I live just outside of Cincinnati. This area is a bedroom community where people own houses. Lots of new subdivisions being built, too. Real estate prices are going up, although they haven't increased as dramatically as other regions of the US.
Housing
- Thread starter Cuchullain
- Start date
GinandTonic
Saphire w/ Schweps + Lime
- Joined
- May 25, 2005
- Messages
- 8,898
£550 pcm for a slightly run down single bed in brighton. Great location as near to the station and the centre as you would want to be, great garden. Crappy little kitchen, not in the best nick, no room for a dining table.
The only way I could afford housing in my area, or the area close to where I work, is if I was making over $100k a year. And even then, it'd be a tight financial situation.
edit: to purchase a house....i'm currently renting since rent is half of what a mortgage payment, combined with property taxes, would be.
edit: to purchase a house....i'm currently renting since rent is half of what a mortgage payment, combined with property taxes, would be.
GinandTonic
Saphire w/ Schweps + Lime
- Joined
- May 25, 2005
- Messages
- 8,898
Dammit refresh re-posted.
Deleted, sorry.
Deleted, sorry.
JerichoHill
Bedrock of Knowledge
jamiethearcher said:
When you buy, you typically do not go into realizing gains from buying a home until after 5 years.
If you have uncertainty in where you are going to be, renting can be a much more attractive option.
Im obviously not going to do something that doesnt make economic sense
--@Jamie
Oh, and I have a 50% Savings Rate off of my net income, and thats with 5% savings into TSP pre tax
Drewcifer
Agent of Karma
Housing used to be cheap in the Twin Cities but the strong economic growth in the 90's led to a lot of people moving here which caused a housing shortage. A friend of mine bought a 2 bedroom house in St Paul in 1995 for $49,000, now it is worth almost $200,000. Most of the housing around here is single family houses or small apartment buildings. There is a lot of infill condo development going on in Minneapolis proper right now, everything from 3 story buildings to 55 story towers. The vacant lots in the city are starting to disappear, especially downtown. Hopefully this development will help stabilize or lower prices.
Right now I rent, I have a pretty nice large victorian 1 bedroom that I pay $630 a month for. I am thinking about buying a condo, probably something in $160,000 to $190,000 range. That would get me a new 1 bedroom around 900 square feet.
Right now I rent, I have a pretty nice large victorian 1 bedroom that I pay $630 a month for. I am thinking about buying a condo, probably something in $160,000 to $190,000 range. That would get me a new 1 bedroom around 900 square feet.
Drewcifer
Agent of Karma
About the renting vs buying thing people need to understand that with a 30 year mortgage almost half of your payment over the lifetime of the loan is interest. If your mortgage payment is $1200 a month that is not much different than paying $600 a month rent and saving $600 a month. The main thing you would be missing out on by renting would be appreciation but if you are in the midst of a bubble market you are not likely to see much of that in the short to medium term.
Leatherneck
Drive-by poster.
Where I live it's rather cheap from I'm seeing others say. I live on a farm with around 200 acers (about 81 hectare) a medium size home about 3500sqft (guess that is a little over 340m² give or take) with a guest house got a couple of lakes and some barns about a million mature trees. Since this area is not a urban, industrial area you can get homes from really, really cheap to really, really expensive. The area in which I live the average price is $350K to $500K but in downtowns and subdivion things can be had for as little as $50K even cheaper if you're not to picky. Go out to the lakes and you can spend as much as you want. Saw one the other day for $7.5M ... I laughed and thought good luck.
jamiethearcher
President of Canmerica!
- Joined
- Jan 20, 2006
- Messages
- 669
Drewcifer said:
Don't forget that mortgage interest payments are tax deductable, so your calculations don't really work.
Drewcifer
Agent of Karma
This is true but with a Roth IRA you don't pay any capital gains tax when you cash it out, IIRC contributions to a regular IRA are tax deductable. In my mind the main argument for not buying is that we may be in the middle of a housing bubble and are at the top of the market right now. Stocks may be a better investment for the next few years. I haven't decided.jamiethearcher said:
aaglo
Furioso!
