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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Lizzie Tudor who wrote (63491)10/8/2006 1:20:09 AM
From: XoFruitCakeRead Replies (4) of 306849
 
"I don't think the rent vs. buy equation has worked in many markets for a while. It hasn't worked in California for 20 years at least."

I had a house in Fremont, Ca from 1985 to 2004. So I am familiar with the California story. True the number never work in California. But you can always count on appreciation to bail the home owner out in the past. I think the question right now is if I have a house today, when will appreciation bail me out from the negative cash flow. I think my answer is 10 years or more if you assume the slow drop in house price for the next 3-4 years. Then it move back up slowly for the next 3-4 years and finally figure a couple year of appreciation to make up all the negative cash flow for the last 6-8 years. Would you want to hold an asset for 10 years to break even?
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