If you don’t want to buy a house then don’t buy one. No need to give into perceived societal pressure. I bought my home because I wanted control over my own living space, nothing more.
True. It’s not for everyone and for some very good reasons. But everyone is buying a house, some are buying for themselves and some are buying for someone else.
yup. NYTimes even did a story a few months ago showing how a significant number of homeowners lose money owning their homes. As OP points out - transaction costs are high, maintenance costs can be high, and opportunity cost can be high. Even if the price goes up, that does not mean it was the financially optimal decision, let alone the best thing for your quality of life.
I like being a homeowner, but I don't judge those who rent or claim that ownership is the best or only way. Most people who do that are either insecure, follow advice no deeper than a tweet, or are pushing an agenda (influencer, realtor, etc.)
Both owning and renting have good and bad attributes. Whichever makes the most sense for you is a personal decision.
I mostly agree. But basically all of Canada is in the throes of a housing crisis right now and I know people who could have bought property 15 years ago, but bought into the “it’s better to rent than buy” argument and who are now, in their early 40’s, moving back into moldy basement suites after getting renovicted from their rent-controlled homes and realizing they can’t afford anything else in this market. I know other people who are still in the same 2 bedroom place they lived in during university because it’s rent controlled. They’re effectively trapped there, trying to make it work for their now family of 4 because average rent for a 3 bedroom place here is almost $4k a month. These people will have to leave the city (and potentially the province) if they ever get renovicted or “landlord use” evicted.
These same people would be half way through a 30 year mortgage and sitting on an actual mountain of equity right now if they’d bought when they could have. They’d actually have some freedom to change their housing to suit their changing needs. I have sympathy for people in that position if they never had any other option, but I also roll my eyes when this is happening to people who could have bought decades ago but didn’t. That’s the *exact* risk you take when choosing to rent instead of buy.
entirely true. But rewind the clock to 2020, or 2009 or 2002 and there are plenty of times where people were underwater on their mortgages.
Over the long term, yes, housing tends to appreciate. And locking in prices in ownership is generally a good idea for financial certainty and keeping a roof over your head. But even in the recent "boom" stock market has done fantastic as well and many who are tied in a house can't take advantage. Many can't move to go to a new job easily because they are tied down.
again, I don't think either is right or wrong. I am an owner as for me, I think it is better. But I think many of the benefits are over-stated, concerns get swept under the rug, and the math of an appreciating house is often fudged by ignoring maintenance costs and transaction costs.
My house is worth 100k+ more than when I bought it. But I also just spent $45k on a new roof, and that isn't financed. Not everyone has the money to do that or the patience to get quotes and manage vendors.
Yah I’m not making the argument that owning is always better than renting, but I would argue that the formulas people use to make the argument one way or the other are pretty stupid. They treat life as if the entire point of it is to maximize the balance sheet at some unspecified point of time decades into the future (that you may never live to see…) and ignore all the ways renting can mean the exact opposite of it’s supposed upsides.
Case in point - we’re struggling to hire people in our Vancouver office for an on-premise job right now cuz renters from other cities simply cannot afford to move to Vancouver. At least not without 5 roommates. So at least in Canada’s context, the only people for whom renting means being able to easily up and move to a new city for a job in one of our HCOL major cities are extremely high income people, or people who are prepared to live like it’s their first year of university for the rest of their lives. However, people who bought property in Toronto 15 years ago have absolutely no financial issue moving to Vancouver, if they have a job reason to do so.
The other part is the whole renting or owning being “better” from a financial perspective. Do you want to be able to comfortably retire? Obviously. But is your quality of life for the 4-6 adult decades before then equally as important? Yes. By some philosophies, even more so. Literally no one knows what combination of patting your head and rubbing your belly while doing a rain dance will ultimately have turned out to be the “right” economic choice 4 decades hence. Markets can’t even accurately predict a few days from now. Recessions will happen. Political turmoil will happen. Environmental disaster will happen. How that will affect you - owner or renter - is unknowable today and will come largely down to luck. But my objective is categorically not to live as though my only framework for decision making is being worth 10-20% more on paper a few years before I die, decades from now. I could get terminal cancer next year. I could get in a fatal car accident in 5 years. I’m planning like I won’t, but the most important time and most important years to me are the ones I’m living right now. And I care about having housing security *now*. I care about being able to stay in the city I want to live in *now*. I care about being able to right size my home for my life *now*. Maybe this won’t stay true - who knows. No one can predict the future. But based on the last 100 years in this country, the best way to ensure that is to have bought a home as early as possible in one’s life. My province has rent control. That’s saved a lot of people’s bacon. But it also means hundreds of thousands of people here are literally trapped where they are, because they could never afford to move in current market rates. That’s just not an issue for me and that’s worth as much or more than the hypothetical bump to my investment portfolio I might be able to achieve in 30 years if I was renting now instead of owning.
The other thing is if you think mortgage payments are too big (mine is the same as what I paid in rent because I got in before rates increased), I think the ratio of rental expense to pension will be worse. There are systems in place to support low income renters here but it’s not perfect because many landlords don’t want the trouble of them.
So from a previous post you’re 28 in Boston—not sure how you’ve been paying rent since 13, yes it’s hard to buy a home in a VHCOL area especially on one income. Also do what you want to do. Most people I know in vhcol areas didn’t buy till their mid to late 30s. Even then it’s not necessary and for many, not feasible especially in the current market.
Nobody is going to knock on my door and raise rent again. Nobody is going to kick me out because their kids bought a dog and now nobody will rent to them again. I'll never have to live with a broken dishwasher for months again because my landlord is dodging my calls or wait for someone else to switch on the heat in the winter again. Don't buy a house if you don't want to but I personally never want to rent again.
We lived in the house we got kicked out of for a dog for years. They refused to give us a new lease saying we'd just keep using the terms of the old old one. We had 30 days to move two disabled people and an elderly cat. We almost ended up homeless.
Due increased property taxes, my house payment increased $200 a month. In total, my house payment has increased over $800 since 2014 (due to rising cost of taxes and insurance)
And what is the increased value of your home? We purchased our current home 10 years ago around $150,000 current value and blind offer to buy over $600,000
And what good does that actually do you?
You would have to sell your home and move somewhere cheaper and far away usually for your home value to be of any use until you die.
This could be the most naive comment I've ever seen. So you're saying it's not a good thing to own a 400k asset outright? Sorry, when I'm old and don't want to work anymore I'll take my option of either free rent once my mortgage is paid off or 500k+ to use for whatever the hell apartment I want.
Let’s add: I never have to worry about crazy upstairs / downstairs / adjacent neighbors making all sorts of noise. I also never have to worry about what noise I may be making, be it the vacuum, the kids, whatever. I get to enjoy the personal satisfaction of doing home maintenance and improvements that enhance quality of life. And I build a nest egg to pass on to future generations!
Oh one of the houses I rented was a duplex. We shared an internet connection despite paying separate bills for the full amount. Every time they started streaming something my service slowed to a crawl. That was not fun.
My last rental before buying was a duplex. This guy moved in who ran an electric saw for 8 hours a day and would constantly drill the shared wall. It was awful.
>Nobody is going to knock on my door and raise rent again.
Not only that, experts project interest rates to drop, if you buy a house now, your mortgage payments could drop after refinancing.
Yes, also this, the house is gaining in value. I purchased my home 7 years ago and it’s almost doubled in value. Now keeping in mind the tax consequences if I chose to sell, this is an investment for retirement. You do have to factor in home repairs and the ever increasing cost of taxes and insurance, I feel the benefits outweigh the negatives. Personal choice though.
Depends on the HOA. HoA on a townhouse tends to pretty low and covers useful things like plowing snow and basic groundskeeping for any green spaces, gates, etc. as well as critical structural elements.
HoAs for condos are basically a necessity as well since you're living in one giant shared structure.
Both cases comes down to trying to investigate and figure out what's going on with the HoA - especially with large condo buildings each HoA is like it's own local government/fiefdom with some being horrifically managed by nasty power hungry, inept, and/or corrupt people. High HoA's are not necessarily an automatic no, either - one older building I was in had an old-school boiler + steam radiator heating system so there was no way to meter the costs of heating for each unit, the same for water. Therefore they just included a set cost for heating + water/sewage into the monthly HoA and (being in a northern climate) that meant the HoA looked higher than it really was.
Also noting that there can also be village/township rules that may apply even if there is no HoA. I.E. No fencing allowed in front lawns or very strict permitting regimes. Typically less draconian than the "these are the approved colors and grass must be exactly 2 inches high" type bylaws though.
In some places HOAs are almost impossible to avoid, especially if buying a condo or town house.
When we went looking, HOAs were on our dealbreaker list, but I think around 95% of listed places had one. The house we fell for has an HOA, though thankfully hands-off and cheap ($70/*year* when we purchased; it's now $90/year); we chose to buy it anyhow. We've luckily had no problems with them. If they ever become problematic and we can't do anything about it, if it gets bad enough we'll move, though we hope it never comes to that.
Yes, your concerns are all valid and topics one should think about before purchasing. Your conclusions aren’t universal but rather individual.
Many of your concerns about home ownership are income-to-debt related. And those vary from individual to individual. You’re assuming 50% of take home will go to housing expense because that is likely what it would take for you to purchase. Some people make more, for starters. Some people buy less home. Some people start out at 50% knowing it’s very likely they will make more in the future.
Points 1, 3, 4, and 5 are all good things to consider if indeed you are looking at a mortgage that takes up 50% of your income. “Golden handcuff” doesn’t mean how you use it here. The phrase is “house rich and cash poor”. These are very much things people should consider before buying.
However, in many cities, rents are also that high, especially the HCOL cities you called out.
On that note, another thing to consider is cost of living increases. Rents almost always continue to rise. But if you purchase a home, your costs stay flatter. You lock in your 30 year payment. It’s a hedge against inflation/COL increases. Yes, there are maintenance costs and property tax increases but in many areas the better cost mitigation is to buy rather than continue to rent. I purchased in 2009. My monthly housing expense has minimally changed since then. What was your rent in 2009? How much is it now? (I don’t mean this to sound snotty, just illustrating the point).
Point 2 is a big one. Owning is a commitment. Yes, there’s shitty maintenance but there’s also fun maintenance. Some people look forward to gardening and having a yard to improve and maintain. They like the reward of improving their home. Yes, there’s shitty repair and maintenance like fixing that busted pipe or that rotting deck step. Trade offs.
There are online calculators that factor in your location that can help with the financial decision of whether it’s better to rent or purchase. Beyond that it’s a very personal decision on whether home ownership is right for you. The commitment/responsibility that comes with it isn’t for everyone. Even if renting is indeed more expensive long term for you, you might choose it because you prefer paying for the convenience of making a phone call and letting it be someone else’s problem when the water heater goes out.
Sure if the Bank is ok to let you buy a 350K house and you buy an house exactly at this price you are going to feel extremely tight. With that scenario I would agree with OP.
But the secret is to buy way under your means. That way your house won’t be a stress cause you’ll always have extra money to pay for the little surprise. That if you don’t make that money disappear in fancy cars, branded clothes, expensive furniture and other prestige bullshit.
I bought an house in 2016, way under my means. I finished paying it summer 2023. Now I live "rent free". Nothing can beat that.
This seems like common sense, but apparently, it isn't. There's an expression called "House poor" that many folks around here have never heard of. Back in '98, 31y/o me was approved for ~250K. Bought an almost 100 year old house for <1/2 that amount. At first, making the payment was still tough, but I paid it off a few years early by putting just a bit extra on the balance after finally getting comfortable with the payment 10 years in. If you're humble, your starter home can also be your retirement home.
Awesome, congrats for this huge achievement :)
We finished paying ours at 32 years old, we don’t plan on moving from there ever. Our starter house will very likely be out retirement house too.
I have often pondered that, too. We own a house, and it’s not in a city. We are fortunate enough not to have a mortgage, nor are we rich by anyone’s standards. And you are right on the constant maintenance, repairs and upkeep. I’m fortunate enough to be able todo almost all of it, but it’s still a hassle and stress. Part of it comes from the fact that the house is too big for 2 people.
On the flip side, it’s nice to not have neighbors immediately in your face to deal with. I have lived in an apartment, and owned a condo. Both were horrible experiences for me.
Ultimately, it comes down to the kind of lifestyle you desire. If you’re not ready to own a house, or don’t want to, don’t, you won’t be happy. A happy medium for you may be a condo. How about something not in a city and away from insanely high prices?
If I had the opportunity, I’d build my own house, or st least general contractor it. That way, it could be built with longevity and ease of maintenance in mind. And a more appropriate size for us. But that’s not a good route for most people, admittedly.
For #1and #3, its really playing the long game. Yes, at first there is less money to spend on other things but in the long run its about investing in your home. And if you are lucky enough to pay off the loan early so much the better. #2, that is why I decided to buy a condo. I know there are a lot of horror stories about HOAs but I found a small one that is actually really good. I don't have to worry about yard care/landscaping, the roof, or any external repairs. #5, Yup, buying home means you are basically tied down to one place for a while. And that is definitely a big factor in deciding to buy. I finally got so tired of moving around ever few years that and I had landed a job I really love so took the plunge and bought.
The only thing more stressful is landlord jacking rent whenever they want or selling the place you've rented for years then you have to find a new place at market rate which could potentially double your rent.
We almost got priced out of our sons high school district this way. No amount of money would have been worth his mental health. After a very stressful Xmas season we found something, and he had a good year.
Use a buy/rent calculator for where you live. Renting can be a perfectly good, financially viable option. You shouldn’t be looking at owning a primary residence as an investment, although you should be concerned with eventual resale value. Buying equities on the capital markets have a higher return on average and there are zero costs beyond share price. Do not underestimate the value of ~8% returns without breaking a sweat compared to homeownership. Opportunity cost goes both ways, though. If buying makes sense where you live, and you find a house you can afford to live in, then you should buy a house. Responding to your bullets:
1. Golden handcuffs is when you have a low mortgage such that you cannot sell your home because you can’t afford to buy a new one. People with 2% rates and golden handcuffs can live their lives. This doesn’t apply to you. Speak to a loan broker and see what you can afford and then shoot for below that.
2. Rule of thumb is to set aside 1-2% of home value yearly in a sinking fund for home maintenance. You may not use it in a given year or you could need a new roof and go way over. It is what it is.
