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How Many Years of Life Does That House Cost?

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Re: How Many Years of Life Does That House Cost?

#61

Post by rconti »

jdavis703 wrote: post #22
magic_beans wrote: post #8

Is it really necessary to own a home if your mortgage is going to be 20 years long? I get that renting is like throwing money in a hole, but people are so much more nomadic these days. What's the big deal in moving once every 10 years once rent gets unbearable?

Rent gets unbearable way faster than every 10 years. My first place in the Bay Area had rent jump from $1800 (uncomfortable but doable), to $2300 per month. This was after just one year of being there, and since then I've noticed that 4 years later rents in that neighborhood are now at $3300 a month for a one bedroom.

And if it gets unbearable after 10 years, it's because the market went up, not because your unit went up. You can't just move to a different property in the same area and start back where you were from a rent perspective.

OTOH, I lived in Belmont CA on $2000 rent for a whole house blocks from caltrain for over 3 years, no adjustments.

Re: How Many Years of Life Does That House Cost?

#62

Post by pjc50 »

prklmn wrote: post #53
sbenitoj wrote: post #39

Earlier quoted context omitted.

Rent is NOT throwing money away, it is HIGHLY dependent on where you're living. There are MANY sunk one-time costs you have to pay when buying a home, including: --realtor commission (averages 6% of home price, or approximately 1.5 years of 30 year mortgage payments) --title fees (frequently 1% of purchase price) --other legal and bank fees The NYT has a buy vs rent calculator that helps make decisions like these: ht…

The one time costs involved in buying a house do not refute the idea that renting is throwing money away.

A mortgage is just renting the money instead of the house. In both cases you're paying for the time value of money. It's just that in many (but not all!) cases you can get a much better deal renting the money than renting the house.

Re: How Many Years of Life Does That House Cost?

#63

Post by ianai »

shados wrote: post #56
rconti wrote: post #47

Earlier quoted context omitted.

And of course the NYTimes calculator also factors in home prices appreciation. This is not really academic; it's fairly important. In cheaper housing markets with limited growth, it might be cheaper to rent because the expected cost of a major repair (and return on that investment) are both so low. Of course, you can't ever recognize the value of your house unless you sell it and move somewhere cheaper (or buy a 2nd…

Reverse mortgages are an option too, especially around retirement. I didn't do too much research and I'm sure on paper it's a scam, but with no kids and no one to really give the house to beyond charity when my wife and I kick the bucket, I am considering making my place part of my retirement plan. Or just sell it to pay rent for the rest of your life. Either way it's a pretty big boon.

Not really. End of life care can drag on and is expensive. Even if you're really lucky and net $1 million from your house a single illness could wipe that out quickly. Retirement homes cost much more than comparable rent/mortgages.

Re: How Many Years of Life Does That House Cost?

#64

Post by throwaway30yo »

prklmn wrote: post #53
sbenitoj wrote: post #39

Earlier quoted context omitted.

Rent is NOT throwing money away, it is HIGHLY dependent on where you're living. There are MANY sunk one-time costs you have to pay when buying a home, including: --realtor commission (averages 6% of home price, or approximately 1.5 years of 30 year mortgage payments) --title fees (frequently 1% of purchase price) --other legal and bank fees The NYT has a buy vs rent calculator that helps make decisions like these: ht…

The one time costs involved in buying a house do not refute the idea that renting is throwing money away.

You are not throwing it away. You are exchanging money for a place to live.

Re: How Many Years of Life Does That House Cost?

#65

Post by eloff »

magic_beans wrote: post #8

Is it really necessary to own a home if your mortgage is going to be 20 years long? I get that renting is like throwing money in a hole, but people are so much more nomadic these days. What's the big deal in moving once every 10 years once rent gets unbearable?

I'm going to offer an alternative idea on the rent-vs-buy discussion that I never hear. In most sane countries (not the US) you can achieve non-resident status and not have to pay taxes. In Canada this is possible if you rent, but not as a home-owner. You have to be out of the country at least six months a year and you lose your health coverage.

What you gain is not having to pay taxes. If you're working remotely on a software engineer's salary, that can free up over $50K a year. That's enough to pay your rent, and likely also your food, for a small family even in Canada's most expensive cities.

Taxes are also throwing money in a hole.

