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The real cost of owning a home

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Re: The real cost of owning a home

#491

Post by natebc »

bombcar wrote: post #482
asdff wrote: post #470

Earlier quoted context omitted.

>But the biggest thing is that I'm the only one in charge of maintenance. There's no one person I can call for every single problem. Keeping track of regular maintenance, performing that maintenance, and learning how to DIY things takes a lot of time. And even if I want to pay someone to do it for me, I still have to research contractors, coordinate estimates, and schedule the project. And I still need to learn enoug…

If you treat your house like a rental that you rent to yourself, you can avoid a bunch of headaches - mainly because you’ve given yourself “permission” to spend on it.

wait ... There are landlords out there who will "spend on it"?

Mine took 3 weeks to replace a broken HVAC when it was 35 degress out. 5 days to fix a toilet that when flushed dumped sewage into my downstairs neighbors ceiling.

Maybe if you're treating yourself as a tenant but your run of the mill rent extracting (or worse, middle man) landlord is the cheapest creature on the land.

Re: The real cost of owning a home

#492

Post by [deleted] »

alistairSH wrote: post #382
TimorousBestie wrote: post #309

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. 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.

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…

[deleted]

Re: The real cost of owning a home

#493

Post by asdff »

strongpigeon wrote: post #175
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…

> You don't have to worry about rent increases I'd also argue there are financial advantages (on top of the psychological ones) to the price stability as you don't have to hedge against your housing cost shooting up as much.

Depends where you live. CA has prop 13 but other places you are reassessed regularly and plenty of homeowners are surprised to get priced out of their homes.

Re: The real cost of owning a home

#494

Post by Paracompact »

jstanley wrote: post #298
Paracompact wrote: post #280

Earlier quoted context omitted.

> I, and most people I know who have invested in home ownership over the past 30-40 years, have done way better than we could ever have in the stock market or 401k. https://www.macrotrends.net/3072/us-house-price-index (~3x in the past 30 years, about 3.7% return per year) https://www.macrotrends.net/2324/sp-500-historical-chart-dat... (~15x in the past 30 years, about 9.3% return per year) This is in line with conve…

You're missing that most people are able to buy houses on borrowed money, so their housing investment is effectively levered up 10x or more, at least at the beginning. It's not a choice between $1m in housing appreciating at 3% and $1m in stocks appreciating at 9%. It's a choice between $1m in housing appreciating at 3% or $100k in stocks appreciating at 9%.

The borrowed money isn't free from interest. There's no numerical sense in borrowing money at 5%+ interest to fund an investment appreciating at 3%. Some schemes might advantage it further (such as leveraging your mortgage with your retirement funds) but then we might as well also discuss further disadvantages compared to renting, such as upkeep and property taxes.

Back around 2020 when mortgage rates very briefly dipped below 3%, there could have been an argument. But such is no longer the case and not likely to return soon.

This guy breaks down the analysis very cleanly to a first-order approximation, using 2019 figures: https://www.youtube.com/watch?v=Uwl3-jBNEd4

> It's a choice between $1m in housing appreciating at 3% or $100k in stocks appreciating at 9%.

Just to drive the point home: It would be $100k in stocks appreciating at 9% and monthly rent subtracted, or $1m in housing appreciating at 3% and a $900k debt growing at 5%+ interest.

Re: The real cost of owning a home

#495

Post by jonplackett »

This doesn’t factor in the growth in the value of your house, which mostly happens tax free (in the uk at least)

We bought our house 10 years ago and it’s basically doubled in value since then. Which is way more than the money I’ve spent on interest.

It seems like this is also based on buying somewhere with a super low deposit, which I agree is probably a bad idea.

Re: The real cost of owning a home

#496

Post by bombcar »

barchar wrote: post #457
wwweston wrote: post #365

Earlier quoted context omitted.