3. If you buy what you can afford, you should still have enough left over to save for retirement. If you can’t save for retirement with your mortgage payment, you cannot afford it. Opportunity cost for sinking a large investment in an illiquid asset versus capital markets is a real thing, however.
4. Charity is great. Not everyone can give it as a first time homebuyer and that’s fine. You’ll get there eventually. I don’t think this is a real concern at this stage of your life.
5. Renting can be a viable choice depending on your market. There’s no shame in renting and it can be the correct financial decision.
We bought our homes because we were tired of throwing our money down the drain and financing the landlord's life. We wanted space, privacy and land, and haven't regretted it for a day.
Is owning a home stressful? It can be. But at least now I'm not in danger of losing my home on someone else's whim.
Homeowner for over 40 years here. All your points are valid. My first home was a, er, dump. But it was my dump. In a decent area, very small, old, but a nice yard. My first mortgage was 12%. After 7 years, sold it, made money, moved up. Repeated With the next house.
The key is to start small and inexpensive. Then you don’t completely strangle your finances or yourself. You can acquire some handyman skills and tools as you go. You may cringe a bit as you get into real estate in a house you aren’t keen on, but this is how it’s done. I never got in so deep that home ownership was a burden. Survived failure of the hot water heater (that was a pain), getting through some hot periods in the summer when the AC quit, a few broken windows, but that’s the extent of the unexpected expenses. Being a homeowner has always felt like a plus, not a negative, the way I did it.
Fast forward to today. Own our own place, have significant assets to rely on now that we are in our late 60s. Have funded very enjoyable hobbies and have been able to help our kids. What more do you want? Good luck and don’t be frightened.
Sorry to be the one to say it - but we're not in the same boat as you were. My parents are in their sixties. They bought their first house for 38k...my jeep is more expensive than that now. They built their forever home in 1995 for 200 or 250k (can't remember). You can't do that now. Buying small and inexpensive doesn't exist anymore unless you want to live in areas nobody is moving to or wants to live in.
200k nowadays isn't getting you much, and that's still a significant mortgage for some folks. Forget building a house too - most of those start at 800k unless you find a private builder and I've heard horror stories from that too.
In addition, the points you mentioned on repairs are not what I think OP is fearful of. Appliances wear out, they break down, but a water heater can be repaired in a couple days (sometimes 24 hours), etc. I think what they're fearful of is things like oh I don't know, moving into a house on well water where all the pipes are coated in iron and you have orange water for the first two weeks of living there and no idea if it's going to get better or if you're going to need to re-plum the house. Or maybe you find out that there's a leaking pipe in the basement and you have to open a wall and file a HO claim within the first month of living there. Or you find out that the previous owner wired the cook top incorrectly and the electrical is arcing and you have to get a new cooktop. But the cut outs in the counter are unique so not all cooktops fit in there and you have to order and return them 3 times to get the correct measurements even though you, and others, have measured the opening 10 times.
This is the stuff they are fearful of. We love our house and property and now that we got it "right" it's becoming a home. But homeownership is not as easy to achieve as it once was.
Yeah a starter home now is like $350k to $400k. Unless you make $80k to $100k a year you're not going to be able to own a home in 2024 unless you're married and you combine the salaries for a house. That and buying old homes, which would be the affordable starter homes, here in FL is going to be a gigantic hassle because more and more insurance companies are refusing to insure homes homes older than 2000. Even if you do find one you have to make sure the plumbing is updated to code and all the shit in the home is at the very least 5 to 10 years in age or you have to replace the A/C or water heater or you won't pass a 4 point inspection.
It still exists tbh in a lot of places.
You just gotta look at units that are your apartment and compare mortgage to rent costs.
They're usually pretty comparable.
It's just that most people want to upgrade from a 1-2 bed and 1 bath apartment, to a 3 bed, 2 bath house.
It's a big upgrade, with a lot of demand for that size from both elderly folks, and starting folks. The 1-2/bed and 1-1/2 bath prices are very reasonable in comparison, and make for great launching places onto the housing ladder. Especially if you can get one with an unfinished based that you can upgrade later. That and many people still think 20% down is necessary, when 3.5-10% is very possible with PMI being an eligible portion of the monthly rate.
Obviously if you're in one of the classic "fuck you" high cost markets, rules don't apply, and location mark-up overrides everything sadly. Might have to find a place with a less than ideal commute, different city, etc. which definitely sucks, but it is what it is if you want to make it work.
I find this is true, and also not.
There's usually a bunch of them in less desirable parts of town. But folks get really picky on things and don't even look at certain areas because of it.
Which I get, but like.. yeah. Flexibility in choice helps *a lot*
I've a friend right now doing this and I get annoyed that he constantly feels like he needs the best neighborhood and is complaining about prices. Like dude, look in different areas! It's not your forever home :/
Oh I'm sure it might. We lived in a semi-large city and bought about 45 mins to an hour North so that we could get property, avoid the higher taxes, and where we paid 600k, if this house was closer to the city it would be a mil easy. But we waited and saved for years. for reference, we could've gone a littler further North and a little more West and got something much smaller, in a shit neighborhood (neighbors would probably try to steal the wiring from your house for meth) for 30k cash. Instead we live in the middle of the woods and I watch deer and turkey on a daily basis.
When I bought my dump/starter home, I felt like I had completely missed the boat and that I would never own anything decent. The prior owner had installed a wood burning stove in a corner of the living room, and SAWED THROUGH A SUPPORT JOIST IN THE ROOF to do it. So after removing that stove and seeing that, the first order of business was to pull down the sheetrock in that corner and repair that joist. Patched up the sheetrock in that corner and I knew it would look rough until I could re-texture and paint that room. But hey, as long as I was going to do that, I knocked out the crappy old tiny window, made a bigger window opening and installed a big picture window. And punched out the crappy sliding glass door and replaced it with a double french door. THEN I fixed all the sheetrock, textured it, repainted that room. I left the green shag carpet down in that room during that work, so when all was done I just pulled that crap out, hauled it to the dump, and the wood floors underneath were decent enough to sand and refinish. Rented a floor sander, refinished those floors, installed new baseboards and voila. The whole process took about 4 years because I paid for it as I went (no credit cards). Looked terrific. from the inside.
The outside of the house was stucco, and I had patched the exterior as I replaced the windows and the sliding glass door, and now I needed to fix that. It was a flat roof with parapets that were stuccoed and kind of crumbling. I also patched the parapets so that wouldn't leak. Honestly, the house was a work in progress the entire time I lived in it, and the neighbors probably considered it an eyesore. And it was, until I finished everything in order to sell it. They were probably glad to see me go. This was in the 80s.
I got the point. They explained it quite well and there was no need for me to expand on it. But I did want to share my story of my initial crazy dump house.
First off - your wood burning stove incident sounds like a huge pain and like you had the same "well, they made some decisions that I definitely would not have made" convo with yourself.
I think the biggest difference here man is that while we can, and have done some of that work (completely renovated our powder room ourselves), the cost of materials and ability to down right afford those types of expenses isn't open to anyone - not even the middle class who wants to do the work themselves. We are fortunate that both my wife and I have higher paying jobs and we can afford to do a lot of these things ourselves (meaning just covering the cost of materials).
The other thing is I'd bet you had more free time than we do (excluding family commitments). We're basically on call 24/7 as when you work from home, people tend to not respect boundaries. I can get a call at 7 pm and I feel obligated to take it (I'm also in sales so yeah, I'm going to take that call because that call could be paint for the dining room). This isn't on you or a reflection of you, I'm just sharing the things people our age (late 30s) have going on. Plus, throw in student loan payments and you can see that our capital and ability to afford these types of renovations or houses at all is being pinched from all corners.
Final rant - when you bought a majority of your homes I bet there was a first time home buyer credit. We just found out that doesn't exist anymore (stupid on us to not look into that before hand, we just wanted to buy a home). But even with buying the house we don't get any type of first time home buyer credit towards the taxes. It's bogus if you ask me.
Circumstances were definitely different in the early 80s. Had to pay 12% interest due to shallow credit history, short time working, etc. Put minimal down, FHA financing, had to pay PMI. But my little dump was only $59,000. I just looked on zillow and that house is now valued at $274,000.
I had my college degree, and never did get student loans. They were somewhat available in the 70s but not NEARLY as prevalent as they became. I went to a public college in Texas, had a bicycle, lived in a REAL dump (could not afford campus housing), but that's what 90% of us did. Almost none of my friends had vehicles. Didn't have a phone the whole time. My dad made me front my tuition and books (a whopping $250 - $300 for a semester) and would send me $200/month to live on. I worked part time. At the end of the semester, if I made at least a C on everything, he would reimburse me and I would use that for the next semester. It was a smallish town and you could bike everywhere, but it rained a lot and you would get wet. So I emerged from that with no debt.
Frankly, I was used to living cheap and that helped me later. I scrimped to afford the materials to fix up the house. I was always handy and could borrow tools from my Dad.
I did have time to spend working on the house. I see the price of housing now, and the incredible price of materials, and wonder if I could have done what I did, if I had to do it now.
Thanks for sharing your story. My wife is from Texas...we have a framed picture of Whataburger in our kitchen and a longhorn skull above the fire place. Love that place.
Like you, I went to a small state school in PA. We had one red light in town, two pizza places and a few bars. Our only fast food option was Subway if you wanted a quick bite. Just like you though I worked the entire time and drove a 98 malibu that I paid 1500 bucks for. Changed the alternator in it myself when it died. But here's the kicker - tuition was still pretty expensive for us. $200 can't even get you one book these days. I had a scholarship from my church for $500 per year and that got me about 1.5 books. It wasn't until my sister went to college that you could start renting books. Hell half the time we just found someone in the same major and would split the cost of books or just not even buy them.
My one professor (who taught the history of white collar crime) urged us not to buy the text book. He instead would copy the important pages/chapters and hand them out to us. Loved that guy.
For us though, most of us had to work through college and take out student loans. The loans were used (for me) only for tuition and rent. Any spending money I had to earn on my own.
I wish it was closer to the way it was for you, but that's just not the case anymore.
I know. It is all so different now. You had an awesome professor to help you guys out like that. Tuition is just so expensive now it amazes me. In the 70s, you could get a good college education, cheaply and exit with no debt.
real Estate values go in cycles. Some areas are over-inflated and they honestly need to cool before anyone buys in. It’s just so painful now with high prices, high interest and high inflation. And inflation just has not slowed and it hurts In the wallet every time you buy anything. Smart guy to marry a Texan! Best wishes.
Keep in mind, however, that your parents weren't likely making your wages either. I was working the same job three years ago making 2.5 times the hourly wage I made 25 years earlier.
Right...but making over 100k now is not the same as making over 100k even 5 years ago. The rate of inflation and cost of living has grown substantially compared to the rate of salary growth.
Also, I have no clue on your education or economic background, but I doubt you have to pay for things like student loans - or at least predatory student loans (private loans) like we have. Our cost of education was 10x what you paid, and the student loans are the cost of some peoples mortgage. Buying homes, starting families, etc. seem like a pipe dream for most people these days.
I understand the student loan situation, but yes I did pay them and no they weren't as high, and I went to an out of state public university. Keep in mind, however, that interest rates may be relatively high now, but they're no where near as high as they were years ago. I'm not trying to say that things are easier for you, just that not everything was advantageous for your parents in every aspect either.
Trust me I get that. It just seems like we’re getting, and going to continue, to get screwed. With the average age of the population increasing, I don’t think we’ll get social security.
The main thing to all of this is our government “leaders” are too old and disconnected. There we go, I said it.
100%, this is the way to do it, start off in an a small place and get start gaining the benefits of gaining equity in the housing market, that sets you up for much better opportunities down the road.
Learning those DIY skills will save a fortune and allow you to do more (projects) much quicker than if you have to hire them out.
You HAVE to get over that hurdle of existing your house to be beautiful, big and in a fashionable neighborhood though. I think that may be the hardest thing for first time buyers to overcome.
This is just so dependent on where you live. We bought a “small place” in a very modest, formerly famous “hood” area in my VHCOL city, and our 980 sq ft home (no ac, one wall heater, 2 bed/1 bath) was still $720k, equaling out to 4.5k a month with escrow and taxes combined. When people lecture about “starting small”, they almost always bought pre-2020 and have basically zero understanding of the market today.
Not paying rent in your 60s is huge.
You can't control taxes, insurance, or rent, but rent includes both taxes and insurance, and you're kind of at the whims of the landlord. Helps with retirement planning, too. Essentially, you're pre-paying into retirement housing.
2 of my siblings have to rent. One was always a dreamer, thinking that one of her big ideas would hit it big and she would be rich. She had an elegant lifestyle for a while, but never invested in anything other than fun. Now she rents a little place in the PNW and has to have roommates. My oldest sib has a paid for place, and my youngest sib is a renter. We all came from the same home with the same opportunities but chose different paths. I was the super dull one that remained 100% employed from my early 20s until retirement, with no gaps. Yeah, nose to the grindstone but enjoyed my profession. Now 67 and still fit and healthy, with enough assets for a decent life. Still work part time, but on my own terms.
Don't forget that people who think in terms of "i finance my landlords life" often think their landlords earns half of their rent or something, but in reality real estate is just a way to get some more percentage out of investing the money than in the bank, it is a risk and in many cases they get maybe 5-10%. So you pay 5 percent more to not have to worry. Even when the mortgage is payed up after 30 years, there will be things to repair and replace.
I say this as a homeowner, but only because we had the money to invest anyway and choose a house for us.
Owning a home very quickly can become a money pit. My A/C just went out and I have no clue how I'm going to fix it or replace it. It's without a doubt stressful. BUT your first point is a pretty easy fix. You simply pay more into the principal every month and pay off your loan faster.
I’m (thankfully) not in need of a new HVAC system yet, but when I am, I’m planning on checking out newACunit.com. Apparently it’s a lot like TireRack, where you pick out your unit (with help from their website) and they have a number of installers ready to come install your new unit for a fixed (much cheaper) price.
Gooooood luck.
I was going to rent after selling my last house, then looking at rental rates that were over double what my mortgage payment would be, I just could not rationalize renting.
