.. you could easily buy a condo/house and beat rent. 2 BR/2 BA condos were around 100-120K. At 7%, PITI was less that the equivalent rent of $1000+. Of course, this was dependant on location, etc, but these were the numbers I looked at. On top of all of this, you were getting the interest deduction, so it was pretty much just plain silly to rent if you had down payment money, etc.
This phenomenon will happen again, but it may be 20 years from now. Rents will increase to catch up with the increased property values, and most people agree that property values are due for some sort of correction. It’s cyclical and simply the nature of things.
Renting seems to be the obvious correct choice in the short term right now. Just remember that your rent is 99.9% likely to increase every time you renew your lease. This is probably the peak time for renting due to the same low interest rates that made the current boom possible.
Unfortunately, now investors need to make higher payments if they are on an adjustable loan, so they will pass the costs on to their renters. Your rent may go up $50/month, and you’ll be forced to decide if that’s worth moving out over. The collapse in prices that many people like to predict on this board seems very unlikely. It may happen in certain areas, but it should be tempered as a whole. Areas that were desirable to live in will remain so, and outlying areas where people speculated will be hit the hardest.
