An observation on waiting to buy

[noone]

To make this decision, you need a good rent vs. buy calculator. I’ve been using this one:

http://spreadsheets.google.com/pub?key=pM4Gw0s2zSeCXIvKktNGLbg

If you know of another that you like, please post a link.

[davelj]

pepsi, sorry I wasn’t clear. I included property taxes as part of the mortgage payment since the they’re both tax deductible. So, when I say “mortgage payment” I really mean “mortgage and property taxes combined.” My mistake.

[davelj]

pepsi, sorry I wasn’t clear. I included property taxes as part of the mortgage payment since the they’re both tax deductible. So, when I say “mortgage payment” I really mean “mortgage and property taxes combined.” My mistake.

[davelj]

pepsi, sorry I wasn’t clear. I included property taxes as part of the mortgage payment since the they’re both tax deductible. So, when I say “mortgage payment” I really mean “mortgage and property taxes combined.” My mistake.

[davelj]

pepsi, sorry I wasn’t clear. I included property taxes as part of the mortgage payment since the they’re both tax deductible. So, when I say “mortgage payment” I really mean “mortgage and property taxes combined.” My mistake.

[davelj]

pepsi, sorry I wasn’t clear. I included property taxes as part of the mortgage payment since the they’re both tax deductible. So, when I say “mortgage payment” I really mean “mortgage and property taxes combined.” My mistake.

[joestool]

That’s the kind of thinking that went into this bubble in the first place.

I/O mortgage vs rent is more like renting-with-risk than renting-with-benefits.
Renting exposes you to risk of rental cost increase; but you have the option to move or re-negotiate your lease arrangements.

I/O mortgate exposes you to housing market risk, interest rate risk, tax target risk, HOA rate and special assessment risk (if you have HOA), fire/flood/earthquake/etc. disaster and associated insurance market risk….

But you do get to participate in the benefit of speculating in housing price appreciation. Of course to monetize that benefit, you have to extract that gain in the form of increased debt, or: SELL AND BECOME A RENTER!

[joestool]

That’s the kind of thinking that went into this bubble in the first place.

I/O mortgage vs rent is more like renting-with-risk than renting-with-benefits.
Renting exposes you to risk of rental cost increase; but you have the option to move or re-negotiate your lease arrangements.

I/O mortgate exposes you to housing market risk, interest rate risk, tax target risk, HOA rate and special assessment risk (if you have HOA), fire/flood/earthquake/etc. disaster and associated insurance market risk….

But you do get to participate in the benefit of speculating in housing price appreciation. Of course to monetize that benefit, you have to extract that gain in the form of increased debt, or: SELL AND BECOME A RENTER!

[joestool]

That’s the kind of thinking that went into this bubble in the first place.

I/O mortgage vs rent is more like renting-with-risk than renting-with-benefits.
Renting exposes you to risk of rental cost increase; but you have the option to move or re-negotiate your lease arrangements.

I/O mortgate exposes you to housing market risk, interest rate risk, tax target risk, HOA rate and special assessment risk (if you have HOA), fire/flood/earthquake/etc. disaster and associated insurance market risk….

But you do get to participate in the benefit of speculating in housing price appreciation. Of course to monetize that benefit, you have to extract that gain in the form of increased debt, or: SELL AND BECOME A RENTER!

[joestool]

That’s the kind of thinking that went into this bubble in the first place.

I/O mortgage vs rent is more like renting-with-risk than renting-with-benefits.
Renting exposes you to risk of rental cost increase; but you have the option to move or re-negotiate your lease arrangements.

I/O mortgate exposes you to housing market risk, interest rate risk, tax target risk, HOA rate and special assessment risk (if you have HOA), fire/flood/earthquake/etc. disaster and associated insurance market risk….

But you do get to participate in the benefit of speculating in housing price appreciation. Of course to monetize that benefit, you have to extract that gain in the form of increased debt, or: SELL AND BECOME A RENTER!

[joestool]

That’s the kind of thinking that went into this bubble in the first place.

I/O mortgage vs rent is more like renting-with-risk than renting-with-benefits.
Renting exposes you to risk of rental cost increase; but you have the option to move or re-negotiate your lease arrangements.

