[sdcellar]

[quote=CA renter]Although many of us would like to think we’re buying our “last” house, life has a tendency to be unpredictable, and any number of events — like changes in family formation (marriage, divorce kids, in-laws, etc.), job loss or transfer, etc.– might force someone to have to sell. Better to have bought near the low, so that you are always able to sell at any point in the future.[/quote]

Agree that it’s difficult (impossible?) for anyone to see 30 years out. I tend to think a good approach is to make sure things work for you 7-10 years out with somewhat challenging assumptions (e.g. value drops another 15-20%, can’t re-fi, must sell, etc.). If that can work, then it typically only gets better from there.

[sdcellar]

Yeah, and that’s the part that none of us really know. I think prices will come down a bit more. I have no idea on interest rates, other than they’re more likely to go up rather than down, but all bets (for me) are off on timeframe.

This whole rising interest rate/lowering price thing is interesting in theory, but I’m just sticking with a) finding the house I want to buy and b) making sure it’s not rent/buy stupid. Other things for sure, but those are at the top of my list.

[sdcellar]

Yeah, and that’s the part that none of us really know. I think prices will come down a bit more. I have no idea on interest rates, other than they’re more likely to go up rather than down, but all bets (for me) are off on timeframe.

This whole rising interest rate/lowering price thing is interesting in theory, but I’m just sticking with a) finding the house I want to buy and b) making sure it’s not rent/buy stupid. Other things for sure, but those are at the top of my list.

[sdcellar]

Yeah, and that’s the part that none of us really know. I think prices will come down a bit more. I have no idea on interest rates, other than they’re more likely to go up rather than down, but all bets (for me) are off on timeframe.

This whole rising interest rate/lowering price thing is interesting in theory, but I’m just sticking with a) finding the house I want to buy and b) making sure it’s not rent/buy stupid. Other things for sure, but those are at the top of my list.

[sdcellar]

Yeah, and that’s the part that none of us really know. I think prices will come down a bit more. I have no idea on interest rates, other than they’re more likely to go up rather than down, but all bets (for me) are off on timeframe.

This whole rising interest rate/lowering price thing is interesting in theory, but I’m just sticking with a) finding the house I want to buy and b) making sure it’s not rent/buy stupid. Other things for sure, but those are at the top of my list.

[sdcellar]

Yeah, and that’s the part that none of us really know. I think prices will come down a bit more. I have no idea on interest rates, other than they’re more likely to go up rather than down, but all bets (for me) are off on timeframe.

This whole rising interest rate/lowering price thing is interesting in theory, but I’m just sticking with a) finding the house I want to buy and b) making sure it’s not rent/buy stupid. Other things for sure, but those are at the top of my list.

[sdcellar]

AN, you have to include the $100K whether you sell the house or not. The expense is incurred as principal payments over the course of the loan. I do get why you were thinking of it another way, since if you do sell before 30 years, you will have to figure the principal payed down offset by sales price. (and I’m not picking on you either. can’t forget I had a $90K oops).

So, this means that you have to use your second scenario where the lower price wins by $52K. The reason I have it as less that you do ($14K) is because I used 28% for the tax break (vs. 37%), 1.05% for the property tax rate (vs. 1.09%), and most importantly, didn’t apply annual prop 13 basis increase. I had considered that, but also knew that it would take more work and just improve my numbers anyway (also, isn’t it a 2% annual increase?)

That said, I’ve since realized that along those lines, the buyer of the more expensive house can help themselves tremendously by appealing the value when the prices drop. E.g., just a few years in, you can get the basis dropped to the $500K number. I don’t remember how long you can keep it there, but you can probably do it until real appreciation occurs. When/if this happens, the advantage swings back to the lower priced house because the original bases will come back into play. Even so, if you got to take advantage of that for like 10 years or something, that would be great.

[sdcellar]

AN, you have to include the $100K whether you sell the house or not. The expense is incurred as principal payments over the course of the loan. I do get why you were thinking of it another way, since if you do sell before 30 years, you will have to figure the principal payed down offset by sales price. (and I’m not picking on you either. can’t forget I had a $90K oops).

So, this means that you have to use your second scenario where the lower price wins by $52K. The reason I have it as less that you do ($14K) is because I used 28% for the tax break (vs. 37%), 1.05% for the property tax rate (vs. 1.09%), and most importantly, didn’t apply annual prop 13 basis increase. I had considered that, but also knew that it would take more work and just improve my numbers anyway (also, isn’t it a 2% annual increase?)

That said, I’ve since realized that along those lines, the buyer of the more expensive house can help themselves tremendously by appealing the value when the prices drop. E.g., just a few years in, you can get the basis dropped to the $500K number. I don’t remember how long you can keep it there, but you can probably do it until real appreciation occurs. When/if this happens, the advantage swings back to the lower priced house because the original bases will come back into play. Even so, if you got to take advantage of that for like 10 years or something, that would be great.

[sdcellar]

AN, you have to include the $100K whether you sell the house or not. The expense is incurred as principal payments over the course of the loan. I do get why you were thinking of it another way, since if you do sell before 30 years, you will have to figure the principal payed down offset by sales price. (and I’m not picking on you either. can’t forget I had a $90K oops).

