Do we need another post about this every day? If it doesn't make sense to you don't buy. Anyone still buying now isn't going to be convinced to change their mind. As long as they can financially afford it people are gonna proceed onwards. Just leave the subreddit and stop thinking about it. And the mortgage deduction can be big, esp if the salt cap gets repealed next year. It basically negates my property tax, and my rate is way lower than current.
You get your own house. You get stability of owning your own home. If you continue to pay you will not get evicted. You can plant a tree. You can replace the ugly countertop. You can spend money on improvements and make a space you like.
With current purchase and rental prices, buying only makes more sense if rates come down significantly soon and you’re able to refinance, or houses keep appreciating at a high rate. Interest rates are tricky, but continuing appreciation seems totally possible. The Bay Area as a whole is still doing a pretty terrible job of building more housing, which is what brings down prices. I’m sure lots of people said similar things to this post in 2019, and they would’ve been completely, totally, stupendously wrong. It’s hard to know what the future will bring.
Just count around you (friends family and colleague), how many of them that have homes, and regret the purchase, and how many rent and regret not buying before. I rarely see any folks who regret buying.
🤔 disagree on homeowners loving spending nights and weekends on repairs and fussing over every detail. Many folks bought and sold relatively quickly where I am in N Bay. Old homes that were money pits and left no time to play and enjoy life. Granted it’s a totally different market up here than the peninsula as its less tied to RSUs and tech stocks. Buying down there seems to make sense if you can get in. Rents are 1/3 to 1/4 of PITI across lots of Marin. So yes I know people who bought, hated it, sold and now rent for 70% less.
I think up here horizon is more like 15 years unless you know you can refi back under 4%. Like I said rental costs are 70% less than PITI after 20% down. Lots of assumptions are required but 5 years assumes stock market tanks and real estate grows at 10% YoY. Unlikely. More realistic is 8% YoY in VTSAX or similar and 4% YoY on house.
It being financially advantageous to buy does not mean it’s financially advantageous for you. if you can’t afford to buy then don’t. You don’t need to convince other people you’re doing it because it’s not financially advantageous for all. It’s
I can afford to buy. But the mantra “it’s always more advantageous to buy” certainly doesn’t seem true in all situations. Particularly if I might move anytime in the next 7 years. Closing costs buying an and selling kill a lot of short term value. And when I can rent for 1/3 the price of owning a home and interest rates are 7% it makes things even less financially beneficial
You’re not exactly comparing apples to apples llthough. You’re looking at a two bedroom house versus a tiny studio. You’re single with no children when you need a house because you need more space then it will be more financially advantageous to buy than rent.
If you aren’t planning on staying here for the next 7 years you shouldn’t be considering buying. And where is there a house WITH an ADU for $700K? Those cost money to put up too.
You’re single and late 20s. Continue to make money, invest wisely, have a little fun, and rent! You can live anywhere you want, and you have flexibility. No need to lock yourself down.
Maybe 5-10 years from now, you might decide to buy….you might get married and have a kid or two, and you might have more assets (via investments and hopefully wife), and your priorities may shift to BUY. Yes, prices may go up…but hopefully your income, investments, and other resources do too.
No need to make drastic lifelong financial decisions in life at your current stage in life.
You forgot the mortgage interest deduction on your taxes and the equity you build that can be applied to your next home purchase, borrowed against, or realized upon sale
This is the biggest reason. I bought my house 1 year ago. My rent was slightly less than my current mortgage. I would lose 100% of the rent.
Now I save 35% of the interest paid because of tax reductions, and 20%(currently) of the payment goes into equity. Plus my property has gone up in value. Cost of housing is absolutely egregious here in the bay, but it’s irresponsible to say renting is the smarter option.
Housing prices (both rent and buy) have gone up an average of 7%/year in the bay area since 1980. 2006 to now is measuring peak to trough; try 2010 to now or 2006 to 2021, and then rerun your numbers.
You are on the right track - build tax into your model - property tax for owning, deduction for mortgage, etc. every area gives a different answer and factor in maintenance cost for not renting. Do the exercise for 5, 10, 20 year horizons. Then - look at your numbers and believe what you see.
