I think the tax benefit is being underplayed here. Rent nuetral is a good time to buy because it is a sound fundamental and it also means others can buy because they are successfully renting. I use a formula that doesn’t factor in the downpayment, it is more simple to figure out even though you are likely to put money down, it takes out the variable of how much (5%, 10%, 20%, 25% 50%, or cash).
When rent equals the P&I of the purchase price, then I rate it as a “buy.” This formula also gives more power to interest rates, since you factor everything at 0 down (but dont factor PMI, since you will be making a down)
You can wash out the taxes, insurance, hoa, mello roos, maintenance, etc. with the tax deduction, so just use the P&I as the solid number vs. the rent. Whatever you put down will reduce it but those dollars cost you the loss of interest in other investments so that ends up being a personal decision based on your situation and portfolio.
Since you pay 2500 for rent. 450k at 5.5% P&I is $2555, if you were to pay 450k for a house that rents for 2500 (I know you still have to overcome the fair rent since you are moving areas and housing size/style) is where you should buy it. If you were to find a 2500 rental for 450k and you have been successfully paying the 2500 rent you will be paying a fair price as well as setting yourself up for success. Some people pay $1500 rent and then try to tackle a $3k mortgage, they are setting themself up for failure, while others pay $2500 rent and are waiting for the same house to be 300k, it may get there but it will make sense to the other guy before it gets there.
This doesn’t mean it will bottom when it hits rent nuetral, markets have a way of overcorrecting, but it gives you an idea of once it’s crossed sea level and you are in the overcorrection water, nobody can guess how far it will overcorrect. But that is the fun part, thats the gamble.
