21–30 of 199 posts
As we are on the topic, which percentage of your salary going to pay up rent would you consider "sane"? Edit: I mean post tax. It's a cultural thing, in Italy we don't ever consider the gross salaries.
In many places, homes available to rent are not and will never be comparable in quality to homes available to purchase.
Plus renting is basically flushing your money away each money opposed to building equity in something over time.
#6 seems somewhat tinfoil-hatty.
Does anyone have some data to back up #7?
> Buyers should be rioting in the streets, demanding an end to all mortgage subsidies.
...and we went off the deep end.
#9 is incredibly specious. Why would retired people sell? Where are they going to live?
#10 is very true, however it's so difficult to trust a new home builder. Even if you know what bad construction looks like, it takes an immense amount of effort to ensure that everything is done properly and you'll probably be adding 20% onto your cost just to babysit the construction.
Some very solid points about the market in general, but I wonder how several of these points (particularly the points about oversupply, baby boomers, etc.) apply to places like SF or Manhattan. SF, in particular, seems to be extremely young (though that could be observational bias on my part), well-monied, in sharp undersupply of housing, with rent matching or in some cases exceeding the cost of a mortgage. Historica…
Some very solid points about the market in general, but I wonder how several of these points (particularly the points about oversupply, baby boomers, etc.) apply to places like SF or Manhattan. I was just coming to say the same thing. Solid advice, but housing has such metro-geographical differences, 40% of this doesn't line up with my area (Atlanta). Edit: Had 60% went back and modified to 40% after reading again.
In many places, homes available to rent are not and will never be comparable in quality to homes available to purchase.
Plus renting is basically flushing your money away each money opposed to building equity in something over time.
Also, s/each money/each month/g
Some very solid points about the market in general, but I wonder how several of these points (particularly the points about oversupply, baby boomers, etc.) apply to places like SF or Manhattan. SF, in particular, seems to be extremely young (though that could be observational bias on my part), well-monied, in sharp undersupply of housing, with rent matching or in some cases exceeding the cost of a mortgage. Historica…
First, it's a bit of a cliché from realtors in every area of the US to say: "It's different here". Sometimes it might be, but when interest rates and cheap money are available nation-wide, it pays to think about what that implies about prices.
If buyers were using only their own cash, then you don't have to worry about what interest rates are doing. But if people of varying levels of financial sophistication are competing to purchase, and some of those people are using borrowed funds, then it implies something about how the least sophisticated buyers are going to bid.
Because first-time buyers have all been ruthlessly exploited and the supply of new victims is very low. From The Herald: "We were all corrupted by the housing boom, to some extent. People talked endlessly about how their houses were earning more than they did, never asking where all this free money was coming from. Well the truth is that it was being stolen from the next generation. Houses price increases don't produce wealth, they merely transfer it from the young to the old - from the coming generation of families who have to burden themselves with colossal debts if they want to own, to the baby boomers who are about to retire and live on the cash they make when they downsize."
Important to remember that for every homeowner over-stretching to buy their dream house is another home-seller making a healthy profit.
If you have a high downpayment, and in the extreme case buy your house in cash, you don't have to pay any interest. You can take into account the revenue you could have got from your capital, but nowadays you can't get much without taking pretty big risks.
Then there's the long term. If you end up staying 30 years in the same house, buying is cheaper. Depending on your local market, the number of years you need to stay in house to make up for the purchasing fees (interests, taxes, etc.) is different. It's this number you need to find out. Of course when the real estate price was going up fast, the increase in value made it up pretty quickly so buying was an easy choice. That's no longer the case, you need to do the math.
So it's not whether it's universally better to buy or rent. It all depends on your local market, your downpayment, and how long you're willing to stay in your new house.
For example: $650 student loans,$100 cellphones,$90 car insurance,$300 food,$250 gas,$150 electric (average over 12 months),$80 water/sewage/trash ---- $1620
($1620/$4000) 100 = 40.5% recurring debt to credit ratio
Note: Most lenders do not factor in utilities. You should. They will let you drown.
It is always wise to take your Good Faith Estimate and refactor your d/c ratio.
$1620 recurring,$350 mortgage,$120 home insurance,$150 taxes,$80 mortgage insurance ---- $2320 (2320/4000)*100=58% 42% of your income remains to be spent on fed taxes, benefits at work, non recurring debt, random quirks of life.
I really think 2x Household salary is pushing the limit of what you can afford. Vehicles break, pipes bust, utilities are going to have fees/unexpected jumps, people get sick, etc, etc.
Don't waste your life preparing for the unknown. Just don't dig yourself into a hole that you can't swim out of once the floods come.
As we are on the topic, which percentage of your salary going to pay up rent would you consider "sane"? Edit: I mean post tax. It's a cultural thing, in Italy we don't ever consider the gross salaries.
15% of my post-tax wages go towards rent EDIT: That's 11% of my pre-tax wage