I think most people couldn't do it because they have kids (and don't want to homeschool), or one or both spouses have jobs in a physical location, or they just don't like nomadic living. But it's an interesting idea.

Re: How Many Years of Life Does That House Cost?

#66

Post by srj »

bluedino wrote: post #33
FLUX-YOU wrote: post #26

Earlier quoted context omitted.

> also, obviously, after 20 years you have no more payments. You have maintenance. And if something bad happens with the foundation, that's very expensive to fix. Unless you just plan to die and have the house demolished and the property sold (which is honestly preferable in some cases of inheritance). I had to pay $25k to have supports installed in the crawlspace and other mitigation to avoid foundation work. I migh…

Don't forget the roof that needs replacing every 15 or 20 years. Appliances. Furnace. Plumbing. Septic tank. Water lines on your property. Tree removal. Re-decorating and re-modeling. Replacing windows.

I think people generally maintain the homes they own to a higher standard than the ones they rent out. It's not equal in home ownership vs renting. The place I rent has the cheapest appliances possible, paint mostly chipped off on the steps, the flooring is from the 80s, etc.

If you look down a street where I live (Boston area) you can likely guess which units are rentals and which are owned.

Re: How Many Years of Life Does That House Cost?

#67

Post by srj »

rifung wrote: post #35
pjc50 wrote: post #16

Earlier quoted context omitted.

Do you want to have pets? Do you want to redecorate to your own taste? Can you even find anywhere to rent? Not everywhere has a liquid rental market. Moving only once every 10 years sounds great. Renting means maybe having to move on notice as short as one month. Back when I was renting I moved about every 3 years, although that was also house-sharing with other young professionals. Rent is usually more expensive tha…

> Do you want to have pets? At least in the competitive housing markets of San Jose and Seattle this is not much of an issue as every apartment I've visited allows pets and most even have accommodations for them as perks. I suppose there are limits though so maybe if you wanted to have 4 dogs that might not be allowed

I rented in Seattle with a pit bull that we adopted and it was challenging to find a place that would allow us.

Re: How Many Years of Life Does That House Cost?

#68

Post by cableshaft »

bluedino wrote: post #33
FLUX-YOU wrote: post #26

Earlier quoted context omitted.

> also, obviously, after 20 years you have no more payments. You have maintenance. And if something bad happens with the foundation, that's very expensive to fix. Unless you just plan to die and have the house demolished and the property sold (which is honestly preferable in some cases of inheritance). I had to pay $25k to have supports installed in the crawlspace and other mitigation to avoid foundation work. I migh…

Don't forget the roof that needs replacing every 15 or 20 years. Appliances. Furnace. Plumbing. Septic tank. Water lines on your property. Tree removal. Re-decorating and re-modeling. Replacing windows.

My brother, only a few months after buying his first house, had a tree in the backyard get struck by lightning, break in two and crush his neighbors garage.

The neighbors insurance paid for that, but then he still had to pay almost $3000 right away to get the rest of the tree removed from his backyard, because it was still in bad shape. Was an unpleasant introduction to the wonderful world of home ownership.

Re: How Many Years of Life Does That House Cost?

#69

Post by ghaff »

sbenitoj wrote: post #32
zaroth wrote: post #27

Earlier quoted context omitted.

That's funny, my takeaway was that the vast majority of the US has incredibly affordable housing. But I suppose if your call center employees simply must be living in downtown S.F. the answer must be that we just need lax zoning and higher density!

Ha, well in non-major cities you're right, but all the major cities cost an arm and a leg for the most part!

In addition to less expensive cities, in many in-demand cities (SF not so much), it's actually possible to live in many nice suburbs/exurbs for a lot less money. That's often even where most of the tech jobs are.

Boston/Cambridge? Expensive. But 45 mins or so out? Far less so. And you're closer to where most of the jobs are anyway. The urban cores may be a lifestyle choice. But it's a luxury choice in many cases. Not a place that someone actually has to live if they want to work.

Re: How Many Years of Life Does That House Cost?

#70

Post by monocasa »

throwaway30yo wrote: post #64
prklmn wrote: post #53

Earlier quoted context omitted.

The one time costs involved in buying a house do not refute the idea that renting is throwing money away.

You are not throwing it away. You are exchanging money for a place to live.

As opposed to exchanging it for a place to live, and getting some of that money back when you sell.
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