Rental parity on a 4/3 SFR?

[freedomCM_IHB]

I would guess it depends on what you think will happen with rents, and how ok you are with losing the 20%.





I suspect that rents will go to 30% of take-home for a slightly above average household, say 100k income, 70k take-home, $2k-$2500 or so rent.





My guess is that there has been a lot of income loss that has not yet shown up, either in the census numbers, or in rental rates (since most people are on year leases and moving is a pain, people will hold out). But even with low rental turnover of SFRs, the empty ones will drift down over the next few years.

 

[qwerty_IHB]

[quote author="No_Such_Reality" date=1247134694][quote author="IrvineRenter" date=1247101640]BTW, it was IPOP who first confirmed that you do not get the benefit of the full 37% marginal tax rate. It might feel like it to you if you already own a home, but you must compare it to renting to have an legitimate baseline.</blockquote>


If you can afford to buy a home in Irvine, you're probably already itemizing because of California's high tax rate. Since I'm already itemizing, any mortgage deduction is at the marginal rate. Provided I don't trip into AMT.

[quote author="irvine_home_owner" date=1247122007]BTW: I'm not posting this thread to indicate that "Now is the time to buy!" or "Irvine has hit bottom!"... I was just doing research and I found these numbers intriguing.



There is still that whole 20% down thing that some families can't afford so renting is still a good deal.</blockquote>


If you're getting 2% on $130K, buying a home is probably a good plan.



Keep in mind the calculator has another gotcha in it. <strong>Equity hidden in payment, that's the poison pill IMHO. At Irvine prices it's substantial. In your example, it's $130K down and another $500 a month on principle that is vaporizing. That's $500 REAL dollar coming out of your pocket. It's $500 real dollar that is an expense until that future date when you can sell the house or get an HELOC. But the reality is it's not $3000/month expense, it's $3500 a month out of pocket</strong> ONLY if you manage to tweak your withholdings to hit the numbers. If you don't, then it's more like $4000/month out of pocket each month with a nice tax refund and a bunch of wierd quazi random expenses repairing, painting, calling an electrician, fixing the cracked window from the bird flying into it. etc.</blockquote>


Agree - the equity in the payment make the rent/own comparison a bit flawed. Its better if you compare cash flow going out.

 

[No_Such_Reality_IHB]

[quote author="freedomCM" date=1249613871]I would guess it depends on what you think will happen with rents, and how ok you are with losing the 20%.





I suspect that rents will go to 30% of take-home for a slightly above average household, say 100k income, 70k take-home, $2k-$2500 or so rent.





My guess is that there has been a lot of income loss that has not yet shown up, either in the census numbers, or in rental rates (since most people are on year leases and moving is a pain, people will hold out). But even with low rental turnover of SFRs, the empty ones will drift down over the next few years.</blockquote>


I agree with Freedom. Rents are going to 30% of income and that will be a premium above the cost of owning.



For whatever reason, the 2008 American Community Survey census info is pushed back all the way to Sept 22, 2009.