Buy a house or keep renting?

[lulu0915]

Hello. My husband and I have been renting for the past 10 years since we have been married. Now we are wondering if we should buy or keep renting and invest our money. Together we make about 300K this year. Next year it will be 400-500k. That will be teh same going forward after next year. Our rent is $5100 (southern california - I know crazy high. Before in Chicago it was less). We both work from home so we have a home office. 3 young kids. The money we saved in the past we bought, rented and/or sold a few rental properties. We have one left that we are selling in the spring. it's in another state and we need to just sell it, but we'll make about 150K from it.

If we want to buy a comparable house to the one we are in, it is about 1.2-1.5K. We can put 300-400k as a down payment. But I'm just wondering is this the best use of this money? I mean we can keep renting. Some of our friends tell us to buy because we can deduct the interest and renting is a bad idea. To be honest I'm not sure what to think.

I've learned a LOT from this forum so I figured this was a good place to ask this question :)

[alsoknownasDean]

How long would you like to stay in the area? Do you plan on sending your kids to the local schools? Do you plan on any more kids?

Financially renting may make sense, but if you plan on staying in an area long term, the stability of owning a place might matter more to you.

[chemistk]

Have you taken a look at the NYT rent vs. buy calculator? It's a few years old but most of the variables are adjustable so you can make it relevant.

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

We live in the Mid-Atlantic, in a mixed rural/suburban area. In our area, home prices and rents have been rising with no end in sight (and I would assume most of the country is tracking the same).

Our current residence, for example: in 2016, its estimated market value was $170k and as of today it's estimated at $190k. We rent, and when we moved in we were paying just a hair under $1200 a month. (3Br, 2.5Ba, 2k sq. ft. townhome w/garage and finished basement). We're now a hair over $1200. Our neighbors next door, whose house has a mirror layout to ours and is owned by our landlord as well recently moved out. Our new neighbor now pays over $1400 a month, in a house with lower quality finishes and less yard. We estimate if we were to move today, ours would be listed for $1475+.

Another example: we were considering buying a home a couple years ago, and the median home price in our target neighborhood at the time was just under $200k. Currently the median home price is approx. $220k and expected to kiss $230k by year's end. For reference, in 2014, the median home price in this neighborhood was $180k.

In short - we're going to sit the "buy" market out for a bit until it deflates.

[slow hand slow plan]

Yes if you are going to stay there. Your rent is more than the mortgage would be on a 1.5 million dollar house not even including the tax advantages that might be available.

You should consider maintenance, furnishing, yard work, handy work, market factors, schools , commute time,

If you are just looking to retire soon i would say no. Find somewhere cheaper to rent/ or live and save more money especially since you both work from home. 

[MustacheAnxiety]

Taking all factors into account in the NYT article 5100 in monthly rent looks like the better way to go financially than buying a 1.5 million dollar house even if you are planning to stay another 10 years.  Although it is close enough that you could get a different result with more accurate input. 

Also keep in mind that the tax treatment for home owners is less beneficial than it was when the calculator was created.  Given your state and high income you will almost certainly not be able to deduct your property taxes as you could when the article was written.

That said there are a lot more things to consider when deciding to buy a home than financial.  If home ownership is a goal, makes you feel more secure, if you like fixing things yourself, if you want more privacy; by all means purchase a home.  If you hate the idea of home maintenance or don't want to be tied to a specific place long term; keep renting.

[BOP Mustache]

Let’s be honest. This decision isn’t just a pure financial one. Where we live, it’s defini cheaper to rent long term than own. However, we want to buy a house next year. Why?

We have a newborn and have been kicked out of rentals before where the owner wanted to move in or sell it. I just really don’t want that to happen if our kids make new friends with neighbours or local school friends. We also want to plant fruit trees, etc which we can’t do at our rental.