Is the delta between renting & owning now so high that it really just makes sense to rent?

[Anonymous]

Anonymous wrote:It's always going to be location dependent. There is not obvious answer that will be true across the country. The answer is different in Silicon Valley, DC, NYC, Chicago, Phoenix, Austin, and Minneapolis. These cities have different costs of living, different housing demands, different housing stock, etc.

You just have to compare the costs in the place where you live, and decide what makes the most sense for you. Or even better, seek out a location that enables you to do the thing you want to do. For instance, if I was just starting out and buying a home was very important to me, I would probably not move to Silicon Valley (unless I had some hug $$$ FANG job that enabled me to buy regardless) because I wouldn't be able to accomplish my goal.

You just have to make these decisions on a personal level.

Even if you have a starting level FAANG engineering job, you still need to work for 3-4 years to save up for a downpayment. Even if you're making $200K+ as a 23 year-old.

It's so wild that these dumpy homes are fetching well over $3m, but then only renting for $5K. Total distortion of the market that puts a crazy premium on owning.

[Anonymous]

Yes, anyone that does not presently own a house in the Bay Area is screwed forever.

DMV really needs to quit its whining about unaffordable housing prices.

[Anonymous]

It’s better to rent now, but let me tell you. In 2021 I was paying 3300 for a 2 bedroom apt in Woodley park. My rent was gonna increase to 3600. I bought and my PITI is 6k a month for a house double the size (so, a deal for me)

No nice houses in the 1000 sqft range anymore really, for a similar price to the apt rent anyway

It worked out for me. And my PITI will be fairly steady over time, to the point of not paying anything except insurance and tax once it’s paid off

[Anonymous]

Silicon valley home prices are distorted because of zoning keeping them SFHs rather than making best use of the land given demand. These homes are not gems bur demand is crazy.

[Anonymous]

Anonymous wrote:I live in California. My rent is $1650 for a small one bedroom with no bathtub, no dishwasher and two closets. I can't afford to buy. Anything. At all.

Unless I moved to the middle of nowhere and bought a shack.

This would be considered reasonable rent if located in a decent area of DC.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I live in California. My rent is $1650 for a small one bedroom with no bathtub, no dishwasher and two closets. I can't afford to buy. Anything. At all.

Unless I moved to the middle of nowhere and bought a shack.

This would be considered reasonable rent if located in a decent area of DC.

I pay $2700 for a one bedroom in downtown DC (I do have a bathtub and a dishwasher, though, and it’s quite spacious). Also no car and can’t afford a down payment on anything I would want to buy. But I have a new job that doesn’t tie my to DC, and I’m moving next month so I’ll be able to save! Good luck to you CA PP — I hope something works out for you.

[Anonymous]

Not that hard to do the math. It is definitely that way right now for almost any house assuming 20% down and a 7%+ interest rate. If you don’t believe me pick any house for rent on Zillow right now that sold recently and compare the asking rent with what a mortgage with 20% down would be. Not only will the rent be lower significantly, you will be also able to invest your down payment and transaction cost of buying. And as a bonus maintenance is someone else’s problem. Purely financially renting makes a lot of sense now. Having your own place however has other advantages and if those matter enough to you, then go ahead and buy if you can afford it. Life is too short.

[Anonymous]

A 20 or 30% increase in cost for buy vs rent is reasonable…

In market where it’s 2-4x the cost of buying vs rent, then no question renting is better.

[Anonymous]

Anonymous wrote:Silicon valley home prices are distorted because of zoning keeping them SFHs rather than making best use of the land given demand. These homes are not gems bur demand is crazy.

California already made single family zoning illegal because YIMBY's want to destroy the American Dream. If you are going to complain about zoning policies at least stay up to date on the new rules.

[Anonymous]

Anonymous wrote:Not that hard to do the math. It is definitely that way right now for almost any house assuming 20% down and a 7%+ interest rate. If you don’t believe me pick any house for rent on Zillow right now that sold recently and compare the asking rent with what a mortgage with 20% down would be. Not only will the rent be lower significantly, you will be also able to invest your down payment and transaction cost of buying. And as a bonus maintenance is someone else’s problem. Purely financially renting makes a lot of sense now. Having your own place however has other advantages and if those matter enough to you, then go ahead and buy if you can afford it. Life is too short.

It's not so straightforward. I would like to upsize from current property and can put 50% down in the next property in my price range. That's what a lot of people are doing. Or it's all cash offers. If you can pay cash, I'd buy the house rather than rent.

Market is terrible for first time buyers but there's something about owning a property. Putting money in the market + renting doesn't always work out. Market can go south but if you own, you still own a house!