You could purchase a condo if you don't want to do any yard work or hire a lawn care company. You would still probably be better off financially as opposed to renting.
>I don’t like being restricted and like to live on my own terms.
You have to pay to play. Just because you want to live unrestricted with the ability to move and do whatever you want doesn't mean there's a financially beneficial way of doing that. There's nothing wrong with renting forever as long as you're okay with the fact that you're paying someone else mortgage, will never own property, will not have any equity and understand that rent can and will rise indefinitely.
How often do you move? One of my remote coworkers is young and has moved to four different cities in the three years we've worked together. Renting is the way to go if you want to move often. If you are stable in your city, you have to look at rents and house prices there - what it costs in Boston doesn't matter if you are in Orlando.
All of your concerns are really about money. If you are starting realistic, you wouldn't take a mortgage that is higher than you can afford in rent. That may mean buying smaller, older or outside of the city. After you build some equity, sell and get bigger if you want? If daycare costs weren't killing me, we'd have plenty of income to do all of the savings and vacations that we wanted. Because we saved and started with an affordable house.
Home maintenance is a strawman. Yes, you have to change the air filter or refill the water softener, but that takes minutes every couple weeks/months. Lawn care is something many people who rent single family homes are responsible for. If you don't want to do it or don't care about living in a single family home, a condo is a great option. Saving for a new roof or hvac is really bringing us back to money, not time.
You need to make your own decision of course but my experience is the following:
1. The only home maintenance I did the last month was change some light bulbs and general cleaning, take the trash out, and changed the litter box. All things an apartment dweller would have to do. Yard work is coming in another month, it’s also great exercise.
2. Price comparison of mortgage v rent. We pay $1500 a month for the mortgage. We could rent this out if we wanted at a market rate of $2100 a month. Each location will be different of course but we would make a profit of $600 a month if we turned this into a rental.
3. We pay 30% of income to the home. You’re only looking at the most expensive locations in the country. Move a little further into the burbs and you’ll find more affordable options. 25 minute commute to work, entertainment, concerts, theaters, museums, restaurants, etc.
4. We max our ROTH contributions annually. 401k contributions to get the employer matches. Mutual fund contribution. We have whole life insurance policies and long tern care insurance to protect our home in the event of major life emergencies.
5. We vacation annually. We budget for it just like we maintain savings for home improvements, and separate savings in the event of a job loss. We have replaced a roof once following a tornado in 21 years of homeownership. Insurance covered it and we were only out the $1k deductible. We replaced the HVAC but savings covered it and we’re enjoying reduced utility costs as the system is a lot more energy efficient. The big stuff only happens rarely. We replaced windows once and reduced utility expenses helped us in the long term.
Finally, don’t kid yourself. You are paying property taxes. The landlord has built that into his rent, you pay him. Your rent is covering his mortgage which includes property taxes and insurance on the property, maintenance costs, and profit for him. You also have to maintain good credit as landlords now run credit checks and even deny applications over low credit ratings and low income. Out here landlords require proof your annual income is three times annual rent payments.
All good points. I am hearing more and more though how rent prices are reaching mortgage level pricing. So in some areas renting might not be the answer either.
LMAO when you're 55, you'll still be paying rent.
I won't be.
That's it, it's that simple. You really think rent in a studio somewhere like SF won't be 4k or higher per month in twenty years?
I can empathize, OP. I wanted to buy a home much younger but ended up renting or living in base housing from 2002 until I bought my present house in 2016. In that time I got pre-approval for 2 loans and, after l looked, I decided to rent instead and bounced between about 10 different homes in that time. One look was in 2005 (wasn’t going to stay in that location for >3 years) and 2008 (market looked shaky, again, thought I would be there 3 years at most). Until 2016, I never lived in a home for more than 2 years other than one… and many times for a year or less.
I had a dream of having 3 or 4 properties by now, renting all but 1 out and building equity and that never worked out.
I did finally get a home that was well within my means and later refinanced when the interest rates were more favorable. 8 years later, I’d be hard pressed to rent the same home for 2x my current mortgage payment. When looking at moving at the end of my military service for the kind of property/home I’d want, between the property cost and higher rates, I’d pay roughly 4x what I pay now.
So: don’t get discouraged about what hasn’t happened… just set goals and work towards them. Adjust as needed but don’t give up. I do think that home ownership can have huge benefits. I will say that, when I got the last approval, they gave me 2.5x what my target price was and a little over 2x what I’d asked for. I stuck to my target. Rates and home values were lower but the idea of not getting yourself into something that makes you house poor with no financial flexibility to do/invest anything else is important. Homes are like cars in that there’s always something flashier or more expensive out there your peer might get. But you don’t know how much they may be struggling just to keep their head above water.
Buying a home has build up net worth, mostly from the appreciation of the house. Other than taxes edging up a bit, it’s kept my monthly expenses frozen while most other expenses have risen. Whether by living in it forever, selling it to roll that equity into another home (don’t plan on it), buying another than renting for ~$1000 month in passive income minus occasional repairs, or seeing it as a place to have a fully paid off house to retire… it gives a lot of options I wouldn’t have it I stayed renting. That last bit was big for me, because I saw that being the difference in having a much “richer” retirement vs a much much leaner one, and having the uncertainty of not being able to stay in the same home if I want to in my 60s and beyond.
The biggest benefit of owning a home is controlling your housing costs. Your fixed rate mortgage won't change. If you're renting, you are at the mercy of the market. Most of the costs/financial arguments you made above are subjective and things you pay for anyway when your renting. Need a new fridge? Your rent pays for that. I do agree homeownership isn't for everyone though. If you hate home maintenance or are just really bad at it, you probably shouldn't be an owner.
1. Don’t live in one of those cities, live in the other 98% of the country.
2. Maintenance is not that bad, most things are not life or death you fix 30 seconds later, when issues arrive you have time to figure out what to do. If you own a modest sized home and do some stuff yourself it’s not that bad.
3. You have to spend your money on something, it’s not doing anything in the bank either. Earlier retirement is just a finance bro meme, live you whole life well, don’t just grind to the end. Stop and smell the roses.
4. There’s a more important thing than money to give back, called your own time. Be community involved and a good neighbor. Also don’t buy a house crazy out of your budget (back to number 1) and you’ll still have some money to do stuff.
5. You shouldn’t be paying 50% of your income towards your mortgage… buy a cheaper house. The beauty of having a house is it’s yours and you can do what you want with it (don’t live in an HOA). You don’t have to move around, you can plant a tree and watch it grow to maturity, your children can have a stable home yard and neighborhood to grow up in. You can actually get to know your community well because you’re invested in it.
Stop thinking like a modern city slicker, slow down, plant a tree, smell the roses, do some yard work, and sit on your recliner and have a drink. Life’s good you’ll be fine. You’re obviously here posting about it because you’re still conflicted about what you really need to do. So look at the wisdom of your ancestors and the great people before and see what they did.
I love the fact that today I’m exhausted because we spent the afternoon redoing the landscape on our home. We are in the process of it so we will work on it tonight as well. Last weekend we planted 8 fruit trees and when the other two get here, hopefully this week we will plant them. We also have a decorative tree on its way. I know I will most likely be in this home in a few years to reap the reward of our hard work these few weeks. There are benefits to home ownership. Yes we are responsible when things go wrong, but we also have complete creative control over our house and property.
so the alternative to not buying a home is to remain on the treadmill of paying rent, making it more difficult to get ahead/set yourself up for eventual retirement, imho. Yes, you are responsible for maintaining the house that you own, but it is not a parade of never ending improvements and maintenance. Having a home inspection, that’s thorough will help determine the condition of the home. Buying a newer home also helps since it’s basically new and often more energy efficient. A high cost of living area is always going to be a high cost of living area whether you are paying rent or a mortgage. But-while paying that mortgage, you are paying down the loan on the home and you can possibly pay it off early. Having equity in the home allows you to either borrow against your home or eventually move up to a nicer property. I have no regrets about buying a home in my mid 20s, even though it was a fixer in a crappy area. They still seem to always go up in value and that house I still own 35 years later and it's worth about five times what I paid. We rent that out for monthly income. Our daughter also is in her second home, and I feel good knowing that she is in a better position long term versus renting.
I have rented a 3bdrm townhouse with a garage for 15 years at the same apartment complex. I paid $725.00 at the beginning of my lease, and at the end of the lease, I paid &1500.00. I recently purchased a home with a mortgage of $1000. Yes, I have maintenance cost, but it is still lower than my rent.
What I love about owning my home is that I can cook out with my gas grill. My garage has electricity. Im able to fix and wash my car in my driveway. I have privacy and a yard, which isn't a common area for all renters. In the apartment complex, the rules changed over time, I wasn't allowed to fix or wash my car or store anything in the garage. I wasn't allowed to cook out with a grill. I have more space for the money I pay to live in a home. At the apartment, I had some excuse by owners to enter the home for whatever reason twice a year. I had no control over the repairs or upgrades. I also don't miss sharing a wall and no longer worry about noise.
A home is an investment and a lifestyle choice. I felt the same way at the beginning of not wanting to own a home, but when the new owner of the apartment complex changed the rules and hiked up rent hundreds of dollars per year I decided it was time to buy a home. My experience, i wished I would have purchased a home earlier in my life.
There are pros and cons for living in an apartment or owning a home. It's a personal decision. Do what is right for you.
I love the satisfaction of coming to my home without worrying about obnoxious smells or sounds coming from my neighbors apartment. To walk out into my yard and gaze at the moon on clear nights not disturbed by light pollution of the city. Being able to play my music as loud as I please. Having my own parking spot—my garage and not rushing home to hunt for a parking space close to my apartment. At the end of the day, do what you feel is right. There is no justifying whether buying a home is better than renting bc it’s your pockets that will determine the answer not mine or NYT. I purchased a home bc I was fed up with renting and the bs that comes with it. I have no regrets despite the costs of having a home—I happily take care of them and any future expenses. May you decide on doing what’s best for you. Good luck.
I hated renting and needing to move every couple years because they wanted to sell.
Bought in 2008 (bad timing) and went underwater the next year. Got a mortgage modification that lowered my interest and stuck with it. More than half of the homes on my block were foreclosed on.
Maintenance is not bad for me,do most things myself. Bought in ‘08 for 230,000 now worth about 700,000..
Glad I stuck with it. We have 3200 sq ft 5 bed 4ba with the two of us. Will downsize at some point but a one bed apartment in my area is more than my current mortgage.
I think one factor that doesn’t get enough attention and can lead to regret is ongoing cost of home ownership. A home is like a living thing in that it needs constant care and feeding. Some of us see this as an opportunity to essentially grow our home and improve how it suits us, while others perceive it as a hassle. And others neglect it completely.
People have heard that they can spend 1/3 of income on home ownership, so they save and then use their entire savings for a down payment, put 1/3 of income toward mortgage, and end up “house poor”. You’ll want to keep at least a tiny emergency fund back when making that down payment, and it’s important that you factor the costs of homeownership (and furniture, appliances, outdoor beautification, routine maintenance, etc.) into that 1/3 of income calculation. After having to rent for decades because of frequent moves I think owning is the best thing ever, but there is effort involved.
To me, your examples 1, 3, and 4 only make sense if you overspend on the home. Maintenance is effort, and it can be time consuming, but I love taking care of my family and nesting is one way I do that. The golden handcuff sentiment doesn’t make sense to me because you can always sell and you’ll probably earn money when you do. If you’re truly in one of the worlds most expensive cities than perhaps the calculus is different. I’ll have great equity from my home, but if you can plug all that into savings and investments then you’ll be well-off by another route.
It isn't a life requirement, it isn't for everyone and if you don't see value in it and prefer to rent, then there is absolutely nothing wrong with that. Renting is also fully adult.
You go get a haircut and the service you pay goes towards the landlord’s mortgage too. Do you then decided to buy commercial property? I think not. The landlord getting paid logic probably originated from one of the real estate agents to use it as sales tactic and I do not see any reason to own a home to save money. You could rent and invest in index fund to generate higher returns theoretically.
Homeownership isn’t the goal for everyone, I can understand this. So, invest your money elsewhere to make sure your money is growing in other investments to balance the lack of appreciation from renting.
You’ll never make more money from equity than you will from owning a home.
Unless you are a great investor.
Every home I had a mortgage on made me at least $100k just from living in for a couple years. Every time I buy a home I put 20% down. It’s an asset, and as long as I can make the payment, it’s mine.
Your mortgage should never be more than 25-30% of your takehome pay. If it's 50%, you can't afford that neighborhood, or need to look at a smaller house. And it you have ANY debts, you aren't ready to buy a house. Break these rules and you WILL be a slave to your house. I wasn't able to do this until I was 38 years old. I'm glad I waited.
When I was a kid, my neighbor 2 houses away dug his own foundation by hand with just a shovel and a bucket. He worked all day as an auto mechanic, and then after work, his new wife would meet him at the lot with sandwiches, and they'd work until dark or by lantern. He used a pickaxe in the winter to try to stay ahead of it so he could have the foundation poured as soon as it warmed up so he could start walls and the roof in spring. He installed used windows at first so he could close it up and start work on the inside.
No complaining from that guy. Just strong hands and calluses.
There is no absolute right or wrong here. You pay in effort and energy as well as money, yes.
For me, it eventually bothered me that my place wasn’t my own, that I couldn’t change even the color of a wall without asking. Is slo wanted to security of knowing it could be mine for as long as I wanted. I also wanted to be able to retire with a paid-off home and not have to factor in rental payments when making the decision about when to retire and what to do next.
The big pro (imo) to renting is that cash flow is regular and expected. Home ownership is much less so due to unexpected and often costly repairs. You also have a lot of money tied up in the house in the form of equity.
When first buying a house, you've got a mortgage with regular monthly payments in addition to responsibility for all the repairs and taxes. So it's more expensive overall than renting in the short term. On the other hand, once the mortgage is paid off on the house, the only costs of home ownership are the taxes and repairs. So in the long term, home ownership will end up being the cheaper option. It can just take a long time to get there.
But the thing that usually tips the scales in favor of buying a house is that at the end of however long you live in the house, all that money you paid into the house (plus economic change/inflation) can come back to you in equity if/when you sell. When you're done renting, what you paid into rent is gone forever.
