Originally Posted by tricky88
I take it you live in a very expensive area as far as real estate goes. How did you calculate and arrive at your calculations that it's better to rent? We live in Los Angeles, and our rent isn't terribly high - we like the neighborhood -but we feel like we should buy our own place. Doing so though would at least triple the amount of money we put towards shelter each month, it would drastically limit the amount we save and invest each month, and it would take up a big chunk of our existing savings to make the 20% downpayment.
We just looked at a nice townhouse near our apt. It was $620,000, and that price actually seemed "reasonable" compared to the last 2 years of prices we've seen.
I know your post went far beyond this part, but I'd be curious what your thoughts are of renting / buying in a very expensive area.
Not Dangermouse here, but I would like to comment on your question. I take it that it is the monetary aspect that concerns you, not the emotional one.
Implicit in what you say is that you are afraid of being locked out of the market, or losing out on appreciation. I think it is a complicated question, because the correct answer depends entirely on the assumptions you make about appreciation of the home that you might buy and escalation of rents if you don't buy.
In a way, you are forced into speculating-since a decision to rent is a speculation that rents will not escalate rapidly. And a decision to buy is a speculation that price appreciation of the home will pay back with interest all the extra cash you are laying out each month.
IMO, no pat answer. If it were me, and I was absolutely committed to staying in LA, I would probably bet that prices will come down more, but be looking for that chance to buy the place I want.
If moving to a cheaper area were a possibility, then I might just stay with renting.