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My husband and I rent a cute 2 bedroom house in Silver Lake (9 years) with a view that is almost $2,600 a month. We are thinking about buying a house, but we are not sure if we would be better off just staying here. What are your thoughts?
A lot of people are struggling with these same questions. I know it’s somewhat daunting to compare the fairly predictable costs of renting with the variable cost of home ownership. Don’t try to figure it out on your own in Excel, there are a number of Rent vs Buy calculators online. I recommend that you use the Rent vs Buy calculator on the New Your Times website, because it takes into account many variables (down payment amount, interest rates, how long you will stay, inflation, etc.). It also has sliders so you can play with it and see how the numbers change as you adjust the variables.
If we look at your specific situation on the NYT’s calculator, it may be kind of a toss up if you plan to stay in Silver Lake. Buying a comparable 2 bedroom house in Silver Lake might cost you around $800,000+. For the purpose of my example I’m assuming you are going to stay for 10 years with a 20% downpayment. The calculator recommends that if you can rent a similar home for less than $2,616 that you are better off renting. You are paying almost $2600 now, so you are pretty much on the fence. But if you moved to a nearby neighborhood (Frogtown, Cypress Park, Mt. Washington, Highland Park, etc.), with even slightly more affordable homes, it would clearly make sense to buy.
A screen capture from the NYT’s calculator
I would encourage you to explore some nearby neighborhoods with lower home values. Visit some open houses, walk around and see if they are places you would consider living.
If you have any questions just holler!