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The real cost of owning a home

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Re: The real cost of owning a home

#221

Post by inanutshellus »

jedberg wrote: post #164

The benefit of owning a home is almost always psychological, not financial. If you take the money you'd use for a down payment and mortgage and invest it instead (after paying rent) you end up in about the same place. But the psychological benefits can be huge. You have much greater control over the place you spend most of your time. You can change it to your liking. You don't have to worry about rent increases or ow…

Neighbors of owned-properties:

  - care about the long-term effects of their actions
  - care about the plan of their surroundings
  - plan to stick around
This is a HUGE part of the psychological benefit you refer to of buying.

Notably this is equally applicable to any occupant-owned property (e.g. condos > apartments).

Re: The real cost of owning a home

#222

Post by cmiles8 »

zeroonetwothree wrote: post #185
cmiles8 wrote: post #62

Over short term windows it’s very possible for renting to make more sense. Over the long term it’s very difficult for renting to come out ahead. If you’re talking about the same town over say 20 years then the chances of renting coming out ahead is near zero. In the US at least the tax system is also heavily setup to favor home ownership. Mortgage interest and real estate taxes (which are baked into rent) are tax ded…

I bought my house about 10 years ago and it has appreciated around 50% since then. That might sound good but the market is up massively and meanwhile all the price increase on paper means is that I pay more property tax. Since I have no plans to sell there is no actual benefit to me from the price increasing. I calculated it recently and in retrospect I would have been vastly better off renting and buying VOO with my…

“ the price increase on paper means is that I pay more property tax”

In almost all jurisdictions that’s not how property tax works. You’d only pay proportionally more if your home went up more in value than your neighbors. Also, property tax goes up on rentals too, it’s just baked into the rent vs something a separate charge. In the US the homeowner gets to deduct all or part of that tax from their income taxes while the renter must pay that with after tax dollars.

Re: The real cost of owning a home

#223

Post by bloomca »

jrflo wrote: post #153

A lot of discussion of the cons without discussion of the pros. For example: 1) your home is a hedge against inflation, your $2000 to interest sounds terrible when rent is $2500, but doesn't sound so bad if rent rises to $3500. If you live in your home for long enough, this is all but guaranteed. 2) your home is a leveraged investment. You may only be getting 4% per year in appreciation, but that's 4% gains on the to…

The biggest advantage of buying a house is that it forces people to actually put money into a giant savings account which is not easily accessible. Otherwise people just spend the vast majority of the money they have. As an investment, houses are historically mediocre outside of some hot areas.

Re: The real cost of owning a home

#224

Post by hdgvhicv »

shadowpho wrote: post #109
mholm wrote: post #6

Beyond the financials, the psychological impact of both being able to make greater-than-superficial changes, and having extremely predictable payments for years without worrying about substantial rent increases, is substantial. I redid/improved the bathroom to exactly what I wanted. I renovated the kitchen. I added paneling to the walls. I added a few outlets to rooms that needed more. I wouldn't do these things in a…

> and having extremely predictable payments for years I’d argue rental is more predictable. Housing has a huge amount of upkeep — $10k ac, $5k water heater, $20k roof…

American homes are weird that roof costs are something that occurs.

Last house I owned in the U.K. was 60 years old, original roof. Was advised it might need $10k of work if I wanted to out 10kWp of solar on it to the weight of the tiles.

$180 a year into a “roof fund” doesn’t seem extreme to me.

Re: The real cost of owning a home

#226

Post by tencentshill »

mholm wrote: post #6

Beyond the financials, the psychological impact of both being able to make greater-than-superficial changes, and having extremely predictable payments for years without worrying about substantial rent increases, is substantial. I redid/improved the bathroom to exactly what I wanted. I renovated the kitchen. I added paneling to the walls. I added a few outlets to rooms that needed more. I wouldn't do these things in a…

>says local homeowner, 2007

Re: The real cost of owning a home

#227

Post by ThinkBeat »

Your rent payments now, may be quite different in a few months. If you rent an apartment in a desirable location, which is far easier than owning a house in a desirable location, then rent payments are huge.

And comparable or worse than owning a house in farther out.

Your luck with landlords can wary a lot, and your rent payments may increase substantially with little notice. The landlord may also sell the building with either different management or repurpose it for something else and you will have to find a different apartment.

You may also suddenly have unpleasant neighbors. That is true with a house as well, but the distance between you and them is closer in an apartment.

As a dog lover, If you wish to have a big dog your may not be allowed to. If you want a yard to kids to play, you cant. If you want chickens you cant. (I know many in Denver who do) If you wish to install extra cooling /AC/heatpump you probably cant.

None of that negates your arguments fully, but the case is far from as black and white as you make it.

Re: The real cost of owning a home

#228

Post by hunterpayne »

01100011 wrote: post #123
danesparza wrote: post #35

Buying a home is a hedge against inflation. Renting has no similar protections. Your choices are, "Pay the (increased) rent" or "Move"

Rent control changes the math on this. Obviously location dependent but it can have a significant effect.

The markets with rent control have astronomical increases in rent when compared to markets without rent control. Also, you lose supply when there is a unit that it doesn't make sense to renovate because the future rent won't be high enough to cover it. So it remains unrented instead.

Re: The real cost of owning a home

#230

Post by babelfish »

FrustratedMonky wrote: post #26

Is there someplace that takes all of these inputs. Then graphs them over 10 or 20 years and include some adjustment for inflation? I didn't see in article any discussion about mortgage rates versus appreciation versus inflation. Article did sum all the inputs/outputs, and came out at loss. I'm just wondering if there is some other trends over 10 or 20 years that make the house better.

https://www.nytimes.com/interactive/2024/upshot/buy-rent-cal...
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