Quote:
Originally Posted by H2O
Have you been in any of the recently constructed downtown rental buildings? Most are comparable in quality to condos.
Condo (and all home owners) are willing to pay more per month than renters, because they are building equity with their investment rather than building somebody else's equity.
|
Downtown rental buildings are not comparable to luxury condos. Have a look at Skyhouse, it's like student housing. If Austonian is the current standard for luxury ($600 PSF) there is no comparison to rental properties. Suggesting the Seaholm apartments are comparable at $500 PSF is silly. If you make specific comparisons you'll find very little is comparable - from finishes, building quality and developer provided amenities. That's why it cost $280 PSF (blended) to construct Austonian and the construction budget for Seaholm is only $180 PSF (blended). That's a big difference. If we wanted to demonstrate that difference we'd simply double the construction cost PSF and Austonian would price at $560 PSF and Seaholm would be $360 PSF, but we don't know yet what additional investments the Seaholm Developer will make based on the switch to condos.
Based on the $500 PSF quoted price for Seaholm condos and rents at the similarly designed Gables (next door), it would take 18 years before buying was better than renting. If you purchased the condo and stayed for 6 years and then sold it, renting is much better. It would cost $38,612 less than buying, an average savings of $6,435 each year. This includes everything related to purchasing or renting and is based on a $2,100 rent (increasing 3% a year) and a $350,000 purchase price with 10% down.
If, as Ive suggested, the real value (and price) of the Seaholm Apartments-Condos is $350 PSF, then buying would be better. If you purchased the condo and stayed for 6 years and then sold it, buying is a little better. It would cost $7,165 less than renting, an average savings of $1,194 each year. Buying is actually better than renting after 5 years. That's reasonable, 18 years is not.
You can enter the data here and see the results:
http://www.nytimes.com/interactive/b...ator.html?_r=0
By using this calculator and entering all the relevant data it becomes clear when buying is better than renting - the primary factor is the price. $350 PSF makes sense, $500 PSF does not.