So I’ve got a question based partly on some hypothetical scenarios, but that I was having with someone about some upcoming life decisions of several people that I know.
I live in Spokane, WA. The rental market is booming. The housing market is booming.
Prices for both are through the roof, the median sale price of a home in the city has gone up roughly 30,000 dollars from May 2017-May2018. Even at the height of the boom right before the recession, Trulia is showing a median home sale price of 176,000, and this year it’s 220,000. Even accounting for inflation this 176,000 in 2008 dollars is roughly 206,000 in 2018 dollars, showing a 15,000 dollar increase in price.
Rent shows roughly the same story. Data on trulia is more limited, only showing a 1 year history, but for all properties, rent has increased from a median rent of $1,200/month to $1,375/month. Spokesman.com , our local news source, reported in winter of 2017 that Spokane has experienced an average increase of $102/month in that previous year, and that at the time it was the fastest 12month increase in average rental rates in the past 10 years.
Soooo...
Given all of the above, and I encourage more research (as always), let’s look at persons A and B.
Person A and B each live in an $850/month apartment, at exactly 30 percent of their income.
Person A stays in their apartment and continues to pay rent, facing potentially annually climbing rates with each new 12 month lease they sign.
Person B bails out of the apartment at the end of their lease, and purchases a house, even though we are at the peak of the housing prices and values in this area. Let's say that they find a cheap house where their mortgage and related, constant, monthly costs total $800/month.
Who is making the right choice?
I live in Spokane, WA. The rental market is booming. The housing market is booming.
Prices for both are through the roof, the median sale price of a home in the city has gone up roughly 30,000 dollars from May 2017-May2018. Even at the height of the boom right before the recession, Trulia is showing a median home sale price of 176,000, and this year it’s 220,000. Even accounting for inflation this 176,000 in 2008 dollars is roughly 206,000 in 2018 dollars, showing a 15,000 dollar increase in price.
Rent shows roughly the same story. Data on trulia is more limited, only showing a 1 year history, but for all properties, rent has increased from a median rent of $1,200/month to $1,375/month. Spokesman.com , our local news source, reported in winter of 2017 that Spokane has experienced an average increase of $102/month in that previous year, and that at the time it was the fastest 12month increase in average rental rates in the past 10 years.
Soooo...
Given all of the above, and I encourage more research (as always), let’s look at persons A and B.
Person A and B each live in an $850/month apartment, at exactly 30 percent of their income.
Person A stays in their apartment and continues to pay rent, facing potentially annually climbing rates with each new 12 month lease they sign.
Person B bails out of the apartment at the end of their lease, and purchases a house, even though we are at the peak of the housing prices and values in this area. Let's say that they find a cheap house where their mortgage and related, constant, monthly costs total $800/month.
Who is making the right choice?
Last edited by:
Koala Bear: Aug 16, 18 20:45