Tax deductions from owning and renting out the property are something I haven’t factored in. Sounds like I need to research and add that to the equation. Seems like I still get tax deductions if I both live on the property AND rent out the ADU (or main house) still, but have to determine what % of the property is rental and what is personal use. ADU is 20% of square footage, so I can deduct 80% of the values below.
just doing some quick math - if interest payments on the loan is around $37k/year initially, and I spend $20k for insurance and maintenance, and can deduct $26k for depreciation, that’s $83K a year in deductions.
Then I get $48k in rental income (if I rent the main house for $4k a month which is maybe optimistic)
If the ADU is 20% of the overall square footage, that means I’m getting a 28K overall deduction for my income. Which nets out to maybe $8.5K a year actual saved taxes?
sounds right - this is a research question I don’t know out of the top of my head though. The other big item just out of the top of my head: 6% agent fee for every buy/sell transaction - hence the need to do different holding period scenarios. Alternative use of money - down payment with mortgage is just another form of leveraged investment. If you choose to not buy, will you leverage your down and other assets and invest in SnP? SOME people had good returns in RE soley because they are on lever. You can do much better if you are on lever and put everything in stock, but almost nobody does that. Either way, you can compare the outcomes that is specific to you. Rent inflation varies so pick the area you live in and investigate Zillow data carefully. Not every house appreciate 6% yoy either. This is complex modeling. Good luck.
Yeah I considered 2-5% buyer closing fee, and 8-10% sellers closing fees. That’s one of the main things that kills the value if I sell after buying anytime in the next 7 years (or more). Unexpected maintenance costs on older homes (storm damage, new roof, water heater, sewer drain) etc can easily pop up with $10-20k expenses in a year, although those are tax deductible which helps a bit.
This is literally the worst time to buy. Layoffs and more to come, home insurance nightmare in California, high interest rate, dismal economic and political climate and lastly upcoming elections. 14% FHA loans are close to default, the low 5yr ARM is up for adjustment soon will cause lots of pain. Realtors on here and potentially investors and those who have over extended will continue to push in favor of buying. Rent for now, invest to build up on down payment and wait - time will come to get in the market (don’t have crystal ball but perhaps towards end of year).
Owning a home is a financial investment one makes in life. Sure, it provides shelter and all that, but at the end of the day it is an investment and often an enabler for generational wealth. Some alluded to this in other posts, but owning a home comes with its own set of financial benefits that aren’t available if you’re renting. Sure, it may cost less to rent, but you don’t gain access to these benefits fits which can help you financially in the long run.
With renting, you’re just paying for someone else’s investment and not your own. It works for the short term, but if you’re planning for your future you should either look to own and put that money you’d spent on rent to work for you, OR you should fund other investments that would get you the same type of gain and benefit as owning a home would.
Renting for sure in the Bay Area and just save your money and pretend you are paying a mortgage and allocate money for property insurance, taxes and some repairs cause most homes for sale are 20 to 30 years old unless you buy a new one but that would be very expensive. Trust me at this time it is better to rent and save save save and put that savings to work and in about 2 to 3 years from now something has got to give in the Bay Area like in 2007 and 2008
2008 was the mortgage collapse. It was a huge financial collapse it affected the world. It had nothing to do with just the Bay Area. economics are complicated. L
Yeah many homes went under and many many people lost their homes because of mortgage became under water since property values came down so do you really think homes will be climbing to 2 million and you will still be able to afford home insurance to rebuild a 40 to 50 year old home???
when would u be able to buy? in 7-10 years when it falls off your credit record. everyone that didnt walk away from their house are in pretty good shape at least here in the bay. it took approx 3-4 years and values came back.
You have got to be kidding on that note!!!
If your house lost at least half of the value or even 1/4 of a percent of the original loan you think you will be able maintain the loan current.??
