Yikes. Yesterday I was discussing my living options, and I’m thinking about buying a condominium when my lease is up. I’ve been in this apartment for longer than I had originally planned, and I can probably afford a modest condo.
According to a calculator offered by the New York Times, it makes more financial sense to keep renting. If you click the image, you can see the full results.
Assuming my rent at $901 increases 4% a year, a condo price of $215,000, a down payment of 20%, a mortgage rate of 6.25%, and property taxes of 4%, and a condo appreciation rate of 2%, it will never pay off to buy.
There are a bunch of assumptions, and it’s hard to say what the true scenario would be. By adjusting the sliders, changing the condo appreciation to 7%, it would be more profitable to buy after the 6th year of ownership. There are advanced settings, such as condo fees, deduction of fees, and annual renovation costs, but I didn’t adjust these in my short experiment.
What I would hope is that the general market will see the benefits of renting, so there is a possibility of keeping house prices down while I go through the process of buying.
Aside from the money, one thing holding me back from buying is the lack of the desire to stay in the area. Yet, I am still here.