Renting vs Buying... Can't find reason to buy!

[zetta]

MTA is monthly payment for interest + tax + HOA + insurance after tax. So this is money that is NOT coming back much like the monthly rent money. This is why I use MTA when buying to compare with the rent payment. Its either paying the landlord for rent or paying the bank(interest)/complex(HOA)/state(tax)/insurance company with buying a home.

When you do this calculation, be sure to take into account that mortgage interest and property taxes are tax deductible. If you are in the 15% tax bracket, I would suggest multiplying these numbers by .85.

[Seeker]

Seeker, what is the value of your condo and paying $2.6k in property taxes is a drop in the bucket. I many areas of high property taxes you have a $300k home and $7-8k in property taxes.

CA is low and when we lived there the assessed value went up nil.

$120k
$125k
$130k
$135k

We paid $1800 on average from 2002 to 2005. And the condo value when sold in 2005 was $275k from $150k in 2002. You can't say that it's even 1% of the sale price. I don't even think it's come down that much.

One thing CA's got is low property taxes. If it's been 20 years for you, what's the value of the property you are holding right now that cost you $2.6k?

Frankly, I don't know. Most of the people whom have left have not tried to sell... they are renting to other people instead. The fact is that our property is not in the cities 'safest' area and it's a rather small property. Total square footage is less than 1000 and that includes an external 2 car garage. Most of the properties outside our complex only have car ports and the fact that these have true garages makes it a greater renting value (& frankly a greater selling value if people were realistic with their selling prices).

I know that our property taxes are a drop in the bucket comparted to other properties in other states. But I don't beleve that we could sell this for 260k which means that it's probably overvalued in today's terms. The unit upstairs of me was bought during the peak and they paid 370k, probably 3 or 4 years ago.

We have begun getting the snail mail letters trying to charge us for doing that which I've done before (by going to the county assessors office and putting together the paperwork), so these mails are tell me that maybe it's time to look at this again (reassessment).

But either way.... we like where we are at (even though small), in 15 or so years, it'll be time for retirement and we'd probably have to sell and leave the state after retiring anyway. So regardless of where house prices go in this state, we do not wish to tackle a new mortgage for a larger property. Not enough time for us to make it worthwhile.

[LivingAlmostLarge]

I think CA has very reasonable property taxes. High state income taxes and high COL otherwise, but property taxes seem good.

[yellow heel]

When you do this calculation, be sure to take into account that mortgage interest and property taxes are tax deductible. If you are in the 15% tax bracket, I would suggest multiplying these numbers by .85.

Yup, the tax deduction has been accounted for so it is money that is definitely NOT coming back!!

[Seeker]

I think CA has very reasonable property taxes. High state income taxes and high COL otherwise, but property taxes seem good.

I don't disagree LAL.... the only thing that I was trying to say is that property taxes are not "nil" in their upward journey. They do go up, and they are not frozen... unless you purchased pre-78 and have not moved since. To imply that property taxes are frozen to a potential new buyer is not quite right.... and that's all I was trying to say about property taxes.

The prices of homes in this state are outrageous however; considering both the size and quality of the homes you can purchase in other states for half the money (or less).

California is hugely populated though, and space where people want to live (close to where they work) is at a premium because the demand will not go down as long as the jobs remain in these areas.

Yes, you can find nice housing and pricing deals in areas that are very nice, but you have to transport yourself to work everyday and many people don't want to make a long daily commute.

So it's all a choice. And each person needs to weight those costs and benefits.

[Goldy1]

I think a lot of it is emotional. I like knowing I am buying a home even if it costs me in upkeep etc. Sure I could sell it and rent an apt for cheaper than my mortgage and taxes, but I don't want to.
I think the main con to buying is not being able to relocate quickly for a jo bif needed or getting stuck with a bad commute esp in this newer economy. (most jobs are not not secure albeit some more than others.)

[Goldy1]

I would be skeptical of buying a condo after hearing how associations are not getting thier dues from many home owners.

[LivingAlmostLarge]

Seeker, the property taxes are also capped at a 2% year increase not keeping up with new valuations. So after 15 years how much has your property taxes gone up? Compare that to most areas which don't cap or have a 10% year cap.

[zetta]

Yup, the tax deduction has been accounted for so it is money that is definitely NOT coming back!!

On the other hand, if you stay in the house long enough that the price rises above what you paid for it, you can end up closer to breaking even or having a net gain. A lot depends on whether house prices are near the bottom or will go down further, and on how long the market will be flat. It's a gamble because no one really knows what the real estate market will do over the next decade.

