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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?

#311

Post by TomMarius »

switch007 wrote: post #108
BoorishBears wrote: post #82

Earlier quoted context omitted.

>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'v…

> ...a top quality gym, yoga studio, apartment owned cafe, etc.). It's funny how different things are in different countries. I've read a few US rent-vs-buy articles and they often mention these uber cool apartment blocks. I think they're extremely rare and/or so expensive nobody's heard of them in the UK (outside of small, prestigious areas of London). Here, a majority of the flats are in blocks with just the accomm…

It's getting increasingly common in Prague upper-class apartment buildings.

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

#312

Post by shados »

tunetine wrote: post #133
shados wrote: post #56

Earlier quoted context omitted.

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.

Sell it and rent. The bank won't even come close to the true value of the home for a reverse mortgage.

Selling it means I can't live in it anymore. Renting is the ideal option, but if I'm 85 years old, maintaining a rental property or dealing with property managers would be tricky at best.

(My actual goal with my current property is to sell it once I'm having trouble going up the 3 flight of stairs leading to my unit and using the money to live in a much smaller place as people mentionned already)

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

#313

Post by 0xbear »

aceon48 wrote: post #299
0xbear wrote: post #225

Earlier quoted context omitted.

I know a dude who makes $800k/yr and still lives paycheck to paycheck. Lack of savings is not necessarily caused by lower income. People tend to shovel money out the door as quickly as it comes in.

What does he do to make that kind of money?

Manages about 20 people.

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

#314

Post by IanCal »

PoachedSausage wrote: post #274
IanCal wrote: post #263

Earlier quoted context omitted.

> Pensions are a Ponzi scheme, don't fall for it. Pensions are mostly just highly tax advantaged wrappers for investments now. They are most definitely not ponzi schemes. Your link is for a defined benefit pension, which is not typical anymore.

That's the point. Large numbers of current retirees have been promised unaffordable pensions.

Telling people to "not fall for it" sounds like talking about what people will currently be offered. Given the level of misunderstanding about pensions generally I think just telling people this is dangerous.

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

#315

Post by dahart »

OldSchoolJohnny wrote: post #302
dahart wrote: post #292

Earlier quoted context omitted.

> So sure, a mortgage in SF is $6k/mo. But rent might be $6k/mo as well -- and you don't earn any equity or tax write-offs while renting. When you rent, your money is gone. When you buy, you normally get most or all of it back later. There's barely any economic comparison between renting and ownership. The tax write offs is the one of the least of your concerns. People go completely and absolutely nuts when they end…

> When you buy, you normally get most or all of it back later. Whoa! No, not even remotely close.

Oh really? Please explain. I have sold a house before, and I got back more than I paid, after taxes and agent fees, after maintenance and repairs.

*keep in mind that "most" means better than 50%. Are you claiming that the average house sold in the US gets a worse than 50% return?

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

#316

Post by dahart »

astura wrote: post #298
dahart wrote: post #292

Earlier quoted context omitted.

> So sure, a mortgage in SF is $6k/mo. But rent might be $6k/mo as well -- and you don't earn any equity or tax write-offs while renting. When you rent, your money is gone. When you buy, you normally get most or all of it back later. There's barely any economic comparison between renting and ownership. The tax write offs is the one of the least of your concerns. People go completely and absolutely nuts when they end…

When I sell my house I'm not getting back all my property taxes paid, interest paid, closing costs, inspection cost, realtor commission, insurance payments, and routine maintenance costs.

Interest is a good point. But taxes are in the noise where I live, as is all the rest of your list.

Either way, we could debate a whole bunch of minor costs, and it's obviously not the same for everyone. But that would be missing the point completely.

If you sell your 500k house for a very very bad return of 125k, you will be 125k ahead of where a renter is. Renting returns nothing. Whether or not I get back 100% of what I put in, the point is when you rent you get nothing back.

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

#317

Post by astura »

dahart wrote: post #315
OldSchoolJohnny wrote: post #302

Earlier quoted context omitted.

> When you buy, you normally get most or all of it back later. Whoa! No, not even remotely close.

Oh really? Please explain. I have sold a house before, and I got back more than I paid, after taxes and agent fees, after maintenance and repairs. *keep in mind that "most" means better than 50%. Are you claiming that the average house sold in the US gets a worse than 50% return?

