your risk tolerance is. You may just find that buying is not right for you. Likewise, understand that if you don't buy, you very well will be nibbled to death in rent increases where you have no choice to move away. This choice isn't great either, but again, its all about self awareness IMO.
My gardener did. He bought a house with no money down, stayed free for more than 2 years before they kicked him out. Lucky bastard.
If the 2005 buyer could afford it, in most places he is above water now. And he is now 12 years into his note - 18 years til being payment fee and eating through principal at a very fast rate. I'm sure the first years of worry sucked, but he would much rather be where he is now than having rented for 12 years and NOW thinking about starting that 30 year clock to freedom.
very few people who rent for 40-50 or 60 years would call a mere 30 year payment term "slavery"
Sorry, to be clear I don't consider rent slavery, because it doesn't involve debt and it's much easier to leave a rental than a house you still owe on.
Renting 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.
It hasn't caught up to me until year 16. I've only started paying something close to a mortgage this past year
I was speaking simply from a monthly payment perspective
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