Assume if you are buying 4B house, the formula that I uses is the local decent-shape 3B apartment rent (maybe with one garage rental as well). There should be plenty of data from the apartment ads. I figure that’s the bottom of the housing rental price. Sure, the apartment might be currently running or could be running promotion so it is not exactly the bottom price. But that’s what I use.
Then you calculate mortgage, HOA, MoloRoos, property tax and insurance. If those two prices are close, then I think it is time to buy. Sure, you will be out the downpayment, but you also get some tax benefits on the interest. I call it a wash.
If it is 5B house with 3000+ sqft, I will probably add another 10%. I’m buying 4B with 2700 sqft, so I don’t give extra rental price credit.
I don’t know if you might consider that a dream target. But I think I have achieved that with the house that I’m currently in escrow on. In the end, however, I think it is OK to overpay a little as long as you like the house. The difference in investment return is going to be small as long as you are paying attention to the buy/rent tradeoff.
