When to buy and how long to wait in San Diego?

[Asterix]

Another Good Strategy

Here’s another idea, and I’m not being facetious. MOVE to another part of the US. Without going into details, I don’t think CA real estate is going to be a good buy for a long time. If you could buy shares of stock in the state, I doubt if CA would be a good buy either.

Asterix

[34f3f3f]

Follow the graphs and stats at on this web site. When there is a consensus that prices have bottomed out and may be on a recovery, that may be the time to buy. If ever you get restless and the irrational itch to buy, go to zillow.com and see what people paid for homes four years ago.

[blahblahblah]

So maybe you could estimate 5% annual rent increases and then your fixed payment/taxes becomes cheaper after 3-5 years or so? Maybe that’s a better way to calculate it than just saying “…wait until it’s cheaper to buy”. Right now it would take a lot more than 3-5 years of 5% rent increases to equalize…

[guitar187]

If I were you I would pretend you are buying right now. Estimate what your mortgage payment will be when you buy. Subtract your current rent and put the remaining amount into savings, cd, etc. If you can make this payment for the next 8 months (comfortably) you will know you can afford a house. You will also have a nice little pot saved up.

Unfortunately, many of my borrowers think they can afford a home, but they do not understand the things they need to give up to make it happen. Don’t let your ego mislead you. It is better to rent and be able to pay your bills then own something you can’t afford. Keep saving until you have a down payment big enough for an affordable payment.

You may have reasons for buying a home before the market reaches the bottom (kids, family, etc.). You don’t have to wait for the bottom to hit. But you do need a payment you can afford. Follow the above and you will be in good shape sooner than you think.

[(former)FormerSanDiegan]

Conho – In my circumstance in 1996 it was about 10-15% more (monthly) to purchase with 5% down versus rent. I ultimately ended up renting the house out in 2000 for break even back then. In that case it probably took about 3-4 years to make owning cheaper than renting.

I like your approach to consider how many years to own before owning beats renting. Good rule-of-thumb.

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