Somebody claimed that there was a rough inverse correlation between the cost of buying a home and the relative value of buying over renting. In other words, more expensive homes were a better value to rent....cheaper homes were a better value to buy. You are more likely to get a better deal buying a $200K home and you are more likely to get a better deal renting a $2M home.
Clearly there are many other factors involved, but in general is that true?
And another question....I was checking a location on the W coast of FL....
2 br apartments sell for about $350K-400K (HOA fees+taxes+insurance are about $900/mo) and ones somewhat comparable but not quite as nice rent for about $3500/month.
1 br apartments sell for about $200-250K (HOA fees + taxes + insurance are about $700/mo,) and much smaller rentals rent for about $2300/mo.
Forgetting about speculation regarding what would happen to your money if you invested in the stock market instead, how much your home will appreciate, etc (nobody really knows), don't those rental prices seem quite high compared with purchase prices?
Inverse correlation between housing cost and relative value of buying over renting?
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Re: Inverse correlation between housing cost and relative value of buying over renting?
Rental prices are subject to supply and demand. There has been a considerable exodus from NE states to places like Florida with the newly acceptable WFH arrangements, so rents there may well be inflated at the present time.protagonist wrote: ↑Sat May 08, 2021 9:22 amAnd another question....I was checking a location on the W coast of FL....
2 br apartments sell for about $350K-400K (HOA fees+taxes+insurance are about $900/mo) and ones somewhat comparable but not quite as nice rent for about $3500/month.
1 br apartments sell for about $200-250K (HOA fees + taxes + insurance are about $700/mo,) and much smaller rentals rent for about $2300/mo.
You can rent a $350K home in the Grand Rapids, Michigan area for about half that - say about $1800 a month.
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Re: Inverse correlation between housing cost and relative value of buying over renting?
Interesting. Thanks for the response.David Jay wrote: ↑Sat May 08, 2021 9:55 pmRental prices are subject to supply and demand. There has been a considerable exodus from NE states to places like Florida with the newly acceptable WFH arrangements, so rents there may well be inflated at the present time.protagonist wrote: ↑Sat May 08, 2021 9:22 amAnd another question....I was checking a location on the W coast of FL....
2 br apartments sell for about $350K-400K (HOA fees+taxes+insurance are about $900/mo) and ones somewhat comparable but not quite as nice rent for about $3500/month.
1 br apartments sell for about $200-250K (HOA fees + taxes + insurance are about $700/mo,) and much smaller rentals rent for about $2300/mo.
You can rent a $350K home in the Grand Rapids, Michigan area for about half that - say about $1800 a month.
Re: Inverse correlation between housing cost and relative value of buying over renting?
In our area a <1,000 square foot rowhouse that would sell for $1.2 million (zillow estimates monthly mortgage/tax/insurance cost at $5,500) would rent for about $3,500. The sale prices do not make any sense to me. Yet, every time one of them is listed for sale, someone buys it. The sale prices have kept going up and up the 7 years we have been here.