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The real cost of owning a home

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Re: The real cost of owning a home

#131

Post by 01100011 »

bell-cot wrote: post #2

> You can save a lot of money in maintenance and repairs by doing your own work whenever possible. True. But even if you have the physical ability, skills, tools, and equipment handy - you can spend a lot of time on maintenance & repairs. Just ask anyone who's done yard work for a few years, or has repainted a house, or ...

I spent my 30s playing "this old house" when I could have made significant amounts of money just working more consulting hours. Yeah, I enjoy some home improvement and maintenance tasks, but I also enjoy financial security and pain-free joints. The tools and things required to maintain a home also take space you could use for hobbies or simply downsize. Home maintenance makes sense for folks with lower value skills and less means to side hustle though.

Re: The real cost of owning a home

#132

Post by brailsafe »

mholm wrote: post #6

Beyond the financials, the psychological impact of both being able to make greater-than-superficial changes, and having extremely predictable payments for years without worrying about substantial rent increases, is substantial. I redid/improved the bathroom to exactly what I wanted. I renovated the kitchen. I added paneling to the walls. I added a few outlets to rooms that needed more. I wouldn't do these things in a…

> Beyond the financials, the psychological impact of both being able to make greater-than-superficial changes, and having extremely predictable payments for years without worrying about substantial rent increases, is substantial.

As a renter in a place that protects renters from radical increases year over year, I'd argue the only compelling sense of stability would be trading the risk of being evicted for that of losing the house

> I redid/improved the bathroom to exactly what I wanted. I renovated the kitchen. I added panelling to the walls. I added a few outlets to rooms that needed more.

I think this is an interesting differentiation that would either be very compelling for a hobbyist or carpenter, or someone who works on cars, but it's also crazy to me if I frame homeownership this way. I don't think a condo would really provide the surface area for such customization *if* I were a person to be interested in doing it, nor would a townhouse or duplex. It seems that at least in my city, the premium to be able to do something as common as paint the exterior of your home, is like $2.5m CAD, or $1m more than a newish townhome, or $1.5m more than modest condo, or $10000/m more (just on the mortgage) than renting a sufficiently sized place.

That's partly because the kind of place I can rent is dramatically smaller than the minimum size of a place that has a modifiable exterior, and it's one of the most expensive cities. I guess it's sort of a framing that makes clear how dystopian the class divide is; I don't have any interest in painting my house, but if I did, I'll never be able to, and if I could (at the current rates), I'd have to be incredibly unimaginative to allocate that much to the house that could hypothetically be painted.

I guess people who value the concept of a home in that way more than anything else would simply move someone where they can buy one, but I value so many other things more than hacking away on the walls that it's an absolute no-brainer to continue renting where I want to live despite the ambient sense that I have no sense of permanence secured by land

Re: The real cost of owning a home

#133

Post by crabbone »

mholm wrote: post #6

Beyond the financials, the psychological impact of both being able to make greater-than-superficial changes, and having extremely predictable payments for years without worrying about substantial rent increases, is substantial. I redid/improved the bathroom to exactly what I wanted. I renovated the kitchen. I added paneling to the walls. I added a few outlets to rooms that needed more. I wouldn't do these things in a…

I absolutely don't see these as benefits... Living in the Netherlands, apartments owners typically have to pay "VVE" (service fee for the ongoing upkeep of the building where your apartment is), while house owners typically pay out of their pocket for any repairs they have to do.

This was my first time living in a house as opposed to an apartment. It's been three years of bitter regret, and I'm very eager to sell the damn thing and leave the nightmare behind. In the last three years, I had to re-paint the roof, replace the garden fence and a bunch of related stuff in the garden, replace the water boiler. I had to climb on the roof of the house to rake the leaves at least twice a year (not expensive, just scary). I had to repaint areas of the house because the previous owner did a crappy job painting them.

But, most importantly, it's a piece of junk. It's a typical front brick wall with the rest of the house made of wood covered in dry wall. Its foundation is going to skew and sink because... that's the general condition of everything in the Netherlands: the ground water is too close to the surface, so the foundation is too shallow. I can't hang anything heavy on the wall because the wall can't support it. Every wall is crooked and bent and so is the ceiling, so, for example, it's not possible to put a curtain railing on the ceiling...

Everything is made of perishable materials which will last five to ten years tops, and then everything needs to be torn down and redone. Looking at how my neighbors are spending their lives on the hamster wheel of infinite repairs... I want absolutely none of this. Some people enjoy sinking their time and finances into this black hole, but I'd rather just buy hard drugs for the same price all the way until I die. It's just an arduous and unrewarding toil.