Oh, yeah.
I used to live in Helsinki in a rented apartment.
The rent was roughly 500 € / month at that time (5 years ago). And it was ridiculously small, only 32 m2 (~320 sqft).
So take that, you cheaply-living-people
I used to live in Helsinki in a rented apartment.
The rent was roughly 500 € / month at that time (5 years ago). And it was ridiculously small, only 32 m2 (~320 sqft).
So take that, you cheaply-living-people
Zardnaar
Deity
A housing boom here has priced property out of reach for younger people on low and medium incomes. Alot of the baby boomers have invested in property. A gouse used to be 3 years average income roughly now its around 6-7 years income. Over the last 10 years here wages have gone up around 36% while house prices have gone up 200%
JerichoHill
Bedrock of Knowledge
jamiethearcher said:
Actually, they do.
Just because you think its always better to buy doesn't make it so. There are many factors to consider when buying a home
Your most common mistake is not handling "opportunity cost". What could you have done with that money otherwise? What's my expected length of tenure?
If I had bought in DC when I finally had income to do such (last year), I would have realized thus far, after capital gains taxes, brokers fees, closing costs, tax deduction, et. al., a 3-5% return on 600K loan.
Currently, though the market is stinking, I've put the difference between my rent and what the mortgage would have cost me and invested it. I'm about at 18% return at the moment. Even with capital gains had I taken it out, I've returned 9%.
9 > 5
Real Estate Agents want to convince you that renting is stupid. It is not actually the case. Its only in their interest to proporgate this myth.
If I have time, I'd be happy to go full-bore into the economics of buying vs. renting. but can't right now as i am very busy at work
However, I did make an excel spreadsheet calculator that handles this process (handles costs involved, including opportunity, closing costs, brokers fees, rates of return in th emarket, duration of loan and type etc...) Can't find it right now, but its a handy tool
However, Ginnie Mae has such a tool.
You can enter these values to confirm that im right about it making more sense to rent.
Current Rent: 600 bucks
Price of home (My GF's duplex is worth 450K on the market currently), also try 250(1br condo).
%DP = 10
Loan =30yr
IR = 7.5%
Years plan to stay (10, 20,30)
property tax =1
appreciation =2
450,10 Renting: $117,775
450,20 Renting: $104,608
450,30 Buying: $90,261
250, 10 Renting: $29,792
250, 20 Buying: $23,126
250, 30 Buying: $190,384
Basically, when youre settling down, buy a home. Otherwise, rent and stay single
Thanks JH, that clears up your logic nicely. 
It's good to see someone "get it" in regards to renting versus buying.
Yes, let me buy a crappy house and have a $3,000/month mortgage, which doesn't even factor in property taxes. And it doesn't factor in unexpected costs/repairs for the home, or renovations on the home. Thanks, but I'll stick to my $1400/month 1 BR apartment for now until the housing bubble deflates a bit. Air conditioner breaks ? Building management takes care of it. Need apartment painted ? Building management takes care of it. Plumbing breaks, same thing. And with the money saved, make that money grow which would enable me to lay down a larger down payment when the time does come, and have half the mortgage payment later.
And if I lose my job or land a less paying job, I don't have to worry about not being able to meet a ludicrous mortgage payment and have no worries about foreclosure and being broke and homeless.
Yes, let me buy a crappy house and have a $3,000/month mortgage, which doesn't even factor in property taxes. And it doesn't factor in unexpected costs/repairs for the home, or renovations on the home. Thanks, but I'll stick to my $1400/month 1 BR apartment for now until the housing bubble deflates a bit. Air conditioner breaks ? Building management takes care of it. Need apartment painted ? Building management takes care of it. Plumbing breaks, same thing. And with the money saved, make that money grow which would enable me to lay down a larger down payment when the time does come, and have half the mortgage payment later.
