One year ago, I explained in the post Renters Lose Money why I was renting and not buying.
I choose to rent rather than own because it’s A LOT cheaper today. Yesterday I got our building’s newsletter. It lists 9 properties for sale at an average price of $554 per square foot. If we extrapolate this rate to my 1770 square foot condo, it would have a sale price of $980,580.
Throughout the year I saw a steady decline in the price per square foot in my downtown San Diego condominium. The current newsletter lists the average price per square foot at $488. That means the $980,050 condo that I rented last year, is now worth $863,760. That is a decline in value of $116,820 or $9,735 each of the last 12 months.
Meanwhile the inventory continues to grow, while lending standards get tighter. Will I continue throwing my money away renting in 2007? You bet I will.
Photo by Bart
That is amazing! I think the people who own real estate are throwing their money away. They took on debt while their asset was at a temporarily inflated bubble price.
What surprises me is the large number of people still buying. Despite all the blogs and media attention given to the housing bubble, thousands of San Diegans jump into financial servitude every month. They are setting themselves up for either bankruptcy or being debt slaves. Very sad.
I would say that renting is a hallmark of the financially savvy. It shows that we are savvy enough to have seen the bubble.
Schahrzad Berkland, aka powayseller
PowaySeller has an excellent web site on area real estate. If you are interested, go to CA Housing Forecast.
Huh. I’m financially savvy… I just thought I didn’t make enough money to float a 600K loan. Oh, wait, I guess that does make me financially savvy. Or at least frugal. 🙂