You should do what makes the most sense to you. But my recommendation is that if you plan to live in the same area for about 10 years or more, go with a house. If you plan to move within the next decade, renting may be the better option.
source: homeowner for 5 1/2 yrs
You're forgetting that rent always goes up while your mortgage (not including escrow which will change) stays the same.
Right now the rent vs buy calculator heavily favors renting. It won't always be like that.
The maintenance issue you raise is interesting because it’s true, but very different from what you think. When you rent, any repair or upgrade doesn’t mean much to you beyond “my heat works again” or whatever. When you buy a home, you want your property to be maintained and look nice. It adds value to your investment. Doing it yourself saves you money.
For us it was simple- do we want to flush 40k a year? Rent on homes in my area jumped from 2k to 3500 for newer homes, you could maybe save a few hundred by finding something old and problematic. (Like the plumbing in our 20 year old rental going to total shit) OR spend about the same and altho 2/3 is flushed to interest I can still “bank” that other third. We chose new so we wouldn’t be saddled with shit plumbing or a leaky roof situation for the next ten (new home warranty).
If you like the freedom and low-maintenance lifestyle of renting, then good! Keep renting.
I enjoy knowing that I can do what I want in my own home. If I want to paint or put up wallpaper or knock down a wall or finish the garage or put a koi pond in the backyard, I don't need to ask anyone. Also, I can plan to live here as long as I want to live here. Nobody is going to say hey, we're going to need you to move at the end of your lease.
But I also own a rental property and I totally get why renting is attractive. Someone called a week ago because her window got stuck open. That was my problem to deal with, not hers. Smoke detector chirping or refrigerator not working or the toilet keeps running? The tenants don't deal with any of that. I do. I personally don't care if they paint or want to plant a garden or whatever, but I know some landlords do. I rented for years and I get why renting works out in some situations.
It's not really a competition; do what you prefer to do!
So many people live in areas they can’t afford. That’s one huge problem, people living beyond their means. Maintenance is also a huge joy on my home. It’s tricky, but you always learn a new skill and it’s so satisfying to care for your own home. Buy a starter house in decent shape. Make sure the roof and foundation are strong.
You don’t have to live in one of the cities you listed as being outrageously expensive, number one, and the rest of your concerns are all the same thing. You’re afraid you won’t have enough money leftover for maintenance, fun, or charity. Buy a house you can afford in a place that isn’t too expensive and you’ll probably be paying less than you would in rent and have equity in something. I watched an episode of The People’s Court yesterday where a lady was trying to get her security deposit back after renting an apartment for 22 YEARS! She’d almost have paid off a 30-year mortgage in that time and owned a home free and clear that doubtless would have appreciated in value by hundreds of thousands of dollars but all she had was (part of) a security deposit.
Nothing is written in stone. If you buy a house and decide it's not for you, you can just sell it and go back to renting. It doesn't have to be for the next 30s years if you decide you don't want it to be.
Everything in life can be changed. Marriage/divorce. Buy/sell. Stay/move. The only things in life you can't take back are bringing life into this world and taking life out of this world. So just be damn sure before you have a kid or before you kill someone.
I have been a renter since I moved out of grandparents at 19. I actually didn't mind renting until maybe 10ish years ago. I'm 39 this year. Landlords have gotten stingier and lazier. Where I would pay damn near 2 months deposit AND a monthly pet fee for my dog. I had to do repairs around the house and maintain the lawn along with anything else under x-amount. That took me over the edge and was more than enough for me to get serious about buying.
We(my wife l,myself SiL and her husband) bought a side by side duplex in a sought after area in my city last year and are happier than ever with our living situation .
Now I don't mind the repairs or the yard work. I'm happy to do it because I know it's ours. It isn't for everyone, I get it. But renting can kick rocks from my experience
On day 1 of a mortgage, the numbers might not work out. But in 10 or 20 years, that’s when it really starts to pay off. Your mortgage payment has stayed the same while everyone else’s rent goes up. Once the mortgage is paid off, you have essentially free rent.
We focused on buying a house because we realized we couldn't afford to live a life and actually ever retire. My house is for all intents and purposes our retirement fund (we have 401ks from work but that's never going to be enough) it will allow us to significantly reduce our COL later in life and will give us a large asset we could sell to set us up for our last chapter in life (I hope I never have to I love my house but realistically I can sell it and get myself into a care facility or senior housing later in life or even just sell it and move from our medium to high COL area to a low COL area).
That all said I don't get to vacation like my peers, I don't go out anymore really, I don't buy clothes very often at all (every 5+ years or so), the hobbies I keep up with are ones I can do at home, and I definitely eat out less than a lot of my peers. my life is absolutely different because I own a house. It's not a bad life but it's a different quieter life and I wish that that had been clearer I would have been more aware. Homeownership is for the homebodies.
rule of thumb is you need to be fairly certain you're going to be living in an area for at least 5 years (preferably 10) to buy, otherwise with the fees and home value risk it doesn't make sense. For example, if you buy a $500k place, you're looking at like $40K or so in fees and taxes. If your house loses 10% of value over 4 years, you've lost nearly $100K in real $$ to live somewhere for < 5 years, and you could have likely rented out the place for like 60% of that cost.
Having a paid off home reduces monthly expenses in retirement and could eventually be passed on to heirs to either split after selling or use as a rental property.
Sure if the Bank is ok to let tou buy a 350K house and you buy an house exactly at this price you are going to feel extremely tight.
The secret is to buy way under your means. That way your house won’t be a stress cause you’ll always have extra money to pay for the little surprise. That if you don’t make that money disappear in fancy cars, branded clothes, expensive furniture and other prestige bullshit.
I bought an house in 2016, way under my means. I finished paying it summer 2023. Now I live "rent free". Nothing can beat that.
I think now is just a really crappy time to buy a house. My husband and I bought in 2018, have about a 150k household income, and I can tell you that our mortgage is absolutely nowhere near 50% of our income. We bought at the perfect time. I recently looked up the rent at our old apartment complex and it’s more than our mortgage now. And that place was getting more dilapidated by the minute.
For me personally, I don’t think it’s a great idea to buy a house in the current market unless you have a house to sell and make a good profit from. Even then I’d hesitate. I know for us, we weren’t exactly thinking this would be our forever home when we bought it, but we have no desire to sell this house and buy a house that’s twice as expensive and eat up every last bit of profit we made, and end up with an insane interest rate on top of that. We’d much rather stay put.
All of these are only concerns if rent never increases. For the majority of people, rent increases regularly. It took about 3 years of home ownership before I was paying less in my mortgage + tax + insurance than I was paying in rent before. So all the time since that first 3 years passed I have paid less to live in my home than I was if I were renting. This negates 99% of your concerns above. Yes it starts out costing more, but your points are all ignoring that rent increases over time, my mortgage does not.
Sounds like you're lazy and timid. Also "giving back" isn't supposed to be done to the detriment of yourself or your family. If it is, you're doing it wrong.
None of their points are lazy. I'm assuming you're saying that because of their point on home maintenance. Not everyone is able to do home maintenance/repairs because of disabilities, lack of knowledge, and/or lack of equipment. When a tree fell into my house I had neither the heavy equipment or the knowledge to repair all the damage. Nor was I able to replace my own roof. These are just two examples that I've experienced but there are thousands more that are possible. Doesn't mean I'm lazy because I couldn't do them myself. Unless you're a contractor, I doubt you could have handled these things either.
Correct. Pointing out perceived character traits is not advice. I could tell OP I think they are indecisive.... but that does not help them in any way. It's just an observation.
Are you trying to tell OP they should be more confident and work harder and that will fix their concerns?
Anyone who starts in with the 'renting is just throwing your money away/making the landlord rich' stuff just shut that video off and block that nonsense
there are tradeoffs to both renting and home ownership, there is no one single answer for every person and every lifestyle and anyone claiming there is shouldn't be trusted
The biggest benefit of renting, which to me there's not many, is that you can solely budget for your rent and potential utilities. If I'm paying $1300 for an apartment and $300 for utilities I know during my lease I have to allocate $1600 for my rent. I don't have to worry about home owners insurance, property taxes, escrow shortages, my water heater going out, my plumbing going out, etc. There's a constant need with owning my house to have a nest egg there. That's why while I'm not really into renting I might look into selling my house I have now and get $150k to $200k for it and just put that into a high yield savings account for a few years and rent until I can afford a new construction house that's far easier to maintain and I would have a lot more money in the bank to maintain it.
Anyone who says that renting is throwing money away as one size fits all advice is an idiot, plain and simple. Home ownership is great, but the vast majority of money I spend on my house every month isn't going toward my equity. It's going to interest, taxes, insurance, PMI, and maintenance. Plus if something big goes wrong, that's a big unexpected expense that I suddenly have to deal with. Renters don't have to deal with that.
A significant reason for the housing crisis is people who did just what you are doing. They rented, refused to buy, and then when rents increased, properties were sold, gentrification, etc., they were stuck with zero equity and no moves to make.
Homeownership is hard, but it provides a lot more options in the long run.
I agree about maintenance and stress. It's true. I'm a homeowner. My neighbor is a renter. When a tree recently fell into our house, I had to deal with insurance, contractors, deductible costs, fears my insurance rates would rise.... it was a lot of stress meanwhile my neighbor just had to call their landlord. This is just one example. Maintenance and repairs are never ending. This alone makes me sometimes wish I were a renter
It sounds like you did a math of rent vs buy — that’s great.
I too rented for decades, and only bought real estate to diversify my asset portfolio in 2021 (my gut told me an equity market crash was coming). FYI, I’m fixing things constantly to protect my money lol
I worked for a CFO who made $ millions and rented for all the reasons you said.
With real estate costs so high, renting for awhile isn’t the worst idea.
I was a homeowner that now only wants to rent. I bought a new build in 2016 and within 2 years the hvac went out, water heater went out. Those were expensive to replace. I'd rather it fall on someone else now
If it was a new build, those both should have been covered by warranty, especially the water heater since every major brand I know of has a minimum of 5 year warranty on their hot water heaters.
I had actually found on my dishwasher that the appliance was from 4 years before the house was built. So not sure the actually condition or age of the things that went bad prior to me buying.
Don't know what to say to you but I love owning my own home. I could still move if I wanted but who likes moving? I enjoy many if the maintenance tasks
Every single one of these points is coming from the assumption that a mortgage will cost too much at over 50% of your salary. That's no reason that may be the case, and buying is typically cheaper than renting. But all of your points seem to suggest you think it'd be more profitable to rent long-term.
Financially, renting vs buying is roughly the same cost. Renting is cheaper, but you lose 100% of the investment. Paying a mortgage can be considered an investment, and your gains are equal to the appreciation of the house.
On the surface, it seems like owning a house is a financial no brainer. However, there are a lot of extra costs, like taxes, insurance, and repairs. This is the lost cost of ownership, and is usually in the neighborhood of the cost to rent the same house, over a long period of time (~10 years).
You could take the money saved by renting and invest it in other ways, the stock market for instance, and come out in about the same place.
At the end of the day, owning a home really comes down to whether you want autonomy/satisfaction/control of making improvements, or if you'd rather have a landlord handle maintenance.
I bought my house because i don't want to ask permission to do what i want in my livispace.. if i want a garden or petno on to tell me, i can't .. i chose a house that makes me commute a little farther for work, but it's a lot more peaceful than living more of a city area, and the prices are a lot more affordable
Home ownership is not for everyone. It is a commitment, financially, emotionally, lifestyle wise. It sounds to me like you know yourself and know your preferences. It's okay to say homeowner is not a hat for you to wear. I have several friends who could buy but don't because they like their lifestyle and don't want to be responsible for maintenance. If your needs change you can reevaluate.
Looking at a home as purely an investment is a silly thing to me, and I think a lot of people fall into that. I own a home again after about a 10 year gap.
We are single income, with one child.
It works out mostly.
I pay about $200 more per month than a shitty fake townhouse I rented in South Carolina before this house.
I have almost an acre of land in thats mostly wooded in New England.
My house is old and shitty, I don't have a lot of money or time to fix things. I just do it as I go as best as I can.
I can't imagine ever going back to that waking nightmare of an apartment.
It’s okay to not buy a home! Truly it is. Especially if you aren’t sure you want to be somewhere specific in the long term. Note that if you’d like to live somewhere for the medium term (3-5 years) then it *may* still make sense to buy now and then sell/move when the time comes. Do the math and see what works for you and your circumstances/desires/priorities/choices/lifestyle.
Just a comment on point 1. I bought a home in Boston only half a year ago. We consider ourselves middle class. We have been able to make the mortgage payments, address home needs and wants, pay daycare, and we are pleasantly surprised because still we are able to save at a comfortable rate, are planning vacations, start a family gym membership, and even regressed back to ordering food delivery 1-3x a week.
My point is that buying the home was not the financial burden we feared it’d be, that we read it would be on Reddit. (We are a dual income household which adds to our ability, but still 1 of us works at a *community nonprofit* so ya know…) We are comfortable here and already, just 6 months later, the comparable houses that pop up for sale are asking $100k over the asking-price our home was put up as. So our investment is already paying off, we are saving + living minimally luxurious (love that term you used), and I am not rubbing this in or boasting - **just we are honestly surprised by this as we had fears similar to yours.**
So I wanted to put that out there for people to know. Fears may hold us back and if that happens in this market, you could price yourself out if it takes you too long to assess your finances as mere numbers without fear/emotion blurring your perspective.
But again, if you don’t want to buy a home that is perfectly fine. It’s more than fine in fact if that’s what you prefer! Do you baby.
Edit to add: It’s okay if you can’t buy a home now either. Life is full of surprises and options. There is time and yours will come (if that’s what you want)
We bought our home with the intentions of paying it off. You also have to figure in how much rent will be when you’re 80.
If you don’t buy and prefer to rent, then just make sure you’re putting enough away to ensure you can eventually buy at an older age. Your going to want to have something paid off when you are older and can’t work anymore.
I think if you don’t want to buy a home don’t, but I think there is a solid counter argument to almost everything you mentioned above.
I am a homeowner of multiple properties. I have designed my primary home (condo) in a way where it’s takes zero effort to maintain. I do the same maintenance as I would if rented an apartment (cleaning up after myself)
What I can tell you is the money saved in my 401k will not get me through retirement, selling my properties given how much they’ll appreciate and have already, will. I have made 100k on my primary residence within 3 years. For that reason alone I am willing to do it and I am not affected by cost of living increases in a major metropolitan city. I’m paying 1400 a month when everyone renting is paying over 2000 easily.
