Bay Area - Rent vs Buy

Apple
SwFU77

Go to company page Apple

SwFU77
Apr 14 20 Comments

With mortgage rates surpassing 5% now.

And inflated house prices from years and years of cheap money.

There is no way it makes sense to buy now right?

And since people need to live somewhere - rents will increase drastically over this Summer and more and more people will leave HCOL areas.

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 TOP 20 Comments
  • Google
    bleeeh

    Go to company page Google

    bleeeh
    Buying now is buying at the top of the market for the next 5-7 years (probably 10+ years). The Fed has been very clear about their plan to reduce housing prices, and a firm belief that it's in the greater good of the economy to intentionally take actions to deflate the housing market over the next 24 months. The Fed is also selling their own large stakes holding mortgage backed securities as an asset which tells you... a LOT about their thesis on the short term grown trajectory of the housing market. There will be multiple more interest rate rises throughout 2022 and into 2023, likely ending at a 6-9% avg mortgage rate akin to where we were more normally (Ex: 70's and 90's). With broader inflation and incomes not rising (even in the Bay Area and in tech circles) at the same pace to compensate for interest and inflation... the market for buyers who'll pay over or even at asking price, will quickly end in 2022. Yes, rents will also be high in the short term, but they'll also correct downwards in time.

    The market isn't going to crash, but it is going to deflate by 5-20% over the next 6-36 months. The Bay Area is a bubbly market, so we're probably on the mid side of that range. Unless you're making a 30+ year bet with your purchase... now is a terrible time to buy. Combined with the larger environmental outlook for the Bay Area by 2050+ (extreme drought, increasing heat waves, increasing wildfires, etc) and the tech sector trending towards remote work and away from the bay area... it just makes no sense to buy in 2022. Unless you have a strong rental or Airbnb monetization plan, or the mortgage is somehow *way* below what you'd pay in rent.
    Apr 14 4
    • Just look at home values going back last 50 years. With a 5 year horizon you’ve never lost money. 250k-500k in tax free gains on the sale after two years. The Bay Area has been a destination to live for 100+ years, I’ve been here since the early 80s, owned 4 homes and been through dot com, 08 meltdown, everything. I can assure you that no one who has purchased a sfr in a 50 mile radius regrets it’s after 5 years. Don’t buy a condo, townhome, buy sfr and you will be rewarded tax free when you sell
      Apr 14
    • Also all this fed talk is absurd. Fed selling mbs as if they have some “thesis” lol this dude needs stop talking about things he knows nothing about
      Apr 14
  • Google / Eng
    aziemsjdns

    Go to company page Google Eng

     aziemsjdns
    Everything’s going up except the stonks I own
    Apr 14 0
  • Amazon
    GMTUDT

    Go to company page Amazon

    GMTUDT
    US learned how to escape rescission… just print money.. no one will stop the printer
    Apr 14 1
  • New
    vAYm02

    New

    vAYm02
    If you need a place to live, have the money, and expect to live there > 5 years, then it is basically always a good time to buy.
    Apr 14 0
  • Apple
    SwFU77

    Go to company page Apple

    SwFU77
    OP
    Plus all existing sellers have low property taxes and refinanced rates, so they won’t sell for huge discount, unless they can’t afford their low payments anymore.
    Apr 14 1