And if I lose my job or land a less paying job, I don't have to worry about not being able to meet a ludicrous mortgage payment and have no worries about foreclosure and being broke and homeless.
Be careful with that logic. You know and I know that returning 18% annually on equities is not realistic. I'll give you the probability of negative absolute returns since 1969JerichoHill said:
S&P 500
1 year = 20% chance
5 years = 10% chance
10 years = 0% chance
Real Estate
1 year = 23% chance
5 years = 3% chance
10 years = 0% chance
I'm a big believer in liquid and portable assets however don't neglect the benefits of leverage on that 5% return.
The 5% return is on $600,000 with only ~$120,000 invested (not $600,000 invested).
$600,000 * 5% = $30,000
$30,000/$120,000 = 25%
Don't discount the leverage.
I would suggest own (equities, R.E.)...don't loan (C.D.s bonds) to create wealth.
Leatherneck
Drive-by poster.
marioh said:
Since you are in NYC that might make sense, but in the rural areas you are flushing money away. In order the have a $3000/mo house payment, provided you put 10% down you house would have to cost about $500,000 which is not uncommon where you are. Here in the boondocks of the south you can get a house payment for of under $300/mo ... but the jobs don't pay as much on average. Rent verses buying really depends on where you live, most building managers will not paint a room for you, they will fix things that are broke but you get what they give you and it might not be what you want.
Urederra
Mostly harmless
I bought a townhouse in Minnesota last year for $125K (semidetached house, I think that is its name in british english) two bedrooms, nice kitchen and living room, den in the second floor (where the Civilization playing center is 
), one stall garage and beautiful forest views. It costs me 25 minutes to walk to work or 8 minutes to go by bus/bycicle.
I made a bit what marioh said. I lived in a quite small aparment 5-10 minutes walk from job for 3 years until I built up a bit of savings and credit and I made a downpayment of the 20% of the cost of the house, which saved me some bankrupcy (sp?) insurance, or something like that. (There is an extra you have to pay if you buy your house and your downpayment is very low).
Right now I am spending around 30 % of my monthly salary in mortgage and I have already paid 33 % of the total mortgage, (I made another downpayment last month). If I get promoted next year (everybody cross fingers) I hope to get rid of my mortgage in 2010 My mortgage was a 20 years one, but you can tell I want to finish it paying ASAP.
I think it was a good move, first to rent a small and cheap aparment to save some money and then to move on and buy a better house. But, again, everything depends on job stability, if you have a stable job, then you can think about buying a house, otherwise, rent.
), one stall garage and beautiful forest views. It costs me 25 minutes to walk to work or 8 minutes to go by bus/bycicle.I made a bit what marioh said. I lived in a quite small aparment 5-10 minutes walk from job for 3 years until I built up a bit of savings and credit and I made a downpayment of the 20% of the cost of the house, which saved me some bankrupcy (sp?) insurance, or something like that. (There is an extra you have to pay if you buy your house and your downpayment is very low).
Right now I am spending around 30 % of my monthly salary in mortgage and I have already paid 33 % of the total mortgage, (I made another downpayment last month). If I get promoted next year (everybody cross fingers) I hope to get rid of my mortgage in 2010
My mortgage was a 20 years one, but you can tell I want to finish it paying ASAP. I think it was a good move, first to rent a small and cheap aparment to save some money and then to move on and buy a better house. But, again, everything depends on job stability, if you have a stable job, then you can think about buying a house, otherwise, rent.
Leatherneck
Drive-by poster.
marioh said:Location definetly has everything to do with the choice of renting vs buying. $300/month around here would get you a small room, probably the size of a walk in closet.
I know I use to live in Chicago ... LOL Now I flip houses in the rural south I just bought one at the courthouse steps for $7000 not a totally crappy neighborhood its about an 1930's vintage and 1800 sq ft. granted I'm going to have to do a lot of work to it, but all it cost me is time and supplies, really nothing major like jacking up all the floors. Might have $15,000 total in it when finished and sell it for mid $50's - low $60's
