[Previous entry: "Static IP DSL"] [Main Index] [Next entry: "5 in the morning updates"]

09/16/2004: "Renting vs. Buying (again)"

Every once in a while, I get stuck in a mental rut of rent vs. buy.
I start browsing listings at www.mls.com and realize how expensive things are-- and then I inevitably click on the "what you can afford" link.

Even if I had zero minimum payments a month, www.homestore.com says I should not attempt to purchase anything more than a 300k home (unfortunately, this doesn't buy you much in the 940xx area code).

Of course I don't have "zero" minimum payments a month, so I can afford even less than that!

So then I decided to play the game of "what if". What if I were making a lot more money? Could I afford a decent place?

Like if I were 20 years down the line, making a six figure income (hopefully) -- what kind of house I could expect?

Well according the the mortgage qualifier, if I have zero minimum payments a month, make $140k a year and have 100k in the bank, I can buy a 3br/2ba (1-1.3k sq ft) townhouse/condo in the bay area.

See what you qualify for here.

$498,957
Maximum House Price Loan Amount:
Down Payment:
Closing Costs: $411,295
$87,661 (17.6%)
$12,339

$3,267
Monthly Payment Principal & Interest:
Taxes:
Hazard Insurance:
Private Mortgage Insurance: $2,368
$520
$208
$171

This is crap-- how are people making "normal" salaries going to live anywhere?

Replies: 1 Comment

There's an assumption that by the time you make $140k (is that even possible as a computer person in the future, given India/China/Israel?), that the price of a 3br/2ba will remain at today's prices.

Given the 20% per year increase (or whatever)... well... let's just say that the future is cloudy.

There are many signs that we're in a ridiculous housing bubble (for example, rent prices continue to fall, while house prices continue to rise) - but when will the bubble burst? Will it?

Scary questions.

Dennis T Cheung said @ 09/16/2004 10:18 AM PST