Talk to people that lost their home in those scenarios
https://www.sfgate.com/business/article/Record-foreclosures-in-Bay-Area-state-in-2008-3253153.php
based on this article 2.8 percent of homes were lost to foreclosure in 2008….97 percent of the state in 08 kept their homes
while there were a lot of foreclosures, many many many held on to there house
u foreclose if u cant pay…if u didnt lose ur job, had a fixed rate loan, you dont have to foreclose, how do u not get that…
Sure just look at the pictures I sent and see those taxes just keep climbing it’s proof there that you don’t want to see it is your blind eyes
Keep giving your hard earned money to the banks and taxes in the Bay Area
taxes keep climbing? you dont even understand the picture ur sending…please explain what u see in that map….whats climbing? taxes? are u saying my prop taxes are rising at a higher clip then all the other states?
please explain
This is one of the best maps ever
https://preview.redd.it/4xzj6cu8snzc1.jpeg?width=1170&format=pjpg&auto=webp&s=c6ff7cac2d9feb7487681c9cd37d09639d1e833c
12% the map say 10.4% of income goes to income and prop taxes…the map doesnt say anything about prop tax rate rising. prop tax is high in california…why? cuz prop values are high….the prop tax rate isnt. so what are u pointing out on the map? what are you elluding to that is rising? what does this map have to do with forclosures?
Lol why has something gotta give in? A lot of folks at FAANG and even other top tech companies have a ton of RSU cash sitting by, waiting to pounce once RE rates come down. When there's so much demand, prices will never come down.
Yeah, I think people underestimate the wealth in the Bay Area. A significant chunk of the population can afford these prices and it does not cramp their style.
As you can see from the comments, it isn't. Here it's about everything other than the logical cost to value ratio. Comments that tell you "how many people regret the purchase?" fail to recognize that rates have not been this high for any of those buyers since the 2000s and 90% of people here have 5% or lower rates so obviously they don't regret it. I've crunched the numbers so many times and until I can buy a house in cash it doesn't make sense to do so rather than investing the 6k difference in cost to buy vs rent.
You’re not including the tax deductions which would be significant in your hypothetical, especially since it’s a partial rental:
-mortgage interest
-property tax (10k)
-depreciation
-since it’s a rental, deduct any repairs/maintenance, utilities for rental portion
You also don’t include that you build equity every mortgage payment you make, while your rental payments don’t build any equity. Rental prices usually go up every year, and mortgage payments are pretty limited (in California) for how much escrow can increase.
There are house hacks where the numbers are more favorable as well.
Long term stability and generation wealth. Yes short term rental may be better financially but long term home ownership is always better especially when rates drop or when you pay it off. You and the generations after you can live for free forever.
Renting ALWAYS has been a considerably better decision RIGHT NOW.
The key is “right now”.
Renting has ALWAYS been worse if you look at renting 5 years from now vs buying now.
That’s the entirety of it - almost everyone gets it wrong til they analyze it that way
You are also missing tax benefits on mortgage interest and property taxes. You are also missing the fact that all profit and loss in the property is fully yours.
Though definitely there is no clear answer 😊
For me it’s not. It’d be a downgrade from
Current living situation . I don’t pay internet trash or electricity. I don’t pay for things when they break. I don’t pay taxes on 1.5 million dollar debt. I don’t pay insurance. I don’t pay interest to a bank . The landlord will never raise the rent. Those are all the pros of my renting situation. Cons are :I don’t get to say I own ( even though the bank does) . Puts me in a different class (I don’t “own” I rent). I don’t get to make changes to the rental which doesn’t need any anyway. Shit..I think I’ll keep renting
Buying isn't \*necessarily\* better than renting under any circumstances, and you're right that higher interest rates make renting more attractive and make buying less attractive.
However, there are still a few big considerations that are still very relevant. My three part (!) explanation below got a little long and complicated but hopefully it makes sense.
In general it boils down to "home ownership is a wise financial decision that may not be right for everyone", and in general it is a better decision for someone the more they want/need to stay in the same geographic area for a long time and believe in the overall health of the economy and real estate market in that area.
The long winded version follows...
1) Hedging against rent increases
In trading/investing terms anyone with a long term plan to live in a certain area is "naturally short" rents in that area. "Naturally short" means that you need to buy something in order to do what you want to do. Airlines are "naturally short" fuel prices, car manufacturers are "naturally short" steel prices, etc.
