[Bay Area]Why buy when you can rent for cheaper?
I know everyone in Bay Area goes after buying a house. But doesn’t it make sense to invest that money for a passive income? Looks like you can rent a nice house for $5000/$6000 in Cupertino/Los Altos/Mountain View area. While mortgage for the same house will be very high.
Because after 30 years, you don’t have to pay rent especially when you stop working and have less income.
@wakeup this comment shows that you don't understand economic101
Hahahaha retiring in the Bay area... What for???
You should discount payment to principal in that calculation, although it should be compared to what it could be making elsewhere. Also consider that a mortgage locks in the cost whereas rent can keep going up. Even with that, it still arguably makes sense to rent in the Bay area because that area is insane.
> Even with that, it arguably makes sense to rent in the Bay area because that area is insane. Totally. When I can rent a 2BR apartment for $2200 with rent control, there’s no way I can touch that with a mortgage without a huge down payment.
I do wonder where you're seeing rent numbers like that unless you started renting the place 5 years ago.
Some of the mortgage is going to principal. House value goes up and your investment is leveraged. For instance, overly simplified, you put 200k down to buy 1 mil house. Next year house goes up 5% in value. That's 50k return on 200k investment. Of course there are other factors but you get the idea.
It’s a lifestyle choice, not a wise financial choice. If you look, you’ll find articles about how buying a house over 300k is not a wise investment.
Just rent. Invest your money in the stock market and profit long term whilst being mobile to be able to change jobs for higher pay.
Financially this is the best answer. It will also allow you to rent exactly what you need whenever you need it. If you need one more room? Easy to do when you rent. Not so easy when you buy
Buy in East Oakland. Mortgage will be less than $2,000/month.
If you’re male, yes. If you’re female, get prepared for the crime there
You're saying females can't handle crime?
Why rent and expose yourself to fluctuations in your monthly housing costs when you can buy and get more predictable housing costs for ~30 years? It's a trade-off between short and long term.
It's all about opportunity cost. Renting is better . Fluctuations don't matter that much
You can't say "renting is better" without qualifying it. Strictly financially, renting would have been terrible for me. We bought a house in 2015 for 650k (130k down) and in that time our value has grown to roughly 900k with another 50k in updates. That's a ROI of over 110% in 3.5 years, or 20% YoY. I can't find that elsewhere when subtracting the rent I would have paid otherwise. If you subtract monthly payments, we made 40k or 11% ROI but you can't do that unless you chose to be homeless.
Even if the bay area housing market flattens and you’re not reaping benefits of insane appreciation, there’s a lot to be said for owning a house. Aside from the points already mentioned like owning it outright after some time, homeownership is something that many cherish. Not answering to anybody, changing your living situation when you feel like it, and being part of a real community versus transients. Housing is so expensive these days that I would advise you make a decision based upon your lifestyle, not the numbers. After all, not everything is about money. - Recent homebuyer
There comes a point where renting is smarter than buying. As long as you rent less than as you would be able to buy in the same area and invest the difference. But what happens is people rent a better place with a better location with the most they can afford. The investment or equity potential is lost in the better housing quality which normally wouldn’t be achievable if you were to buy.
Building your own equity vs giving it to other is what you should think about. Also think about leverage. But that works both ways.
You don't give it to others, you use the extra cash you save from not having the mortgage and down payment to build equity somewhere else (stock market for example). So no you don't just throw it out the window
If you make 20% downpayment, and home price increases 20%, you effectively doubled your downpayment. Also home appreciation is tax free for upto 500k profit for married people. Do you think there are any other places except this, where you can double your money, tax free?