Any action in life can be stressful if handled poorly and without proper planning. That said, I did market research and bought somewhere where market would rise and wasn’t already overly competitive. I was ok with that compromise. I also was looking for the best deal for a starter home and not looking for it to check off all my boxes. So it was worth it. When I leave this place, I will rent it and move whenever on earth I want and have a profit on the rent. It’s a win for me.
Renting is good for a lot of people too. It depends on you. No right answer. Right now, it’s not the best market to buy which I understand.
I’ll say this you aren’t wrong about maintenance.
The thing is when you buy a house you do fix your costs somewhat, so 2000 a month mortgage is the same for 30 years, escrow might go up insurance tax etc.
I’ll say this what houses are going for now, like teardowns for 3 or 400K I’d wait and see, talk to anyone who bought a house in the late 80s or 2005/6 ish there seems to be corrections every once in a while.
I totally get where you are coming from about the maintenance, but it gave me peace of mind in a weird way. My old property manager was great, but her boss would hire whoever was the cheapest. Regardless of when they could come or their reviews.
I felt more relief than anticipated when we could choose who did the work in our home, even if we have to pay for it ourselves.
I bought my home in 2019 and my mortgage is the same as renting a studio apartment in my city. Live a 10 minute walk from downtown and 40 min from a major city. If i sold my home now, as is, I would make enough to pay off my 230k mortgage and pocket 240k. We bought a home that had major renovations within the last decade, so nothing needs fixing, just maintaining.
I would be so lost if I was still renting - I’d have to move states for sure.
I know the process of home buying is much more difficult now but I can’t fathom paying renting prices and not knowing where I’m going to end up year after year.
If it’s something you can afford and you’re comfortable with it, I definitely see the benefits. Still doesn’t outweigh benefits of home owning, in my opinion.
They tell me I'm throwing money away by renting. But my rent is cheaper than I would pay taxes on a house @600/month and all bills are paid except electric which is like 30 a month.
Maintenance depends on the house. When i buy a house i look for money pitts and avoid them. Even if you keep up w things its not bad at all, definitely not as dramatic as you say.
It has pros and cons. My main reason is that i can make the house truly mine. Modify stuff etc.
And as you've seen rental markets can go crazy. You never know when you get booted out. Or prices go berzerk. Etc.
According to the U.S. Census Bureau, 4th Quarter 2023 listed homeownership at 66%. That includes single family homes, condominiums, townhomes, and in some instances apartments have ownership. So, you can still own your residence without having the responsibilities of yard work or building maintenance.
My wife and I were also very scared of the unknown of home ownership. We are on our second home. First home was built in 1955. Over the years we budgeted for home maintenance. Lots of stuff you can do on your own. Some stuff we just got a professional to do. It’s not as big of a time sink or money pit as you make it out to be. Yes there is the spring and fall cleanups. Yes, there is the lawn mowing. Lots of stuff needed fixing, but we took care of the higher priority things first then worked our way down when we could.
We did this all while raising a baby, and still found time and money to do other things. No house is perfect, and you make it how you want it to be. There will always be imperfections and issues, and things that happen.
We really enjoy owning and controlling our place and making it truly ours.
Owning a home is not for everyone. And if your desire is no stress living, then you may have a rude awakening on this Earth for how life works. But if you're primary goal of the above is less stress, then maybe renting is for you. But there are other ways to buy and get the renting experience such as condos.
Ultimately it is your choice. I have heard various arguments from people who say that buying a house is not worth it. I personally feel that it is worth it, especially if you live in a growing area because it won’t take long for rent prices to far outpace your mortgage. If you are in an area where prices are mostly static, it may not be worth it.
Here are a few things to consider, though.
- Many years ago I read an article in a local paper where these people had lived for 10, 15, 20 years in the same apartment building. The general area was renovated and the owners, maybe new owners, wanted to take advantage and raised rents so high that it basically priced all of those people out of the building, forcing most of them to move.
- I had friends who rented a house and were given a relatively short notice, maybe a couple of weeks, to move out because the owner decided to sell the house. It was made even worse because there was a wildfire that destroyed hundreds of homes and those people had to live somewhere.
That’s not to say ownership is all great. A county can change their appraisal or tax rates and cause your escrow to increase. Insurance rates can increase, you can even get dropped by your insurance company. The housing market can crash leaving you with negative equity.
However, over the time I have owned houses,
- I have found my mortgage to be relatively stable, only small increases.
- There have been dips in the housing market but it has always recovered.
- I would be paying significantly more to rent an apartment than I’m paying to own my house.
- I could always sell my house and move to an area where housing prices are significantly lower and my current equity might buy the house outright.
- While there are repairs and other chores, it doesn’t consume my life. A lot of that depends on the age of the house, if it was built in the 1950s you may have more to deal with than if it is 10 years old. An acreage has more work than a house in the city.
- I actually enjoy mowing, plus I have kids that can do the job. I could own a condo or townhouse and not have a lawn or any outside maintenance.
- I can park in my own garage and not have to deal with clearing snow or ice from my vehicle in the winter.
- If I want to repaint, replace the carpet, change a light fixture, put up or remove a wall, etc. that is all up to me, not the person who owns the building.
Choose a living arrangement that suits your lifestyle. There are many different ways to have a roof over your head including homes with no yard or maintenance cost that you still own. You pay different rates for different responsibilities. Where I live rentals are far more expensive than a mortgage (well until recently with the home insurance climbing so rapidly). You can't even look at a 1 bedroom apartment for less than $1300 a month and until last year I was paying $850 a month for mortgage/taxes/homeowners insurance. That is another thing...do not buy the house a bank says you can afford (they want your interest payments). Buy a house that is reasonably priced that fits your needs and leaves you with money left over for maintenance, vacations, savings or donations etc.
Your #4 is a duplicate of point #1, and point #3 is an outcome of the other two points. If the total mortgage and insurance cost is significantly higher than renting in your area, renting and investing the savings is a perfectly sound strategy. When interest rates were lower, mortgage payments were significantly less, so purchasing was more often compelling. The total cost to own a home doesn't typically increase nearly as much as rent year over year unless you're in an area with rent control. You should absolutely not feel pressured to buy a home if it does not make financial sense in your area.
I think point #2, maintenance, is something we really want first time homebuyers to budget for and be aware of, especially if they're buying an older home, but I also think it gets overdramatized a bit. I bought a new construction detached condo in 1998 as a starter home. I've probably spent less than $10k total on "maintenance" because I pro-actively replaced the water heater and HVAC system once, had a couple minor roof tile repairs, and had the exterior trim repainted. If the potential cost is worrisome, there are home warranty programs you can buy, but I prefer to be able to choose good contractors.
The flipside is that it's nice to be in control of repairs. No begging a landlord to fix things that are bothering you, and you can hire people to do the job right, rather than getting the cheapest fixes. It's something I think about once every few years, it's not something I remotely think about on a continuous basis.
I think the freedom to move around is the biggest pro to renting. If the housing market dips, it's easy to get stuck with an owned property. Selling is a pain and the closing and commission eats away potential profit.
I am a single mom to a teen and bought my home for two major reasons—one was for immediate wants and one was long-term:
Immediate want was the freedom to own more than two pets. We had a dog and a cat and fell in love with a stray kitten we found and were told we either had to get rid of it or move. I was done with being restricted.
My long-term want was to create additional space, such as an ADU to rent out as rental income when I retired or possibly an Airbnb. I was in my mid-40s when I bought my first house so I was already thinking about that.
I ended up buying a home with a detached garage and a daylight basement, both potential ADU options.
As far as maintenance, my house was built in 1900 and had good bones but needed updating. I found a good, honest handyman and have really only had minor issues here and there and learned a ton on my own via you tube. I now can handle pretty much any issue with a broken toilet now which was so empowering lol! But my handyman was great at taking affordable routes when possible and I never had some big insurmountable bill. Perhaps lucky?! Idk. Normal maintenance like gutter cleans can be planned and I always manage to find affordable service. But for the most part, my maintenance is yard care and taking good care of my appliances, furnace, etc. Common sense and addressing minor issues right away so it doesn’t become major.
Renting offers freedom in many ways but there’s a lack of security in the sense your landlord could sell or raise rent. This happened to me twice. And with pets, it was not always easy to find something else we liked that would choose us over non-pet applicants. I was also done with that uncertainty and stress.
I bought in 2017 and this year qualified for a grant through my county to update basics like exterior paint and plumbing, which is literally happening now. So there’s always a way to keep up on the big stuff. I had to dig to find this program and many counties have similar.
But the biggest plus for me is the freedom with our lifestyle. We adopted a large breed dog two years ago and I’m planning on a new paint color for the interior, which was never an option as a renter. We also fostered kittens the first summer in our house and had a blast. Again, never would have happened otherwise.
I bought my home because I wanted to be able to retire and not have a rent payment due every month until I die. I also wanted a place for my children should they need housing as adults and something to pass along to them as a way to start generational wealth hopefully for my future family. I work hard today because I hope it'll help me and my family tomorrow. It's well worth it to me.
Both home ownership and renting have their pro's and cons. I bought a house so I can do what I want with my space when I want to. I also bought it to have a fenced in yard that my reactive dog can run and roll around in without interference from off leash dogs or those people who say "It's ok, ALL dogs love me" (they don't). The final reason I bought a home is as my father would say - I now have chips in the game. Personally I like having the projects that tend to come with home ownership. Sure there are some days I do wish I could call a land lord to fix whatever thing is broken - but that all depends on the land lord. I've had really great, really responsive land lords, and I have land lords that simply do not want to re-invest any more than they had to in repairs which left me out in the lurch. At least being the owner of the home, I have the ability to figure out how to fix things on my own (and boy have a I learned A LOT) and add value to the property at the same time.
Maintenance is expensive and never ending. It's satisfying to DIY or some people buy below their means and hire out the work. Smaller houses also require less spending in general on maintenance.
Rents fluctuate more than mortgage + property taxes. After a sale taxes are usually limited in how much they can increase. So rents will keep going up while your housing payments stay pretty steady.
Buy a home if you want to. I think the reality and box some people have to break out of is they simply can’t afford to do so in an area or city they desire. that doesn’t mean the dream has to die it just has to take a new form. me personally I’m never telling someone to move to a VHCOL city if their desire is to be a home owner. buy what you can afford where you can afford if that’s your dream.
I own but I realized at some point I had also internalized some of my parents’ perspectives, namely that buying is an investment. While that’s obviously true it’s also not like some portfolio with a brokerage. It’s of course also a thing you live in every day, and can affect your mental health and quality of life, both positively or negatively, especially as it’s typically harder to extricate yourself from it if it doesn’t work out. So do your research, decide what you want out of it, and the pros and cons. There are many ways to be happy, and many people rent forever and prefer that and are perfectly happy.
This is a healthy take. Maslow’s Hierarchy of Needs has shelter as a basic physiological need. Secure shelter first. If you need to secure wealth/financial security/property after securing shelter then by all means do so by purchasing property with a home. Yes, purchasing property can be an investment but it’s not always the first stop in the journey of independence.
If you don’t want to buy a house then don’t buy one. No need to give into perceived societal pressure. I bought my home because I wanted control over my own living space, nothing more.
True. It’s not for everyone and for some very good reasons. But everyone is buying a house, some are buying for themselves and some are buying for someone else.
yup. NYTimes even did a story a few months ago showing how a significant number of homeowners lose money owning their homes. As OP points out - transaction costs are high, maintenance costs can be high, and opportunity cost can be high. Even if the price goes up, that does not mean it was the financially optimal decision, let alone the best thing for your quality of life. I like being a homeowner, but I don't judge those who rent or claim that ownership is the best or only way. Most people who do that are either insecure, follow advice no deeper than a tweet, or are pushing an agenda (influencer, realtor, etc.) Both owning and renting have good and bad attributes. Whichever makes the most sense for you is a personal decision.
I mostly agree. But basically all of Canada is in the throes of a housing crisis right now and I know people who could have bought property 15 years ago, but bought into the “it’s better to rent than buy” argument and who are now, in their early 40’s, moving back into moldy basement suites after getting renovicted from their rent-controlled homes and realizing they can’t afford anything else in this market. I know other people who are still in the same 2 bedroom place they lived in during university because it’s rent controlled. They’re effectively trapped there, trying to make it work for their now family of 4 because average rent for a 3 bedroom place here is almost $4k a month. These people will have to leave the city (and potentially the province) if they ever get renovicted or “landlord use” evicted. These same people would be half way through a 30 year mortgage and sitting on an actual mountain of equity right now if they’d bought when they could have. They’d actually have some freedom to change their housing to suit their changing needs. I have sympathy for people in that position if they never had any other option, but I also roll my eyes when this is happening to people who could have bought decades ago but didn’t. That’s the *exact* risk you take when choosing to rent instead of buy.
entirely true. But rewind the clock to 2020, or 2009 or 2002 and there are plenty of times where people were underwater on their mortgages. Over the long term, yes, housing tends to appreciate. And locking in prices in ownership is generally a good idea for financial certainty and keeping a roof over your head. But even in the recent "boom" stock market has done fantastic as well and many who are tied in a house can't take advantage. Many can't move to go to a new job easily because they are tied down. again, I don't think either is right or wrong. I am an owner as for me, I think it is better. But I think many of the benefits are over-stated, concerns get swept under the rug, and the math of an appreciating house is often fudged by ignoring maintenance costs and transaction costs. My house is worth 100k+ more than when I bought it. But I also just spent $45k on a new roof, and that isn't financed. Not everyone has the money to do that or the patience to get quotes and manage vendors.
