[DesertCat]

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I guess a shortcut would be to say 84k per year rent divided by 1.8mil is a 4.67% carrying cost. After tax mortgage is about the same, but then you have taxes and maintenance.

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He's not going to get the full tax deductions, because of NY income taxes and his income level he's way into AMT. And have we calculated property taxes, which also help trigger AMT?

Edit: I'm estimating cost of renting at around $70k per year, $7k per month minus $18k per year in interest on your $350k downpayment. Owning costs are near $110k for mortgage interest, $18k for maintenance, so $138k without property taxes. Wouldn't property taxes be at least another $30k or more?

And from a couple days ago in the WSJ.

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Mortgage Fears
Drive Up Rates
On Jumbo Loans
By JAMES R. HAGERTY
August 7, 2007; Page A1

Turmoil in the U.S. home-mortgage market is starting to pinch even buyers of high-end homes with good credit records, in the latest sign of rising anxiety among lenders and investors.

...

Lenders -- having already slashed lending to subprime borrowers, as those with weak credit records are known -- now are jacking up rates on jumbo mortgages for prime borrowers. These mortgages exceed the $417,000 limit for loans eligible for purchase and guarantee by Fannie and Freddie. They account for about 16% of the total mortgage market, according to Inside Mortgage Finance, a trade publication, and are especially prevalent in California, New Jersey, New York City, Washington, D.C., and other locales with high home costs.

Lenders were charging an average 7.34% for prime 30-year fixed-rate jumbo loans yesterday, according to a survey by financial publisher HSH Associates. That is up from an average of about 7.1% last week and 6.5% in mid-May.

The higher costs for such loans will put further downward pressure on home prices in areas where homes typically bought by middle-class people can easily cost $500,000 to $700,000.

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This may be temporary, but the interest cost for new buyer just increased over 10% in the last few months. If it stays high it's going to impact demand and prices. The value of real estate is inversely correlated with interest rates.

If I was OP, it looks like renting is much the better financial decision for this year. I'd keep my eyes open for bargains and maybe make some low ball offers if the market gets cold. But I'd only make an offer if the cost of owning was similar to the cost of renting.