As I mentioned earlier, we are planning to move to a new city in about 6 months. We have been saving hard for a downpayment on a condo (can't afford a house yet in this area), but now that we are in a position to put down 20%, I am questioning whether it's a good idea. I found some of the points in this post by Jim from Blueprint for Financial Prosperity to be really helpful in thinking about whether it's the right thing right now, and I'm leaning towards continuing to rent. My reasons include these:
1) We will be moving again in 2-6 years, and it's more likely to be on the 2-3 side. It seems unlikely to me that a condo will appreciate much in the next 2 years given the housing market.
2) This means that we won't make much on the investment, since the money we save on lower payments as opposed to rent will be cancelled by closing costs, selling costs, condo fees, etc.
3) The same downpayment money could make a better return if we invested it, or even if we stuck it in a CD or our ING account, if we assume that the money we lose on rent is the same money we would lose on interest, closing costs, selling costs and condo fees. This is the major point that makes me want to rent instead.
4) We are in a low tax bracket, so the deduction on the interest won't make a huge difference.
5) It would be a huge pain if we had a lot of trouble selling when we leave the area, since both of our schedules would be pretty tight in terms of needing to be moved into a new city on time.
6) On the other hand, the area that we will be living will continue to be popular, and we expect the housing market there to increase over the long term. Maybe renting it out even though we would be moving out of state could be a good investment, given that it's a condo, so the upkeep shouldn't be as difficult from afar.
7) The next place that we move has a 50% chance of being more permanent, but could also be a 4 year move or so, so investing in our first city wouldn't necessarily interfere with any near future plans to buy a primary residence somewhere else.
8) We would be buying the condo at the low point of this particular market, and although I don't know how to predict how fast prices will rebound, I expect that if we have 6+ years to hold on to it (2+ living and 4+ renting it) that it might appreciate by then.
What do you think? Any and all advice would be appreciated. For us there are no major emotional issues associated with this decision, instead we're just looking to do the most fiscally responsible thing. Taxes vs. landlord vs. mortgage company - it doesn't matter to us who we're paying, as long as we're optimizing our financial position.