Sure: today is a lousy time to buy. But in the high-demand places (which also happen to have physical limits), appreciation will outstrip everything for the foreseeable future. People wondered after 9/11: will Manhattan become less desirable, now that it looks like a sitting duck?
Answer: NFW.
..........
Here's how the rent/buy thing has shaken out for yours truly...
One fine day, my wife turned to me and said "I want a house." I like crisp, direct sentences with a minimum of to'ing and fro'ing so this impressed me. I also like my wife, quite a lot, so I was strongly motivated to get a move on.
For about seven years, we'd enjoyed pleasant apartment living in Philadelphia's Art Museum area. Our unit was the converted first floor of an imposing 19th century mansion. The landlord was professional, friendly and cosmopolitan (a former State Dept. official stationed in the ME during the go go Sixties) the neighborhood eclectic and posh.
Trouble was, every year or so, rent began creeping ever northwards towards mortgage territory. After a few seasons, we were essentially making the equivalent of a mortgage payment on a plus $250,000 property but gaining zero equity. Financials aside, apartment living was starting to wear thin: prohibitions against any but the smallest modifications to the living space, having to clean up after other people (i.e., Starbucks coffee spilled in the vestibule, etc, etc), the odd bit of raucous contracting work in the basement, work over which we enjoyed less than zero control but which filled our space with the sounds of hammers, circular saws and 'classic rock'...
Nerves were starting to fray.
So we began the hunt for a house.
We set a price point - an ideal mortgage payment which would fit our current budget. Ideally, that payment would be the same as our rent or a hundred or two more at the most. The rate had to be fixed and the property in good repair (didn't want to have to put out thousands in upgrades upfront - water heater breakage and similar calamities should come in the future after we're established).
The search began in our then current area. Unsurprisingly, houses were going for between $400,000 and $1.5 million. Our helpful landlord offered one of his properties which was nice of him but unhelpful: we found $600,000 to be an Everest of debt we didn't want to climb (and at the time, plenty of banks were willing to give us the climbing gear).
What's that ancient Greek saying? 'Count no man lucky till he's dead'? I won't say we're lucky just yet but the story does end well...at least for now. We found a 50 year old house on the very edge of Philly, close to some of the woodsy northeastern burbs. The price came in very competitively because the owners were eager to sell. They even fixed, at considerable expense, all the items our inspector identified. The mortgage interest rate was set at the prime of the moment. Our monthly payment will be only $150 more than our rent.
My wife is smiling. A good outcome.
So, in our case, continuing to rent probably would have resulted in spousal frowns, a hefty rental expense and little to show for it at the end of the day.
.d.