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The real cost of owning a home

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Re: The real cost of owning a home

#341

Post by goosejuice »

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…

I've rented a studio all the way to a 5 bedroom house. The difference in maintenance/upkeep for me has mostly been the yard. There's also the fact that cities typically have more demands on landlords.. meaning renters foot the bill/time on more maintenance items more in some areas. I think that's often overlooked when weighing the costs.

I sadly don't get much benefit out of renting beyond freedom of movement and higher cash on hand in my current place. Sometimes I've lost my freedom to stay though.

I have a, perhaps irrational, fear of getting stuck with a house.

Re: The real cost of owning a home

#342

Post by ocdtrekkie »

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…

Passing it down to your kids is huge. Unfortunately what I've learned is most people are incredibly selfish and do not actually care what happens to their family when they pass.

Renting and owning may not be all that financially different to you with a mortgage of 30+ years, but it will definitely be financially different to your heirs.

Re: The real cost of owning a home

#343

Post by lnsru »

em-bee wrote: post #96
quantified wrote: post #84

Earlier quoted context omitted.

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.

that's the nice thing about renting in germany. there this would not work, the owner can sell the house but they can't kick out the tenant. so whoever is buying is taking over the tenant. and while you can ask a tenant to move out if you need the house for yourself, that too has to consider the needs of the tenant. if they have kids in school it is almost impossible to remove them unless you go out of your way to hel…

That’s a very nice theory. Decent real estate first buyer will not even consider rented property. But there are enough unscrupulous shady people who will buy the property at a great discount and get the tenants out. You will be right according the law, but still mistreated. Will you enjoy abuse waiting 3 years for a court? Probably not. It’s not their first rodeo.

Re: The real cost of owning a home

#344

Post by tobadzistsini »

And yet the property will appreciate in value, barring the implementation of a land value tax, and negate those extra charges the article's author is enumerating. One can borrow against one's property and reinvest in the property and you'll still make money. No bank or credit union will ever turn down land as collateral for a loan because in this economic paradigm land remains the safest and best investment. Nothing there is really relevant and skeptical r

Re: The real cost of owning a home

#345

Post by ashley95 »

A big reason why people believe one should own their own home (or that it is prudent to do so) is due to the historical fact that land has gone up in value in many countries with strong population growth (such as the United States).

As the population of the US starts decreasing (due to lower immigration, and historically low birth rates) and the urbanization trend completes, it's unclear why the value of land should go up, and therefore why real estate should increase in value.

The rest of the debate is very dependent on things like tax treatment (e.g. SALT and property taxes), personal preference (stability of fixed rent vs right to stay forever/customize), and transaction costs.

Re: The real cost of owning a home

#346

Post by esalman »

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…

This.

Our household income is 300k, and I took a big risk purchasing a home in Socal where mortgage is 50% of our take home income. In a space of 1 year or so, we went from saving two out of four paychecks each month, to sinking two into mortgage each month.

For me, we have one kid and we plan to stay put for at least 10 years. It's a good school district. The quality of life is excellent considering the weather, outdoors, cultural diversity, things to do, and proximity to international airport. We have friends and family here.

But to me what mattered most is that I am 40, our income is going to plateau. Renting is good advice, but in 5-10 years, we won't be able to afford rent here, let alone buy. On the other hand, I can refinance now and bring my mortgage down to what I was paying for rent previously, and in 10-15 years be mortgage free at a place with all the benefits I mentioned above.

Re: The real cost of owning a home

#347

Post by philipallstar »

cma wrote: post #302
kridsdale1 wrote: post #254

Earlier quoted context omitted.

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.

That's pretty contingent. If you had Snapchat shares instead you'd be ahead.

Even selling up and putting the money into the S&P500 would've done a lot better than that[0], so I think it's a reasonable claim.

[0] https://investment-estimator.com/s&p-500-calculator says $850k in 2017 would be $2.8M by 2026.

Re: The real cost of owning a home

#348

Post by Mezzie »

arwhatever wrote: post #130
zeroonetwothree wrote: post #113

Earlier quoted context omitted.

I have had very good experiences with corporate apartments. They tend to have their shit together. Compared to renting from some random old guy that wants to “fix things himself”

Corporate apartments raise their rents in lockstep with the market, whereas at least some randos will leave it stable for some years in a row.

Also, if you're a marginal renter, e.g. can't make 3x the rent from a W2 and don't have a co-signer, credit issues, etc. then the randos are more likely to work with you.

My sister was a sex worker for a while when she was younger, and trying to do things like rent was difficult because her income fluctuated a lot (always enough to cover rent, but she'd save during good months for poor ones) and she was technically self-employed. Or if you're on any form of disability, or if you had a medical issue that trashed your credit, etc. People getting out of prison, and so on.

If you stray from the happy path, woe unto you when dealing with large companies.

Re: The real cost of owning a home

#349

Post by jandrewrogers »

defen wrote: post #323
jandrewrogers wrote: post #316

Earlier quoted context omitted.

The problem with leveraged investments is that they can put you deep underwater. Many people in Seattle that bought $1M leveraged with $100k now own a $800k asset. They've lost twice as much as they invested. They would have been much better off investing that in stocks without leverage.

Multiple people in this thread have mentioned the Seattle real estate market going to shit (for sellers) - is that related to tech layoffs or is something else going on? San Francisco's market is just as crazy as ever.

Seattle real estate has been trending downward for a couple years now. It isn't a single factor but the confluence of several. Initially it was only in some market segments but seems to have spread to most of them now.

The inventory of housing currently on the market is anomalously high and there are relatively few buyers. I know a few people that will be lucky to sell for as much as they paid a decade ago. People who bought during the COVID bubble are underwater.

This feels more like the beginning of a macro trend than a temporary blip.

Re: The real cost of owning a home

#350

Post by somehnguy »

Mezzie wrote: post #326
c0nsumer wrote: post #205

Earlier quoted context omitted.

You illustrate this nicely. Just something as simple as "that ceiling fan doesn't work so well, and squeaks once in a while when on high" can easily be remedied yourself when owning the house by just going buying and installing a new ceiling fan. Regardless of how handy one is, with a landlord that's generally not allowed without permission, the landlord often won't install as nice of one as you might like, etc. This…

If you live somewhere long enough and under a negligent enough landlord, you can just do a lot of those upgrades anyway and either take them with you when you leave or just chalk them up to practice for when you own a place. I've lived in my current apartment for 9 years and I've never met the guy who owns it now (it was sold). I'm also not getting my deposit back, so that doesn't matter. It's the big stuff that's an…

> They're not going to find out until I move out anyway.

Maybe. Probably, given what you've described. But you're still relying on an assumption and the behavior of someone else. It could be sold again tomorrow to an owner who has a real problem with those sorts of changes and it would be out of your control.

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