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Post bubble it's much cheaper to rent in most areas unless you are in the highest income tax bracket. Yeah, that sure is funny, isn't it? It's almost as if "po
by mechanical_fish 18y ago
Post bubble it's much cheaper to rent in most areas unless you are in the highest income tax bracket.
Yeah, that sure is funny, isn't it? It's almost as if "post-bubble" is the wrong word, the bubble is still in the process of deflating, and housing prices are likely to continue to fall for the next several years!
[Psst: http://www.irvinehousingblog.com/blog/comments/how-inflated-are-house-prices/ http://www.irvinehousingblog.com/blog/comments/how-inflated-... ]
Keep on renting.
- Retric 18y agoIt's not realistic to directly compare rent with a 30 year mortgages because at the end of rent you have a house and at the end of renting you have nothing and your rent is going up every year while your house payment is constant. IMO it's best to compare interest only loan on $1,589,000 to renting @ $5,000. So 6% a year = 7,945/month but that's pretax so it's closer to 5561.5. But to keep up with inflation it's reasonable for the home value to increase at ~2%/year and rent should also increase at that rate. But you need to add in ongoing costs like taxes etc. If you run the numbers renting and owning a home cost about the same over 15 years and investing the difference in value which is reasonable. The problem is you want to buy the house you want in 20 years so most people go for a larger house than they need today. Note: Owning a home is risky but so is renting. When you rend you can randomly have increases of 20% per year or it stagnates for a while but with home ownership you’re stuck in that area so your job or other local issues become a much larger problem. Basically having an affordable mortgage in a good area is not bad as long as you don’t need to move.