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A Growing Problem in Real Estate: Too Many Too Big Houses

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Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#201

Post by malvosenior »

Balgair wrote: post #116
andechs wrote: post #114

Earlier quoted context omitted.

It's similar to a telecommunications giant - as the customer, you need to pay a cost of switching (moving expenses, hookup fees etc.). So it's in their best interests to try to squeeze customers when possible, even with the occasional person that moves out, they'll net a lot more from tenants who just don't bother to dispute the increase.

True! We've decided to be nimble, and it does take a toll (no pool tables, no big patio furniture, smaller couches, etc). But saving the cash is worth it to us. 12% on 1000k/mo rent comes out to an extra 1440/year that could be saved. To us, such a thing is worth the weekend of moving hell.

Don't you also lose a lot of the deposit money you put down on the old apartment and the services that went along with it though? Not to mention that moving is more than a weekend of shuttling around possessions (if you don't own much), you also have to change your address with everyone, sign up for new utilities... I always burn a lot of money and time when moving.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#202

Post by cblum »

hn_throwaway_99 wrote: post #93

One of the trends that I can only hope continues is getting rid of this idea that home ownership (especially single family home ownership) is the American dream. I live in and own a detached single family home (was a compromise with my spouse) and to be honest, I hate it. I hate having to take care of the yard, to deal with unreliable tradespeople when things break, to deal with the huge expense of minor home repairs…

Glad to see this near the top and glad to know I’m not the only one who thinks like this.

Like you, I only own a place as a compromise with my wife. And like you, I hate everything that comes with homeownership. People don’t realize there are a lot of hidden costs in owning a home.

When you rent, if you secure a 12 month lease, you know exactly how much you’re spending in housing over the next year.

When you own, all bets are off. This year for example we’ve already spent a couple thousand dollars on appliances that broke. There are things around the place we know are gonna need repairs soon and those are gonna cost us a few hundred more.

Our situation is compounded by being under an HOA, so special assessments are always a possibility.

I know two people who sold their homes and went back to renting specifically because they couldn’t put up with maintaining a home anymore.

I saw renting as paying for a service. I know I wasn’t building equity, but I saw it as paying for not having to worry about all the crap I have to worry about now. Any issue was a phone call and $0 away from getting resolved and the maintenance folks were always awesome at the place where we lived.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#203

Post by thorwasdfasdf »

hn_throwaway_99 wrote: post #93

One of the trends that I can only hope continues is getting rid of this idea that home ownership (especially single family home ownership) is the American dream. I live in and own a detached single family home (was a compromise with my spouse) and to be honest, I hate it. I hate having to take care of the yard, to deal with unreliable tradespeople when things break, to deal with the huge expense of minor home repairs…

One way to think about it is the Spread between the cost of owning vs the cost of renting. For example, in SF, the spread is very small and hence favors the renter.

Here's an example: In SF, your cost of ownership is roughly 2% per year (1.4% property taxes, 0.5% for Earthquake Insurance, 0.3% for repairs and depreciation and HOA), which comes to a total of 2.2%.

The average Rent for an equivalent house is roughly 3% of the purchase price per year. So the spread is just 0.8%. Which means, if you can take the equity you would have put into the house and put it somewhere else, as long as you get a 0.8% real return (easier said than done with the high PEs we're facing), then you'll be ahead with renting. And of course, if you need to do a mortgage as most do, that adds a additional 1-3% to the cost of ownership making it even more in favor of the renter.

Now keep in mind, here in SF, it's pretty extreme. Most places have a much larger spread between renting and owning.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#204

Post by cblum »

LarryDarrell wrote: post #118
hn_throwaway_99 wrote: post #93

One of the trends that I can only hope continues is getting rid of this idea that home ownership (especially single family home ownership) is the American dream. I live in and own a detached single family home (was a compromise with my spouse) and to be honest, I hate it. I hate having to take care of the yard, to deal with unreliable tradespeople when things break, to deal with the huge expense of minor home repairs…

When I call the super they drag their feet, do a half-assed job, take a dump in my bathroom, and then I get a rent increase for "improvements" they've made to the property. I used to own a 1000 sq ft cape cod that was built in 1942. I fixed everything myself and since it was small, nothing could really get out of hand. I believe most of the pain involved in home owning lately has come from bigger houses with more com…

Did you enjoy making repairs though? In my experience that’s what makes people either love or hate owning their place.

