Tightening Lending Standards Discussed at RCG

[rent for now]

[Eleua]

Perfectfire,

You are onto something. Watch the monthly payment and the monthly rent. I was in the Navy, so I have rented from sea to shining sea over a long period of time. My experience showed me that in a bubbly market (California), rents were always cheaper. However, in areas that were not moving one way or the other (Maine, NW Florida, NE Florida, S. Texas, N. Texas, and Hawaii in the mid-90s, rents were usually more expensive than PITI.

Why?

My theory was renting has fewer risks and lower transaction costs. The only reason you would ever buy (from a financial perspective) was to cash in on appreciation or to stay in the house a loooooong time.

When to buy? When rents are at a slight premium to PITI. Buy when PITI is no more than 1/4 of your income. Buy when price is 2-3X appropriate income. Buy when everyone thinks you are a moron if you do (not now, BTW).

[perfectfire]