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NEW -> Contingent Buyer Assistance Program
I plugged the numbers in for the house across the way from me that recently rented for $3k. The landlord has barely raised rent 2% a year but I used it anyway and 4% for appreciation. You know above inflation because of the weather in OC and that is about what it has been between 1982 and 2002 a more normal time for appreciation. You could buy it for $875k and with 10% down in 30 years it would never be better to buy than rent.
 
The thing that is striking to me about this calculator is how much of a difference 1% in annual price appreciation makes. I plugged in the following parameters:

Rent: $2500, Buy: $650,000 Down Payment: 10% Rate: 6.25% Tax Rate: 1.9% (I am including Mello Roos on new homes for an effective rate) , Home Appreciation 4% annual, Rent Increase 3% annual

Results: Buying is only better than renting after 27 years! At year five, renting would have cost roughly 60K less than buying. This doesnt even factor in outlay that goes towards HOA's....

When you keep all factors the same, except you just increase annual appreciation from 4% to 5%:

Results: Buying is better than renting after 7 years!! At year five renting would have cost roughly 25K less than buying.

You are talking about a 20 year long-term difference, and $35K difference after 5 years due to one percentage point of annual price appreciation?!? Are we really betting on as little as a single percentage point of annual price appreciation?! Of course, I understand all the arguments of FALLING prices and how long it might take us from this point to even see 5% annual price appreciation year-over-year, but one percentage point seems like such a small amount to "predict" that makes such a big difference in the comparison....
 
Blue Fire,

You just discovered the power of extreme leverage. Small amounts of appreciation makes you rich, and small amounts of depreciation quickly wipe you out. Put in a 20% downpayment, and the numbers don't fluctuate as much (although appreciation is still very important).
 
Blue, each time I do a rent vs buy, I come up with similar results. It requires only a modest appreciation for buying to come out on top of renting. Like IR said, it's all about the leverage.
 
Mortgage rates go up again

excerpt:

In its latest forecast, the National Association of Realtors said this week that the median price of an existing home is likely to decline by 0.7 percent this year from the 2006 level, which would be the first time on record that prices have fallen for the entire year.

The Realtors also forecast that tighter lending standards in the wake of rising delinquencies will depress sales this year further than had been expected. The Realtors projected that existing home sales will drop to 6.34 million in 2007, down 2.2 percent from 2006, which was the first year sales had fallen after setting sales records for five straight years.
 
It won't happen! Please! I think we need to write our local Congressmen and Senators and not go for the ones who could careless about us.
 
I hope you are right, Graphrix. I am afraid this is an economic crisis, on par with the dot.com or the S&L implosion. And yes, I wrote to Diane Feinstein, the only level headed Democrat in the Senate. Thanks for the reminder!
 
" Seems like it would hurt the poorest of the poor the most. They're basically increasing the cost of living for renters."

That is how I read it.

Having lived in Florida, I know first hand the homestead exemption was a great savings. It only works on your personal residence, so landlords and investment properties will still pay tax.

The sales tax is aimed mostly at tourists. They are trying to capture as many out-of-state dollars as they can. However, it will really hurt the poor unless they exempt food and other essentials.
 
Unless something has changed recently, food (other than candy, etc) is exempt in Florida. I'm shocked that ANY state would levy a sales tax on food. IL taxes food, and it royally pissed me off when I made that discovery.
 
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