Say you have a total of ~1M in assets. 350K is in retirement funds. 150K in cash. The rest (500K) in equities. Selling any of these equities will result in significant taxes since these were either RSU gains or bought very low. You’re currently paying ~2k per month in rent (Bay area, good deal) but need to move out soon for other reasons. You want to buy a 2b/2b place (so you can rent the second bedroom for a couple of years at least) before the IPO craziness but there’s very little on the market. Secondly your loan amount is maxed at 850K due to employment history so you’ll have to make up the difference. Option 1: Buy 1b (For around <800K) since there’s more availability, price is obviously lower, and will not require selling any equities. Downside - won’t get any roommate rent and monthly rent will be very high (cost of owning minus principal). Good use of cash. Option 2: Buy 2b/2b (max 1.3M) and be okay with selling a lot of equities to do so. Will reduce my monthly rent but has headache of finding compatible roommate etc and selling well performing equities that have more upside left to them plus taxes. But maybe better long term investment. Currently zero availability on the market. Option 3: continue renting and do anything to keep the current apartment TC: 300K
Option 4: leave the Bay Area, who wants to stick around long enough for home ownership to be worth it? (10 years is the typical break-even point)
Keep renting. Why would you want to move with a roommate to invest all your savings into an overpriced condo? Read the thread where a vegetarian roommate asks someone not to eat meat in the house. PS I am happy we bough a townhouse 12 years ago. But we were a family and intended to stay for a long time.
Only buy if you believe the real estate price will outperform your equity. Otherwise, keep renting
How old are you?
Any option that does not involve a room mate
Rent unless you plan to live in the same house for more than 8 years
There are tax benefits for mortgage interest. I wonder what’s the cut off point to make buying worth it.
There’s not much benefit to be honest since the basic deduction went up so much. If you max out the 750K it gives you back 350$ extra per month after accounting for the increased basic deduction