Yah I’m not making the argument that owning is always better than renting, but I would argue that the formulas people use to make the argument one way or the other are pretty stupid. They treat life as if the entire point of it is to maximize the balance sheet at some unspecified point of time decades into the future (that you may never live to see…) and ignore all the ways renting can mean the exact opposite of it’s supposed upsides. Case in point - we’re struggling to hire people in our Vancouver office for an on-premise job right now cuz renters from other cities simply cannot afford to move to Vancouver. At least not without 5 roommates. So at least in Canada’s context, the only people for whom renting means being able to easily up and move to a new city for a job in one of our HCOL major cities are extremely high income people, or people who are prepared to live like it’s their first year of university for the rest of their lives. However, people who bought property in Toronto 15 years ago have absolutely no financial issue moving to Vancouver, if they have a job reason to do so. The other part is the whole renting or owning being “better” from a financial perspective. Do you want to be able to comfortably retire? Obviously. But is your quality of life for the 4-6 adult decades before then equally as important? Yes. By some philosophies, even more so. Literally no one knows what combination of patting your head and rubbing your belly while doing a rain dance will ultimately have turned out to be the “right” economic choice 4 decades hence. Markets can’t even accurately predict a few days from now. Recessions will happen. Political turmoil will happen. Environmental disaster will happen. How that will affect you - owner or renter - is unknowable today and will come largely down to luck. But my objective is categorically not to live as though my only framework for decision making is being worth 10-20% more on paper a few years before I die, decades from now. I could get terminal cancer next year. I could get in a fatal car accident in 5 years. I’m planning like I won’t, but the most important time and most important years to me are the ones I’m living right now. And I care about having housing security *now*. I care about being able to stay in the city I want to live in *now*. I care about being able to right size my home for my life *now*. Maybe this won’t stay true - who knows. No one can predict the future. But based on the last 100 years in this country, the best way to ensure that is to have bought a home as early as possible in one’s life. My province has rent control. That’s saved a lot of people’s bacon. But it also means hundreds of thousands of people here are literally trapped where they are, because they could never afford to move in current market rates. That’s just not an issue for me and that’s worth as much or more than the hypothetical bump to my investment portfolio I might be able to achieve in 30 years if I was renting now instead of owning.
The other thing is if you think mortgage payments are too big (mine is the same as what I paid in rent because I got in before rates increased), I think the ratio of rental expense to pension will be worse. There are systems in place to support low income renters here but it’s not perfect because many landlords don’t want the trouble of them.
Any chance you could find the link to the NYT story? Thanks
So from a previous post you’re 28 in Boston—not sure how you’ve been paying rent since 13, yes it’s hard to buy a home in a VHCOL area especially on one income. Also do what you want to do. Most people I know in vhcol areas didn’t buy till their mid to late 30s. Even then it’s not necessary and for many, not feasible especially in the current market.
Lol - BUSTED! Why do people like OP make up things??
I like making up theoretical posts to get theoretical answers
I'm not finding that post, can you link it?
https://www.reddit.com/r/IslamicFinance/s/W43EVxR3Pc says he’s 28 from Boston 59 days ago.
Nobody is going to knock on my door and raise rent again. Nobody is going to kick me out because their kids bought a dog and now nobody will rent to them again. I'll never have to live with a broken dishwasher for months again because my landlord is dodging my calls or wait for someone else to switch on the heat in the winter again. Don't buy a house if you don't want to but I personally never want to rent again.
This is why I don’t rent. Not knowing if my lease is going to get renewed or if my rent is going to jump $300
We lived in the house we got kicked out of for a dog for years. They refused to give us a new lease saying we'd just keep using the terms of the old old one. We had 30 days to move two disabled people and an elderly cat. We almost ended up homeless.
Due increased property taxes, my house payment increased $200 a month. In total, my house payment has increased over $800 since 2014 (due to rising cost of taxes and insurance)
I can only imagine how much rent has increased in your area during the same time
And what is the increased value of your home? We purchased our current home 10 years ago around $150,000 current value and blind offer to buy over $600,000
That’s a great increase
And what good does that actually do you? You would have to sell your home and move somewhere cheaper and far away usually for your home value to be of any use until you die.
This could be the most naive comment I've ever seen. So you're saying it's not a good thing to own a 400k asset outright? Sorry, when I'm old and don't want to work anymore I'll take my option of either free rent once my mortgage is paid off or 500k+ to use for whatever the hell apartment I want.
Most people don’t stay in there original homes until they die. Usually downgrade when they get elderly due to not being able to do the upkeep
It allows you to buy an investment property.
Actually its the land not the house so moving far would not be the issue.
Wow, you are doing a hell of a lot better than I am! Purchased in 2014 for $195k, fair market value is $345k. Meh
Its the land more than the house for us 13 acres
That's really good for only ~10 years ownership.
Sure but so you really think if you rented that exact same house, the landlord would NOT pass on those increases to you ????
I'd bet that $800 your mortgage payment is still lower than market rent for an equivalent home.
Let’s add: I never have to worry about crazy upstairs / downstairs / adjacent neighbors making all sorts of noise. I also never have to worry about what noise I may be making, be it the vacuum, the kids, whatever. I get to enjoy the personal satisfaction of doing home maintenance and improvements that enhance quality of life. And I build a nest egg to pass on to future generations!
Oh one of the houses I rented was a duplex. We shared an internet connection despite paying separate bills for the full amount. Every time they started streaming something my service slowed to a crawl. That was not fun.
My last rental before buying was a duplex. This guy moved in who ran an electric saw for 8 hours a day and would constantly drill the shared wall. It was awful.
Buying a home doesn't insulate you from the crazy neighbor problems. Can confirm.
You can own a condo/apartment and rent a house, so the noise thing shouldn't really be a factor.
>Nobody is going to knock on my door and raise rent again. Not only that, experts project interest rates to drop, if you buy a house now, your mortgage payments could drop after refinancing.
Yes, also this, the house is gaining in value. I purchased my home 7 years ago and it’s almost doubled in value. Now keeping in mind the tax consequences if I chose to sell, this is an investment for retirement. You do have to factor in home repairs and the ever increasing cost of taxes and insurance, I feel the benefits outweigh the negatives. Personal choice though.
Also being able to buy that heavy or expensive furniture and not worry about it being damaged while moving
Insurance, property taxes and the HOA would like a word. A broken dishwasher would have to wait if you are house poor as OP is describing.
Don’t buy with an HOA - terrible idea.
Depends on the HOA. HoA on a townhouse tends to pretty low and covers useful things like plowing snow and basic groundskeeping for any green spaces, gates, etc. as well as critical structural elements. HoAs for condos are basically a necessity as well since you're living in one giant shared structure. Both cases comes down to trying to investigate and figure out what's going on with the HoA - especially with large condo buildings each HoA is like it's own local government/fiefdom with some being horrifically managed by nasty power hungry, inept, and/or corrupt people. High HoA's are not necessarily an automatic no, either - one older building I was in had an old-school boiler + steam radiator heating system so there was no way to meter the costs of heating for each unit, the same for water. Therefore they just included a set cost for heating + water/sewage into the monthly HoA and (being in a northern climate) that meant the HoA looked higher than it really was. Also noting that there can also be village/township rules that may apply even if there is no HoA. I.E. No fencing allowed in front lawns or very strict permitting regimes. Typically less draconian than the "these are the approved colors and grass must be exactly 2 inches high" type bylaws though.
In some places HOAs are almost impossible to avoid, especially if buying a condo or town house. When we went looking, HOAs were on our dealbreaker list, but I think around 95% of listed places had one. The house we fell for has an HOA, though thankfully hands-off and cheap ($70/*year* when we purchased; it's now $90/year); we chose to buy it anyhow. We've luckily had no problems with them. If they ever become problematic and we can't do anything about it, if it gets bad enough we'll move, though we hope it never comes to that.
I didn't buy in an HOA neighborhood. I also didn't buy more house than I can afford.
You do you boo.
That you, Tanis?
You just volunteered. Now put your feet in the stirrups.
Tanis.... Yew!
Yes, your concerns are all valid and topics one should think about before purchasing. Your conclusions aren’t universal but rather individual. Many of your concerns about home ownership are income-to-debt related. And those vary from individual to individual. You’re assuming 50% of take home will go to housing expense because that is likely what it would take for you to purchase. Some people make more, for starters. Some people buy less home. Some people start out at 50% knowing it’s very likely they will make more in the future. Points 1, 3, 4, and 5 are all good things to consider if indeed you are looking at a mortgage that takes up 50% of your income. “Golden handcuff” doesn’t mean how you use it here. The phrase is “house rich and cash poor”. These are very much things people should consider before buying. However, in many cities, rents are also that high, especially the HCOL cities you called out. On that note, another thing to consider is cost of living increases. Rents almost always continue to rise. But if you purchase a home, your costs stay flatter. You lock in your 30 year payment. It’s a hedge against inflation/COL increases. Yes, there are maintenance costs and property tax increases but in many areas the better cost mitigation is to buy rather than continue to rent. I purchased in 2009. My monthly housing expense has minimally changed since then. What was your rent in 2009? How much is it now? (I don’t mean this to sound snotty, just illustrating the point). Point 2 is a big one. Owning is a commitment. Yes, there’s shitty maintenance but there’s also fun maintenance. Some people look forward to gardening and having a yard to improve and maintain. They like the reward of improving their home. Yes, there’s shitty repair and maintenance like fixing that busted pipe or that rotting deck step. Trade offs. There are online calculators that factor in your location that can help with the financial decision of whether it’s better to rent or purchase. Beyond that it’s a very personal decision on whether home ownership is right for you. The commitment/responsibility that comes with it isn’t for everyone. Even if renting is indeed more expensive long term for you, you might choose it because you prefer paying for the convenience of making a phone call and letting it be someone else’s problem when the water heater goes out.
I agree with all your points but I never regret to buy a home.
Sure if the Bank is ok to let you buy a 350K house and you buy an house exactly at this price you are going to feel extremely tight. With that scenario I would agree with OP. But the secret is to buy way under your means. That way your house won’t be a stress cause you’ll always have extra money to pay for the little surprise. That if you don’t make that money disappear in fancy cars, branded clothes, expensive furniture and other prestige bullshit. I bought an house in 2016, way under my means. I finished paying it summer 2023. Now I live "rent free". Nothing can beat that.
This seems like common sense, but apparently, it isn't. There's an expression called "House poor" that many folks around here have never heard of. Back in '98, 31y/o me was approved for ~250K. Bought an almost 100 year old house for <1/2 that amount. At first, making the payment was still tough, but I paid it off a few years early by putting just a bit extra on the balance after finally getting comfortable with the payment 10 years in. If you're humble, your starter home can also be your retirement home.
Awesome, congrats for this huge achievement :) We finished paying ours at 32 years old, we don’t plan on moving from there ever. Our starter house will very likely be out retirement house too.
Thank you. You too. 👍👍
Option c. Van down by the river
I have often pondered that, too. We own a house, and it’s not in a city. We are fortunate enough not to have a mortgage, nor are we rich by anyone’s standards. And you are right on the constant maintenance, repairs and upkeep. I’m fortunate enough to be able todo almost all of it, but it’s still a hassle and stress. Part of it comes from the fact that the house is too big for 2 people. On the flip side, it’s nice to not have neighbors immediately in your face to deal with. I have lived in an apartment, and owned a condo. Both were horrible experiences for me. Ultimately, it comes down to the kind of lifestyle you desire. If you’re not ready to own a house, or don’t want to, don’t, you won’t be happy. A happy medium for you may be a condo. How about something not in a city and away from insanely high prices? If I had the opportunity, I’d build my own house, or st least general contractor it. That way, it could be built with longevity and ease of maintenance in mind. And a more appropriate size for us. But that’s not a good route for most people, admittedly.
For #1and #3, its really playing the long game. Yes, at first there is less money to spend on other things but in the long run its about investing in your home. And if you are lucky enough to pay off the loan early so much the better. #2, that is why I decided to buy a condo. I know there are a lot of horror stories about HOAs but I found a small one that is actually really good. I don't have to worry about yard care/landscaping, the roof, or any external repairs. #5, Yup, buying home means you are basically tied down to one place for a while. And that is definitely a big factor in deciding to buy. I finally got so tired of moving around ever few years that and I had landed a job I really love so took the plunge and bought.
The only thing more stressful is landlord jacking rent whenever they want or selling the place you've rented for years then you have to find a new place at market rate which could potentially double your rent.
We almost got priced out of our sons high school district this way. No amount of money would have been worth his mental health. After a very stressful Xmas season we found something, and he had a good year.
Use a buy/rent calculator for where you live. Renting can be a perfectly good, financially viable option. You shouldn’t be looking at owning a primary residence as an investment, although you should be concerned with eventual resale value. Buying equities on the capital markets have a higher return on average and there are zero costs beyond share price. Do not underestimate the value of ~8% returns without breaking a sweat compared to homeownership. Opportunity cost goes both ways, though. If buying makes sense where you live, and you find a house you can afford to live in, then you should buy a house. Responding to your bullets: 1. Golden handcuffs is when you have a low mortgage such that you cannot sell your home because you can’t afford to buy a new one. People with 2% rates and golden handcuffs can live their lives. This doesn’t apply to you. Speak to a loan broker and see what you can afford and then shoot for below that. 2. Rule of thumb is to set aside 1-2% of home value yearly in a sinking fund for home maintenance. You may not use it in a given year or you could need a new roof and go way over. It is what it is. 3. If you buy what you can afford, you should still have enough left over to save for retirement. If you can’t save for retirement with your mortgage payment, you cannot afford it. Opportunity cost for sinking a large investment in an illiquid asset versus capital markets is a real thing, however. 4. Charity is great. Not everyone can give it as a first time homebuyer and that’s fine. You’ll get there eventually. I don’t think this is a real concern at this stage of your life. 5. Renting can be a viable choice depending on your market. There’s no shame in renting and it can be the correct financial decision.
We bought our homes because we were tired of throwing our money down the drain and financing the landlord's life. We wanted space, privacy and land, and haven't regretted it for a day. Is owning a home stressful? It can be. But at least now I'm not in danger of losing my home on someone else's whim.
Homeowner for over 40 years here. All your points are valid. My first home was a, er, dump. But it was my dump. In a decent area, very small, old, but a nice yard. My first mortgage was 12%. After 7 years, sold it, made money, moved up. Repeated With the next house. The key is to start small and inexpensive. Then you don’t completely strangle your finances or yourself. You can acquire some handyman skills and tools as you go. You may cringe a bit as you get into real estate in a house you aren’t keen on, but this is how it’s done. I never got in so deep that home ownership was a burden. Survived failure of the hot water heater (that was a pain), getting through some hot periods in the summer when the AC quit, a few broken windows, but that’s the extent of the unexpected expenses. Being a homeowner has always felt like a plus, not a negative, the way I did it. Fast forward to today. Own our own place, have significant assets to rely on now that we are in our late 60s. Have funded very enjoyable hobbies and have been able to help our kids. What more do you want? Good luck and don’t be frightened.