I also don't live in DC but in another midsize city and while it's starting to get more expensive to buy with the 20% down metric versus renting the same, it's only about 10% more expensive to rent. Which means it's still not a bad idea to get on the ladder. Rates could still go up. Rents could still go up. There's still a pent up and growing demand for housing.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:In case anyone wants to look, the going rate for a SFH or townhouse rental in Cupertino is in the $4-6K range for a 3BR. So $6K is actually on the higher end of what's available.

https://www.zillow.com/cupertino-ca/rentals/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22isMapVisible%22%3Atrue%2C%22mapBounds%22%3A%7B%22west%22%3A-122.10998432861328%2C%22east%22%3A-122.0095624230957%2C%22south%22%3A37.287908784262335%2C%22north%22%3A37.34142675180764%7D%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A4281%2C%22regionType%22%3A6%7D%5D%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22priorityscore%22%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%2C%22fr%22%3A%7B%22value%22%3Atrue%7D%2C%22fsba%22%3A%7B%22value%22%3Afalse%7D%2C%22fsbo%22%3A%7B%22value%22%3Afalse%7D%2C%22nc%22%3A%7B%22value%22%3Afalse%7D%2C%22cmsn%22%3A%7B%22value%22%3Afalse%7D%2C%22auc%22%3A%7B%22value%22%3Afalse%7D%2C%22fore%22%3A%7B%22value%22%3Afalse%7D%2C%22apco%22%3A%7B%22value%22%3Afalse%7D%2C%22apa%22%3A%7B%22value%22%3Afalse%7D%2C%22con%22%3A%7B%22value%22%3Afalse%7D%7D%2C%22isEntirePlaceForRent%22%3Atrue%2C%22isRoomForRent%22%3Afalse%2C%22isListVisible%22%3Atrue%2C%22mapZoom%22%3A14%7D

That doesn't seem outrageous for rent. I live in McLean and the 60-year-old SFH rent for $5k+. And the new builds are also $3M.
I know someone in Palo Alto and they choose to rent, because home prices are too high.

Palo Alto now feels like the kind of place where unless you make Founder-level money on an IPO, you put in your 10-20 years and GTFO once you've made your nut (all while trying to keep housing costs as low as possible). $5K for a house in Cupertino is not bad at all. If you're a FAANG engineer, you will bank plenty of money and invest it in the market. Maybe buy a rental home in a lower COL area where you will want to retire.

The issue with Cupertino is that all the housing stock was bought up in the 1st tech wave. People have kept those houses as rentals since the late 90s and they are sitting on deferred asset gold mine.

Look at the Redfin house that sold: https://www.redfin.com/CA/Cupertino/10325-Bonny-Dr-95014/home/597865?600390594=copy_variant&1778901559=variant&utm_source=ios_share&utm_medium=share&utm_nooverride=1&utm_content=link&utm_campaign=share_sheet

Bought in 1995 for $410K and taxes frozen at that level ever since. Sold in Feb 2024 for $3.45M. Insane. This is a very standard middle class house in California; I grew up one remarkably similar in SoCal.

That price is so ridiculous as to be absurd, and I’m used to the DC area absurdity. But wow I can’t imagine why anyone would willingly choose to move to Cupertino right now.

[Anonymous]

We were looking to buy in Massachusetts - 2-2.5 mil, until I did this very calculation. Would cost us hundreds of thousands in a down payment plus $15-20k / month (almost all interest) to buy … or we could just rent for $5-6k and put that money in the market.

[Anonymous]

Anonymous wrote:We were looking to buy in Massachusetts - 2-2.5 mil, until I did this very calculation. Would cost us hundreds of thousands in a down payment plus $15-20k / month (almost all interest) to buy … or we could just rent for $5-6k and put that money in the market.

Which area of Mass? The math just doesn’t make sense when you can rent the same place for one-third of the monthly PITI. You’re making the right call.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Silicon valley home prices are distorted because of zoning keeping them SFHs rather than making best use of the land given demand. These homes are not gems bur demand is crazy.

California already made single family zoning illegal because YIMBY's want to destroy the American Dream. If you are going to complain about zoning policies at least stay up to date on the new rules.

https://www.google.com/amp/s/www.marinij.com/2024/04/26/la-court-strikes-down-controversial-california-law-abolishing-single-family-zoning/amp/

"The Los Angeles County Superior Court judge’s ruling, issued Monday, means that SB 9 can’t be applied in these five cities. The judge is expected to produce a ruling in the next month that could strike down SB 9 statewide"

And FYI just because zoning allows more than single family homes doesn't mean you can't build single family homes. Just means you can build more if you want to.

[Anonymous]

This is the closest comparison I could find, but I’m not seeing how buying would be better in the long run other than said landlord wanting to take their property back. As others have mentioned, renting is the better option as in this case buying would be $2k more a month plus everything else that comes with it.


https://www.zillow.com/homedetails/3205-Theodore-R-Hagans-Dr-NE-Washington-DC-20018/88808131_zpid/

https://redf.in/9c0SM6