If you can afford to buy a house/condo should you do it to avoid rent?

[jaydub]

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Jaydub,

R U SERIOUS?

How about you try coastal regions and then move anywhere inland? Would you like zip codes? Or would you just like to continue to be pretentious and incorrect douche?

[/ QUOTE ]

Yes, I am quite serious. Zips are fine.

Oh, I tried LA, SF, Miami, and DC but failed. Wrong coast?

J

[Thremp]

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[ QUOTE ]
Jaydub,

R U SERIOUS?

How about you try coastal regions and then move anywhere inland? Would you like zip codes? Or would you just like to continue to be pretentious and incorrect douche?

[/ QUOTE ]

Yes, I am quite serious. Zips are fine.

Oh, I tried LA, SF, Miami, and DC but failed. Wrong coast?

J

[/ QUOTE ]

Gulf?

[turnipmonster]

is there a reason you didn't try nyc? I don't know how to check this online, but prices have run up a lot over the past 10 years and I would be very surprised if real returns weren't close to that.

[jaydub]

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is there a reason you didn't try nyc? I don't know how to check this online, but prices have run up a lot over the past 10 years and I would be very surprised if real returns weren't close to that.

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Turnip,

I think it goes without saying that there is no zip within 50 miles of NYC that has been flat over the decade. From your post, you may have misunderstood my question to Thremp.

He said that:

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Some markets have been almost completely flat with normal 1-3% appreciation over the last decade, while other places have boomed. Frequently these places are within 50 miles of each other.


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I asked for an example of one of these many locations because I could not think of any. Some very well may exist and I was curious to look into the dynamics that would allow a boom to remain so close to flatness.

He responded with personal attacks and no such examples. I am not holding my breath.

Hope that clarifies.

J

[Thremp]

Umm... I just did respond with facts. You've made several incorrect generalizations previously about real estate in general and are continuing with this trend. You listed a ton of major metropolitan areas that would be easily recognized as non-qualifiers. I then specified the gulf coast, but since you want more specifics since I assume you have a wealth of real estate research tools at your finger tips to accurately gauge these things. You can check out Ono Island and Silverhill, both in AL. Maybe a decade ago v today?

[pig4bill]

That's a useless comparison. You do realize there has been a huge bubble forming the past several years? A better comparison is a year ago vs today.

There are only a handful of areas that are not declining. Seattle, parts of NYC, and one other place I can't remember.

Some of you sound like the real estate agents I see on tv proclaiming "all is well, buy now".

http://www.cnbc.com/id/15840232?video=534767113#

[Thremp]

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That's a useless comparison. You do realize there has been a huge bubble forming the past several years? A better comparison is a year ago vs today.

There are only a handful of areas that are not declining. Seattle, parts of NYC, and one other place I can't remember.

Some of you sound like the real estate agents I see on tv proclaiming "all is well, buy now".

http://www.cnbc.com/id/15840232?video=534767113#

[/ QUOTE ]

Sigh. You too are clearly correct. Those are the only places in America that aren't losing value. My home prices have fallen steadily for the last 12 months after going up 4x in value over the previous 36. There is a vast amount of real estate aside from major metro areas that isn't moving like NYC/DC/SF/LA, and it baffles me why people seem to assume that rash generalizations such as "Housing prices will be lower in 12 months" are even somewhat passable when they are v v wrong.

jaydub,

You can review those markets or similar ones all in that area. They really are nothing alike. I'm sure if you wanted you could find more extreme examples all along. My main point is that housing markets are local and some are insulated.

[haakee]

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I mean I'm not sure I want to commit myself to one place for the next 10 years or anything like that, but if it's smarter to buy a condo for the next 3-5 years than to rent for that whole time I'm thinking I should do it. It's just that I'm not very clear on the logistics of these things. Other than all of the maintenence I'd have to take care of myself, what downsides are there to owning vs renting?


[/ QUOTE ]

Planning to own for 3-5 years only is generally a mistake. Realize that you're paying 6% to get into a place and 3% to get out. Long-term home price inflation should be in line with wage inflation which has historically been in the 3.5% annual range, so 15% in 5 years. That's a big gamble for most people who are committing much more than 100% of their net worth to buy.

Personally, I see a small number of places in my market that might make sense to buy as a primary residence, but despite the fact that I can certainly afford to buy I'm not. I can't see any way real home prices will go up in the SF Bay Area in the next 2-3 years.

[spex x]

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spex x - I agree with you on the time horizon necessary to justify buying a home, but I think you are wrong when saying you are almost always better off buying a home regardless of appreciation.

Assuming you rent for 30 years as opposed to buying a home and paying down the mortgage over 30 years there are many viable situations where you come out ahead by renting versus buying. If you invest your down payment in the market and add to it the monthly savings from renting versus buying compounded over 30 years (using historical market returns and historical housing appreciation rates at inflation) you will probably come out with much more money in your investment account than you would in home equity. At the end of 30 years you could buy the home in cash and still have money left over in your portfolio. Of course this scenario all depends on the #'s you input, but if you play around with calculator rwesty provided it is not far-fetched at all.

The one good thing about a home is that it is forced savings which bodes well for the people who are not disciplined enough to invest their savings from renting over a 30 year period. Again I am going to fall back upon my belief that the buy/rent decision shouldn't be solely driven by financial analysis, but more importantly the lifestyle preferences inherent in the buy/rent decision.

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Yeah, you're probably right. good post.

[spex x]

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Spex,

Still waiting for your "normal" market example returning 7% real on condos.


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I think that you're taking my 7% "normal" to mean that 7% is the long-term appreciation rate. But actually I meant normal in the sense that if a market that is fluctuating between 4 and 7% it is within the realm of a normal range of fluctuations. I realize that 7% isn't sustainable long term in most markets. But it is just a bit above what I consider to be average appreciation and it a decent appreciation rate for a market. I get worried when properties are appreciating outside the range of 4-7%.

I can't speak to condos too much because we have very few in my local area, and I wouldn't invest in them even if there were an abundance.