Interesting Real Estate Stuff

I got a pm from one of our users regarding a WSJ article. He'll probably post it in a little bit. It got me thinking and I did a quick search to check on current values.

First discovery: Out here, it's cheaper to own than to rent.

At the current average price in the midwest, with 20% down, the mortgage payment from my bank is going to be $597. In Cincinnati, a decent 1400sq' apartment rents for ~$800-$1000.

In January they reported at $975 for 2 br.

If you're a renter and you buy now, there's $8k for you that you can get back when you file LAST year's tax return. There are other first-time home buyer incentives too. Also, if you pick an urban area, there are often incentives for buying there too. In my neighborhood, they'll give you $6k and you can use it as part of your down payment.

Second thing, I just read that real estate report that I referenced yesterday. It tells a different story than I had thought. Things aren't as bad all over as generally believed.

http://www.realtor.o...y_ehs_inventory

This is going to have a positive effect on the market. It's a sign of stabilization. That'll be a spark once it's recognized. There's too much cash uncommitted. Don't stand in the way of the tidal wave. Don't fight it when you get your buys. Don't wait for your targets ignoring volume, breadth and price.

Mark

Now, does that only take into account a mrotgage payment ? Or does it include lawn care, pool care, repairs and other maintenance costs that you have to constantly do to the property and so on. If anyone thinks that cost of owning a house is only a mortgage payment, then he never owned a house. And I suspect that is exactly how so many peopple got sucked in.

Don't forget property taxes and insurance. The "all things being equal" comparison between owning versus renting is not valid as long as prices keep falling. Ask all those first time homebuyers who bought their homes over the last year. Whatever equity they had to make a down payment has now pretty much been vaporized. Once the bottom has been reached the comparison is valid IMO, but we ain't there yet.

I'd say that what you say is definitely true throughout the Midwest. Iowa, Kansas, Missouri, Indiana, Ohio, etc etc. Definitely cheaper to buy than rent, on average. With the $8K tax credit, and these interest rates, it's pretty much a no brainer. And that would be AFTER repairs, and AFTER equity build-up thru mortgage paydown. I'm less confident of the coasts. But I would say that buy versus rent is cheaper than it has been in years. IT

As a recent first home purchaser, let me tell you ogm, those things you cited are certainly a legitimate point - but it is not what we think about. There are only two questions to be asked after all said and done. 1) Utilities cost 2) RE taxes The rest of the stuff is either optional or too difficult to quantify. I personally think the 8,000 credit is incredibly stupid and should be given to people who bought a home in the past 3 years and suffered massive depreciation - why give money to those that are in a position to buy a house anyway? If 8k will make it or break it for them, then aren't we icentivizing risky home owners yet again? Then again when it comes to govt ideas and concepts I am usually left dissapointed. Anyway if there is some hope that values are going to bounce then it will be cheered, but it cannot be a blip, it has to be long enough such that those stuck with crazy rates can refinance and that can take forever.

Mark, Your regional analysis is probably correct, but in places like California (SF, LA) and New York city renting is still 1/3 the cost of owning so we have a ways to go.

Now, does that only take into account a mrotgage payment ? Or does it include lawn care, pool care, repairs and other maintenance costs that you have to constantly do to the property and so on.

If anyone thinks that cost of owning a house is only a mortgage payment, then he never owned a house.

And I suspect that is exactly how so many peopple got sucked in.

Yanno, some of us mow our own lawn. LOL!

Most of us don't have a pool.

Repairs, however, are another matter. Tack on $100 a month for contingency fund. Another $150 (out here) for taxes, depending upon where you are, and another $65 for insurance.

Still cheaper on average.

I'm talking midwest. I have no idea how you folks on the left coast tolerate/survive conditions.



M

Mark,

Your regional analysis is probably correct, but in places like California (SF, LA) and New York city renting is still 1/3 the cost of owning so we have a ways to go.

That "1/3rd the cost of owning" seems out of whack. And certainly the info in this article says it's not correct. You be the judge.

http://online.wsj.co...9423664663.html

As a recent first home purchaser, let me tell you ogm, those things you cited are certainly a legitimate point - but it is not what we think about. There are only two questions to be asked after all said and done.

1) Utilities cost
2) RE taxes

One thing about owning vs. Renting. Most of the time, you can save on utilities, since you have some control over efficiency.

I did the math hard and while I haven't a whole lot of data, I expect that utility savings for owning (and properly weatherizing, insulating, roofing, venting, updating HVAC, siting trees, etc) vs. renting are about $50/month, if not more (each house is different and some repairs are simple and cheap, others are huge, e.g. foaming in a chimney vs. going geothermal).

M

the cheap real estate states have very high real estate taxes. in Ohio, we'd be paying twice what we pay in suburban Northern Virginia. we'd be paying 10K per year in taxes.