Fellow Blinders, i am trying to get advise on buying a primary residence. Single income with a family of 3(2+ 1 toddler) current TC: 172k(base) + 50k stocks. saved 200k for downpayment and some cash for emergencies. Whatever calculations i do, renting seems to be more profitable - as the current place i am renting is so close to work plus ability to move to different school districts once the kid grows up. if i try to get an apartment, its obviously higher than the rent, more commute, no flexibility to move plus thinking abt 30 years of debt scares me. currently no debt. Would like to hear your opinions as well. Thanks!
If you are planning to move out of bay area, then renting makes sense. However, if you have decided to settle down in the bay area, then it makes sense to purchase. The rent that you pay would compensate for the emi. In my opinion, you can purchase a home/townhouse now in an okish school district, and in 4-5 years use it as a line of equity for your second home in good school district. You could then rent your first home by that time and rent would pay off the emi.
If you’re renting in a good school district, reasonable rent, close to work, it’s a no brained to keep renting. Financially, owning is the worse choice. Unless you plan to run a rental business eventually.
Renting in good school district with reasonable price is also an good investment for your kids rather than buying in low rated school district.
Renting in the Bay Area is the option that makes most financial sense to any rational investor at the moment. Now if you want to bet a huge sum of money on the housing market in the bay you might get lucky and housing could keep on appreciating like crazy and in 10 years you double your money..and you’re set like many that bough 20 years ago..but if you don’t get lucky, then you’re screwed. Do you want to bet or are you looking for most reasonable financial option?
If you want to live in the Bay Area for the next 5-7 years - I would say buy. I’m bullish on the real estate or the next 10 years - but not everyone has the same opinion.
Cash flow of owning is worse, i.e. wait for tax return, etc. The long term cost of renting is higher, i.e. no leveraged appreciation.