I spend a lot of time on the various rent v. buy calculators on the web and play with appreciation (or lack thereof) and time of ownership assumptions. Some calculators are better than others, but I like this one even though there is no interest loan option: http://mortgages.interest.com/content/calculators/rentvsbuy.asp
Currently, my rent in Carmel Valley is $3800 after a recent 9% raise. I could buy the house for about a $1M. I’d put down 20-30% and do a 5 year IO ARM. With a combined state-federal tax bracket close to 40%, the tax savings is in the ballpark of $2k per month. I’d probably have better monthly cash flow owning–of course those unplanned maintenance costs can bite you. My cash from selling my last house is only doing 3% these days.
Whether I win owning in the end depends on when I sell and how much appreciation I have to offset the cost of sale. If the current job goes away and I decide to sell and move within the next few years, I could lose. I was fortunately able to sell last year after only owning 2 years and break even.
We’ll probably buy in CV sometime over the next year.
