Buy versus rent

[mixxalot]

Yes, paying 3-4k a month to rent is stupid if one can buy for that. I pay half that in rent and live close to the beach. For me, to buy a 1 bedroom condo costs twice as much with down payment, taxes and fees. A larger home costs even more.

[spdrun]

Assuming money can be more productively invested elsewhere, paying 3-4k per month in rent isn’t a bad thing.

Maybe you can also buy for $3-4k per month, but if other investments yield more, that’s where your money should be.

[mixxalot]

Or pay 1500/month rent and invest 1500-3k in high growth stocks

[joec]

[quote=livinincali][quote=joec]
All I can say as a data point is all the houses near my hood now are > 4k/month rent in stucco 4S McMansion hood and my mortgage even though I am stuck with a higher rate will soon be close to 2k month without tax calculations/benefits (still have prop tax though).
[/quote]

I honestly don’t understand people renting a 4K a month property unless it’s intended to be a temporary thing. I think those kind of markets are a pretty poor gauge of the rental market.[/quote]

Maybe they are, but I know of properties that have been rented near me for 3+ years at these rates by the same family. Some for 2+ and I am sure others probably are the owners/landlords that have had no trouble renting neither…

When there is only 1-2 months of supply and no cheap/affordable homes are being built, people simply have no choice I think.

Bottom line I have been saying for the longest time is the rents are insanely high IMO, but people rent them with no problems apparently and until that changes (massive job losses, some other outside event), I find it impossible for housing to go down in price.

That being the case, yeah, maybe it’s not a good indication, but I am sure flu in CV and folks who own in mira mesa or most anywhere convenient can charge what they wish and rent it out easy.

I also think “families” are much more constrained with there to live due to schools, wife not wanting to live in a slum, etc vs a single guy.

I personally wouldn’t have a problem living in a more slum place and have actually when I was single in the bay area…

[matt]

I’ve been renting my la costa oaks home for the past 5 years, 4 bed 4000 sq feet. First 2 tenants stayed 1 year at 4200. Most recent tenant year is going on 3 years at 4500 waiting for their kids to graduate before moving back to their home state. Never had a vacancy or late payment and conduct an annual inspection. Repair / replace any tenant concerns immediately. Give my realtor 6 percent on a new tenant and 3 percent of an extension, also agree if I sell (which I don’t plan to) he gets the listing. He does an excellent job screening tenants. Bought the house for 900k in 2010 now it’s approx 1.25. Worked my tail off in difficult conditions overseas to pay the house off and give me peace of mind that I own a home with a roof over our heads outside taxes and bills should I lose my job. Now thinking about buying an oceanfront lot and building in baja east cape for retirement as I don’t think I can afford to live in USA particularly health / long term care. Would love another property in San Diego but yields are tough and it’s difficult to get financing from overseas. I feel extremely fortunate for everything we have and hope the rental market can stay strong.

[Coronita]

[quote=livinincali][quote=joec]
All I can say as a data point is all the houses near my hood now are > 4k/month rent in stucco 4S McMansion hood and my mortgage even though I am stuck with a higher rate will soon be close to 2k month without tax calculations/benefits (still have prop tax though).
[/quote]

I honestly don’t understand people renting a 4K a month property unless it’s intended to be a temporary thing. I think those kind of markets are a pretty poor gauge of the rental market.[/quote]

Some people want to live a good area, and don’t have a down payment.

[Coronita]

[quote=mixxalot]Or pay 1500/month rent and invest 1500-3k in high growth stocks[/quote]

And if you make a bad pick?

[mixxalot]

True and same holds water in real estate. If the market turns cold you can lose that 20% down payment quickly as we saw in the last real estate downturn.

Research is your friend. I read morningstar and the different investment rags. I dislike 401k because they limit fund choices.

[Coronita]

[quote=mixxalot]True and same holds water in real estate. If the market turns cold you can lose that 20% down payment quickly as we saw in the last real estate downturn.

Research is your friend. I read morningstar and the different investment rags. I dislike 401k because they limit fund choices.[/quote]

You can’t live in your stocks.

Think of a primary home as a mixed product.
1. Provides housing
2. Forces you to save
3. If your mortgage + operating cost is already close to rents, the extra mortgage interest deduction (and property tax deduction if you aren’t hitting AMT), is just extra icing on the cake.
4. You don’t have to deal with a pain in the ass landlord or wondering if he’s going to jack up rent next month, or if he’s going to sell the house and make you move.

Your 20% decline in stock is most likely immediate (unless you are one of those people that like to speculate in the short term, and then when you take a 20% bath, your short term speculating suddenly becomes a long term buy and hold investment 🙂 )

Your 20% decline in housing is spread out over the utility of your use of a house as a primary. Also, over a long period of time, if you can cash flow the thing as a rental, even better.

I’m not suggesting you go out a buy a house right now, but I’ll agree renting for an extended period of time in SoCal is a losing proposition with the way rents have been and are going. If you think rents are significantly cheaper, you’re probably not doing an apples to apples comparison. You’re probably pricing a rental house that is less than the house you’re looking to buy. The problem with the rental markets these days is that there are so many people that cannot quality/afford to own, and lending standards are still pretty tight, and the inventory in San Diego is not exactly keeping up, since the majority of the new homes being built are the more expensive $800k+homes.

[mixxalot]

Fed highly likely to raise interest rates soon in June which if mortgage rates skyrocket will put a dent in real estate prices hopefully.

[spdrun]

I thought that’s more likely in Sept or Dec than June, but what do I know?

[moneymaker]

Yes, it is smarter to rent right now!

[bearishgurl]

[quote=mixxalot]Fed highly likely to raise interest rates soon in June which if mortgage rates skyrocket will put a dent in real estate prices hopefully.[/quote]

Um, mixxalot, do you realize the listing in your “desired area” that Pigg bewildering gave you to look at nine days ago (it was “open to the public at that time”) on YOUR thread . . .

http://piggington.com/serra_mesa

. . . is now “pending” and cannot accept any more offers at this point?

https://www.redfin.com/CA/San-Diego/3528-Merrimac-Ave-92117/home/6238096

Your “theory” might prove to be believable (IF MIR’s actually end up “skyrocketing”) for listings in St Louis, MO . . . but NOT in San Diego, CA.

Did you ever actually view this property that I suggested you do back on May 10th?

http://piggington.com/serra_mesa#comment-267351

If you haven’t viewed it, mixxalot, my humble opinion is that you’re still “asleep at the switch” and that is A-okay. Perhaps it means that you are/were meant to be a forever-renter in SD.

[FlyerInHi]

BG, just what are your bearish about? Certainly not housing!

[Rich Toscano]

[quote=bearishgurl]Perhaps it means that you are/were meant to be a forever-renter in SD.[/quote]

I literally have not heard that argument since 2005.

[Author]

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