HCOLA to rent or to buy

[jimmychippewa]

If I'm not able to keep my housing costs under 28% gross b/c due to being in a HCOLA should I rent instead of trying to buy? I guess, what is the common thought for this situation? And should you include utilities in the housing expense as well?

[wincrasher]

There is no magic number.

You should rent if:

You expect to move in a few years.
Housing prices are declining in your area.
You don't have 6-8 months expenses emergency fund.
You don't have retirement savings.
You have credit card debt.
Your job or income is not stable.
Your relationship status is not stable.

There are ALWAYS deals to be had either in rents or in buying. Look for bargains in both and then weigh your choices, keeping in mind what I stated above.

A great deal on a house may be 31% of your gross. Would you pass it up because a run-down small apartment is 28%?

[MonkeyMama]

Yes, of course you should consider renting.

I will never understood why "going broke to own a house" has become such a more viable alternative than *gasp*, renting.

I'd look into what options are available. I lived in a HCOLA and renting really sucked and was insane expensive. But I don't get the feeling this is the norm. I don't think one is inherently better - just depends on where you can get the best deal - as wincrasher said. (& considering the factors wincrasher mentioned).

[BlackDiamond]

Read my most recent blog about how unhappy I am that I have to move now. I'm renting.

I live near Boston (30 minutes N)

Be prepared that renting in some areas is going to be hard to keep below 28% too. I am probably going to have to start paying 45% of my income towards rent/utilities (and I make close to 50K a year gross) and it will likely remain this way until my fiance sells his house and can start pitching in.

His is a case where he really REALLY regrets buying in a HCOLA. He and his two brothers that he bought with are all stuck with the thing for at least 3 years due to a lawsuit attached to the HOA in the neighborhood. And even if they weren't, they're looking at a 6 figure loss. If they are lucky, in 6 or 7 years they could break even. They are all in their mid 30's, with my fiance being closer to 40. And now none of them can easily get married, buy homes with their future spouses or afford to have families. Youngest brother's fiance left him because she got sick of waiting because she wanted to have kids before she was 35. Middle brother's last gf dumped him over it as well. He has a gf now but she won't marry him until the house is gone. I sometimes question why I stick around too…forgive me, but I've thought of taking off as well. I think most sane women would have left by now. If I wanted kids (I don't) I'd be gone.

My fiance's 3rd of the mortgage is 80% of his salary each month. 80%. *shakes head*

I am sharing this because these guys are living proof that buying a house you can't afford in a HCOLA is not only a bad idea, it can also ruin your life for a long, long time.

With 45% of my income, I will be renting us a tiny, crappy 1BR studio apartment that is barely big enough for 2 people. We won't be able to save, at all. We really have no other options though, at this point.

I look at some of the apartments we COULD be renting if we didn't have that horrible house. Gorgeous complexes that look like resorts with pools, and jacuzzis and fitness centers. *shakes head*

Please, please think about this carefully before you buy.