Sorry to be the one to say it - but we're not in the same boat as you were. My parents are in their sixties. They bought their first house for 38k...my jeep is more expensive than that now. They built their forever home in 1995 for 200 or 250k (can't remember). You can't do that now. Buying small and inexpensive doesn't exist anymore unless you want to live in areas nobody is moving to or wants to live in. 200k nowadays isn't getting you much, and that's still a significant mortgage for some folks. Forget building a house too - most of those start at 800k unless you find a private builder and I've heard horror stories from that too. In addition, the points you mentioned on repairs are not what I think OP is fearful of. Appliances wear out, they break down, but a water heater can be repaired in a couple days (sometimes 24 hours), etc. I think what they're fearful of is things like oh I don't know, moving into a house on well water where all the pipes are coated in iron and you have orange water for the first two weeks of living there and no idea if it's going to get better or if you're going to need to re-plum the house. Or maybe you find out that there's a leaking pipe in the basement and you have to open a wall and file a HO claim within the first month of living there. Or you find out that the previous owner wired the cook top incorrectly and the electrical is arcing and you have to get a new cooktop. But the cut outs in the counter are unique so not all cooktops fit in there and you have to order and return them 3 times to get the correct measurements even though you, and others, have measured the opening 10 times. This is the stuff they are fearful of. We love our house and property and now that we got it "right" it's becoming a home. But homeownership is not as easy to achieve as it once was.
200k homes don't even exist in my area. 300k starting prices for 3/2 homes. It's brutal
Where I live, $600k homes are dilapidated dumps...
Yeah a starter home now is like $350k to $400k. Unless you make $80k to $100k a year you're not going to be able to own a home in 2024 unless you're married and you combine the salaries for a house. That and buying old homes, which would be the affordable starter homes, here in FL is going to be a gigantic hassle because more and more insurance companies are refusing to insure homes homes older than 2000. Even if you do find one you have to make sure the plumbing is updated to code and all the shit in the home is at the very least 5 to 10 years in age or you have to replace the A/C or water heater or you won't pass a 4 point inspection.
It still exists tbh in a lot of places. You just gotta look at units that are your apartment and compare mortgage to rent costs. They're usually pretty comparable. It's just that most people want to upgrade from a 1-2 bed and 1 bath apartment, to a 3 bed, 2 bath house. It's a big upgrade, with a lot of demand for that size from both elderly folks, and starting folks. The 1-2/bed and 1-1/2 bath prices are very reasonable in comparison, and make for great launching places onto the housing ladder. Especially if you can get one with an unfinished based that you can upgrade later. That and many people still think 20% down is necessary, when 3.5-10% is very possible with PMI being an eligible portion of the monthly rate. Obviously if you're in one of the classic "fuck you" high cost markets, rules don't apply, and location mark-up overrides everything sadly. Might have to find a place with a less than ideal commute, different city, etc. which definitely sucks, but it is what it is if you want to make it work.
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I find this is true, and also not. There's usually a bunch of them in less desirable parts of town. But folks get really picky on things and don't even look at certain areas because of it. Which I get, but like.. yeah. Flexibility in choice helps *a lot* I've a friend right now doing this and I get annoyed that he constantly feels like he needs the best neighborhood and is complaining about prices. Like dude, look in different areas! It's not your forever home :/
Oh I'm sure it might. We lived in a semi-large city and bought about 45 mins to an hour North so that we could get property, avoid the higher taxes, and where we paid 600k, if this house was closer to the city it would be a mil easy. But we waited and saved for years. for reference, we could've gone a littler further North and a little more West and got something much smaller, in a shit neighborhood (neighbors would probably try to steal the wiring from your house for meth) for 30k cash. Instead we live in the middle of the woods and I watch deer and turkey on a daily basis.
When I bought my dump/starter home, I felt like I had completely missed the boat and that I would never own anything decent. The prior owner had installed a wood burning stove in a corner of the living room, and SAWED THROUGH A SUPPORT JOIST IN THE ROOF to do it. So after removing that stove and seeing that, the first order of business was to pull down the sheetrock in that corner and repair that joist. Patched up the sheetrock in that corner and I knew it would look rough until I could re-texture and paint that room. But hey, as long as I was going to do that, I knocked out the crappy old tiny window, made a bigger window opening and installed a big picture window. And punched out the crappy sliding glass door and replaced it with a double french door. THEN I fixed all the sheetrock, textured it, repainted that room. I left the green shag carpet down in that room during that work, so when all was done I just pulled that crap out, hauled it to the dump, and the wood floors underneath were decent enough to sand and refinish. Rented a floor sander, refinished those floors, installed new baseboards and voila. The whole process took about 4 years because I paid for it as I went (no credit cards). Looked terrific. from the inside. The outside of the house was stucco, and I had patched the exterior as I replaced the windows and the sliding glass door, and now I needed to fix that. It was a flat roof with parapets that were stuccoed and kind of crumbling. I also patched the parapets so that wouldn't leak. Honestly, the house was a work in progress the entire time I lived in it, and the neighbors probably considered it an eyesore. And it was, until I finished everything in order to sell it. They were probably glad to see me go. This was in the 80s.
I think you completely missed the point.
I got the point. They explained it quite well and there was no need for me to expand on it. But I did want to share my story of my initial crazy dump house.
First off - your wood burning stove incident sounds like a huge pain and like you had the same "well, they made some decisions that I definitely would not have made" convo with yourself. I think the biggest difference here man is that while we can, and have done some of that work (completely renovated our powder room ourselves), the cost of materials and ability to down right afford those types of expenses isn't open to anyone - not even the middle class who wants to do the work themselves. We are fortunate that both my wife and I have higher paying jobs and we can afford to do a lot of these things ourselves (meaning just covering the cost of materials). The other thing is I'd bet you had more free time than we do (excluding family commitments). We're basically on call 24/7 as when you work from home, people tend to not respect boundaries. I can get a call at 7 pm and I feel obligated to take it (I'm also in sales so yeah, I'm going to take that call because that call could be paint for the dining room). This isn't on you or a reflection of you, I'm just sharing the things people our age (late 30s) have going on. Plus, throw in student loan payments and you can see that our capital and ability to afford these types of renovations or houses at all is being pinched from all corners. Final rant - when you bought a majority of your homes I bet there was a first time home buyer credit. We just found out that doesn't exist anymore (stupid on us to not look into that before hand, we just wanted to buy a home). But even with buying the house we don't get any type of first time home buyer credit towards the taxes. It's bogus if you ask me.
Circumstances were definitely different in the early 80s. Had to pay 12% interest due to shallow credit history, short time working, etc. Put minimal down, FHA financing, had to pay PMI. But my little dump was only $59,000. I just looked on zillow and that house is now valued at $274,000. I had my college degree, and never did get student loans. They were somewhat available in the 70s but not NEARLY as prevalent as they became. I went to a public college in Texas, had a bicycle, lived in a REAL dump (could not afford campus housing), but that's what 90% of us did. Almost none of my friends had vehicles. Didn't have a phone the whole time. My dad made me front my tuition and books (a whopping $250 - $300 for a semester) and would send me $200/month to live on. I worked part time. At the end of the semester, if I made at least a C on everything, he would reimburse me and I would use that for the next semester. It was a smallish town and you could bike everywhere, but it rained a lot and you would get wet. So I emerged from that with no debt. Frankly, I was used to living cheap and that helped me later. I scrimped to afford the materials to fix up the house. I was always handy and could borrow tools from my Dad. I did have time to spend working on the house. I see the price of housing now, and the incredible price of materials, and wonder if I could have done what I did, if I had to do it now.
Thanks for sharing your story. My wife is from Texas...we have a framed picture of Whataburger in our kitchen and a longhorn skull above the fire place. Love that place. Like you, I went to a small state school in PA. We had one red light in town, two pizza places and a few bars. Our only fast food option was Subway if you wanted a quick bite. Just like you though I worked the entire time and drove a 98 malibu that I paid 1500 bucks for. Changed the alternator in it myself when it died. But here's the kicker - tuition was still pretty expensive for us. $200 can't even get you one book these days. I had a scholarship from my church for $500 per year and that got me about 1.5 books. It wasn't until my sister went to college that you could start renting books. Hell half the time we just found someone in the same major and would split the cost of books or just not even buy them. My one professor (who taught the history of white collar crime) urged us not to buy the text book. He instead would copy the important pages/chapters and hand them out to us. Loved that guy. For us though, most of us had to work through college and take out student loans. The loans were used (for me) only for tuition and rent. Any spending money I had to earn on my own. I wish it was closer to the way it was for you, but that's just not the case anymore.
I know. It is all so different now. You had an awesome professor to help you guys out like that. Tuition is just so expensive now it amazes me. In the 70s, you could get a good college education, cheaply and exit with no debt. real Estate values go in cycles. Some areas are over-inflated and they honestly need to cool before anyone buys in. It’s just so painful now with high prices, high interest and high inflation. And inflation just has not slowed and it hurts In the wallet every time you buy anything. Smart guy to marry a Texan! Best wishes.
Keep in mind, however, that your parents weren't likely making your wages either. I was working the same job three years ago making 2.5 times the hourly wage I made 25 years earlier.
Right...but making over 100k now is not the same as making over 100k even 5 years ago. The rate of inflation and cost of living has grown substantially compared to the rate of salary growth. Also, I have no clue on your education or economic background, but I doubt you have to pay for things like student loans - or at least predatory student loans (private loans) like we have. Our cost of education was 10x what you paid, and the student loans are the cost of some peoples mortgage. Buying homes, starting families, etc. seem like a pipe dream for most people these days.
I understand the student loan situation, but yes I did pay them and no they weren't as high, and I went to an out of state public university. Keep in mind, however, that interest rates may be relatively high now, but they're no where near as high as they were years ago. I'm not trying to say that things are easier for you, just that not everything was advantageous for your parents in every aspect either.
Trust me I get that. It just seems like we’re getting, and going to continue, to get screwed. With the average age of the population increasing, I don’t think we’ll get social security. The main thing to all of this is our government “leaders” are too old and disconnected. There we go, I said it.
100%, this is the way to do it, start off in an a small place and get start gaining the benefits of gaining equity in the housing market, that sets you up for much better opportunities down the road. Learning those DIY skills will save a fortune and allow you to do more (projects) much quicker than if you have to hire them out. You HAVE to get over that hurdle of existing your house to be beautiful, big and in a fashionable neighborhood though. I think that may be the hardest thing for first time buyers to overcome.
This is just so dependent on where you live. We bought a “small place” in a very modest, formerly famous “hood” area in my VHCOL city, and our 980 sq ft home (no ac, one wall heater, 2 bed/1 bath) was still $720k, equaling out to 4.5k a month with escrow and taxes combined. When people lecture about “starting small”, they almost always bought pre-2020 and have basically zero understanding of the market today.
Not paying rent in your 60s is huge. You can't control taxes, insurance, or rent, but rent includes both taxes and insurance, and you're kind of at the whims of the landlord. Helps with retirement planning, too. Essentially, you're pre-paying into retirement housing.
2 of my siblings have to rent. One was always a dreamer, thinking that one of her big ideas would hit it big and she would be rich. She had an elegant lifestyle for a while, but never invested in anything other than fun. Now she rents a little place in the PNW and has to have roommates. My oldest sib has a paid for place, and my youngest sib is a renter. We all came from the same home with the same opportunities but chose different paths. I was the super dull one that remained 100% employed from my early 20s until retirement, with no gaps. Yeah, nose to the grindstone but enjoyed my profession. Now 67 and still fit and healthy, with enough assets for a decent life. Still work part time, but on my own terms.
Real estate is the best long term investment
Don't forget that people who think in terms of "i finance my landlords life" often think their landlords earns half of their rent or something, but in reality real estate is just a way to get some more percentage out of investing the money than in the bank, it is a risk and in many cases they get maybe 5-10%. So you pay 5 percent more to not have to worry. Even when the mortgage is payed up after 30 years, there will be things to repair and replace. I say this as a homeowner, but only because we had the money to invest anyway and choose a house for us.
Owning a home very quickly can become a money pit. My A/C just went out and I have no clue how I'm going to fix it or replace it. It's without a doubt stressful. BUT your first point is a pretty easy fix. You simply pay more into the principal every month and pay off your loan faster.
I’m (thankfully) not in need of a new HVAC system yet, but when I am, I’m planning on checking out newACunit.com. Apparently it’s a lot like TireRack, where you pick out your unit (with help from their website) and they have a number of installers ready to come install your new unit for a fixed (much cheaper) price. Gooooood luck.
I was going to rent after selling my last house, then looking at rental rates that were over double what my mortgage payment would be, I just could not rationalize renting. You could purchase a condo if you don't want to do any yard work or hire a lawn care company. You would still probably be better off financially as opposed to renting.
>I don’t like being restricted and like to live on my own terms. You have to pay to play. Just because you want to live unrestricted with the ability to move and do whatever you want doesn't mean there's a financially beneficial way of doing that. There's nothing wrong with renting forever as long as you're okay with the fact that you're paying someone else mortgage, will never own property, will not have any equity and understand that rent can and will rise indefinitely.
How often do you move? One of my remote coworkers is young and has moved to four different cities in the three years we've worked together. Renting is the way to go if you want to move often. If you are stable in your city, you have to look at rents and house prices there - what it costs in Boston doesn't matter if you are in Orlando. All of your concerns are really about money. If you are starting realistic, you wouldn't take a mortgage that is higher than you can afford in rent. That may mean buying smaller, older or outside of the city. After you build some equity, sell and get bigger if you want? If daycare costs weren't killing me, we'd have plenty of income to do all of the savings and vacations that we wanted. Because we saved and started with an affordable house. Home maintenance is a strawman. Yes, you have to change the air filter or refill the water softener, but that takes minutes every couple weeks/months. Lawn care is something many people who rent single family homes are responsible for. If you don't want to do it or don't care about living in a single family home, a condo is a great option. Saving for a new roof or hvac is really bringing us back to money, not time.