Love that the two most solid pro-homebuying points I've ever encountered (jedberg's about the psychological benefits, yours about leverage) immediately surface in an HN discussion. It's probably worth making a closer comparison though: * Buying a House on Loan: commit to paying off a $450k loan over 30 years at 5% interest, with an immediate $50k down payment and the home itself as collateral. So ~$2500/mo payments,…

Eagh, the leverage really isn't that cheap, and you can think of renting as giving you cheap leverage too (it's just your borrowing the house instead of the money).

The leverage only matters in an appreciation market (which we’ve been spoiled with in the USA since boomertimes). If you distill the math on assumed zero appreciation (or zero “real” appreciation) it becomes not so terribly pretty.

It’s really a form of various hedges wrapped up with a bow, that for many people is desirable (and since we HAVE had appreciation it doesn’t “turn out bad” most of the time anyway).

Anyone who says “renting/buying” is the only way to go is missing something.

Re: The real cost of owning a home

#497

Post by brailsafe »

anthonypasq wrote: post #265
huhkerrf wrote: post #261

Earlier quoted context omitted.

> 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. Not all, but a lot of the debate between renting and owning include something like this, but you can rent a home, and you can buy an apartment.

very weird how so many people are using apartments vs single family homes as a variable in discussing renting vs buying

I think it's because there's only a tenuous sense of control with things in-between, and to some extent SFHs that have strict HOAs. I mentioned in another comment that although in theory (in the US & Canada anyway) you can buy an apartment or duplex or townhouse, but as far as I'm aware you only gain marginal control over what you can do to modify it if you wanted to, and the advantage to owning largely comes down to owing the bank vs owing a landlord, but otherwise (sometimes even with SFHs without HOAs) you are beholden to the local bureaucracy if you want to make any significant changes condo strata and/or city permits). Seems like buying a non-SFH for any significant amount more than renting the same place is just trading the fear of eviction for the burden of debt, and buying a SFH is just debt+burden but you get a garden or something.

Re: The real cost of owning a home

#498

Post by anonymars »

sethammons wrote: post #483
darknavi wrote: post #330

Earlier quoted context omitted.

> 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 op, for for me: I have a 4" hole in my cedar siding that I have to craft a custom replacement board for due to a woodpecker. I have a leak in _two_ bathroom shower fixtures that drip into the basement. The first, I started fixing and realized the copper pipe needs to be re-routed. The second, I just turned off the water; I'll get to it later. I have two retaining walls with water routing issues. I need to figure…

Related: https://www.youtube.com/watch?v=_UZFI-8D5uA - 40sec ("What does it look like I'm doing?!)

Re: The real cost of owning a home

#499

Post by bombcar »

barchar wrote: post #464
tootie wrote: post #387

Earlier quoted context omitted.

I always consult this calculator: https://www.nytimes.com/interactive/2024/upshot/buy-rent-cal... It forces you to make some assumptions on market returns and such, but it gives a pretty clear picture. The biggest variable is how long you expect to live in the same place (longer favors buy) and the next biggest is the ratio of average rent to average housing payment. The inflection point being that if you live in one…

It's not true that paying off the mortgage makes it more advantageous to buy, home equity creates portfolio drag.

It is possible to find weird inversions where it never makes sense to buy - prices are too high and rents are too low. CA has these places, where property tax arbitrage by renters can be less than the new property tax would be if sold.

Re: The real cost of owning a home

#500

Post by 01100011 »

hunterpayne wrote: post #213
01100011 wrote: post #118

Earlier quoted context omitted.

I made plenty of money (and still do) holding US treasuries and other safe investments. You don't need to gamble on stocks to have income from cash which offsets rent.

For most of my life, fixed income was outperformed by inflation. Indexed funds returned double fixed income over that entire period. Either you are in your 20s or you aren't nearly as good at investing as you think.

I'm fine with keeping most of my post-tax cash pile in cash equivalents. I don't think you understand investing if your only measuring stick is returns. You do sound like a finance bro though given you took time out of your day to trash talk someone for something they didn't even claim.
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