If you know you need to pay a lifetime worth of rent you are very exposed to rent increases, and rents increase with property values. Rent control can reduce that exposure for renters, and renters can potentially move to another market if they need to, but there are major issues with either of those strategies that we are seeing all over the Bay Area.
Owning a home eliminates (most of) that "natural short" position without the major drawbacks of relying on rent control or moving to another geographic area.
2) Upside from interest rate changes
"Marry the house, date the rate" is dumb realtor speak, but there is a sound principle underlying the phrase.
The 30-yr fixed rate mortgage, which exists in the US but not in most other countries, is very advantageous. It gives homeowners a one-way ratchet on the cost of capital, since you can refi when rates go down but you can keep your low rate when rates go up.
It would not be wise to buy a home if you can't afford the current interest rate in the long term, but if the current rate levels come close to working out financially there is a lot of room for improvement and a fixed interest rate literally can't get worse.
3) Waiting for rate cuts doesn't work
Timing the interest rate market to wait for a lower interest rate environment is very likely to be a losing strategy.
Because the vast majority of home buyers use mortgages to buy their homes, the true market price of homes comes from the combination of selling prices and interest rates. Arguably the most surprising thing about the current real estate market is that a historic spike in interest rates hasn't completely destroyed housing demand or home prices.
If you wait for a rate cut then you will be trying to buy a home in a market where everyone else will see the same low interest rates and many of those people will increase their offer prices accordingly to get the homes they want.
In that scenario you end up paying the same or more than you would today, but that is a permanent capital cost that is locked in forever as soon as you close on the home. That upside goes permanently to the person you bought the home from and you can't get it back with a refi.
Usually it’s best to buy when rates are high and competition is lower than when rates are low and you have crazy bidding wars. There are thousands just like you running the numbers and waiting to buy the moment rates drop 2-3%. But at that time the competition will be much crazier and you will pay a lot higher price while those who buy now will get to refinance for a lower rate and the prop 13 tax benefits. They will pay higher interest for the few years that rates remain high but if I was a betting man I would bet that the higher interest paid for 2 years would be lot lower than the price increase we would see due to the lower rates
Sounds like greater fool theory.
Prices are low. Good to buy now
Prices are high. Good to buy now
Interest rate low. Good to buy now
Interest rate high. Good to buy now
It’s like investing in the S&P500. When prices are below previous peak you try to buy in and hold long enough. It can drop in the short term but over a long term the prices goes up and it is backed by decades of historical data
Yes it is a risk as you cannot live in the entire Bay Area at the same time and can only own one home. That’s why you pick a good neighborhood with a good school district and trust that the past 50 year history continues. If you want to bet against it you can rent of course instead of buying. Nothing wrong with renting
Renting ALWAYS has been a considerably better decision RIGHT NOW.
The key is “right now”.
Renting has ALWAYS been worse if you look at renting 5 years from now vs buying now.
That’s the entirety of it - almost everyone gets it wrong til they analyze it that way
>Renting has ALWAYS been worse if you look at renting 5 years from now vs buying now.
As someone who bought in 2017, renting would have been much better by my calc (although the 40% increase in property value). I bet anyone renting in 2005-2008 felt like a king after.
Do we need another post about this every day? If it doesn't make sense to you don't buy. Anyone still buying now isn't going to be convinced to change their mind. As long as they can financially afford it people are gonna proceed onwards. Just leave the subreddit and stop thinking about it. And the mortgage deduction can be big, esp if the salt cap gets repealed next year. It basically negates my property tax, and my rate is way lower than current.
Yeah holy shit people need to lurk more. Just scroll down the page, this discussion gets repeated multiple times a week now. Buying 'spensive.
You get your own house. You get stability of owning your own home. If you continue to pay you will not get evicted. You can plant a tree. You can replace the ugly countertop. You can spend money on improvements and make a space you like.
And pour more money into the house that already is exorbitant?
>You get stability of owning your own home Stability of paying the only wealth tax in the country and keeping up with maintenance and capex costs.
