I agree. Timing is very important. Just because you hear house prices are falling doesn't mean everyone is in the best position to go out and buy, especially those without much $ down. This mess will not clear up overnight and we have not seen the bottom yet, so you still have time to shop around. I am also riding this downfall looking at homes, but I haven't found anything worth while even though prices are tempting.

If you find a place that is in a great location, at a great deal maybe you should go for it if you can put enough down. Just keep in mind the possibillty that the home will probably continue to depreciate and may take years before your can flip it around if things gets worse.

 

I don't know about anyone else, but I'm still curious to see all of these calculations you ran.

 

I love statements like these with no proof of the pudding. Long term, renting is no where near as smart as buying. There are exceptions to every rule, but they are usually extreme or obvious.

Like sahtt said, we need more info on the OP's situation also, he provided very little insight into his current situation.

 

Even if I could get free rent, on the whole I'm prob. still better off buying due to the real estate appreciation and tax deductions I've gotten via home ownership.

 

I don't believe that would remotely true over the long haul but against our previous 5-8 year huge appreciation spell that's now deflating, it might be right.

Tax deductions are a little overrated IMO. Sure you can deduct your mortgage interest, but you still have to pay a lot of interest. Even if the dems get in office and raise taxes significantly, you'll be paying at least .40 on the dollar vs a free [non existent] condo/apt. etc.

 

Guess what? When you rent, you're usually covering the landlord's interest, only they get the deduction instead of you. Sure, I'd rather not pay interest and not get the deduction, but capital cost is an inherent housing expense whether you rent (implied) or have a mortage (explicit).

 

That was in reference to your free rent situation. No need for me to guess about you said-totally aware of it.

 

Here they are.

favors for the house (I didn't invest the DP, and I said the seller paid the closing costs). I also omited the tax deductions......Assumptions are at the bottom of this post. including the results/conclusion. It ends up the cost of owning the home exceeds the purchase price of the house. Its definitely NOT an investment.

Now I took a cost of a middle apartment here in MN and compared it to a starter home. House prices will most likely not be 5%/yr. I think 10%/yr is reasonable assumption for return on investment. I also said all OTHER costs are the same...same living in apt as a house...like cable TV and stuff. All discounted back in todays dollars.


House costs




Rent


House Value


Difference



assumptions and conclusion

 

Wow, I'm going to sell my house and move into an apartment. The Cayman S has to go as well - I'm going to replace it w/ a '91 Miata to save money!

Can you also run that calculation on an apartment vs. a tent in a state park?

 

You're not really comparing apples to apples here. No way can you rent a $300K house for $1k/mo. Also, I don't understand why you didn't take the tax deduction?

Your calculations might make more sense if you're considering buying investment property.

I don't really consider my home as an investment. I believe that it will appreciate more with time, but I didn't buy it for investment purposes. It's mine, I can do anything with it or to it that I want and I will enjoy unbelievable peace of mind when the mortgage is paid off in a few years knowing that no matter what happens in the economy, I will have a paid-for home.