[quote=bewildering]I like the second graph in the “shambling towards affordability” because it takes in to account rental payments.
We recently bought a house in Clairemont, and that decision was easy. We looked at the cost of a 3/2 rental in our area of Clairemont and found the asking price was around $2400. Obviously less for the worse areas/crappy houses, more for better areas/better houses. And the chances of actually getting a place were low because of the number of applicants, and our dog. Our previous rental in Clairemont, a 2/1 for $1800, had 17 applicants within an hour of going on Craigslist.
You can get a 3/2 house with 10% down for around 500,000. Even if interest rates go to 5% or 6% the financial decision is easy. Just use the New York Times rent/buy calculator. Even if house prices and rents stay flat you are ahead after 3* years
As long as there is demand for rentals I do not see a big fall in prices. Rents just keep climbing higher, and San Diego rent is cheaper than LA, OC or SF.[/quote]
I agree completely.
I’ve mentioned this multiple times as well. As long as rent prices don’t drop down, I see very little chance for houses to drop down much neither…Also, a lot of people here don’t care that much what happens to the national markets. Real estate has always been local and places like SF, bay area, LA is going to have pretty sticky prices.
Unlike in the 2005-2008 period, rentals were a lot cheaper in a lot of areas back then compared to what the houses were selling for so it had to revert to the mean and overshot and crashed. If you can rent the exact same place for much cheaper than buying, you’ll do that and so will other people.
Sure, it’s tough to get a loan for some people, but if people re-adjust what they can afford, it’s hard to make a case to not buy if buying is cheaper than renting…as some articles report in some areas assuming 20% down, decent mortgage rate now, etc…
I agree that if you just need a place, sometimes buying your primary residence to live in and not having to worry about it is such a load off your mind…(assuming the numbers work).
I (and many others) use to read as much about housing news/blogs daily and go to open houses, etc…such a pain and you’re free of all that after you buy. So nice.
