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The real cost of owning a home

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Re: The real cost of owning a home

#141

Post by wat10000 »

sakopov wrote: post #97
cosmic_cheese wrote: post #12

On the other hand, renting comes with hidden (and some not so hidden) costs too. The main one for me is the inherent precariousness that comes with renting. You don’t know how much longer you’re going to be able to stay in your apartment, whether that be due to rent hikes or the landlord deciding that they want to give the apartment to their nephew or any number of other things. The constant low level stress of knowi…

I would argue against this. I'm not sure owning is that much better. At the very least it's just as bad as renting if you bought in the past few years... I bought my home in 2023 and since then my monthly HOA payments doubled, my insurance premiums (nearly) tripled and my property taxes have gone up about $1000. Homeownership went from 35% to 45% of my monthly income. If you bought in the past few years, owning has a…

Buying into an HOA means you're effectively renting a portion of your living arrangements. And if the dues doubled in just three years then you bought into a mismanaged HOA, which makes it worse. There's not much you can do about insurance premiums (assuming you've shopped around for better rates) and property taxes, but definitely check the financial situation of the HOA before you buy, or avoid them entirely.

Re: The real cost of owning a home

#142

Post by foobarian »

Our_Benefactors wrote: post #129
foobarian wrote: post #120

Earlier quoted context omitted.

Once upon a time I had a car, a daily driver. I kept it clean, vacuum/wash/polish with crazy waxes and the works. Stressed out about people riding with dirty shoes, drinks, etc., and when I asked myself why, the usual self-justification was "ah it's for the resale value." Hearing relatives get charged various fees at lease returns just fed that attitude, even though I owned the car outright. One day it was time to re…

Of course, you should never sell the car to the dealer and should always make the effort to sell private party, which will often get you 50% or more greater than the dealers best offer.

Yes there are all those arguments. But it's a lot more work for still a pitiful amount of money.

Then on top of that after COVID dealer gave me $5k tradein for an Ecoboost car with a leaking cylinder wall, check engine light, missing parts, etc. where KBB was less than that. I really don't get it.

Re: The real cost of owning a home

#143

Post by jrflo »

someuser54541 wrote: post #3

Aren't quite a few of these concerns alleviated by owning a condo?

Condos come with another problem: you don't own the land. The condo itself is a depreciating asset unless maintained and money is put into the unit and the building. You're also exposed to the risk of the area becoming less desirable, newer condos being built nearby, general economic trends, mismanagment of the property, etc.

Re: The real cost of owning a home

#144

Post by lacewing »

I'm old enough to have owned a number of homes in a number of jurisdictions, so I'd caution that these numbers will differ significantly depending on where you live. For example, insurance is hugely influenced by fire risk, so a rural or semi-rural home can easily cost 4-5x as much to insure (and some insurers will give you "please go away" quotes, so it's important to shop around).

Similarly, taxes will depend on the locality, loan costs depend on the lender and the loan amount. Utility costs in SFBA can be easily 4-5x higher than elsewhere in the US, etc. So your totals could be easily 30% or 300% of what's outlined in the article.

The one important point that the article makes is that your ongoing costs will also vary dramatically depending on how much work you're willing to do yourself, especially in high-regulation, high-labor-cost areas such as SFBA. A basic job, such as replacing a leaky flush valve, can be hundreds of dollars in plumber costs, or $19.95 if you go to Home Depot. Hiring a painting contractor can cost thousands. Etc, etc.

I've also seen several homeowners outright taken advantage of. My main example in the US are various "mold remediation" contractors, who can help you in some really bad situations, but they're just as happy to charge you $20,000 to do nothing of value based on vague fears.

Re: The real cost of owning a home

#145

Post by Fernicia »

ApolloFortyNine wrote: post #119

>"renting is just throwing your money away" Unless you think landlords are running a charity, some part of your mortgage is going to them as profit (over a large enough sample of renters anyways), and some percentage of your rent is covering 'bad tenants' (which you're not, right?). Their entire improvement section is also something renters tend to not think about. It's a weird situation when renting that you aren't…

> Unless you think landlords are running a charity, some part of your mortgage is going to them as profit (over a large enough sample of renters anyways), and some percentage of your rent is covering 'bad tenants' (which you're not, right?).

You can make the same argument about a bank not being a charity and making a profit from selling you a mortgage (both are true but are not helpful indicators about rent vs buying). Similarly the interest you pay is insuring the bank against bad debtors, which you presumably will not be.

> With home ownership though, things like a modern kitchen, a shed, new laundry machines not only better your life today but also (likely) have some value add.

You can improve your living situation in a number of ways when renting. If you want a new kitchen or bathroom, rent somewhere new with those things. Renting also affords you the freedom to leave when things go from good to bad (crime, noise, building ammenities, etc.).

Re: The real cost of owning a home

#146

Post by vineyardmike »

quantified wrote: post #84
cosmic_cheese wrote: post #12

On the other hand, renting comes with hidden (and some not so hidden) costs too. The main one for me is the inherent precariousness that comes with renting. You don’t know how much longer you’re going to be able to stay in your apartment, whether that be due to rent hikes or the landlord deciding that they want to give the apartment to their nephew or any number of other things. The constant low level stress of knowi…

Being forced to move in the middle of the school year because the owner want to sell the house kind of sucks, though 5 years of a month-to-month was a bad idea. More landlords are asswipes than not, being able to control your own destiny has advantages. After all, you are paying all of the costs plus a premium for the rental, and you don't even get the paint or floor covering you want, let alone nice things.

Or you need to have decent tenant protection laws.

In SF, you can’t evict tenants because you sell the house, and you can’t evict tenants with kids during the school year (without a just cause).

Re: The real cost of owning a home

#147

Post by Finnucane »

turtlebits wrote: post #112

The Repair section of the article could have been mitigated by a inspection and negotiation before buying. Always negotiate repairs into the offer price.

If you live in a house long enough, you will have to deal with things. There will at some point, be a new roof, a new furnace. New windows. Some of it will be optional, some will not. If you are renting, part of your rent is going to the landlord to cover these things. And you are dependent on them doing it. One way or another you are the one paying. If you own, at least you have the choice of doing it the way you like.

Probably the biggest factor of considering the rent/buy question is how long to do you expect to be there. We paid off our mortgage after 16 years, so now it's 'free', except for ongoing maintenance and taxes. And we're looking at some nontrivial reno in the future: the kitchen is quite beat, and someday we'll need to deal with the asbestos siding (one of four layers on the house!). But it least it's our choice.

Re: The real cost of owning a home

#148

Post by thesuitonym »

It's true that there are hidden costs to owning but get this: Those costs exist regardless of who owns the house! When you rent, you are still paying those costs, but you don't have an asset when you're done. You actually have to pay more in taxes and insurance on a rental!

When you buy, you will pay a certain amount for 15-30 years, and then you only have to pay for the continuing maintenance. When you rent, you will pay a certain amount every month forever regardless of whether the property is paid off or needs any maintenance.

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