Bubble bust and changing landscape

[Eugene]

Ok, there was a small error in my calculations (I was computing federal tax based on 130K AGI), and I did not include child tax credit because it’s the same in both cases. I also used 2008 tax tables. Using 120K AGI and taking child tax credit into account, I get $15,037 federal tax when renting and $5,217 federal tax when owning. The difference is lower by $80/month.

I do not doubt that you will be able to spend all money that’s left after paying your mortgage. My point is that owning a 650k house does not put you under more financial stress than renting for $2700/month.

[sdnerd]

Very interesting thread.

I personally would be very concerned in renting a $2,700/mo house there right now. I would imagine just about any rental in that community is running pretty heavy at cash flow negative, although I could be wrong.

Owner occupied I would think would continue to try and make it work in many scenarios for as long as possible. An investor with a ticking ARM bomb renting at cash flow negative…

I’m not saying that would be a strong reason to buy a place, just saying I wouldn’t sleep very well in either scenario. 🙂

[sdnerd]

Very interesting thread.

I personally would be very concerned in renting a $2,700/mo house there right now. I would imagine just about any rental in that community is running pretty heavy at cash flow negative, although I could be wrong.

Owner occupied I would think would continue to try and make it work in many scenarios for as long as possible. An investor with a ticking ARM bomb renting at cash flow negative…

I’m not saying that would be a strong reason to buy a place, just saying I wouldn’t sleep very well in either scenario. 🙂

[sdnerd]

Very interesting thread.

I personally would be very concerned in renting a $2,700/mo house there right now. I would imagine just about any rental in that community is running pretty heavy at cash flow negative, although I could be wrong.

Owner occupied I would think would continue to try and make it work in many scenarios for as long as possible. An investor with a ticking ARM bomb renting at cash flow negative…

I’m not saying that would be a strong reason to buy a place, just saying I wouldn’t sleep very well in either scenario. 🙂

[sdnerd]

Very interesting thread.

I personally would be very concerned in renting a $2,700/mo house there right now. I would imagine just about any rental in that community is running pretty heavy at cash flow negative, although I could be wrong.

Owner occupied I would think would continue to try and make it work in many scenarios for as long as possible. An investor with a ticking ARM bomb renting at cash flow negative…

I’m not saying that would be a strong reason to buy a place, just saying I wouldn’t sleep very well in either scenario. 🙂

[sdnerd]

Very interesting thread.

I personally would be very concerned in renting a $2,700/mo house there right now. I would imagine just about any rental in that community is running pretty heavy at cash flow negative, although I could be wrong.

Owner occupied I would think would continue to try and make it work in many scenarios for as long as possible. An investor with a ticking ARM bomb renting at cash flow negative…

I’m not saying that would be a strong reason to buy a place, just saying I wouldn’t sleep very well in either scenario. 🙂

[BGinRB]

[quote=esmith]I do not doubt that you will be able to spend all money that’s left after paying your mortgage.[/quote]
Ah, I see a straw man and possible ad hominem.
Ad hominem: “you will be able.”
Straw man: necessity vs. possibility of money being spent. My argument is that a person will have to spend all money. Do you doubt that?

[quote=esmith]My point is that owning a 650k house does not put you under more financial stress than renting for $2700/month. [/quote]
That was not your original point.
For that, we would need to throw in maintenance cost, opportunity loss for $130K down, reduced mobility and finally agree on future appreciation.

Since the future appreciation cannot be known there is no point in arguing about it.

[BGinRB]

[quote=esmith]I do not doubt that you will be able to spend all money that’s left after paying your mortgage.[/quote]
Ah, I see a straw man and possible ad hominem.
Ad hominem: “you will be able.”
Straw man: necessity vs. possibility of money being spent. My argument is that a person will have to spend all money. Do you doubt that?

[quote=esmith]My point is that owning a 650k house does not put you under more financial stress than renting for $2700/month. [/quote]
That was not your original point.
For that, we would need to throw in maintenance cost, opportunity loss for $130K down, reduced mobility and finally agree on future appreciation.

Since the future appreciation cannot be known there is no point in arguing about it.

[BGinRB]

[quote=esmith]I do not doubt that you will be able to spend all money that’s left after paying your mortgage.[/quote]
Ah, I see a straw man and possible ad hominem.
Ad hominem: “you will be able.”
Straw man: necessity vs. possibility of money being spent. My argument is that a person will have to spend all money. Do you doubt that?

[quote=esmith]My point is that owning a 650k house does not put you under more financial stress than renting for $2700/month. [/quote]
That was not your original point.
For that, we would need to throw in maintenance cost, opportunity loss for $130K down, reduced mobility and finally agree on future appreciation.

