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I've got a question for those who can answer. I've been living in my buddies Condo ever since I got divorced; now that I have more than 2 nickles to rub together, the time to fucking fly free is upon me. A glorious day, to be sure. What I'm wondering is, would it be better to buy a Condo, or rent an Apartment? Renting seems like a waste of money, but ownership has many pitfalls as well. The housing market blows, can that work to my advantage? What say you? I put this in the Red Room because, seriously, who reads anything in the Gold Room?

I'm of the opinion that the time is right to buy.

Buy a boat you can live aboard.

I'd have to sell my good kidney to be able to afford a boat around here.

If you can afford a decent place (not the cheesiest studio), and if you plan to stay in the area you're currently in then I'd have to say buy.

I considered buying also. Still considering it. But, a friend still thinks renting is better - more freedom. If something breaks, you're not paying for repairs.

I still haven't made up my mind.

Buyer's market, for sure.

Treat every real estate agent like the scum sucking... pond scum that they are.

Right now is a good time to buy. But, just personally I would avoid purchasing a condo, which truthfully is nothing more than an apartment at its heart. Plus you have those pesky community fees and such as well. Depending on what your finances look like, I'd lean more towards a small house.

Good for you Jenee. In your case it is always best to allow others to think for you.

Island and German lake whores.

There are good deals on those stand alone bungalow condo things around here, not the run of the mill spendy apartment type. Unfortunately, unless I wanted to buy a house in the sticks, that option is not really an option. The special assessments on some of these condos are the deal breaker; The dues aren't bad when you factor everything in. I don't know, renting just seems like pissing money away. Does that make any sense at all?

Yea, I've been looking at condos and prices for the more desirable condos in more desirable neighborhoods are still dropping. I can get a really nice condo with the mortgage payment, assessment fees and taxes all for less than my current rent.

I agree with you on the rent of thing. Personally, I'd much rather have a receipt for making a mortgage payment, then a rent receipt. On the flip side, even owning a condo isn't a bad thing. Just not my personal preference. But, most condo complexes out where I live are pretty much the same thing as apartments. Plus the HOA's are draconian, and made of power hungry busy bodies.

All of this is made difficult by the relatively low amount of income I bring home(after all the taxes, child support and insurance business). It's a bit expensive to reside where I do, but if I move to where cheap is(back home), I won't be able to see my child. Quite the catch-22, definitely tricky. I'll not be taking any vacation or doing anything interesting until I'm old and infirm.

I can understand all that. Personally, if I had to make that type of choice, I'd stay where I could afford even if it meant only renting so that I could be close with my child. Of course, ultimately, all of that is a personal decision that you have to make.

Believe me, the decisions been made. I'd live in a fucking box before I move out of range of my son. The real decision is whether to commit to morgagedom now, or wait until later. I'd be more than a little butthurt if the housing market took an unexpected upswing while I was biding my time in rentland.

I can understand how you feel. It really is a big decision, not to mention a costly one. Houses are not cheap and inexpensive by any stretch of the imagination.

I've been interested in buying for a few years now, but I'd want a small house and the only things around here are big houses and big condos with big mortgages.

Depending on your income, a lot of times when you are a first time buyer, even small houses end up being big mortgages.

If you can't pay 20% down and have immediate equity, you are the slave of whatever you buy.

I'm gonna go against the conventional wisdom and suggest you ought to just say "pass" for a couple of years on buying a home, even if you can afford the down payment and mortgage payment on a house that you'd want to commit to for a decade or more (because honestly, even w/a 30-year mortgage it often turns out that your plans for life can change even before 10 years, and you end up selling, or trading up, or whatever).

There are a couple of reasons almost everyone will tell you to always buy instead of rent. First, government subsidy allows you to deduct your interest payments on mortgage, I'm told on the theory that home ownership should be encouraged because people with roots make better neighbors and serve (some politician's idea of, no doubt) the greater good of society. Whatever the reason, the impact on your wallet if you're paying around $1000 a month (let's assume you borrow $160,000 at 3% over prime (i.e. 6.25%)) and your marginal federal tax rate is 25% - both at the higher end of estimates - your interest in Year 1 would be around $10,000 (principal the remaining 2k) and your tax deduction would net you saving around $2500. Then, in future years your $ subsidy paid by US taxpayers continues to drop, until Year 10 you save around 25% of $8500. So buy instead of rent saves you over $2125 every year for 10 years.

The other big plus is the theory that every month you pay mortgage instead of rent is a month of buying equity that after 30 years of payments (i.e. 360 fuckin monthly mortgage payments) will result in your ownership of your own personal castle.