So, this means that you have to use your second scenario where the lower price wins by $52K. The reason I have it as less that you do ($14K) is because I used 28% for the tax break (vs. 37%), 1.05% for the property tax rate (vs. 1.09%), and most importantly, didn’t apply annual prop 13 basis increase. I had considered that, but also knew that it would take more work and just improve my numbers anyway (also, isn’t it a 2% annual increase?)

That said, I’ve since realized that along those lines, the buyer of the more expensive house can help themselves tremendously by appealing the value when the prices drop. E.g., just a few years in, you can get the basis dropped to the $500K number. I don’t remember how long you can keep it there, but you can probably do it until real appreciation occurs. When/if this happens, the advantage swings back to the lower priced house because the original bases will come back into play. Even so, if you got to take advantage of that for like 10 years or something, that would be great.

[sdcellar]

AN, you have to include the $100K whether you sell the house or not. The expense is incurred as principal payments over the course of the loan. I do get why you were thinking of it another way, since if you do sell before 30 years, you will have to figure the principal payed down offset by sales price. (and I’m not picking on you either. can’t forget I had a $90K oops).

So, this means that you have to use your second scenario where the lower price wins by $52K. The reason I have it as less that you do ($14K) is because I used 28% for the tax break (vs. 37%), 1.05% for the property tax rate (vs. 1.09%), and most importantly, didn’t apply annual prop 13 basis increase. I had considered that, but also knew that it would take more work and just improve my numbers anyway (also, isn’t it a 2% annual increase?)

That said, I’ve since realized that along those lines, the buyer of the more expensive house can help themselves tremendously by appealing the value when the prices drop. E.g., just a few years in, you can get the basis dropped to the $500K number. I don’t remember how long you can keep it there, but you can probably do it until real appreciation occurs. When/if this happens, the advantage swings back to the lower priced house because the original bases will come back into play. Even so, if you got to take advantage of that for like 10 years or something, that would be great.

[sdcellar]

AN, you have to include the $100K whether you sell the house or not. The expense is incurred as principal payments over the course of the loan. I do get why you were thinking of it another way, since if you do sell before 30 years, you will have to figure the principal payed down offset by sales price. (and I’m not picking on you either. can’t forget I had a $90K oops).

So, this means that you have to use your second scenario where the lower price wins by $52K. The reason I have it as less that you do ($14K) is because I used 28% for the tax break (vs. 37%), 1.05% for the property tax rate (vs. 1.09%), and most importantly, didn’t apply annual prop 13 basis increase. I had considered that, but also knew that it would take more work and just improve my numbers anyway (also, isn’t it a 2% annual increase?)

That said, I’ve since realized that along those lines, the buyer of the more expensive house can help themselves tremendously by appealing the value when the prices drop. E.g., just a few years in, you can get the basis dropped to the $500K number. I don’t remember how long you can keep it there, but you can probably do it until real appreciation occurs. When/if this happens, the advantage swings back to the lower priced house because the original bases will come back into play. Even so, if you got to take advantage of that for like 10 years or something, that would be great.

[sdcellar]

Okay, I asked you for your basis because it’s not clear to me, but based on what you’ve said, this is my best guess. So, with your numbers not mine (and the one change to start “level”).

Prices: 600,000 vs. 500,000
Interest rates: 5.5% vs 7.238%
Down payment: 20%
Rent two years at $2,500/mo
Tax break: 28%

So for the lower price/higher rate, here’s what costs/saves:

+$60,000 (rent)
-$20,000 (down payment)
-$22,406 (interest deduction)
-$31,752 (property tax)

Buying at the lower price saves $14,158.

[sdcellar]

Okay, I asked you for your basis because it’s not clear to me, but based on what you’ve said, this is my best guess. So, with your numbers not mine (and the one change to start “level”).

Prices: 600,000 vs. 500,000
Interest rates: 5.5% vs 7.238%
Down payment: 20%
Rent two years at $2,500/mo
Tax break: 28%

So for the lower price/higher rate, here’s what costs/saves:

+$60,000 (rent)
-$20,000 (down payment)
-$22,406 (interest deduction)
-$31,752 (property tax)

Buying at the lower price saves $14,158.

[sdcellar]

Okay, I asked you for your basis because it’s not clear to me, but based on what you’ve said, this is my best guess. So, with your numbers not mine (and the one change to start “level”).

Prices: 600,000 vs. 500,000
Interest rates: 5.5% vs 7.238%
Down payment: 20%
Rent two years at $2,500/mo
Tax break: 28%

So for the lower price/higher rate, here’s what costs/saves:

+$60,000 (rent)
-$20,000 (down payment)
-$22,406 (interest deduction)
-$31,752 (property tax)

Buying at the lower price saves $14,158.

[sdcellar]

Okay, I asked you for your basis because it’s not clear to me, but based on what you’ve said, this is my best guess. So, with your numbers not mine (and the one change to start “level”).

Prices: 600,000 vs. 500,000
Interest rates: 5.5% vs 7.238%
Down payment: 20%
Rent two years at $2,500/mo
Tax break: 28%

So for the lower price/higher rate, here’s what costs/saves:

+$60,000 (rent)
-$20,000 (down payment)
-$22,406 (interest deduction)
-$31,752 (property tax)

Buying at the lower price saves $14,158.

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