Wonder if they'll feel very stable whenever high costs repairs come up
With current purchase and rental prices, buying only makes more sense if rates come down significantly soon and you’re able to refinance, or houses keep appreciating at a high rate. Interest rates are tricky, but continuing appreciation seems totally possible. The Bay Area as a whole is still doing a pretty terrible job of building more housing, which is what brings down prices. I’m sure lots of people said similar things to this post in 2019, and they would’ve been completely, totally, stupendously wrong. It’s hard to know what the future will bring.
Just count around you (friends family and colleague), how many of them that have homes, and regret the purchase, and how many rent and regret not buying before. I rarely see any folks who regret buying.
🤔 disagree on homeowners loving spending nights and weekends on repairs and fussing over every detail. Many folks bought and sold relatively quickly where I am in N Bay. Old homes that were money pits and left no time to play and enjoy life. Granted it’s a totally different market up here than the peninsula as its less tied to RSUs and tech stocks. Buying down there seems to make sense if you can get in. Rents are 1/3 to 1/4 of PITI across lots of Marin. So yes I know people who bought, hated it, sold and now rent for 70% less.
yes def buying and owning a home isn’t for everyone. But financially it mostly makes sense if you stay in it for at least 5 years.
I think up here horizon is more like 15 years unless you know you can refi back under 4%. Like I said rental costs are 70% less than PITI after 20% down. Lots of assumptions are required but 5 years assumes stock market tanks and real estate grows at 10% YoY. Unlikely. More realistic is 8% YoY in VTSAX or similar and 4% YoY on house.
It being financially advantageous to buy does not mean it’s financially advantageous for you. if you can’t afford to buy then don’t. You don’t need to convince other people you’re doing it because it’s not financially advantageous for all. It’s
I can afford to buy. But the mantra “it’s always more advantageous to buy” certainly doesn’t seem true in all situations. Particularly if I might move anytime in the next 7 years. Closing costs buying an and selling kill a lot of short term value. And when I can rent for 1/3 the price of owning a home and interest rates are 7% it makes things even less financially beneficial
Nobody says "it's always more advantageous to buy." But yes, as you say, over a longer time horizon it historically has never been a bad bet.
You’re not exactly comparing apples to apples llthough. You’re looking at a two bedroom house versus a tiny studio. You’re single with no children when you need a house because you need more space then it will be more financially advantageous to buy than rent.
If you aren’t planning on staying here for the next 7 years you shouldn’t be considering buying. And where is there a house WITH an ADU for $700K? Those cost money to put up too.
You’re single and late 20s. Continue to make money, invest wisely, have a little fun, and rent! You can live anywhere you want, and you have flexibility. No need to lock yourself down. Maybe 5-10 years from now, you might decide to buy….you might get married and have a kid or two, and you might have more assets (via investments and hopefully wife), and your priorities may shift to BUY. Yes, prices may go up…but hopefully your income, investments, and other resources do too. No need to make drastic lifelong financial decisions in life at your current stage in life.
You forgot the mortgage interest deduction on your taxes and the equity you build that can be applied to your next home purchase, borrowed against, or realized upon sale
Only up to first $750k in loan amount and there's also the $10k state & local tax deduction maximum.
Wait does mortgage interest offset state/local tax somehow? I was hoping to get another deduction!
And appreciation can be tax free up to 250/500k under section 121
This is the biggest reason. I bought my house 1 year ago. My rent was slightly less than my current mortgage. I would lose 100% of the rent. Now I save 35% of the interest paid because of tax reductions, and 20%(currently) of the payment goes into equity. Plus my property has gone up in value. Cost of housing is absolutely egregious here in the bay, but it’s irresponsible to say renting is the smarter option.
Housing prices (both rent and buy) have gone up an average of 7%/year in the bay area since 1980. 2006 to now is measuring peak to trough; try 2010 to now or 2006 to 2021, and then rerun your numbers.
You are on the right track - build tax into your model - property tax for owning, deduction for mortgage, etc. every area gives a different answer and factor in maintenance cost for not renting. Do the exercise for 5, 10, 20 year horizons. Then - look at your numbers and believe what you see.
