I live in a very HCOL area. We rent. I just did the math and in the 5+ years we've lived in our apartment we've paid well into the 6 figures in rent. We plan to continue living in this area for about 3 more years, though we also said that several years ago and here we still are. Whether we rent or buy we are hoping to do a local move and stay in that place until we leave the metro area.
We have enough DP for probably 5-10% of what a place would cost here (depending on which place, how much closing costs are, etc.). I've used some online calculators that include property taxes and PMI and mortgage payments, and they indicate that our monthly costs after buying would be very similar to our current monthly costs renting.
We're not really able to save more towards DP right now, so either we buy with this DP now or we rent for a few more years and then buy with the same DP in another city at that point. We have an adequate emergency plan, stable jobs, and are probably not saving enough towards retirement, since that always seems to come up on this board.
I find it hard to believe that your PITI to buy with even a 10% DP would be identical to renting in a HCOL area for similar places. That's not been the case for us when I run the math.
When are you planning to move out of the area? If it's less than 5 years, that says Rent right there.
I find it hard to believe that your PITI to buy with even a 10% DP would be identical to renting in a HCOL area for similar places. That's not been the case for us when I run the math.
When are you planning to move out of the area? If it's less than 5 years, that says Rent right there.
About 3 years. I really hope it's less than 5.
I also find it somewhat hard to believe, but I guess I'm not sure why the calculators are telling me so. We haven't gotten far enough to actually go talk to someone in person.
I've always kind of assumed we should keep renting.... but it's SO much money to be handing to our landlord over several years.
if you're moving in 3-5 years i would not buy. in fact, i might see if there is a cheaper place to rent so i can save more to buy in the next location.
Post by loskadoodle on May 21, 2012 12:46:57 GMT -5
I would rent. There are so many other costs that go into owning a home.... landscaping, renovations, if something breaks, etc. If you planned to be there for 10 years my answer might change.
I would rent. There are so many other costs that go into owning a home.... landscaping, renovations, if something breaks, etc. If you planned to be there for 10 years my answer might change.
This. Things happen and for 3 years there is no way I'd buy. You're going to take a 6% hit when you sell for real estate agent fees alone.
i never wanted to buy a house, i live in a HCOLA, i was content renting XH had to have a house, it's a pain, even though it was newer (built in 99 and had pretty much everything, needed no repairs, just paint) it was still a money drain
FI bought at the height of the bubble and in the area we live unless you pay a fortune they do a crummy job building (he bought land and had his built)
looking back both of us wish we hadn't bought.
i did the math for where we live, what it costs for interest, property taxes (yeah mine went up 1K in the first year i lived there, insurance, maintenance, electric, oil, water bill vs rent and the smaller electric bill, i didn't have to pay for heat and water and took into account yearly increases....after 45 years, I was still way ahead renting.
granted FI will have his house paid off in 8 years so it's not the same for him, but i like play money so i wasn't into paying off the house faster. so we rent mine out now and hope to sell it soon.
I had no issues handing money over to a landlord because it's a roof over my head, it's somewhere to store my stuff, and i don't give a hoot if i own it, and i'm not tied down to one spot, i can pick up and leave more easily if i'm renting.
but I was really happy renting. and when things break, i didn't have to pay to fix them.
if you're moving in 3-5 years i would not buy. in fact, i might see if there is a cheaper place to rent so i can save more to buy in the next location.
I wish... the only location we've found where we could go less for an acceptable amount of space has a crime map with more gun violence than we're comfortable with.
My suggestions - look into closing costs, both on the buying and selling sides. Because if you buy now, and sell in 3 years, it will greatly impact the overall cost of buying.
For us, we know it's unlikely we will stay in one place for more than 3 years. We had hoped for 4 years here, but that looks less and less likely. Buying wasn't even contemplated. Closing expenses and the stress of having to sell on a firm moving out of the area timeline have us making a pretty easy decision to rent.
I always feel like we're "supposed" to buy, because we're grown ups and have respectable incomes and savings and all of that. It's nice to hear from others who would or did choose to rent in our situation.
Unless you plan to stay 10+ years, then definitely rent. You might feel like you're frivolously handing over money to the landlord now but it's the same concept when you own for the first 10-15 years...you're just handing over money to the bank to put towards interest also. Not to mention, you'll have insurance, HOA maybe, repairs, etc that you will be responsible for as well. I'd just stay put or find cheaper rent if it's even possible and continue to save so you can have a larger DP later on. The housing market probably won't be going anywhere any time soon.