Re: The real cost of owning a home

#134

Post by cosmic_cheese »

zeroonetwothree wrote: post #114
cosmic_cheese wrote: post #12

On the other hand, renting comes with hidden (and some not so hidden) costs too. The main one for me is the inherent precariousness that comes with renting. You don’t know how much longer you’re going to be able to stay in your apartment, whether that be due to rent hikes or the landlord deciding that they want to give the apartment to their nephew or any number of other things. The constant low level stress of knowi…

Why not just sign a longer term lease? Most landlords would love that.

It adds inflexibility with few benefits, and one doesn’t know that they’ll want to stay at any given place until they’ve lived there for a while.

Re: The real cost of owning a home

#135

Post by throw0101c »

com2kid wrote: post #9

It is suggested to set aside 1%-3% of your home's overall value for repairs every year. Most people do not do this, and many homes thus slowly degrade in value. It is a fast track way to destroy potential generational wealth. Home repair issues also tend to be bursty (rule of three...). You'll have a few years of nothing that'll lull you into a false sense of security, then suddenly three major issues will come up. S…

> It is suggested to set aside 1%-3% of your home's overall value for repairs every year.

Rob Carrick, a now (semi-)retired personanl finance writer in Canada, observed that owning a home tends to not be a forced saving plan but rather a forced spending plan:

* https://www.instagram.com/reel/DWG223bPjvf/

* https://thewealthybarber.com/video/owning-a-home-is-so-expen...

Full interview on The Wealthy Barber podcast:

* https://www.youtube.com/watch?v=V8OwBbm5OXc

Re: The real cost of owning a home

#136

Post by niam »

nayuki wrote: post #102

Great article, love that you enumerated all the costs in buying a home. I don't like how renters romanticize home ownership and fail to understand how many costs are involved. > You've probably heard someone say something to the effect of "renting is just throwing your money away". Don't believe it. It's a glib statement that simply isn't true. No, the statement is completely true: 100% of your rent money goes to som…

I'm not sure that your definition of "throwing money away" corresponds to the OP's.

OP uses that phrase to imply the (un)worthiness of spend. You're using it to mean that it doesn't build or maintain equity, which is true almost tautologically but wouldn't be very meaningful unless your audience doesn't understand what it means to rent something.

Re: The real cost of owning a home

#137

Post by whateveracct »

RIMR wrote: post #20

>You've probably heard someone say something to the effect of "renting is just throwing your money away". Don't believe it. It's a glib statement that simply isn't true. If you take literally anything away from this article, this opening line is it. People who say this bought their house decades ago and have no clue what the present situation is.

My sub-3% loan from 2020 says otherwise.

I pay as much as I did for rent in 2019 for my house now (and until 2050). And my house is over 3x larger.

Re: The real cost of owning a home

#138

Post by bell-cot »

jandrese wrote: post #42
bell-cot wrote: post #2

> You can save a lot of money in maintenance and repairs by doing your own work whenever possible. True. But even if you have the physical ability, skills, tools, and equipment handy - you can spend a lot of time on maintenance & repairs. Just ask anyone who's done yard work for a few years, or has repainted a house, or ...

That maintenance has to happen one way or another, hiring someone to do it can add quite a multiplier to the price. For example, I was recently looking at water heaters and called 4 different plumbers to get a quote. All of them came in around $5,000 for the job. The water heater they quoted costs $1,000 retail at Lowes. If you know what you are doing it isn't even difficult to install. That said a layperson probably…

> If you know what you are doing it isn't even difficult to install.

How much time does it take to acquire & refresh the skills and code knowledge, and how many water heaters can you amortize that over during your life?

Re: The real cost of owning a home

#139

Post by akudha »

mholm wrote: post #6

Beyond the financials, the psychological impact of both being able to make greater-than-superficial changes, and having extremely predictable payments for years without worrying about substantial rent increases, is substantial. I redid/improved the bathroom to exactly what I wanted. I renovated the kitchen. I added paneling to the walls. I added a few outlets to rooms that needed more. I wouldn't do these things in a…

“Extremely predictable payments” - I don’t own a home, so I don’t know about this - I have heard mostly horror stories about HOA. Can they hike maintenance fees arbitrarily? Also, what about insurance? Last I read, at least in FL, insurance cost is out of control, is that still true?

Re: The real cost of owning a home

#140

Post by arthurofbabylon »

The article details costs and leaves two big ones out. First, opportunity cost: lot of folks rent instead of own on the basis of keeping assets in higher-performing market sectors. Second (and perhaps actually an expression of the first), anything that prevents a working professional from changing cities can exert downward pressure on future economic opportunity.
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