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The real cost of owning a home

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Re: The real cost of owning a home

#411

Post by pandaman »

TimorousBestie wrote: post #309
y1n0 wrote: post #274

Earlier quoted context omitted.

HOA drama sucks for sure, but just outside of my HOA controlled neighborhood, I see also the houses with junk cars in their yards and grass gone to seed. As much as I hate many stupid rules and seemingly unfair application of them, I do like that it mitigates against people that just don't give a shit about their property or the impact of their life choices on others.

> HOA drama sucks for sure, but just outside of my HOA controlled neighborhood, I see also the houses with junk cars in their yards and grass gone to seed. You don’t need a potentially abusive and/or rent-seeking HOA for this. My locality controls for all of these potential issues through local ordinances.

Though it could also be a case with a HOA, a government employee is much more likely to not give any fucks about local ordinances than the board of HOA, composed of people who are directly affected by violations.

Re: The real cost of owning a home

#412

Post by abalashov »

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…

Indeed. This is why I'm a preferential life-long renter, although I think the primary reason is that I can't stand living anywhere for more than 2-5 years. So much friction to move, unwinding this risky position very expensively, with loads of transaction fees stacked--I can't understand the appeal. Even owning a condo was enough for me to realise I don't want to own my own bare metal, and that I look at housing as a cloud service of sorts, where much of what I pay for is just for all operational questions to be someone else's problem and to relieve myself of the burden of owning and liquidating what I would otherwise have to CAPEX.

For me, it's hard to put a price on the reclamation of _time_ spent otherwise thinking about those issues, to say nothing of the money. I just don't have time to think about even 1/60th of what's involved in getting vendor quotes for roof reshingling or painting or whatever, and even if I do have the time, I'd rather pull my fingernails out than spend it that way.

I sure do miss that mortgage interest deduction, though. I had no desire to accrue equity in the property--and indeed, if I had more equity, I would have lost even more money than I did in the 2008 crash--but I loved my super high-interest loan. It meant that my most of my housing payment was tax-deductible, and that's fantastic. My only regret, besides buying itself, is that I didn't take out an interest-only mortgage.

However, this isn't a Great Recession sob story. The condo would be way too much work and cognitive bandwidth theft even in the best of times, and that's like a tenth of the structural, landscaping, etc. issues one has to think about with an SFH. No thanks, man. I have other stuff to do.

Re: The real cost of owning a home

#413

Post by shaewest »

zeroonetwothree wrote: post #180
turtlebits wrote: post #166

Earlier quoted context omitted.

Then don't worry about the cost of ownership because you're going to make it up in equity.

How does buying for a high price mean you will make it up? If anything it should mean the opposite.

Probably alluding to high demand rather than high prices. More demand, more likely you're win on equity

Re: The real cost of owning a home

#414

Post by Eridrus »

Galanwe wrote: post #303
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…

> 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. That is not the right way to see it. If you have the cash to buy upfront, then yes, real estate is not that good an investment, unless you have a loaded portfolio already and want to diversify a bit, get some high inflation hedge, etc. The real value of buying a home is lever…

This is only relevant when rates are low. Rates are currently higher than the growth you can expect in housing prices.

I have done repeated financial models of this over the last 15 years and it has never made sense to buy a house for me.

When rates were low, if I had bought a house and then stayed in it a long enough time to counteract transaction costs, it could have been ok, but in expectation, basically everyone buying a house would have been better off investing the money from their downpayment & repayments into the stock market.

Re: The real cost of owning a home

#415

Post by lapetitejort »

conorcleary wrote: post #296
craftkiller wrote: post #287

> the total settlement costs were about 3% of the value of the home > That's $12,777.92 to get the loan. This is something I don't quite understand when people talk about homes: they just bought a $425,930 home. If they're getting a 30-year mortgage with a 20% down payment they will pay a total of $902k at current mortgage rates. The closing costs are such a tiny fraction of what you're spending. You wouldn't go into…

Some of these numbers need federal limits/maximums on them, at least in some categories of 'home'.

