Rent vs Own Examples

[RottedOak]

I'd be curious to see some rent vs. own comparisons for Seattle, based on the latest prices and rents. I'll start off with one I found recently:

Posted on Craigslist for rent (), and the ad says it is also for sale. Based on the ad details, it was easy to find the matching MLS listing, which is MLS# 27049028.

Asking price (after two reductions): $379,000
Mortgage payment at 6.5% interest, with 20% down: $1916.43/mo
HOA fee (per listing): $256/mo
Property taxes (per listing): $2575/yr, or $214.58/mo

That brings the monthly cost for a buyer to $2387/mo, and that's before accounting for insurance or maintenance costs. The total carrying costs (adding these and subtracting tax benefits) will probably be around $2400/mo.

Asking rent (without any negotiation): $1600/mo.

Premium to buy: 50%

Note that I made some generous assumptions about interest rates and down payment. If the buyer doesn't have good credit and $80K in the bank for down payment and closing costs, the buying premium would be even higher.

I understand there are "intangible" benefits to owning, and people are willing to pay some premium to own, but 50% is too steep for my taste. To get this particular property down to a more reasonable ownership premium (say, 20% over renting) would require a 25% haircut for the seller, which would essentially put it back to the price they paid for it back in 2004.

Anyone else have good examples like this? I use these to explain to friends why we've decided to rent instead of buy for the time being.

[EconE]

[RottedOak]

[perplexd]

[EconE]

[EconE]

[Lionel]

[george]

[fatsteak]

[truthseeker]

We moved (back) to the Seattle area after an absence of 25 years, and were not surprised to see that prices had escalated substantially. But we WERE a bit shocked to find suburban homes in the area considerably higher than we'd seen in New Jersey and environs. So we kept our powder dry and have been renting for about a year now.

I project we will not enter the ownership market for a couple of years...

[synthetik]

http://seattle.craigslist.org/see/rfs/366649085.html

this was the first link I looked at after typing in "Ballard" (lots of overpriced sh*tboxes to go around there...)

They're listing it on CL for $953K yet they just gave notice to their renter who was paying only $2420.

$2420 for $1M home!!! Nothing out of whack there...

[Alan]

They were renting out the top and the bottom to different tenants.
$2400 for the upstairs. $1500 for the downstairs. 6% interest on $1M is $5k a month. They say taxes are $6k/year. After it sells for $1M that will go up to $10k/year. Insurance is $1200/year. That adds another $900/moth. To buy this place and rent it out, you have to lose around $1900/month -- or 50% of what you are bringing in on the rent.

[perplexd]

Here's a nice real life example. This house just went on the market a few days ago for 599k:

http://www.redfin.com/stingray/do/print ... -id=872142

I'm renting the house directly behind it for $2100. Looks fairly comparable to me.

By the time this sells, it should be a 6.5% fixed at least. I figure they have to put at least 1/2 down before they can get their payment close to my rent.

[BallardRat]

[Nude]