Since the future appreciation cannot be known there is no point in arguing about it.

[BGinRB]

[quote=esmith]I do not doubt that you will be able to spend all money that’s left after paying your mortgage.[/quote]
Ah, I see a straw man and possible ad hominem.
Ad hominem: “you will be able.”
Straw man: necessity vs. possibility of money being spent. My argument is that a person will have to spend all money. Do you doubt that?

[quote=esmith]My point is that owning a 650k house does not put you under more financial stress than renting for $2700/month. [/quote]
That was not your original point.
For that, we would need to throw in maintenance cost, opportunity loss for $130K down, reduced mobility and finally agree on future appreciation.

Since the future appreciation cannot be known there is no point in arguing about it.

[BGinRB]

[quote=esmith]I do not doubt that you will be able to spend all money that’s left after paying your mortgage.[/quote]
Ah, I see a straw man and possible ad hominem.
Ad hominem: “you will be able.”
Straw man: necessity vs. possibility of money being spent. My argument is that a person will have to spend all money. Do you doubt that?

[quote=esmith]My point is that owning a 650k house does not put you under more financial stress than renting for $2700/month. [/quote]
That was not your original point.
For that, we would need to throw in maintenance cost, opportunity loss for $130K down, reduced mobility and finally agree on future appreciation.

Since the future appreciation cannot be known there is no point in arguing about it.

[Eugene]

I absolutely doubt that a single-income engineer with two kids will HAVE TO spend more than 4 grand / month in addition to housing. Based on my personal experience. I wouldn’t call myself all that frugal, but our monthly expenses stay under $2000/month. Granted, I don’t have $600 car payments because the BMW and the minivan are paid off, and I don’t spend $300/month on gas and maintenance. My kids aren’t old enough to need braces, but they are young enough to need diapers, and we just got the twins off the formula. (Now they drink milk like there’s no tomorrow – we usually buy 4 gallons at a time – but it’s a lot cheaper)

But that’s not even the point. The point is, like I said repeatedly, whether you rent or buy, you’ll keep nearly the same amount of money in your pocket. Even ignoring future appreciation, raises, and rent hikes. It is quite feasible for a family with 130K income to buy in 4S today.

[Eugene]

I absolutely doubt that a single-income engineer with two kids will HAVE TO spend more than 4 grand / month in addition to housing. Based on my personal experience. I wouldn’t call myself all that frugal, but our monthly expenses stay under $2000/month. Granted, I don’t have $600 car payments because the BMW and the minivan are paid off, and I don’t spend $300/month on gas and maintenance. My kids aren’t old enough to need braces, but they are young enough to need diapers, and we just got the twins off the formula. (Now they drink milk like there’s no tomorrow – we usually buy 4 gallons at a time – but it’s a lot cheaper)

But that’s not even the point. The point is, like I said repeatedly, whether you rent or buy, you’ll keep nearly the same amount of money in your pocket. Even ignoring future appreciation, raises, and rent hikes. It is quite feasible for a family with 130K income to buy in 4S today.

[Eugene]

I absolutely doubt that a single-income engineer with two kids will HAVE TO spend more than 4 grand / month in addition to housing. Based on my personal experience. I wouldn’t call myself all that frugal, but our monthly expenses stay under $2000/month. Granted, I don’t have $600 car payments because the BMW and the minivan are paid off, and I don’t spend $300/month on gas and maintenance. My kids aren’t old enough to need braces, but they are young enough to need diapers, and we just got the twins off the formula. (Now they drink milk like there’s no tomorrow – we usually buy 4 gallons at a time – but it’s a lot cheaper)

But that’s not even the point. The point is, like I said repeatedly, whether you rent or buy, you’ll keep nearly the same amount of money in your pocket. Even ignoring future appreciation, raises, and rent hikes. It is quite feasible for a family with 130K income to buy in 4S today.

[Eugene]

I absolutely doubt that a single-income engineer with two kids will HAVE TO spend more than 4 grand / month in addition to housing. Based on my personal experience. I wouldn’t call myself all that frugal, but our monthly expenses stay under $2000/month. Granted, I don’t have $600 car payments because the BMW and the minivan are paid off, and I don’t spend $300/month on gas and maintenance. My kids aren’t old enough to need braces, but they are young enough to need diapers, and we just got the twins off the formula. (Now they drink milk like there’s no tomorrow – we usually buy 4 gallons at a time – but it’s a lot cheaper)

But that’s not even the point. The point is, like I said repeatedly, whether you rent or buy, you’ll keep nearly the same amount of money in your pocket. Even ignoring future appreciation, raises, and rent hikes. It is quite feasible for a family with 130K income to buy in 4S today.

[Author]

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