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.

Anonymous wrote:

Anonymous wrote:

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.

https://www.redfin.com/CA/Chula-Vista/677-G-St-91910/unit-183/home/189459321

You can do it!

But then I'd have to buy a car, and all the expenses that go with that. I'd have to drive eight-ish hours each way to work in San Francisco twice a week (or once a week and stay at a hotel overnight). If I got a job in/closer to Chula Vista it wouldn't pay what I earn now so I wouldn't be able to afford that trailer. Plus I'd be moving away from all my family and friends I've made over the last 20 years. All to own a trailer? Is that worth it?

https://www.redfin.com/CA/San-Francisco/900-N-Point-St-94109/unit-CB34J/home/190327841

Nevermind, HOA dues $1200 a month.

Sorry, you are def screwed in San Fran.

Anonymous wrote:

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.

https://www.redfin.com/CA/Chula-Vista/677-G-St-91910/unit-183/home/189459321

You can do it!

But then I'd have to buy a car, and all the expenses that go with that. I'd have to drive eight-ish hours each way to work in San Francisco twice a week (or once a week and stay at a hotel overnight). If I got a job in/closer to Chula Vista it wouldn't pay what I earn now so I wouldn't be able to afford that trailer. Plus I'd be moving away from all my family and friends I've made over the last 20 years. All to own a trailer? Is that worth it?

https://www.redfin.com/CA/San-Francisco/900-N-Point-St-94109/unit-CB34J/home/190327841

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.

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.

https://www.redfin.com/CA/Chula-Vista/677-G-St-91910/unit-183/home/189459321

You can do it!

But then I'd have to buy a car, and all the expenses that go with that. I'd have to drive eight-ish hours each way to work in San Francisco twice a week (or once a week and stay at a hotel overnight). If I got a job in/closer to Chula Vista it wouldn't pay what I earn now so I wouldn't be able to afford that trailer. Plus I'd be moving away from all my family and friends I've made over the last 20 years. All to own a trailer? Is that worth it?

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.

https://www.redfin.com/CA/Chula-Vista/677-G-St-91910/unit-183/home/189459321

You can do it!

That is a mobile home. You only own the mobile home, not the land. So it's 230k + Space rent is $1050/month.

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.

https://www.redfin.com/CA/Chula-Vista/677-G-St-91910/unit-183/home/189459321

You can do it!

Need to add another $1050/month for the ground rent, per the listing (its rent controlled). So it's $2663/month to buy a trailer with 20% down assuming the OP has $45K in cash for a downpayment.

Sorry, OP.

If you would be willing to live in the giant US of A in a place that is not a suburb of the top 10 largest cities, then yes.

If it's top cities or bust, then no.

There is a lot of ground in between (literally, there is a lot of actual land)

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.

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.

https://www.redfin.com/CA/Chula-Vista/677-G-St-91910/unit-183/home/189459321

You can do it!

Interest rates drive everything obviously. 20% on a 600K home at 7.3% would cost almost the same as 20% down on a million dollar home at 5.2%. That's what we're running into now, currently putting our home on the market and if we were buyers now, we'd be spending about $4K on a 600K home.

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

This is fascinating. I too would be renting in this scenario!

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.

I stumbled upon this Reddit post that compares the cost of renting in the Silicon Valley area compared to buying a similar property and it really got me thinking about whether we have the same issue here in the DC area: https://www.reddit.com/r/HENRYfinance/comments/1chr26o/vhcol_its_a_nobrainer_to_rent_compared_to_buying/

The salient part of the post:

Let me illustrate with a very specific example.

In Cupertino, this 2000+ sq ft luxury home is on the rental market for $6k per month.

https://www.zillow.com/homedetails/20598-Sunrise-Dr-Cupertino-CA-95014/19634849_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare

Look at the homes nearby which sold recently

A comparable, actually slightly smaller, home one block away, recently sold for $3.45M. Several other houses in this block have also sold for more than $3M

https://redf.in/CJpbxA

So, the data shows that your $6k rental is valued at $3.5M if you want to buy it instead of renting it. What’s the cost of ownership of buying a $3.5M home?

You need to put down at least $700k (20%). That’s 700k worth of liquidity which you lose and cannot invest. Apart from the potential investment gains, just think of the peace of mind that comes from knowing you have $700k available liquid.

At 7% interest rate, the monthly mortgage payment for a $2.8M loan is $18.6k. Add in property tax at $3.5k per month. Your monthly carrying cost (PITI) is $22k. That does not include money required for maintenance.

So, rent it for $6k per month

OR

Buy it by locking up your $700k, and committing to pay $22k per month

Now, I'm willing to admit that with the extreme values in California this line of reasoning makes sense. But are we starting to get to that point even in places like Cleveland Park, CCMD, Bethesda, or Arlington?

California is a bit weird in that so much of the housing was built immediately post-WW2 that you don't have a lot of variation in housing, whereas here we have a greater mix of housing styles. In much of California, its mostly all the same stucco one-story 1800-2200 sq ft boxes. Further, the property tax is locked in so you get these weird affects where something can rent for much cheaper than a monthly PITI of a recent purchase.

But is the same affect happening here? Are SFH rentals in desirable areas diverging substantially from the PITI with 20% down?

If we ever had to relocate for work, I'm thinking we would probably just keep our DC house @ 2.75% as a rental and then rent in a new location. It's almost guaranteed to have a sizable delta between rent and PITI.