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The real cost of owning a home

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Re: The real cost of owning a home

#721

Post by archagon »

stevenhuang wrote: post #714
archagon wrote: post #92

Earlier quoted context omitted.

And that’s why we have rent control.

Rent control is nice for the select few that get it but results in worse overall conditions for renters by distorting market conditions. It's a stop gap band-aid feel good measure, not an effective long term solution. More housing supply and densification is the solution.

More housing supply is not a solution to landlords deciding to evict tenants or raise the rent for arbitrary reasons. ("The housing market is great for sellers right now and I want to sell my house." "My niece wants to live in the city." "I don't want tenants with pets/children." etc.) Renters deserve stable housing just as much as homeowners and that requires some degree of regulation.

Re: The real cost of owning a home

#722

Post by contingencies »

Transaction overheads are generally not that significant over any realistic period of ownership (5+ years). The OP's situation was a not expensive house in a not expensive area over a negligible period did not appreciate sufficiently to cover overheads. That is not surprising.

Philosophically the real cost is that you become a sitting duck target for taxation, theft, etc. The asset is also highly subject to external effects, such as regulatory change. This is not something you have control over, and can greatly alter valuation.

Given the low returns plus high risk profile plus high capital input, it is generally fiscally smarter to have money in the stock market and rent.

However, on the plus side owning a house means investing in subtle aspects of your environment becomes possible: things like gardening, workshops supporting your interests, or infrastructure projects toward self sufficiency. These can be some of the most rewarding parts of life. Ideally, if you can stand debt-free at a certain age and have self-sufficiency and passive income, with kids grown up and moved out, then you are well placed to relax. Renting ... good luck.

Nothing is easy.

Re: The real cost of owning a home

#723

Post by bottlepalm »

tim-tday wrote: post #170
zeroonetwothree wrote: post #117

Earlier quoted context omitted.

Inflation means pretty much all prices always go up. This statement is not very informative on its own since we care about relative prices.

Mortgage is locked in for 30years

Taxes goes up, insurance goes up, repair costs goes up, and with a 30 year mortgage you lose like 50% the value of the home in interest payments.

Re: The real cost of owning a home

#724

Post by danny_codes »

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…

On the other hand, buying a home reduces mobility since selling is difficult. Always pros and cons

Re: The real cost of owning a home

#725

Post by bottlepalm »

olavgg wrote: post #214
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…

I just paid 120 000 USD for replacing the exterior drainage system. I knew it was expensive, but not that expensive.

Damn, at 3k a month, that's like 3 years of rent right there.

Re: The real cost of owning a home

#726

Post by laughing_man »

skeptic_ai wrote: post #720
laughing_man wrote: post #641

Earlier quoted context omitted.

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…

You can’t compare buy house with rent a flat. You need to compare same property style/type. Otherwise you just lying you yourself. My friend said: I can rent this 3 bed room for 6k. But if I buy a 1 bed I need to pay 2k. So it’s 3 times cheaper to buy.

Lying to myself in what way?

If you read up a bit you'll see I'm talking about single people, for whom that is the normal progression, at least, here in the US. You rent an apartment and save your money until you can buy a house. In the US the vast majority of houses have at least three bedrooms, which is two more than you need as a single person, but if you buy something smaller you'll have trouble selling it. So you buy the three bedroom place, you fill one room with junk and make the other into a guest bedroom.

The point was you're better off staying in the apartment, financially speaking, if you take the extra money that would have gone to a house payment and invest it.

Re: The real cost of owning a home

#727

Post by skeptic_ai »

SirMaster wrote: post #248
oxag3n wrote: post #233

Renting won't match home ownership for few reasons. First one already mentioned in the comments is you can be kicked out at any time within your rental agreement. I was "lucky" enough to get our rental sold two years ago and then again this year. Packing and looking for another rental with 2 months notice is not fun (and boxes smell). Another difference is location and place itself. You'll have much fewer rentals in…

I pay only 650/mo for rent though. My friends with homes around me pay about what I pay in rent in their home property taxes alone... Or especially once you add in some utilities, like my heat is included in my rent and I can have my place at like 75F all winter if I want. Also yes they replaced the dish washer and refrigerator with new ones before they broke or died while I've been there.

But you rent a studio and they have a 4 bed house. You compare apples and oranges

Re: The real cost of owning a home

#728

Post by Suppafly »

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.

>If you treat your house like a rental that you rent to yourself, you can avoid a bunch of headaches

Or you do a bunch of shitty halfass 'landlord fixes'

Re: The real cost of owning a home

#729

Post by arjie »

Mezzie wrote: post #348
arwhatever wrote: post #130

Earlier quoted context omitted.

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 s…

That's interesting. I suppose you can't run that kind of thing in an S-corp and pay yourself the regular salary. It's what I do. You have a W-2 and everything. But I'm doing the other kind of SW: software.

Re: The real cost of owning a home

#730

Post by danny_codes »

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. Any sensible municipality will tax land at it's value, so your costs should rise according to value. Of course most municipalities are failures when it comes to taxation, so probably it's a better deal to own land in those places.
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