In California, property tax can only go up 2% every year based on the original purchase price (prop 13). For my neighbor who bought their house in the 60s, this must be peanuts.

Re: The real cost of owning a home

#416

Post by usernametaken29 »

One thing the author does not think about is end of life depreciation. When you retire and drain your investment funds they very quickly will disappear and stop producing value, especially at any sustained rate. A house has none of these issues. Costs are relatively constant. Rent on the other hand. Well. Anyone who rents knows the cost goes up and will keep going up, if not simply for increased utilities. Another way of course is to die quickly once you retire but then what’s the point of savings anyway?

Re: The real cost of owning a home

#417

Post by carabiner »

steveBK123 wrote: post #405

Last summer I was reminded of the dichotomy of owning vs renting during the crazy heat wave in NY. Both my coworker and I had AC issues. For him, he called his landlord and that was it in terms of hassle. He then went after his landlord for a rent reduction due to the AC being an issue for a week. I instead had to buy a portable unit as a stopgap while I dealt with finding contractors to give me quotes on a new centr…

I had a towel bar fall out of the wall. I realized that that small repair would take a trip to home depot, buying plaster, paint, a paint brush, and probably some other crap. There are of course a million types of paint and brushes to get there. I'd have to research what makes sense. Something cheap but decent, I guess. I have no garage so what I do with the rest of the paint? Drive to the hazardous waste disposal in my city, which has limited hours. So maybe 3-4 hours of my time including watching youtube videos if I don't screw things up, and $50 of stuff.

I then sent a maintenance request to my landlord and they came the next day and fixed it in 15 minutes.

Re: The real cost of owning a home

#418

Post by whiplash451 »

steveBK123 wrote: post #405

Last summer I was reminded of the dichotomy of owning vs renting during the crazy heat wave in NY. Both my coworker and I had AC issues. For him, he called his landlord and that was it in terms of hassle. He then went after his landlord for a rent reduction due to the AC being an issue for a week. I instead had to buy a portable unit as a stopgap while I dealt with finding contractors to give me quotes on a new centr…

You are also reminded of the same dichotomy when you (the renter) get a letter from your landlord asking you to leave the premises you’ve liked a lot for the past few years.

Re: The real cost of owning a home

#419

Post by fragmede »

huhkerrf wrote: post #389
alistairSH wrote: post #382

Earlier quoted context omitted.

Sure, but you don't need to buy in an abusive HOA community. I live in a "town" (Reston, VA) that has a notoriously strict HOA. But, it mostly applies to buying/selling and home additions. And it's very consistent. Each subdivision within Reston also has its own HOA that's run by the owners and in charge of regular community upkeep. It works out, as long as you perform due diligence up front and know what you're buyi…

Genuine question: how can you know ahead of time? I could imagine you could have an HOA that seems reasonable until you get to know them.

You get a copy of the HOA bylaws before you close/finish buying. Read those bylaws to find out what rules exist. Some, like no having junker cars in your front yard, are going to be agreeable. Others, like the HOA gets to judge and prohibit certain flags, or the color of the paint on your house, are going to be vaguely worded, giving room for the HOA to be unreasonable. Additional bylaws can be introduced later, but usually reading the bylaws will you give your an idea of what you might be getting into.

Re: The real cost of owning a home

#420

Post by SirMaster »

bix6 wrote: post #403
SirMaster wrote: post #290

Earlier quoted context omitted.

I'm just a single guy, why do I need more than a small apartment which is like 1/4 the monthly cost of a home mortgage payment. I put the other 3/4 of that cost into index funds. Also saves me time not having to do things like mow and shovel which is quite valuable to me.

I said family which isn’t a reality for you yet.

I suppose you do say family. For me I don't really plan on having a family, so it semes like renting will always be a better option. Perhaps mainly because they don't really make houses small enough to match the cost of renting, or at least not in the area I want to be in.
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