That’s a question that I need answered before I will commit to buying – after all, what’s the point of buying if it breaks the bank in the long run?

There are plenty of factors to take into account – inflation, investment earnings, mortgage rates, HOA dues, and tons more. Sitting down and doing math sounds rather unappealing and dry. Instead I looked for tools to help me make that decision.

That’s when I ran across HotPads. They have a very handy heatmap to give you a quick overview whether it makes sense to rent or buy, depending on the area. Here is the Los Angeles area map.

RentHeat.png

At a glance, I’m now able to find out in what areas it’s (in general) a better idea to buy than to rent. It’s only a rough guideline – you can always find a hidden gem – but it helps to focus the search. (And it helped me pinpoint an area I hadn’t even looked at before)

The next question is, given my current rent and a mortgage of a certain amount, which one makes more financial sense, and how do things change over time?. Thankfully, HotPads supplies me with a buy vs. rent calculator , too.

buy vs. rent asset comparison - buying is better after 2 years BuyVsRentPayments.png

The way it looks in the sample case, I’ll have more net worth within two years, but I’ll have higher monthly payments for the next seven years. Time to find a better mortgage rate…

Commentary

  1. Chris Parnin wrote on 19. Jun 2008

    I liked the NY Times rent/buy calculator mentioned on lifehacker.com:

    http://lifehacker.com/393781/rent-or-buy-calculator-helps-you-decide-which-is-best

    This one doesn’t seem to include property taxes.

  1. More rent vs. buy calculators // Groby Unplugged on 24. Jun 2008

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