I/O mortgate exposes you to housing market risk, interest rate risk, tax target risk, HOA rate and special assessment risk (if you have HOA), fire/flood/earthquake/etc. disaster and associated insurance market risk….

But you do get to participate in the benefit of speculating in housing price appreciation. Of course to monetize that benefit, you have to extract that gain in the form of increased debt, or: SELL AND BECOME A RENTER!

[davelj]

Actually, joe, that’s NOT “the kind of thinking that went into this bubble in the first place.” The kind of thinking that produced this bubble was the idea that price appreciation would more than offset any problems with negative cash flow. Had people bought houses purely based on cash economics we wouldn’t be where we are today. I’m NOT suggesting that people use I/O loans. I merely used an I/O loan for the purposes of making a better economic comparison to renting from a tax standpoint. I thought I made that clear in one of my posts. Personally, I have a fully-amortizing 30-year fixed-rate mortgage. I’d say that if you’re buying a home at a price in which your mortgage+tax+HOA payments are roughly equivalent to the rent you’d pay, in the long run you’ll be better off owning than renting, assuming you’re planning to stay awhile. In such a case, insulating yourself from the “rental cost increase” generally more than offsets most of the other issues you raised. But, to say it AGAIN, in most of SD we aren’t there yet. It still makes more sense to rent.

[davelj]

Actually, joe, that’s NOT “the kind of thinking that went into this bubble in the first place.” The kind of thinking that produced this bubble was the idea that price appreciation would more than offset any problems with negative cash flow. Had people bought houses purely based on cash economics we wouldn’t be where we are today. I’m NOT suggesting that people use I/O loans. I merely used an I/O loan for the purposes of making a better economic comparison to renting from a tax standpoint. I thought I made that clear in one of my posts. Personally, I have a fully-amortizing 30-year fixed-rate mortgage. I’d say that if you’re buying a home at a price in which your mortgage+tax+HOA payments are roughly equivalent to the rent you’d pay, in the long run you’ll be better off owning than renting, assuming you’re planning to stay awhile. In such a case, insulating yourself from the “rental cost increase” generally more than offsets most of the other issues you raised. But, to say it AGAIN, in most of SD we aren’t there yet. It still makes more sense to rent.

[davelj]

Actually, joe, that’s NOT “the kind of thinking that went into this bubble in the first place.” The kind of thinking that produced this bubble was the idea that price appreciation would more than offset any problems with negative cash flow. Had people bought houses purely based on cash economics we wouldn’t be where we are today. I’m NOT suggesting that people use I/O loans. I merely used an I/O loan for the purposes of making a better economic comparison to renting from a tax standpoint. I thought I made that clear in one of my posts. Personally, I have a fully-amortizing 30-year fixed-rate mortgage. I’d say that if you’re buying a home at a price in which your mortgage+tax+HOA payments are roughly equivalent to the rent you’d pay, in the long run you’ll be better off owning than renting, assuming you’re planning to stay awhile. In such a case, insulating yourself from the “rental cost increase” generally more than offsets most of the other issues you raised. But, to say it AGAIN, in most of SD we aren’t there yet. It still makes more sense to rent.

[davelj]

Actually, joe, that’s NOT “the kind of thinking that went into this bubble in the first place.” The kind of thinking that produced this bubble was the idea that price appreciation would more than offset any problems with negative cash flow. Had people bought houses purely based on cash economics we wouldn’t be where we are today. I’m NOT suggesting that people use I/O loans. I merely used an I/O loan for the purposes of making a better economic comparison to renting from a tax standpoint. I thought I made that clear in one of my posts. Personally, I have a fully-amortizing 30-year fixed-rate mortgage. I’d say that if you’re buying a home at a price in which your mortgage+tax+HOA payments are roughly equivalent to the rent you’d pay, in the long run you’ll be better off owning than renting, assuming you’re planning to stay awhile. In such a case, insulating yourself from the “rental cost increase” generally more than offsets most of the other issues you raised. But, to say it AGAIN, in most of SD we aren’t there yet. It still makes more sense to rent.

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