[quote=AN]In my previous example, a 3/2 house in MM is going for about $600k today. Rent for such house would be about $2600-2800/month, depending on when you rent (summer vs winter). Assuming you have 20% down, mortgage of the house at 4% interest rate would be $2291/month (P&I). PITI would be $3386/month. But principal is you paying off your loan. So, we should compare ITI vs rent instead. Which would put you at $2695. Now, if you take in tax deduction, ITI – tax deduction = $2249/month. Which means, if you’re buying the house as a primary residence, it’s still cheaper to buy today than rent the same house.
In order for ITI – tax deduction to be about $2700/month, price would have to push to $800k at 4% rate or rate would have to be @ 6% with $600k price.[/quote]
While I agree with your reasoning for owning a house, the logic behind your math is flawed. Right now you can deduct $24K as standard deduction, so only if your SALT + mortgage is more than that, you can use itemized deduction. Even if so, the benefit of that is the additional amount over $24K, when comparing to renting, not 100% as in your math.
If timing is hard, and you think the market maybe in a slow down trend, personally I think it’s better to wait for the market to drop before selling and buying. For example, if your equity today is $200K and house is $400K and you are looking to buy a $600K house, your loan will be $400K. If the whole market goes down 25% (hypothetically), your equity is halved at $100K, but the house you want to buy is now $450K, so your loan will be $350K. And you also pay less in tax/insurance and have accumulated some more $$$ while waiting.
