Rent vs. Buy depends on location location location

First off: If you don't think this is a bubble akin to the NASDAQ in 2000, this chart may change your mind.

In the DC area it makes sense to rent. The mortgage payment on the 3 bedroom condo I rent for--this hurts to write--$1600 a month, if I bought a similar place right now, would be about $2600 a month (assuming a $350K price). This does not even include $300 monthly condo fees (which my landlord pays).

If I had bought at peak prices back in December, like my landlord who paid $420K, the mortgage would be over $3000.

Condos have taken a dive here due to overbuilding. Townhomes are close behind- two weeks ago I stopped by a Pulte sales office for "manor style" townhomes, 24' wide as opposed to the usual 16 or 18. The asking price for the cheapest model was $535,000. Since then they've dropped it to $450K. That's a 16% cut. The homebuilding industry is hurtin', as a look at this year's 40-50% tumble of stocks like Pulte (PHM), Toll Bros. (TOL), and KB Home (KBH) indicates.

The neighborhood mentioned above is in Loudon County, Va, which the census bureau just called the wealthiest county in the US, with a median household income of $96,500. I work/rent in #2, Fairfax County, where the median income is a mere $94K. And yes, my household pulls in significantly less than said median.

So I am renting.

The whole "real estate bubble" argument is funny in that people are more polarized about it than Democrats vs. Republicans. Check out your local Craigslist housing forum if you don't believe me- there is no middle ground. My eyes tell me prices are dropping, but still unrealistic. $350K for a 3-bedroom condo may sound great compared to last year's $420, but compared to five years ago's price of $150K or most other suburbs' of $200-250, it's ridiculous.

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