Dumb Vs Smart

Hi People.

Just saw a CNN Money article about Trulia's new rent vs. buy index. They do some type of fancy calculations for major cities and can decide if you should rent or buy a home. Nice of them.

In San Diego, according to Trulia, you should rent.

Now, I am a little biased (It is my lively hood), so me thinking the exact opposite of Trulia & CNN Money is no surprise. But, here's my argument.

The article does not talk about tax incentives for a home owner. All of your closing costs and mortgage interest, as well as maintenance is tax deductible. Now, it's not a good idea to spend money in order to get a tax incentive. Talk to your accountant and weigh it out.

It does talk a little about fixed rates vs. rental increases. Here in San Diego the vacancy rate is under 5% and going down (Means 95% + of all rentals are rented). You can not honestly tell me that the rents are not going to go through the roof. Not only a good time to buy your home, but a great time to buy a rental property. The fixed interest rate (Below 5%) you get now and your monthly mortgage will be way below market rents within 5 to 10 years (Crystal ball says so).

The cost of buying vs. renting is what the article is based on. They are going off of conventional loan standards. 10% to 20% down payment. Most entry level buyers in San Diego are going FHA, 3.5% down. In san Diego buyers are also getting sellers to pay for their closing costs, approx 2.5% of the purchase amount (On a purchase of $300,000 that would be $7,500). That sways things towards buying.

Pride of ownership, a sense of community and other good stuff also. Put that in your rental pipe and smoke it.

Remember, even if you do rent, you are still paying a mortgage. It will be your landlord's mortgage.

Anyway, don't let Trulia, and definitely don't let me tell you whether to buy a home, rent a home or live on the moon. Do your home work, check the #s and your financing and make a grown up decision.

Contact me for anything, 619-507-7449.

God Bless