However, I do not believe that is what is happening now. According to most economist(including builders) believe the price degradation is NOT over yet. And the downward pressure of the housing market will be here two more years. The unemployment rate will go up for another two years(per Obama administration project - check Youtube and graphs) and this will definitely negatively impact the housing price.
I tend to believe it is foolish to get in a rent to own agreement at this time. Just get into a regular rental contract and buy when the house price stabilize.
High end housing such as silvercreek area has not been impacted yet but it will get there. It will just take little longer to get there. As soon as many people no longer consider housing as an investment vehicle, it will slowly deflate its value.
I recommend that you just rent for a nice house for 3-4K per month. I expect the price erosion of 1 Million + houses to exceed 100K per year; thus, you are up 50K per year immediately. Only the economic hurricane has passed, consider rent to own. The low interest rate is meaningless. What matters is that is the home you purchase is going to retain its value.
If you consider home like a car(value going down each year), then, purchase a home. If you want to retain value, I recommend that you rent. In Santa Clara valley, I cannot think of any area that I would purchase now and that includes Saratoga and Palo Altos. It is much economical to rent and wait out the storm. In two years, I believe you will able to afford the much better house at cheaper prices.
If you pay your rent on time and keep the house tidy, the landlord will consider you first before others.
Get on my website and there is a calculator allowing you to compare both cases to arrive at a long term cash flow. Assume 4-5% annual appreciation after we get out this recession. In Newer neighborhood such as Silver Creek Valley they will appreciate faster than Monterey/Ford Rd side of 95138.
Rents are back on the rise while property prices, according to some experts, have dropped nationwide by 30% to 40%. Other experts believe we are back to 2002 property values.
If the above wasnâ€™t compelling enough for you buy a home, keep in mind that you can deduct property tax and mortgage interest expense on your tax return. Check with your accountant or tax expert to confirm your projected deduction based on your specific circumstances. This is better than taking a renterâ€™s credit on your tax return. Finally, owning property could be your biggest retirement nest egg. Instead of paying a landlord rent you are investing in an asset you own!
The question posted over 14 months ago address a new Mediterranean style high end estates area in zip code 95138. They consist of typ. ~3,500 to 6,000 sf GLA estates. Few homes there are under 1 mil regardless of the economy.
I am a specialist in the area since it was constructed. Home owners rent homes out to wait for the next upswing cycle. You can rent it for ~$3,500-4,000 which barely covers the mortgage. Owners do better sell to highest offer not to any future price projection.
95138. Foreclosures and shortsales do not affect this part of Valley. Doctors and highly educated scientists still get paid.