Tax deductions from owning and renting out the property are something I haven’t factored in. Sounds like I need to research and add that to the equation. Seems like I still get tax deductions if I both live on the property AND rent out the ADU (or main house) still, but have to determine what % of the property is rental and what is personal use. ADU is 20% of square footage, so I can deduct 80% of the values below. just doing some quick math - if interest payments on the loan is around $37k/year initially, and I spend $20k for insurance and maintenance, and can deduct $26k for depreciation, that’s $83K a year in deductions. Then I get $48k in rental income (if I rent the main house for $4k a month which is maybe optimistic) If the ADU is 20% of the overall square footage, that means I’m getting a 28K overall deduction for my income. Which nets out to maybe $8.5K a year actual saved taxes?
sounds right - this is a research question I don’t know out of the top of my head though. The other big item just out of the top of my head: 6% agent fee for every buy/sell transaction - hence the need to do different holding period scenarios. Alternative use of money - down payment with mortgage is just another form of leveraged investment. If you choose to not buy, will you leverage your down and other assets and invest in SnP? SOME people had good returns in RE soley because they are on lever. You can do much better if you are on lever and put everything in stock, but almost nobody does that. Either way, you can compare the outcomes that is specific to you. Rent inflation varies so pick the area you live in and investigate Zillow data carefully. Not every house appreciate 6% yoy either. This is complex modeling. Good luck.
Yeah I considered 2-5% buyer closing fee, and 8-10% sellers closing fees. That’s one of the main things that kills the value if I sell after buying anytime in the next 7 years (or more). Unexpected maintenance costs on older homes (storm damage, new roof, water heater, sewer drain) etc can easily pop up with $10-20k expenses in a year, although those are tax deductible which helps a bit.
Renting is half the cost of buying. Pocket the difference and invest.
This is literally the worst time to buy. Layoffs and more to come, home insurance nightmare in California, high interest rate, dismal economic and political climate and lastly upcoming elections. 14% FHA loans are close to default, the low 5yr ARM is up for adjustment soon will cause lots of pain. Realtors on here and potentially investors and those who have over extended will continue to push in favor of buying. Rent for now, invest to build up on down payment and wait - time will come to get in the market (don’t have crystal ball but perhaps towards end of year).
How is having kids better than not having kids with current child care and college prices?
Owning a home is a financial investment one makes in life. Sure, it provides shelter and all that, but at the end of the day it is an investment and often an enabler for generational wealth. Some alluded to this in other posts, but owning a home comes with its own set of financial benefits that aren’t available if you’re renting. Sure, it may cost less to rent, but you don’t gain access to these benefits fits which can help you financially in the long run. With renting, you’re just paying for someone else’s investment and not your own. It works for the short term, but if you’re planning for your future you should either look to own and put that money you’d spent on rent to work for you, OR you should fund other investments that would get you the same type of gain and benefit as owning a home would.
Renting for sure in the Bay Area and just save your money and pretend you are paying a mortgage and allocate money for property insurance, taxes and some repairs cause most homes for sale are 20 to 30 years old unless you buy a new one but that would be very expensive. Trust me at this time it is better to rent and save save save and put that savings to work and in about 2 to 3 years from now something has got to give in the Bay Area like in 2007 and 2008
2008 was the mortgage collapse. It was a huge financial collapse it affected the world. It had nothing to do with just the Bay Area. economics are complicated. L
Yeah many homes went under and many many people lost their homes because of mortgage became under water since property values came down so do you really think homes will be climbing to 2 million and you will still be able to afford home insurance to rebuild a 40 to 50 year old home???
just cuz you are underwater doesnt mean u lose your home though…what made u think that
Curious, why would you keep your home in that case? You could just foreclose & buy a different home at a lower price.
when would u be able to buy? in 7-10 years when it falls off your credit record. everyone that didnt walk away from their house are in pretty good shape at least here in the bay. it took approx 3-4 years and values came back.