If we are using "anecdata" then I can say you'll never get your value out of your house - I personally know people who have sold their house for $5K, $20K, $30K, and $50K less than they bought them for. Hell, the entire city of Detroit, Flint, etc. has seen prices plummet so hard they are practically giving away houses and there is a huge arson problem - people are burning their houses for insurance money en mass.

In your "example", if you're very lucky and both buy and sell at the right time during a housing bubble then relocate to an area not experiencing a bubble, then maybe. (I believe you are severely underestimating the carrying costs of a typical house though, it's not just the big stuff.)

However, that's not even remotely close to the typical case. House prices rising fast enough to cover all those costs is indication of an unsustainable bubble.

https://inflationdata.com/articles/inflation-adjusted-prices...

>We can see that if you had bought a house at the peak in 1980 you would have lost purchasing power if you had sold in 1985 (not to mention transaction costs). And then for a little while around 1990 you would have been slightly ahead, but then through most of the 1990’s you would actually be losing money once again. So you’ve paid off half of your 30 year mortgage, you’ve paid taxes, insurance, maintenance, etc. and your house has not kept up with inflation!

You also have to keep in mind the economy of most towns and some cities is very, very volatile and depends heavily on 1-2 employers or industries. Those go away and there's economic collapse. When there's large economic collapse then buy buy home value.

(It's personal preference but I disagree with the idea of leaving family [besides spouse] any significant amount of money/assets when you die - most of my estate is going to charity upon my death)

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

#318

Post by kpommerenke »

PoachedSausage wrote: post #140
pcsanwald wrote: post #104

Earlier quoted context omitted.

Most people I know that don't have white collar jobs don't have any expectation they will ever be able to retire. I'd be very surprised if the majority of americans were in a position to be able to retire.

I'm in my thirties and work for a government funded research organisation doing work on a particle accelerator. I don't expect or want to retire, but then 'retirement' means different things. I would definitely want to retire if I worked as a brick layer. Pensions are a Ponzi scheme, don't fall for it. http://www.bbc.co.uk/news/business-41204209

Parent says "Pensions are a Ponzi scheme, don't fall for it."

While public pensions like social security have certain features of a Ponzi scheme, they can be sustainable forever, unlike other Ponzi schemes. In fact, they can be more efficient than everyone saving and investing for retirement themselves: https://www.economist.com/news/economics-brief/21727877-fina...

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

#319

Post by dahart »

astura wrote: post #317
dahart wrote: post #315

Earlier quoted context omitted.

Oh really? Please explain. I have sold a house before, and I got back more than I paid, after taxes and agent fees, after maintenance and repairs. *keep in mind that "most" means better than 50%. Are you claiming that the average house sold in the US gets a worse than 50% return?

If we are using "anecdata" then I can say you'll never get your value out of your house - I personally know people who have sold their house for $5K, $20K, $30K, and $50K less than they bought them for. Hell, the entire city of Detroit, Flint, etc. has seen prices plummet so hard they are practically giving away houses and there is a huge arson problem - people are burning their houses for insurance money en mass. In…

I'm not sure what your point is. I claim that you get back more than 50% of your money more than 50% of the time. I believe the historical data nation wide agrees with that. When you rent, you get 0% of your money back. 0% is a worse return than x% where x > 0. 0% return is a lot worse than 50%. And there are plenty of people who get better than 100%, I'm not saying it's everyone, but it's a fact that it's common.

So which would you rather have? A 50k loss on your house after 10 or 20 years, or have spent 600k renting a place in San Francisco for 10 years and having 0 dollars back?

There are good reasons to rent, but the long term economic benefits are not one of them. There's just no comparison, and bringing up taxes and fees and repair costs and whether inflation matches, none of that makes a single bit of difference.

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

#320

Post by matthewbauer »

twobyfour wrote: post #301
majormajor wrote: post #48

Earlier quoted context omitted.

Leave the coasts and you can find all sorts of multiple-million-people cities with far cheaper housing.

Are you sure about that? There are only a couple cities in the US other than NYC and LA that have populations of 2M or more, and only 10 cities total with populations above a million in the last census.

If you count entire metro areas, there are at least 50.
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