Red Bank Rentals
Red Bank has come a long way since the late '80s and it seems like it is attracting more families now than in the past. It is my understanding that St. James grammar school is pretty tough to get into these days compared to the early '90s and before that. This makes me think that families are moving to Red Bank, instead of highly expensive Little Silver, Shrewsbury or Fair Haven, and are sending their kids to parochial school since Red Bank's public school system is still miserable. I would imagine that the premium paid for Little Silver schools, when buying a house there, is probably close (on a present value adjusted basis)to paying annual tuition to St. James for 8 years.
But that's not the point.
I drove through the east side of Red Bank today and noticed lots of properties up for sale. In addition I saw at least three single family houses for rent today and thought they looked well maintained and would probably be a nice place to live; especially since they were within walking distance of downtown. I looked on craigslist to see what single family houses rent for in Red Bank and the one example I found was for less than $2000 per month. That sounds like a pretty good deal to me. I would bet that the house on craigslist could be sold for at least $350,000 in Red Bank, and probably more. Needless to say, a $325,000 mortgage at 6.25% for 30 years is going to cost you $2000. If you add another $500 a month for taxes and insurance and upkeep and I don't know why anyone would bother buying a house in Red Bank when it appears to be so cheap to rent.
But that's not the point.
I drove through the east side of Red Bank today and noticed lots of properties up for sale. In addition I saw at least three single family houses for rent today and thought they looked well maintained and would probably be a nice place to live; especially since they were within walking distance of downtown. I looked on craigslist to see what single family houses rent for in Red Bank and the one example I found was for less than $2000 per month. That sounds like a pretty good deal to me. I would bet that the house on craigslist could be sold for at least $350,000 in Red Bank, and probably more. Needless to say, a $325,000 mortgage at 6.25% for 30 years is going to cost you $2000. If you add another $500 a month for taxes and insurance and upkeep and I don't know why anyone would bother buying a house in Red Bank when it appears to be so cheap to rent.
posted by Little_Silvered at 4:11 PM
5 Comments:
I am totally onboard with a bubble and will wait until prices come down, BUT, you bubble mongers lose me with posts like this.
30 years X's 12 Months X's $2000 = $720000
30 years X 12 months X $2500 = $900000
So, over 30 years, one would spend 180K more to own rather than rent. Do you think the Red Bank house will be worth less than 180K in 30 years? Seems like a good deal to me.
Even if your payment calculations come after plunking down a 20% down payment ($81,250), the house would still have to be worth less than $261, 250 in T-H-I-R-T-Y Y-E-A-R-S. I am having a hard time wrapping my brain around the idea that this particular deal is all that bad. If you were planning on leaving Red Bank in 5 years or less, I can accept that this is a risky deal, but if one was planning to stay for 30 years, I don't see how this is a bad deal especially when you factor in the joys of ownership. Please explain.
Joys of ownership.
It's a joy if one can afford it, not go into massive debt to do it. Right now just abut everyone who could afford a house has now over the last few years the idiots using interest only arm loans have been busy.
Owning a house is great but it is expensive.
You're right that any 30 year own vs rent comparison is ridiculous. Who rents for 30 years? Little old ladies in rent controlled flats in NYC, that's who.
I'm guessing that the point has to do with the average time people actually own houses. I think it's more like 7 years and not 30.
And it's almost cliche that the longer a person plans on owning beyond 5-7 years the purchase price means less nd less.
But if you're not sure, or if fate intervenes, you could find yourself underwater like so many of my friends in the early 1990's.
For example, one friend/acquaintence purchased a condo in that garden apartment complex on Harding road (just east of the spring street intersection) in 1988 when the market was booming like it is now. "This is a safe investment" she thought. By 1991, her employer (which seemed unstoppable in the late 80's) was circling the drain and her family had moved so she decided to move too. She finally sold that condo at a $20 loss. Some safe investment.
What was the % loss. I saw people i early 1990's losing 30-50% on condos.
Errr....I meant $20K loss. I remember the loss number more than the price number but I'm guessing a loss in the 15-25% range.
For a young person 15 or so years ago that was a lot of money.
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