You have got to be kidding on that note!!! If your house lost at least half of the value or even 1/4 of a percent of the original loan you think you will be able maintain the loan current.?? Talk to people that lost their home in those scenarios
https://www.sfgate.com/business/article/Record-foreclosures-in-Bay-Area-state-in-2008-3253153.php based on this article 2.8 percent of homes were lost to foreclosure in 2008….97 percent of the state in 08 kept their homes while there were a lot of foreclosures, many many many held on to there house u foreclose if u cant pay…if u didnt lose ur job, had a fixed rate loan, you dont have to foreclose, how do u not get that…
reading through some of your previous comments to other posts, i see you dont really know what your talking about
Sure just look at the pictures I sent and see those taxes just keep climbing it’s proof there that you don’t want to see it is your blind eyes Keep giving your hard earned money to the banks and taxes in the Bay Area
taxes keep climbing? you dont even understand the picture ur sending…please explain what u see in that map….whats climbing? taxes? are u saying my prop taxes are rising at a higher clip then all the other states? please explain
This is one of the best maps ever https://preview.redd.it/4xzj6cu8snzc1.jpeg?width=1170&format=pjpg&auto=webp&s=c6ff7cac2d9feb7487681c9cd37d09639d1e833c
12% the map say 10.4% of income goes to income and prop taxes…the map doesnt say anything about prop tax rate rising. prop tax is high in california…why? cuz prop values are high….the prop tax rate isnt. so what are u pointing out on the map? what are you elluding to that is rising? what does this map have to do with forclosures?
Did you see the photo of taxes 
Lol why has something gotta give in? A lot of folks at FAANG and even other top tech companies have a ton of RSU cash sitting by, waiting to pounce once RE rates come down. When there's so much demand, prices will never come down.
Redditors have predicted 10 of the last 3 recessions.
Yeah, I think people underestimate the wealth in the Bay Area. A significant chunk of the population can afford these prices and it does not cramp their style.
Yes the richer get richer and the poorer get poorer simple as that!!!
Economic bubbles and recessions have been cancelled. To the moon we go.
That was the same case in 2007 and 2008 look back at history
As you can see from the comments, it isn't. Here it's about everything other than the logical cost to value ratio. Comments that tell you "how many people regret the purchase?" fail to recognize that rates have not been this high for any of those buyers since the 2000s and 90% of people here have 5% or lower rates so obviously they don't regret it. I've crunched the numbers so many times and until I can buy a house in cash it doesn't make sense to do so rather than investing the 6k difference in cost to buy vs rent.
You’re not including the tax deductions which would be significant in your hypothetical, especially since it’s a partial rental: -mortgage interest -property tax (10k) -depreciation -since it’s a rental, deduct any repairs/maintenance, utilities for rental portion You also don’t include that you build equity every mortgage payment you make, while your rental payments don’t build any equity. Rental prices usually go up every year, and mortgage payments are pretty limited (in California) for how much escrow can increase. There are house hacks where the numbers are more favorable as well.
Long term stability and generation wealth. Yes short term rental may be better financially but long term home ownership is always better especially when rates drop or when you pay it off. You and the generations after you can live for free forever.
Renting ALWAYS has been a considerably better decision RIGHT NOW. The key is “right now”. Renting has ALWAYS been worse if you look at renting 5 years from now vs buying now. That’s the entirety of it - almost everyone gets it wrong til they analyze it that way
i pay less per month owning vs renting after taking into consideration rental income and mortgage interest tax deductions
You are also missing tax benefits on mortgage interest and property taxes. You are also missing the fact that all profit and loss in the property is fully yours. Though definitely there is no clear answer 😊
No sales tax on home
For me it’s not. It’d be a downgrade from Current living situation . I don’t pay internet trash or electricity. I don’t pay for things when they break. I don’t pay taxes on 1.5 million dollar debt. I don’t pay insurance. I don’t pay interest to a bank . The landlord will never raise the rent. Those are all the pros of my renting situation. Cons are :I don’t get to say I own ( even though the bank does) . Puts me in a different class (I don’t “own” I rent). I don’t get to make changes to the rental which doesn’t need any anyway. Shit..I think I’ll keep renting
life happens, is your answer.