It sounds like you're leaning heavily toward renting, and it may well be right for you.

[yellow heel]

It sounds like you're leaning heavily toward renting, and it may well be right for you.

Yes, for now. I will have to wait to see if house prices will go down further or save more downpayment or when I have more confident about the job security... but until then I guess I will rent (maybe a larger place).

[neatdesign]

Jenney, your "shame" is because you allowed circumstances to make you feel "shame." There's no shame in choosing to rent. Not in any realistic view of any personal situation. People make a choice to feel whatever. Nobody controls what any other person feels. We each control our own feelings.

You say that as if I'm the only person in the whole world who has felt as if renters are considered less-thans to their homeowner counterparts. I'm not. This is not some weird psychological obstacle that I created in my own mind.

For generations, owning one's own home has been considered a goal of most Americans. When people buy homes, there is celebration -- not just by the new owners, but by their families and friends. A milestone has been achieved, and certain benefits that were previously unavailable are suddenly at hand. It's part of the American Dream, and that equals success. Renting means that you have not attained that part of the American Dream, which many people -- whether they realise it or not -- equate with lacking success. That's where the stigma comes in. I don't like it, and I think it sucks and is based on materialistic suppositions, but it's there all the same.

If you have never heard of this concept, then maybe it's because you are from a different part of the country and/or an older generation. But just because you're unfamiliar with it doesn't mean I am suffering from deliberate self-loathing!

~ Jenney

[LivingAlmostLarge]

Why wouldn't you rent a bigger place OP?

Do you feel keeping the baby in a 1 bd appropriate until what age?

[yellow heel]

lal, yes I am considering a bigger place renting or buying. I wanted to explore all my options before leaping into anything. I this was the whole reason I crunched all the numbers to see what the best choice would be for me. I will probably end up renting a 2br for around 2000 in a nice location.

[Seeker]

You say that as if I'm the only person in the whole world who has felt as if renters are considered less-thans to their homeowner counterparts. I'm not. This is not some weird psychological obstacle that I created in my own mind.

Most homeowners have indeed been renters at one point or another.

I do not deny that that feeling exists out there... but I know that people have reasons for what they do. Those reasons are really none of my business.

I tend to judge people on people bahavior (feelings and emotions) and not the materialistic basis. If someone were "snobish" toward me because I was a "renter" and they an "owner" and that feeling were the overriding feeling, then I'd very simply not continue to associate with that person. My choice; and I'd feel no "shame" in it.

Reasons for renting do NOT "equate" to a lack of success...

Renting can very well equate to other sorts of problems that people contend with (for instance, spending monies on: medical problems, accidents, theft, natural disasters out of anyone's control, or even giving money to parents or family or friends in need).

Renting can also be a choice for mobility and freedom.... a choice not to tie yourself down and thus, not "equate" to anything financial whatsoever. Some "rich" and very successful people rent, and some people even "rent" the furniture in their rental, and rent the services of a maid, etc.

IMO, in today's economy, it's even more harsh to judge our fellow man over financial choices.

At any point in time, any one of us, could very well need to start over so to speak. One never knows.

No, I'm 1st generation American... I don't "think" like many people.

If the "American Dream" is to own a home... is not American "success" thereby defined as having money? Many cultures do not place materialism before people; my own included.

Frankly, I get the sense that Americans are changing in their priorities. Family IS becoming more important than materialism as time goes on. It's a change for the better.

All I'm saying is that each and every one of us makes our own choices; all we can do is the best we can, at each moment in time.

I'm sorry if you think I was personally criticising you Jenney... I certainly did not have that intention.

[whitestripe]

it is funny, i often think that renters are treated horribly by real estates (in australia anyway). i think it is quite odd when really, aren't a lot of people making money by 'investing' in property to rent? renters should be treated NICELY.
i have just bought my first house with my fiance, but had to rent for four years before buying. i consider that LONG ENOUGH for myself, personally, and i know people rent for MUCH more than that normally.

for me, i wanted to buy a house, yes, to hopefully set myself up in life so that later on, we may sell and buy another, or keep the current one and rent. another reason i wanted to buy is so that i do not have to deal with being 'a renter'. so i am 100% happy for anyone who does not feel, or are not made to feel, like less of a person for renting. where ever and who ever you are renting from, stay there! that's all i have to say!