31–40 of 155 posts
At least that's how it works in the UK, fixed rates are hardly worth it.
I really don't think the bay area is a good choice to make an argument for the average person against buying.... $3000 a month seems too small for a house in the valley, maybe a 1,300 sqft apartment? Also, how out of touch is this guy? Who the fuck has 250k in the bank? certainly someone who would probably own property... maybe even renting it out to this guy...
As for having 250K in the bank-- if the house costs $1M, you have to make a down payment. In the mid-2000s, that may have been a smaller percentage, but these days I think 15-20% down is not unheard of.
I'd LOVE to find a CD @ 4%. And I'm also glad my mortgage rate is 3.75%.
I've rented for my entire adult like (I'm currently 31 living in Somerville/Boston). While my sister bought her first house in Pittsburgh when she was 23, and my parents had moved between several houses they purchased by my age... I've been happy renting. I didn't want to buy a house until recently, but now I want to buy one around here. Why? For one thing, in the major cities the rents keep going up at a rate faster…
One of my favorite interactive pieces from the NYTimes is a Rent vs Buy calculator which is very configurable: http://www.nytimes.com/interactive/business/buy-rent-calcula...
The numbers are very inflated against buying. 10% closing cost, 1.35% property taxes, utilities only if you buy, another 1.35% annually on maintenance/renos/insurance. Who is paying 2.6% of their property value each year on those things? Who gets utilities for free with their rent. That calculator is very dishonest.
From what I understand, property taxes in the north east are very very high though.
Your rent will probably not stay the same for 30 years ...
One of my favorite interactive pieces from the NYTimes is a Rent vs Buy calculator which is very configurable: http://www.nytimes.com/interactive/business/buy-rent-calcula...
If you assume that Silicon Valley is going to be hot for even just the next 5-7 years, with both purchasing and rental prices increasing by 5% per year, then it very quickly becomes smarter to buy and sell the house within that 5-7 year window.
At some point it all just comes down to your prior belief on the growth rates of the two markets.
I've rented for my entire adult like (I'm currently 31 living in Somerville/Boston). While my sister bought her first house in Pittsburgh when she was 23, and my parents had moved between several houses they purchased by my age... I've been happy renting. I didn't want to buy a house until recently, but now I want to buy one around here. Why? For one thing, in the major cities the rents keep going up at a rate faster…
S&P House Price index:
http://us.spindices.com/indices/real-estate/sp-case-shiller-...
Investing in a house is a gamble on house prices going up, which if you're going to make it you should do with a full understanding that historically there have been many house price crashes (typically caused by broader economic downturns), prices in an individual city can also collapse because of the local job market (Detroit) or natural disasters (New Orleans).
Earlier quoted context omitted.
The numbers are very inflated against buying. 10% closing cost, 1.35% property taxes, utilities only if you buy, another 1.35% annually on maintenance/renos/insurance. Who is paying 2.6% of their property value each year on those things? Who gets utilities for free with their rent. That calculator is very dishonest.
"Who is paying 2.6% of their property value each year on those things?" Nationwide the figure of a couple grand per acre is remarkably constant. Although property costs may vary two orders of magnitude or more, a firefighter gets paid "about" the same everywhere, ditto a new police car costs about constant, etc. So I would guess someone living where an acre costs about $200K would pay about 2.6%. I would imagine in D…
In general, acreage is cheap. The millions of small lots with $X00,000 houses on them tend to make up for all the acres with nothing on them.