Some of your numbers are a bit funny though like renting for $1800 should be at least $2500 for that house.
I've built a very comprehensive spreadsheet that I've been valuing properties with, to get an input (1 time charges and down payment) , monthly input (monthly average of insurance, utilities, prop tax, mortgage payments, etc) less equity returned. What I am left with is a number to compare to the local rentals in the neighbourhood. Then I ask if it is a large enough difference to justify investing all of the down payment for.
To me, in the areas I look at, the number is close to justify a home purchase, but I haven't found a place that I like enough.
Quote:
Originally Posted by JRW
What I find comical is discounting something simply because it last a long time. Great logic there.
Really?? Ok let's runs some fairly average numbers to see if they really would be ahead IF the bubble bursts and they have to sell before the market creates another bubble (if ever). Lets use your assumption of 5 years.
Rent house for 5 years at $1800/month: $108 000
Buy house, 500k house, 200k down, assume interest rate 2.6% for 5 years.
30% reduction in asset value, just by itself = $150 000. So right away your costs are much more than just renting.
Additional costs of owning:
Property taxes $3500/year = $17 500
Servicing 300k loan = $36 000
House maintenance 2000/year = $10 000
Home owners insurance 1000/year = $5000
Total cost of owning = $218 500
I don't think that's called "coming out on top"
Obviously you have a pretty strong bias, but then again I hardly expect a realtor to be an objective source on this matter.
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