long term housing..rent or buy

[haha]

(One reason that the GRM is 57 is that the land we are on is owned by natives under a 99-year lease. So that part of the RE inflation is mitigated by the land lease. I would be very nervous to be renting here in year 99. But I think we are pretty safe!)

I don't understand why the financing of the place should affect rents. It should affect return to ownership, but what a renter wants is space and amenities, and as you say, as long you don't plan to be there beyond the lease, why would it matter? In any case, residential leases are relatively short term, so your occupancy is subject to periodic renegotiation.

Some years ago I bought waterfront land with fee title. However, it was on the res and thus subject to tribal law and administration. I bought it cheap, and got out of it within a few years as the market developed. I felt that this uncertainty was best not dealt with once the property had attained value close to levels outside of an Indian Nation.

Hot markets make for undemanding buyers, but later on everyone gets smart again.

Ha

 

[honobob]

http://tinyurl.com/2tpgvl

So rough figures with the reported 6.6% increase in median home prices here in the Bay Area means if you sold last april to rent you would be out of pocket about $85,000 in appreciation and selling commission. AND if you wanted to buy your house back it would cost you $26,000 more per YEAR in higher (1%) mortgage rates and loss of your old property tax base.

That's why you need to think twice, maybe more before you sell in the Bay Area. Then there's your $24,000 rent GONE to rent a studio. Of course that would be offset by the bazillions you made on your $80,000 down payment and the $100,000 you appreciated before you sold. What would you need...100% return? YMMV :

Wait till the summer market heats up!!!

 

[cho oyu]

http://tinyurl.com/2tpgvl

So rough figures with the reported 6.6% increase in median home prices here in the Bay Area means if you sold last april to rent you would be out of pocket about $85,000 in appreciation and selling commission. AND if you wanted to buy your house back it would cost you $26,000 more per YEAR in higher (1%) mortgage rates and loss of your old property tax base.

That's why you need to think twice, maybe more before you sell in the Bay Area. Then there's your $24,000 rent GONE to rent a studio. Of course that would be offset by the bazillions you made on your $80,000 down payment and the $100,000 you appreciated before you sold. What would you need...100% return? YMMV :

Wait till the summer market heats up!!!

An increase in median home prices does not mean that an individual house has appreciated. The article even mentions this. From everything I have seen, prices have decreased. However, the fewer houses that are selling are higher end and more expensive.

If someone just purchased property, it most likely wouldn't make sense to immediately sell; realtor costs, loan origination costs, etc. from purchasing would likely not be covered by appreciation.

However, if one had seen significant appreciation and was able to take a large amount of equity out of the property by selling, it could very well make sense to rent.

Another aspect to consider is if one were to be moving in 3 to 4 years; I expect that real prices will fall drastically based on house payment:income ratios. If you were forced to sell in a down market, you might have to pay a significant amount of money to sell your home.

All I'm trying to say here is that there isn't a one-size-fits-all solution. One would obviously have to run the numbers to decide which was a better economic and lifestyle decision.

 

[kcowan]

...All I'm trying to say here is that there isn't a one-size-fits-all solution. One would obviously have to run the numbers to decide which was a better economic and lifestyle decision.

Exactly.

Just like there is not a lot of comfort jumping into a super-heated stock market with PEs north of 25, any market where new employees cannot afford to buy is going to eventually become strangled of new blood fuelling the move up chain (unless rich people are moving into the area).

Immigration from the far east certainly helped the Pacific Coastal areas during the last 15 years. Will it continue? We have also seen rich Persians taking over from the Orientals in the last five years. As long as the inflow of money continues, the balloon can stay aloft.