Thursday, February 15, 2007

OC Bears "Holistic" Savings Nearly $79,000, So Far!

In an effort to offer an accurate a picture as is possible of the benefits of renting in the current housing market that is OC, I have decided to build a more comprehensive set of calculations for OC renters.

This new model incorporates the effect of inflation on "real" housing prices, interest expense costs, property taxcosts, tax benefits of ownership and the changes in the DataQuick pricing history methology. I believe this new savings number reflects a more inclusive, comprehensive and accurate estimation of how much we bears have saved already by not buying at the price peak. In an effort to be as unbiased as possible, we have pulled the pricing data from the OC Register and loan specifics from

Let's have a look at the summary of the numbers for the seven-month period since the peak:

Nominal Amount Saved Since Home Price Declines: $ 42,500
Housing Price Decline Due to Inflation $ 15,050
Savings on Acquisition (Closing and Rate Buy Down): $ 7,705
Savings on Renting Versus Buying: $19,239
Investment Income on Down Pyt+Savings $ 1,461
Tax Benefit of Owning - $ 7,297

Net Benefits on not Buying at the Peak, so far: $78,657!

That's on hell of a lot of money. If we weren't prudent bears we could take that amount and buy a very nice car, go on a long vacation, stock the wine cellar and still have some money left over. But being that we are in fact prudent, we'll take the extra $28K in extra cash (rental savings, acquisistion costs, ROI) we've saved by renting and on acquisition costs and invest it, waiting for the right time to buy.

Remember, hosing prices are officially flat now and as I have said many times before, I think they are headed down further. There is NO hurry. Bide your time, demand a good and fair price and if you don't get it walk. As you can see, patience is not only a virtue; it is a virtue that is rewarded.

If you'd like to have a look at the details of the calculations, click here. I believe all of these numbers are correct, but if you find an error in anything you see, post a comment and I will correct it immediately!


Ghetto_Life said...

Nice analysis. I'd say you're really close. It seems like your property tax rate is a little low... also, I know it depends on location, but I'd think that you'd have a hard time renting that house for 2100/month...

Great job, though. I enjoy your blog.

HB Bear said...

Thanks for the feedback.

I'll look into the property tax rate. Yeah, and the $2,100 is was sort of a guess. I'll do a little research and see what the market says and likely will revise it upward.

Glad you enjoy the blog!

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