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The real cost of owning a home

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Re: The real cost of owning a home

#641

Post by laughing_man »

skew-aberration wrote: post #635
laughing_man wrote: post #625

IMO most childless people would be better off renting (kids change the whole set of incentives). Exceptions would be people with hobbies that require a lot of space or a yard, and light sleepers. A house means a better standard of living, but you definitely pay for it. I spent $25k replacing a fence at my house this year, and I'll need to spend another $20k to replace the air within the next few. The roof, another $3…

If you were renting, you would still be paying for the fence, utilities, roof, etc (quoted prices for fence/hvac are very high btw). If every renter on the street had significant free money to invest, why wouldn't the landlords increase rent? The only thing stopping them is the availability of other land / houses to buy, which acts as leverage for the renters. As land gets bought up over time, zoning becomes more res…

Usually when you're renting you're not in a detached dwelling, which is more expensive. On a per-unit basis, it's a lot cheaper for the landlord to maintain your unit than it is for you to maintain a separate house.

Renting a house just makes no sense, IMO, unless you have a family and you know you're going to be moving soon.

Also, rents don't increase just because you have extra money. People take the cost of living into account when they decide where to live, so there's a natural cap on what people will pay for rent if they can commute.

Re: The real cost of owning a home

#642

Post by notepad0x90 »

It's insane that there is literally nowhere that you can have a piece of land reserved to you without perpetually owing someone money. Like it isn't possible at all. With home ownership, you will always owe taxes, so there is no such thing as paying it off. People claim mortgage payments are fixed/stable... yeah, taxes are not. Where I live taxes are like 50% of what rent would be. And on top of that you have costly maintenance that could happen any time, and if you live anywhere prone to natural disasters or even the occasional naughty storm, you better have all kinds of insurance. You're still renting. Even if it is fully paid off.

Let's say you decide to abandon modern life and move into the woods, guess what, there are fees to camp in BLM land or in national forests even, and even then you have to move around every few weeks. Camp anywhere near a city, you're homeless scum that has no rights anymore, what's the matter, the shelter is full? participation in the system is not optional. The only actual liberty and freedom is wealth in modern society, you still have to pay but you can setup lawyers and corporations to manage that for you, and fund any life style you want anywhere without worry.

It used to be in our history, that so long as you can work a land and live off of it, and you lived in peace and got along with your neighbors, you were left in peace and to your devices.

In the name of liberty, slavery has been instituted, since you must work, get currency and exchange it, and even then you must be kicked around like a nomad, whether you are renting (rent prices increase yearly until people move out), or camping in the forest or on a mountain top. Even in medeival feudalism, you got to stay in your allotted house and land, and to the most part currency exchange wasn't required, simply a share of your crops, animals,etc... was what was expected of you.

I don't have (never will) children, I don't drive cars (and even if I did, there are road taxes when you pay for gas!), I pay a ton into medicare and social security, so why am i paying for property tax? i already pay for water/sewage separately, simply having the fire department out to help you costs thousands of dollars anyways, and i wish we could reduce the funding to cops. why would i pay property tax so much, and it is perpetual and permanent, the property owes the tax even, not the owner!! how ridiculous of a mental gymnastic.

And all of this is assuming you're not unfortunate enough to live in a HOA, in which case it is the worst possible situation, non-compliance with a random person's wishes means they can sell your house on the cheap and tell your property with no consequence. I hope there are countries where things aren't this twisted.

Re: The real cost of owning a home

#643

Post by laughing_man »

kccqzy wrote: post #630
laughing_man wrote: post #625

IMO most childless people would be better off renting (kids change the whole set of incentives). Exceptions would be people with hobbies that require a lot of space or a yard, and light sleepers. A house means a better standard of living, but you definitely pay for it. I spent $25k replacing a fence at my house this year, and I'll need to spend another $20k to replace the air within the next few. The roof, another $3…

Theoretically these capital expenses like fence replacement or roof replacement should have been deducted from the market value of a house when you buy it: a theoretically rational buyer would take into account the present value of future capital projects. And this just goes to show how much the market value of a house is now much higher than the present value of all future rent. In simpler words, the market is froth…

Oh, all this stuff was fine when I bought the place fifteen years ago. But eventually everything in a house will wear out right down to the foundation. And that was my point -- these are normal expenses you need to account for as a homeowner. Forget the price; I'm just trying to keep the house livable because I live here.

Re: The real cost of owning a home

#644

Post by paulcole »

JuniperMesos wrote: post #184
zeroonetwothree wrote: post #110

Earlier quoted context omitted.

There’s also a psychological benefit of not having to worry about most problems. Sink broke? Call landlord to fix. Roof leaking? Call landlord to fix. And so on. You never have an unexpected $20k repair show up. And while I agree that it’s nice to customize things to your preferences, this has a downside in that it’s easy to get carried away and overspend. Might as well get the nicer finishes when you are remodeling,…

> There’s also a psychological benefit of not having to worry about most problems. Sink broke? Call landlord to fix. Roof leaking? Call landlord to fix. And so on. You never have an unexpected $20k repair show up. I've never understood why people argue that the model of appealing to a landlord to perform house work is psychologically superior to doing that same work yourself. As a tenant, you have an inherently somew…

> I've never understood why people argue that the model of appealing to a landlord to perform house work is psychologically superior to doing that same work yourself.

