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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?

#81
post #53

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.

Technically correct, but my point is that these costs are frequently ignored and in order to make home ownership more profitable than renting these costs must be amortized over a very long period of time.

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

#82
post #45

The data was very interesting, but there wasn't anything meaningful mentioned that came out of the data, other than possibly where you should look to move to if you have flexibility. I personally bought a house in my early twenties. At the time it was roughly 2.5x my income. I've been there a few years and went through some changes to my employment, I now earn more making it easier. Over the course of ownership, in t…

>You don't need to sell your house for a profit (although we all would love to). Had you rented like @magic_beans wants you to, you might have lost 100% of that money and every year your rental price may go up, you might not be allowed to have pets, you can't make improvements you want; you can lose a lot of control with renting.

For the record, my apartment is pet friendly, you're allowed to paint the apartment, I've been allowed to change fixtures I don't like (such as replace their smart thermostat with a Nest), and there are amenities I could never afford myself (a proper private theater complete with movie theatre seats, a top quality gym, yoga studio, apartment owned cafe, etc.).

And this year want the chance to work in a new market so I'm just not renewing my lease. It took 5 minutes of filling out a form to decide I'm allowed to leave in 30 days with 0 financial burden.

As a 20-something year old I think buying a house in your 20s is a terrible idea unless you're talking very late 20s (practically 30s).

A huge investment feels like it'd be adding almost as much inertia to your life as a wife, kids, and settling down (from a financial standpoint it certainly is). It's an age at which even some people who think they have it all figured out enough to settle down don't (not that it's not an issue at other ages, but the early and mid 20s are a ripe time to do something about it when it happens), and the last thing you want to to do after you decide to make a change is to deal with a mortgage hanging over your head.

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

#83

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 guess it depends on where you live and what you're looking for. When we where looking for a house there simply wasn't anything to rent long term that matched our requirements. So the option simply wasn't there. It was buy or nothing.

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

#84
I like this concept a lot, but like most choropleth maps (i.e. maps that color-code a state or county for a given value), it's misleading because the this is really city-level, or even suburb-level data. I'm not sure what the bedt way to represent this data is; maybe a histogram of median property value of zip code vs population density?

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

#85

This is an awesome site, visually depicting how unaffordable housing has become in so many parts of the US. It's truly amazing how much the Fed (with perpetually low interest rates) and local restrictions on building (making it more expensive or impossible to build) have increased the cost of home ownership over the past 60 years. Anyone who's seriously considering purchasing a home should read The Housing Trap by Pa…

This more-so shows how affordable lots of the country is!

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

#86
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…

> after 20 years you have no more payments . You have no more principal and interest payments. You still have property taxes (~$1000/mo for me) and most will pay insurance (~$300/mo) and you'll have on-going maintenance; I think it's wise to ballpark the last at 1% of the house market value. I'm a two-time homeowner and it absolutely fits my family life situation very well, but it's a common fallacy that housing cost…

Ah yes; I'm in the UK where local taxes are levied on the occupant not the owner, so you have to pay them even if you rent.

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

#87
post #58

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…

(Full disclosure: Bay Area homeowner here) I can stomach the idea of renting for the rest of my working life. My renting life was good, had more cash to spare, good landlords, etc. What terrifies me is the idea that I'd have to keep paying rent when I retire.

Real estate probably won't be a part of the post-scarcity economy, otherwise I'd bet on just buying a home in 30 years while forgetting what a mortgage was for.

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

#88

Earlier quoted context omitted.

It's not like you avoid these expenses by renting. They're just rolled into your rent. You get to avoid thinking about them, of course. Although there is an economies-of-scale advantage to maintenance on multi-family dwellings.

The property group takes on risk if something like a roof needs replacing unless they just keep a lot of cash sitting around for just such a thing. They may also have access to better loans but I have no idea for sure. I don't want to keep a pile of cash around waiting for housing emergencies (personal emergencies are a different thing), and I certainly don't want to sell stocks to fix a roof if my roof fails during…

[deleted]

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

#89

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.

If your roof needs replacing every 15 years then there is something seriously wrong with the structural integrity of your house.

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

#90
post #86

Earlier quoted context omitted.

> after 20 years you have no more payments . You have no more principal and interest payments. You still have property taxes (~$1000/mo for me) and most will pay insurance (~$300/mo) and you'll have on-going maintenance; I think it's wise to ballpark the last at 1% of the house market value. I'm a two-time homeowner and it absolutely fits my family life situation very well, but it's a common fallacy that housing cost…

Ah yes; I'm in the UK where local taxes are levied on the occupant not the owner, so you have to pay them even if you rent.

Interesting. TIL this; thanks.

I like that approach as it makes clear the financial flows and put the tenant in the logical frame of mind of "am I getting what I'm paying for?" when considering new civic projects or other budget items.

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