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Re: Housing: Rent vs. Buy
Old 01-11-2005, 05:40 AM   #41
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Re: Housing: Rent vs. Buy

Pete,

It sounds like Southern California is approaching the point New York City (or more specifically, Manhattan) many years ago where it became cheaper to rent than it did to buy. Areas like NYC and Southern California, as well as Washington, D.C., are among the most highly concentrated areas of job growth/availability in the country. Consequently, I don't expect that prices will fall dramatically as interest rates rise. On the other hand, prices won't rise substantially again until wages rise and there is a subsequent decrease in interest rates.
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Re: Housing: Rent vs. Buy
Old 01-11-2005, 05:50 AM   #42
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Re: Housing: Rent vs. Buy

Quote:
Hi guys,

This is pete from san diego, california where renting is a way of life not a choice. The homes are ridiculously overpriced(557K being the median). This does not make any sense where median income is said to be 63 K, yet the demand seems to be constant. The question is not whether to rent or buy rather whether to stay or leave. Any thoughts on this irrational phenomena?
Pete: I started to answer this question with a somewhat different angle (real estate in coastal Calif. requires more of a creative approach than most areas of the U.S.
However, I see your question is whether you should stay or leave. That's a decision you'll have to make yourself.
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Re: Housing: Rent vs. Buy
Old 01-11-2005, 05:53 AM   #43
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Re: Housing: Rent vs. Buy

Oldest nephew has rotated from Whidbey to San Diego - now renting. Any creative solutions would be welcome.
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Re: Housing: Rent vs. Buy
Old 01-11-2005, 06:53 AM   #44
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Re: Housing: Rent vs. Buy

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Oldest nephew has rotated from Whidbey to San Diego - now renting. Any creative solutions would be welcome.
Is your second question any easier?
In today's overheated mkt. in the coastal area of Calif.,and the short time span that your newphew will probably have in that area, he should probably enjoy the relatively inexpensive rent. (And the So. Calif girls, if he's single.)
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Re: Housing: Rent vs. Buy
Old 01-11-2005, 07:42 AM   #45
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Re: Housing: Rent vs. Buy

Quote:
This is pete from san diego, california where renting is a way of life not a choice. The homes are ridiculously overpriced(557K being the median). This does not make any sense where median income is said to be 63 K, yet the demand seems to be constant. The question is not whether to rent or buy rather whether to stay or leave. Any thoughts on this irrational phenomena?
I live in Silicon Valley where the prices are even higher but so is the median family income ($80K - $100K depending on town). *Yes the median income family will have trouble buying the median priced house but the market isn't made up of median income families. *It appears that the incomes here are bimodal. *The income distribution curve probably looks more like a two humped camel. *There are a lot of people whose family members work in low paying jobs - teacher, fast food employee, grocery clerk, nurse, government employees, etc. - and their family incomes are below the median. *This is the lower of the two humps on the income distribution curve.

The upper hump in the distribution curve are those families where the members are working in high tech jobs making from $80K to $200K (and up) each. *If you've got two people working in such jobs the family income can be very large. *So, what you've got is maybe one third to one half of the families that have at least one member in the high tech industry and who can really buy a home that are driving the housing market. *The rest will probably never be able to buy even if the prices do drop.
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Re: Housing: Rent vs. Buy
Old 01-19-2005, 01:54 AM   #46
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Re: Housing: Rent vs. Buy

I think Hyperborea hit the nail on the head. The median income will always seem low when compared to the median house prices. When compared to the median household income it doesn't look so bad. Attempting to predict the housing market is a loosing propasition. Not long ago the housing gurus predicted a housing crash nation wide. Obviously it didn't happen. I think that if conditions remain the same you might see a slight drop in housing costs or a slowing of apprieciation, but I doubt it. I don't foresee a sharp decline everyone is screaming about. Interest rates go up, but only to the point where banks start losing money, then they will lower them again. It has happened in the last couple of years. The mortgage rates started going up, the real estate market started to cool, then the banks started lowering them again, and the values started rising again.

As far as buying goes I have been fortunate I've owned four houses and have made a profit on three (I still live in one). I owned the houses for 4, 3, and 1 year, I lived in all of them and normally made over 15,000 per house when I sold it. If your motivated, then owning them short term can produce profits. However they need to be in poor condition and you need to be able to do all of the work.

If you are unsure whether you should buy or rent, then you should rent. If there is a quetion in your mind then you probably aren't ready for the long term commitment of dealing with owning house. Also if you are unsure if you are going to stay in your current area then I would definately say rent until you find an area you are willing to live for at least 5-6 years.

Of course al of this is looking through the rose colored glasses of a place where retirees love to live so until the baby-boomers quit retiring the property values around here will most likely go up.
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