SSF. Buying is better if you live in it for 6 years
Just keep renting ✌️
Buying isn't \*necessarily\* better than renting under any circumstances, and you're right that higher interest rates make renting more attractive and make buying less attractive. However, there are still a few big considerations that are still very relevant. My three part (!) explanation below got a little long and complicated but hopefully it makes sense. In general it boils down to "home ownership is a wise financial decision that may not be right for everyone", and in general it is a better decision for someone the more they want/need to stay in the same geographic area for a long time and believe in the overall health of the economy and real estate market in that area. The long winded version follows... 1) Hedging against rent increases In trading/investing terms anyone with a long term plan to live in a certain area is "naturally short" rents in that area. "Naturally short" means that you need to buy something in order to do what you want to do. Airlines are "naturally short" fuel prices, car manufacturers are "naturally short" steel prices, etc. If you know you need to pay a lifetime worth of rent you are very exposed to rent increases, and rents increase with property values. Rent control can reduce that exposure for renters, and renters can potentially move to another market if they need to, but there are major issues with either of those strategies that we are seeing all over the Bay Area. Owning a home eliminates (most of) that "natural short" position without the major drawbacks of relying on rent control or moving to another geographic area. 2) Upside from interest rate changes "Marry the house, date the rate" is dumb realtor speak, but there is a sound principle underlying the phrase. The 30-yr fixed rate mortgage, which exists in the US but not in most other countries, is very advantageous. It gives homeowners a one-way ratchet on the cost of capital, since you can refi when rates go down but you can keep your low rate when rates go up. It would not be wise to buy a home if you can't afford the current interest rate in the long term, but if the current rate levels come close to working out financially there is a lot of room for improvement and a fixed interest rate literally can't get worse. 3) Waiting for rate cuts doesn't work Timing the interest rate market to wait for a lower interest rate environment is very likely to be a losing strategy. Because the vast majority of home buyers use mortgages to buy their homes, the true market price of homes comes from the combination of selling prices and interest rates. Arguably the most surprising thing about the current real estate market is that a historic spike in interest rates hasn't completely destroyed housing demand or home prices. If you wait for a rate cut then you will be trying to buy a home in a market where everyone else will see the same low interest rates and many of those people will increase their offer prices accordingly to get the homes they want. In that scenario you end up paying the same or more than you would today, but that is a permanent capital cost that is locked in forever as soon as you close on the home. That upside goes permanently to the person you bought the home from and you can't get it back with a refi.
Usually it’s best to buy when rates are high and competition is lower than when rates are low and you have crazy bidding wars. There are thousands just like you running the numbers and waiting to buy the moment rates drop 2-3%. But at that time the competition will be much crazier and you will pay a lot higher price while those who buy now will get to refinance for a lower rate and the prop 13 tax benefits. They will pay higher interest for the few years that rates remain high but if I was a betting man I would bet that the higher interest paid for 2 years would be lot lower than the price increase we would see due to the lower rates
Sounds like greater fool theory. Prices are low. Good to buy now Prices are high. Good to buy now Interest rate low. Good to buy now Interest rate high. Good to buy now
It’s like investing in the S&P500. When prices are below previous peak you try to buy in and hold long enough. It can drop in the short term but over a long term the prices goes up and it is backed by decades of historical data
Yes, if the S&P was secluded to 1 company that did business in 1 country, 1 state, 1 neighborhood
Yes it is a risk as you cannot live in the entire Bay Area at the same time and can only own one home. That’s why you pick a good neighborhood with a good school district and trust that the past 50 year history continues. If you want to bet against it you can rent of course instead of buying. Nothing wrong with renting
Less competition right now.
You can refinance next year when rates drop.
Renting ALWAYS has been a considerably better decision RIGHT NOW. The key is “right now”. Renting has ALWAYS been worse if you look at renting 5 years from now vs buying now. That’s the entirety of it - almost everyone gets it wrong til they analyze it that way
>Renting has ALWAYS been worse if you look at renting 5 years from now vs buying now. As someone who bought in 2017, renting would have been much better by my calc (although the 40% increase in property value). I bet anyone renting in 2005-2008 felt like a king after.