Rent Vs Buy in Silicon Valley

By Karina Rook

This is a debate we’re having at the moment, well, more like a friendly discussion to help us decide what to do for housing here on the Peninsula. We arrived seven months ago when renting was the only logical choice due to time factors, financial factors and the uncertainty of whether we would like living in the Silicon Valley. Now that we’ve been here a while and we love it, it’s time to start making plans.

Benefits of renting

• Flexibility – if the office moves, or the kids need a different school we can move easily
• Carefree – all those annoying building issues are not our problem, we don’t vote on local issues, we don’t pay a huge property tax bill annually
• Nicer house – we get to live in a nice house in a nice area (but at a price!)

Benefits of buying

• Financially better – not throwing our money away, can claim interest on mortgage repayments as a tax deduction, can deduct home-related expenses, good asset
• Sense of belonging – generally feel more settled, can make longer term plans
• Make improvements – we can change the house if we want, more satisfaction

We would like to buy, but are at the mercy of the banks. We only just got a credit card, so we have to build up a good credit history to get a loan. We could sell our house in Australia, but given the expensive property market here, we’d still need to borrow to get a decent place.

Even if we get the finances sorted, actually winning a bid on a house is apparently pretty hard (they don’t do house auctions here). The people I speak to say you have to put multiple bids on multiple houses and there’s usually someone with more cash who gets the house in the end. It all sounds too hard….but here in California I was advised to get a realtor to help with the house hunting, as houses are often sold even before the first open house!