Because I have less than 0 interest in doing that work myself. If I have to email 5 days in a row to get something fixed, that is a cost I’ll happily pay.

I want to spend 0 of my time on home maintenance of any kind. I’d rather be reading a book, watching tv, shopping online, going out to eat, sitting quietly, etc.

It’s not particularly complicated, we just see the world in different ways.

Re: The real cost of owning a home

#645

Post by 0xbadcafebee »

rogerrogerr wrote: post #634

Been thinking about this a lot. Curious what the rational folks of HN would suggest for me. Fact pattern: - I'm in the 25-30yo range, single male - Living with parents because I can; there's no friction and I mostly enjoy it. And I'm saving a ton of money. - Remote senior SWE for a non-FAANG, but still doing around $200k/yr between my W2 and a few other things - NW somewhere around 400-500k. I could easily go buy a h…

Do you want to buy a house? Do you need to buy a house? If the answer is no to both, then don't buy a house.

Re: The real cost of owning a home

#646

Post by what »

jandrewrogers wrote: post #523
notnaut wrote: post #466

Earlier quoted context omitted.

I understand it’s more complicated than this, but it seems really really confusing at a basic level. In one situation you are paying someone else for a place to live, and when you stop doing that after 30 years, you’re out on the street. In the other situation you are paying someone else for a place to live, and when you stop doing that after 30 years, you have a house.

Renting gives you a giant pile of additional money you can save and invest so that after 30 years you could buy a house in cash if you wanted to. The person with the house does not have this cash, they have a house instead. After 30 years you either have a house or enough cash to buy that house. In many cases, the rate of return on the cash is sufficiently greater that it is significantly more than the value of that…

Eh, not really? If you have money to invest after rent, you’ll also have money to invest after mortgage payments.

Re: The real cost of owning a home

#648

Post by bsammon »

DamonHD wrote: post #574
nostrademons wrote: post #547

Earlier quoted context omitted.

The incentives change when you become a homeowner. You reap the benefit of any improvements you do to the property; you also know for sure when you're going to leave it, and you have the freedom to do whatever you want to do to it. Before, when you were renting, any improvements you did were throwaway time and money, benefitting the landlord and future tenants more than yourself. Many homeowners respond to these ince…

> you also know for sure when you're going to leave it Well, about that... There is a thing called a Compulsory Purchase Order in the UK, with equivalent in the US for example. Guess which freehold home owner with two thumbs can expect a CPO sometime in the next 10 years?

https://en.wikipedia.org/wiki/Compulsory_purchase_order

The USA (and other countries?) equivalent appears to be "Eminent Domain": https://en.wikipedia.org/wiki/Eminent_domain

Re: The real cost of owning a home

#649

Post by Forgeties79 »

kxrm wrote: post #566
memcg wrote: post #558

Earlier quoted context omitted.

Realtors often have a list of contractors they rely on to help potential sellers get their homes ready for sale. I have found and used recommended roofers, plumbers, HVAC and electricians from a local realtor that wants my future business.

I would caution seeing a Realtor as an easy way to avoid doing your homework on someone. I did this long ago and the Realtor's recommendation was one of the worst I have ever worked with. There is, unfortunately, no shortcut to finding quality handymen.

you can definitely save a lot of time by asking your friends for referrals. Anybody who loves their Electrician/Plumber should be listened to in particular.

Re: The real cost of owning a home

#650

Post by skew-aberration »

lesuorac wrote: post #578
ApolloFortyNine wrote: post #119

>"renting is just throwing your money away" Unless you think landlords are running a charity, some part of your mortgage is going to them as profit (over a large enough sample of renters anyways), and some percentage of your rent is covering 'bad tenants' (which you're not, right?). Their entire improvement section is also something renters tend to not think about. It's a weird situation when renting that you aren't…

> Unless you think landlords are running a charity, some part of your mortgage is going to them as profit This isn't true due to market dynamics. If a homeowners mortgage is say 4k/month and they list the property at 4.5k/month and receive no renters they can only do this for so long before they are forced to down the price. Of course, what actually happens is that they list it for 5k/month because other properties a…

Maybe OP is saying when you buy from a landlord, they still get their profit (you pay them the NPV of the expected future rents - it's neutral from their perspective).

In cases like your example, what forces landlords to lower the rent? Usually only a) cost of credit, as you said b) opportunity cost, and c) government intervention [land tax, property tax].

a) not all landowners have mortgages! many own outright. they make pure profit b) the game theory of this case is frequently misunderstood, landowners are a monopoly and are strongly incentivized to act as a cartel. same principle as walmart destroying old stock.

Landownership is one of the most lucrative and profitable enterprises in (American) history, so you might want to question the logic which has convinced you that market dynamics is so effective in taking its profits.

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