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The real cost of owning a home

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Re: The real cost of owning a home

#331

Post by 1123581321 »

anthonypasq wrote: post #263
1123581321 wrote: post #253

You come out ahead with home ownership if you buy the right-sized home and stay there. Homes almost always offer more space and utility for less than rent would, assuming the rental even allows you to do what you want to do with your home or at your home. Staying put reduces the time and money you spend on borrowing, closing and moving, but most importantly, it keeps you from lifestyle inflation that is the biggest f…

> Homes almost always offer more space and utility for less than rent would 1. you can rent a single family house so the space and utility are the same 2. if interest rates recently increased very rapidly, the owner can afford to charge rent much lower than the current mortgage would be because they are locked into a lower interest rate.

I don't think so.

A rental house is almost always more expensive if it's an apples-to-apples space, or the renter's use of it is significantly restricted even though it looks similar. Sometimes both.

There can be temporary mispricings of rent vs mortgages, but they correct, and they go in both directions. There are always small mispricings in housing markets that let individuals do exceptionally well (or be ripped off.)

Re: The real cost of owning a home

#332

Post by kylehotchkiss »

ramesh31 wrote: post #29

Having your own home and property where no one on earth can tell you how to live: priceless. Maybe home ownership is becoming a luxury, but humans don't exist in financial spreadsheets. The intagibles of SFH ownership are worth literally everything to me after a lifetime of renting. It's also absolutely a class differentiator in the US. If you're behind on your rent and getting evicted, that's seen as a personal mora…

You've never had a HOA have you

Re: The real cost of owning a home

#333

Post by markdown »

kridsdale1 wrote: post #254
rwmj wrote: post #246

Earlier quoted context omitted.

But the same argument applies to landlords too. Why are they willingly losing money?

I’m a landlord. I’m losing money because the Seattle market went to shit and nobody will buy this place. I bought for $850k in 2017. Selling now asking $899k and no-one’s buying. Think of my ARR with inflation and opportunity cost here. I sold Facebook shares to get this. I have made zero return from rents overall. I’d likely have earned $1M if I hadn’t sold those shares.

Can I ask why you're selling?

Do you happen to be a young person looking to move for better prospects (economic migrant)?

Re: The real cost of owning a home

#334

Post by appreciatorBus »

kennywinker wrote: post #320

For renting to be a better deal than owning, one of two things has to be true: 1. Your landlord is losing money Or 2. The rental market is dominated by landlords who own outright, or bought long enough ago that their cost is much lower than the cost of owning is now. I’ve never seen #1 happen, and the only place i’ve lived where #2 was the case the market has now adjusted and it’s very much not true anymore.

Just like in the production of other durable goods, the lower bound on price (rent per sqft of floorspace per month) has a relationship with opex, capex, & financing costs, but it's only binding when we are talking about a very small scale - and individual with a mortgaged property trying to get into rental.

Buildings last 60-100 years. It does not take that much over building in a previous era to decimate the bargaining position of landlords of a future era. We have been using the law to prevent this horrible no good outcome /s for the last 100 years or so. We can stop anytime.

Re: The real cost of owning a home

#335

Post by jedberg »

monegator wrote: post #324
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…

Yeah, no. Fuck renting. It may be ok for 5 maybe 10 years, while you're figuring yourself out, but after that it's just wasted money. If you buy property it will be yours, forever. You will pass it down, you will be forever part of the community, and your children, and so on. Both my parents come from big farmer families, and lots of poverty. When my grandparents managed to end serfdom in the late 50's and their rent…

I probably should have put a big caveat in my comment: In the USA. Other countries are a whole other puzzle.

Re: The real cost of owning a home

#336

Post by anthonypasq »

1123581321 wrote: post #331
anthonypasq wrote: post #263

Earlier quoted context omitted.

> Homes almost always offer more space and utility for less than rent would 1. you can rent a single family house so the space and utility are the same 2. if interest rates recently increased very rapidly, the owner can afford to charge rent much lower than the current mortgage would be because they are locked into a lower interest rate.

I don't think so. A rental house is almost always more expensive if it's an apples-to-apples space, or the renter's use of it is significantly restricted even though it looks similar. Sometimes both. There can be temporary mispricings of rent vs mortgages, but they correct, and they go in both directions. There are always small mispricings in housing markets that let individuals do exceptionally well (or be ripped of…

>I don't think so.

this isnt a valid response. you are just wrong. https://constructioncoverage.com/research/cities-where-its-c...

Re: The real cost of owning a home

#337

Post by colordrops »

darknavi wrote: post #330
dividefuel wrote: post #315

Beyond financial costs, I was caught off guard at how much time home ownership took up. House maintenance and projects have taken up most of every single weekend of mine for the past few years. Part of it is simply that I bought a house with more space than the places I usually rented. More to clean, more to maintain, more things that can go wrong, etc. But the biggest thing is that I'm the only one in charge of main…

> House maintenance and projects have taken up most of every single weekend of mine for the past few years. Mine come and go but it's no where near every weekend since I've purchased in 2019. What sort of things occupy this much time?

Not gp, but I bought a fixer-upper and it was at least weekends for the first two years, then slowed down quite a bit after that. Now it comes in fits and starts similar to you.

Re: The real cost of owning a home

#338

Post by bombcar »

gib444 wrote: post #252
inanutshellus wrote: post #221

Earlier quoted context omitted.

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).

Can attest to this, living on a street which each year sees houses sold off to landlords, and now there are very few of us occupying-owners left. The renters all have rubbish in their front and back yard, have more pets that they let bark and poo everywhere, smoke weed etc.

This has more to do with how the neighborhood is going (literally “to the dogs”) than it does with renting - you’d be surprised at the houses that look owner occupied but are actually rentals.

Re: The real cost of owning a home

#339

Post by rurp »

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…

Totally agree with all of this. When I was younger I'd heard that owning a home was financially a no-brainer so many times I took it as fact. Boy was I in for a surprise when the reality of actually owning a home kicked in. It's not just the less obvious overall costs that add up, it's also the variance. At any point you can be hit with a sudden expenditure of thousands or tens of thousands of dollars for a major repair.

Owning does give you a lot more control over your life in certain ways, which some will find a lot of value in. If you're someone who likes doing home improvements then buying a house makes a lot of sense.

Whether or not you plan to stay in the area for a while is probably the biggest factor. Buying a house makes it a lot harder to move in the future, but it also means you can't be forced to move. I had a horrible rental experience where I suddenly found out I had to move on short notice. It happened right after starting a stressful new job. Combining those two stressors made for some rough months.

I know a lot of other folks with similar stories of having to scramble out of a property on short notice. Maybe the rent gets jacked up to an unaffordable level, or maybe the landlord who said they were renewing the lease suddenly changes their mind.

Re: The real cost of owning a home

#340

Post by ramesh31 »

kylehotchkiss wrote: post #332
ramesh31 wrote: post #29

Having your own home and property where no one on earth can tell you how to live: priceless. Maybe home ownership is becoming a luxury, but humans don't exist in financial spreadsheets. The intagibles of SFH ownership are worth literally everything to me after a lifetime of renting. It's also absolutely a class differentiator in the US. If you're behind on your rent and getting evicted, that's seen as a personal mora…

You've never had a HOA have you

Nope, never would.
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