Personally I loathe doing any kind of maintenance work. I hate dealing with drywall, paint, wiring, pipes, and whatever else you have to deal with when maintaining a home.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#205

Post by Wowfunhappy »

cblum wrote: post #202
hn_throwaway_99 wrote: post #93

One of the trends that I can only hope continues is getting rid of this idea that home ownership (especially single family home ownership) is the American dream. I live in and own a detached single family home (was a compromise with my spouse) and to be honest, I hate it. I hate having to take care of the yard, to deal with unreliable tradespeople when things break, to deal with the huge expense of minor home repairs…

Glad to see this near the top and glad to know I’m not the only one who thinks like this. Like you, I only own a place as a compromise with my wife. And like you, I hate everything that comes with homeownership. People don’t realize there are a lot of hidden costs in owning a home. When you rent, if you secure a 12 month lease, you know exactly how much you’re spending in housing over the next year. When you own, all…

> When you rent, if you secure a 12 month lease, you know exactly how much you’re spending in housing over the next year.

Only for exactly 12 months though. After that, your rent could double for all you know, and there’d be nothing you could do. You can move, of course, but now you’ve been forced to upend your life.

I live in a rent stablized apartment, and I feel lucky not just because my current price is lower than market rate overall. But of course, that’s not a scalable economic solution.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#206

Post by dawnerd »

hn_throwaway_99 wrote: post #93

One of the trends that I can only hope continues is getting rid of this idea that home ownership (especially single family home ownership) is the American dream. I live in and own a detached single family home (was a compromise with my spouse) and to be honest, I hate it. I hate having to take care of the yard, to deal with unreliable tradespeople when things break, to deal with the huge expense of minor home repairs…

Flip side, I get most/more of my money back by owning a home so I look at it like free rent for just doing maintenance. Buy a newer home, less problems.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#207

Post by Balgair »

malvosenior wrote: post #201
Balgair wrote: post #116

Earlier quoted context omitted.

True! We've decided to be nimble, and it does take a toll (no pool tables, no big patio furniture, smaller couches, etc). But saving the cash is worth it to us. 12% on 1000k/mo rent comes out to an extra 1440/year that could be saved. To us, such a thing is worth the weekend of moving hell.

Don't you also lose a lot of the deposit money you put down on the old apartment and the services that went along with it though? Not to mention that moving is more than a weekend of shuttling around possessions (if you don't own much), you also have to change your address with everyone, sign up for new utilities... I always burn a lot of money and time when moving.

> Don't you also lose a lot of the deposit money you put down on the old apartment and the services that went along with it though?

Wait, what? It's a deposit, you get it back at the end of the lease.

Like, granted, if you have a lot of damage to the carpets, sure, you're gonna be out $80 for the cleaning of them. But I've always gotten it back in full after a month or so.

For me, moving is litterally a weekend (maybe including a Friday afternoon). We really don't have much to move. I'm not joking.

Also, my state allows you to just forward the mail to the new address for free. It only lasts a year, but you can re-up that at any time. We've just done that without much worry and we also have a lot of online stuff that works through the phones and whatnot.

I guess I'm just old hat at doing this kinda moving stuff. It's not much stress for me, though you are right, it is some extra stress. For us, it's worth the savings.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#208

Post by cblum »

maxsilver wrote: post #98
hn_throwaway_99 wrote: post #93

One of the trends that I can only hope continues is getting rid of this idea that home ownership (especially single family home ownership) is the American dream. I live in and own a detached single family home (was a compromise with my spouse) and to be honest, I hate it. I hate having to take care of the yard, to deal with unreliable tradespeople when things break, to deal with the huge expense of minor home repairs…

I also hate maintaining a detached single family home with a yard. I also hate being responsible for the fixes. But that situation is still far better than renting. When we rented, we were subjected to eviction at any time, for nearly any reason, for basically no notice (60 days, which in the US is effectively zero notice). Your subjected to every whim the crazy wildly-irrational housing market throws at you (we've h…

>housing security

There is no such thing unless your home is paid off.

If you have a mortgage and are hit by a catastrophic life event that leaves you without a job and depleted of your emergency fund, your home is gone.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#210

Post by cblum »

Wowfunhappy wrote: post #205
cblum wrote: post #202

Earlier quoted context omitted.

Glad to see this near the top and glad to know I’m not the only one who thinks like this. Like you, I only own a place as a compromise with my wife. And like you, I hate everything that comes with homeownership. People don’t realize there are a lot of hidden costs in owning a home. When you rent, if you secure a 12 month lease, you know exactly how much you’re spending in housing over the next year. When you own, all…

> When you rent, if you secure a 12 month lease, you know exactly how much you’re spending in housing over the next year. Only for exactly 12 months though. After that, your rent could double for all you know, and there’d be nothing you could do. You can move, of course, but now you’ve been forced to upend your life. I live in a rent stablized apartment, and I feel lucky not just because my current price is lower tha…

True, but from my perspective moving is a small, point in time hassle that you go through every couple years as a renter, as opposed to a lifelong stream of issues that you have to deal with as a homeowner.
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