Sticking with just the financial factors, on the negative side, when you own you must pay taxes, which can range anywhere from a few thousand to over $5k, $8k, and even $10k in some neighborhoods (although generally that means home value more like $400k plus). And the Seattle area isn't exactly driving away people because taxes will be going down in the future - you can expect your taxes of, say, $3500 a year will grow over those ten years, with the result that your savings on federal taxes from the mortgage interest deduction will always be less than you pay in local taxes (real estate, school tax etc.).

There are some practical issues that rent makes easier than ownership - you need a new roof or new toilet, it's the landlord's problem, not yours. The theory (again, it's all theory, the specifics mean a lot, and YMMV), in simple terms is that rent rate should more or less account for the market value of your neighborhood, plus an amount for cost of capital that reflects current interest rates (combined, the opportunity cost to the landlord).

But your long-term plans are probably more important than any other single factor (aside from how much money you have, which is usually the winner). If you plan to live in the place for the full duration of the mortgage then it's almost a no-brainer to buy, not rent (but pause a moment to reflect how you once may a commitment for a "lifetime," sorry, and then consider whether you'll actually last the whole 30 years in the house). If you are confident that RE values can only go up then that's a pretty big factor in favor of buy, not rent. But it might take a long time for markets to improve- they may be static for several years. Be really careful about predicting RE markets, they can stay soft for much longer than people think. And note that often the lower value homes don't increase all that much (in relative terms) when the market improves. [To use an example from LI, NY, a $200,000 house in Freeport has been a $200,000 house in Freeport for decades (it's among the lowest price decent house you can find in Nassau Cty in a decent neighborhood).] Maybe it drops to $190k, and maybe you get $210 during good times, but there's a definite ceiling on how much someone will pay to buy the worst decent house you can afford at the low end that will always drag on your upside.

Anyway, there's obviously a lot more to it, and there are factors other than economic that matter. This week I just started to rent for the first time in my life because my situation is temporary (I've committed to just a year so as not to box myself in). I'm down in Texas which hasn't been impacted as harshly as a lot of the rest of the US, but it's not exactly been booming here either. But I certainly don't think suddenly over the next 24 months that RE values and costs of existing homes are poised for any kind of major hikes even if the economy suddenly accelerates and millions of new (non-government) jobs are added. Things were pretty frothy for quite a while, now, going back even to the Greenspan bubble.

If there's a really nice neighborhood you've been trying to crack, then a down RE market like now might be your best chance to get in at a good, low price, and prices are sure to rebound when the economy picks up some real steam (in Japan it took a couple of decades and they've still not recovered to pre-crash late 80s heights, but then Japland is a lot different than US for several deep, structural, reasons, so it's not a fair comparison).

It's definitely a buyer's market out there right now. I'd buy while the getting is good. If you plan to actually stay there and aren't using it just to rent it out, now is an awesome time to buy. I wish I were an American citizen, because I'd probably consider moving.

If you are thinking of buying to sell, it might not be such a good time. Apparently, the government is doing something again to prop up prices and not just letting market forces work. (Tax credits.)

Katrina explains it better than I can:
http://video.foxnews.com/v/4685470/home-values-continue-to-fall/

Hey! I read stuff in the Gold Room fuckface!

There, now it's RR worthy!

The answer to your question is continue living in your buddies condo. If you insist upon moving out then I'd say buy a condo. Around here mortgages are less than rent and they come with tax breaks and potential equity. Worst case scenario you could rent out your condo for more than the mortgage payment and move back to your buddies condo. You'd have a positive cash flow plus your tenants would be paying off your mortgage.

Thanks for all the feedback, people. I'll keep you updated!

My inclination is to buy a house, not a condo. I don't like recurring costs that don't build equity. Same reason that, as much as I'd like to buy a boat, I wouldn't. Slip fees and all that. I bought way-waay out in the sticks. Like, when I was driving out to Mt. Hood and I got to "the boonies"--my place is a couple miles past there. And I do hate having to drive to get anywhere. Or a half hour to get somewhere. But the place was cheeeap. And I like it. And the neighbors. And it will be a decent rental at some point.

It'll be a cold day in hell before I submit to a Home Owner's or Condo Association. Putting up with government rules and regulations is bad enough. I'll never stand for letting the neighborhood busy-bodies tell me what I can and can't do with my* property.

* - It is my property, not a bank's. I've got the deed in my safe deposit box at the bank.

Almost agreed with you, until I got to this part:

If you still owe money on the property, the bank has final say in its fate. They own it until the last payment is made.

I made out like a bandit when I bought my house last Summer. Five years ago it sold for $220,000, and I got it for half that. It's more than twice the house (and over 4X the property) as I owned in Memphis, and I bought it for slightly less than what I sold the Memphis house for.