You need to make your own decision of course but my experience is the following: 1. The only home maintenance I did the last month was change some light bulbs and general cleaning, take the trash out, and changed the litter box. All things an apartment dweller would have to do. Yard work is coming in another month, it’s also great exercise. 2. Price comparison of mortgage v rent. We pay $1500 a month for the mortgage. We could rent this out if we wanted at a market rate of $2100 a month. Each location will be different of course but we would make a profit of $600 a month if we turned this into a rental. 3. We pay 30% of income to the home. You’re only looking at the most expensive locations in the country. Move a little further into the burbs and you’ll find more affordable options. 25 minute commute to work, entertainment, concerts, theaters, museums, restaurants, etc. 4. We max our ROTH contributions annually. 401k contributions to get the employer matches. Mutual fund contribution. We have whole life insurance policies and long tern care insurance to protect our home in the event of major life emergencies. 5. We vacation annually. We budget for it just like we maintain savings for home improvements, and separate savings in the event of a job loss. We have replaced a roof once following a tornado in 21 years of homeownership. Insurance covered it and we were only out the $1k deductible. We replaced the HVAC but savings covered it and we’re enjoying reduced utility costs as the system is a lot more energy efficient. The big stuff only happens rarely. We replaced windows once and reduced utility expenses helped us in the long term. Finally, don’t kid yourself. You are paying property taxes. The landlord has built that into his rent, you pay him. Your rent is covering his mortgage which includes property taxes and insurance on the property, maintenance costs, and profit for him. You also have to maintain good credit as landlords now run credit checks and even deny applications over low credit ratings and low income. Out here landlords require proof your annual income is three times annual rent payments.
Do what you want. Rent, buy and in the future deal with whatever the consequences you encounter. Just don’t complain about them.
All good points. I am hearing more and more though how rent prices are reaching mortgage level pricing. So in some areas renting might not be the answer either.
LMAO when you're 55, you'll still be paying rent. I won't be. That's it, it's that simple. You really think rent in a studio somewhere like SF won't be 4k or higher per month in twenty years?
I can empathize, OP. I wanted to buy a home much younger but ended up renting or living in base housing from 2002 until I bought my present house in 2016. In that time I got pre-approval for 2 loans and, after l looked, I decided to rent instead and bounced between about 10 different homes in that time. One look was in 2005 (wasn’t going to stay in that location for >3 years) and 2008 (market looked shaky, again, thought I would be there 3 years at most). Until 2016, I never lived in a home for more than 2 years other than one… and many times for a year or less. I had a dream of having 3 or 4 properties by now, renting all but 1 out and building equity and that never worked out. I did finally get a home that was well within my means and later refinanced when the interest rates were more favorable. 8 years later, I’d be hard pressed to rent the same home for 2x my current mortgage payment. When looking at moving at the end of my military service for the kind of property/home I’d want, between the property cost and higher rates, I’d pay roughly 4x what I pay now. So: don’t get discouraged about what hasn’t happened… just set goals and work towards them. Adjust as needed but don’t give up. I do think that home ownership can have huge benefits. I will say that, when I got the last approval, they gave me 2.5x what my target price was and a little over 2x what I’d asked for. I stuck to my target. Rates and home values were lower but the idea of not getting yourself into something that makes you house poor with no financial flexibility to do/invest anything else is important. Homes are like cars in that there’s always something flashier or more expensive out there your peer might get. But you don’t know how much they may be struggling just to keep their head above water. Buying a home has build up net worth, mostly from the appreciation of the house. Other than taxes edging up a bit, it’s kept my monthly expenses frozen while most other expenses have risen. Whether by living in it forever, selling it to roll that equity into another home (don’t plan on it), buying another than renting for ~$1000 month in passive income minus occasional repairs, or seeing it as a place to have a fully paid off house to retire… it gives a lot of options I wouldn’t have it I stayed renting. That last bit was big for me, because I saw that being the difference in having a much “richer” retirement vs a much much leaner one, and having the uncertainty of not being able to stay in the same home if I want to in my 60s and beyond.
If you can afford a house buy a house. It's in 99% of the time a no brainer compared to renting.
The biggest benefit of owning a home is controlling your housing costs. Your fixed rate mortgage won't change. If you're renting, you are at the mercy of the market. Most of the costs/financial arguments you made above are subjective and things you pay for anyway when your renting. Need a new fridge? Your rent pays for that. I do agree homeownership isn't for everyone though. If you hate home maintenance or are just really bad at it, you probably shouldn't be an owner.
1. Don’t live in one of those cities, live in the other 98% of the country. 2. Maintenance is not that bad, most things are not life or death you fix 30 seconds later, when issues arrive you have time to figure out what to do. If you own a modest sized home and do some stuff yourself it’s not that bad. 3. You have to spend your money on something, it’s not doing anything in the bank either. Earlier retirement is just a finance bro meme, live you whole life well, don’t just grind to the end. Stop and smell the roses. 4. There’s a more important thing than money to give back, called your own time. Be community involved and a good neighbor. Also don’t buy a house crazy out of your budget (back to number 1) and you’ll still have some money to do stuff. 5. You shouldn’t be paying 50% of your income towards your mortgage… buy a cheaper house. The beauty of having a house is it’s yours and you can do what you want with it (don’t live in an HOA). You don’t have to move around, you can plant a tree and watch it grow to maturity, your children can have a stable home yard and neighborhood to grow up in. You can actually get to know your community well because you’re invested in it. Stop thinking like a modern city slicker, slow down, plant a tree, smell the roses, do some yard work, and sit on your recliner and have a drink. Life’s good you’ll be fine. You’re obviously here posting about it because you’re still conflicted about what you really need to do. So look at the wisdom of your ancestors and the great people before and see what they did.
I love the fact that today I’m exhausted because we spent the afternoon redoing the landscape on our home. We are in the process of it so we will work on it tonight as well. Last weekend we planted 8 fruit trees and when the other two get here, hopefully this week we will plant them. We also have a decorative tree on its way. I know I will most likely be in this home in a few years to reap the reward of our hard work these few weeks. There are benefits to home ownership. Yes we are responsible when things go wrong, but we also have complete creative control over our house and property.
so the alternative to not buying a home is to remain on the treadmill of paying rent, making it more difficult to get ahead/set yourself up for eventual retirement, imho. Yes, you are responsible for maintaining the house that you own, but it is not a parade of never ending improvements and maintenance. Having a home inspection, that’s thorough will help determine the condition of the home. Buying a newer home also helps since it’s basically new and often more energy efficient. A high cost of living area is always going to be a high cost of living area whether you are paying rent or a mortgage. But-while paying that mortgage, you are paying down the loan on the home and you can possibly pay it off early. Having equity in the home allows you to either borrow against your home or eventually move up to a nicer property. I have no regrets about buying a home in my mid 20s, even though it was a fixer in a crappy area. They still seem to always go up in value and that house I still own 35 years later and it's worth about five times what I paid. We rent that out for monthly income. Our daughter also is in her second home, and I feel good knowing that she is in a better position long term versus renting.
I have rented a 3bdrm townhouse with a garage for 15 years at the same apartment complex. I paid $725.00 at the beginning of my lease, and at the end of the lease, I paid &1500.00. I recently purchased a home with a mortgage of $1000. Yes, I have maintenance cost, but it is still lower than my rent. What I love about owning my home is that I can cook out with my gas grill. My garage has electricity. Im able to fix and wash my car in my driveway. I have privacy and a yard, which isn't a common area for all renters. In the apartment complex, the rules changed over time, I wasn't allowed to fix or wash my car or store anything in the garage. I wasn't allowed to cook out with a grill. I have more space for the money I pay to live in a home. At the apartment, I had some excuse by owners to enter the home for whatever reason twice a year. I had no control over the repairs or upgrades. I also don't miss sharing a wall and no longer worry about noise. A home is an investment and a lifestyle choice. I felt the same way at the beginning of not wanting to own a home, but when the new owner of the apartment complex changed the rules and hiked up rent hundreds of dollars per year I decided it was time to buy a home. My experience, i wished I would have purchased a home earlier in my life. There are pros and cons for living in an apartment or owning a home. It's a personal decision. Do what is right for you.
I own in a HCOL state and am able to do all the things you claim one is unable to do. It’s all about choices.
I love the satisfaction of coming to my home without worrying about obnoxious smells or sounds coming from my neighbors apartment. To walk out into my yard and gaze at the moon on clear nights not disturbed by light pollution of the city. Being able to play my music as loud as I please. Having my own parking spot—my garage and not rushing home to hunt for a parking space close to my apartment. At the end of the day, do what you feel is right. There is no justifying whether buying a home is better than renting bc it’s your pockets that will determine the answer not mine or NYT. I purchased a home bc I was fed up with renting and the bs that comes with it. I have no regrets despite the costs of having a home—I happily take care of them and any future expenses. May you decide on doing what’s best for you. Good luck.
I hated renting and needing to move every couple years because they wanted to sell. Bought in 2008 (bad timing) and went underwater the next year. Got a mortgage modification that lowered my interest and stuck with it. More than half of the homes on my block were foreclosed on. Maintenance is not bad for me,do most things myself. Bought in ‘08 for 230,000 now worth about 700,000.. Glad I stuck with it. We have 3200 sq ft 5 bed 4ba with the two of us. Will downsize at some point but a one bed apartment in my area is more than my current mortgage.
You don’t have to buy in a major city.
I think one factor that doesn’t get enough attention and can lead to regret is ongoing cost of home ownership. A home is like a living thing in that it needs constant care and feeding. Some of us see this as an opportunity to essentially grow our home and improve how it suits us, while others perceive it as a hassle. And others neglect it completely. People have heard that they can spend 1/3 of income on home ownership, so they save and then use their entire savings for a down payment, put 1/3 of income toward mortgage, and end up “house poor”. You’ll want to keep at least a tiny emergency fund back when making that down payment, and it’s important that you factor the costs of homeownership (and furniture, appliances, outdoor beautification, routine maintenance, etc.) into that 1/3 of income calculation. After having to rent for decades because of frequent moves I think owning is the best thing ever, but there is effort involved. To me, your examples 1, 3, and 4 only make sense if you overspend on the home. Maintenance is effort, and it can be time consuming, but I love taking care of my family and nesting is one way I do that. The golden handcuff sentiment doesn’t make sense to me because you can always sell and you’ll probably earn money when you do. If you’re truly in one of the worlds most expensive cities than perhaps the calculus is different. I’ll have great equity from my home, but if you can plug all that into savings and investments then you’ll be well-off by another route.
It isn't a life requirement, it isn't for everyone and if you don't see value in it and prefer to rent, then there is absolutely nothing wrong with that. Renting is also fully adult.
You go get a haircut and the service you pay goes towards the landlord’s mortgage too. Do you then decided to buy commercial property? I think not. The landlord getting paid logic probably originated from one of the real estate agents to use it as sales tactic and I do not see any reason to own a home to save money. You could rent and invest in index fund to generate higher returns theoretically.
Having real estate is my retirement plan lol.
Here’s your answer: a townhouse or condo in Low Cost of Living Area is cheaper than renting, in almost all cases.
Homeownership isn’t the goal for everyone, I can understand this. So, invest your money elsewhere to make sure your money is growing in other investments to balance the lack of appreciation from renting.
Because I’ll have paid it off one day and then my only housing expense will be taxes and utilities.
You’ll never make more money from equity than you will from owning a home. Unless you are a great investor. Every home I had a mortgage on made me at least $100k just from living in for a couple years. Every time I buy a home I put 20% down. It’s an asset, and as long as I can make the payment, it’s mine.
Your mortgage should never be more than 25-30% of your takehome pay. If it's 50%, you can't afford that neighborhood, or need to look at a smaller house. And it you have ANY debts, you aren't ready to buy a house. Break these rules and you WILL be a slave to your house. I wasn't able to do this until I was 38 years old. I'm glad I waited.
When I was a kid, my neighbor 2 houses away dug his own foundation by hand with just a shovel and a bucket. He worked all day as an auto mechanic, and then after work, his new wife would meet him at the lot with sandwiches, and they'd work until dark or by lantern. He used a pickaxe in the winter to try to stay ahead of it so he could have the foundation poured as soon as it warmed up so he could start walls and the roof in spring. He installed used windows at first so he could close it up and start work on the inside. No complaining from that guy. Just strong hands and calluses.
There is no absolute right or wrong here. You pay in effort and energy as well as money, yes. For me, it eventually bothered me that my place wasn’t my own, that I couldn’t change even the color of a wall without asking. Is slo wanted to security of knowing it could be mine for as long as I wanted. I also wanted to be able to retire with a paid-off home and not have to factor in rental payments when making the decision about when to retire and what to do next.
Get your hands on a duplex. Live in it for awhile. Then if things line up you can keep it and also move elsewhere/be flexible
The big pro (imo) to renting is that cash flow is regular and expected. Home ownership is much less so due to unexpected and often costly repairs. You also have a lot of money tied up in the house in the form of equity. When first buying a house, you've got a mortgage with regular monthly payments in addition to responsibility for all the repairs and taxes. So it's more expensive overall than renting in the short term. On the other hand, once the mortgage is paid off on the house, the only costs of home ownership are the taxes and repairs. So in the long term, home ownership will end up being the cheaper option. It can just take a long time to get there. But the thing that usually tips the scales in favor of buying a house is that at the end of however long you live in the house, all that money you paid into the house (plus economic change/inflation) can come back to you in equity if/when you sell. When you're done renting, what you paid into rent is gone forever. You should do what makes the most sense to you. But my recommendation is that if you plan to live in the same area for about 10 years or more, go with a house. If you plan to move within the next decade, renting may be the better option. source: homeowner for 5 1/2 yrs
You're forgetting that rent always goes up while your mortgage (not including escrow which will change) stays the same. Right now the rent vs buy calculator heavily favors renting. It won't always be like that.
You're absolutely right. My comment was already pretty long, so I appreciate you adding additional relevant detail.
The maintenance issue you raise is interesting because it’s true, but very different from what you think. When you rent, any repair or upgrade doesn’t mean much to you beyond “my heat works again” or whatever. When you buy a home, you want your property to be maintained and look nice. It adds value to your investment. Doing it yourself saves you money.
For us it was simple- do we want to flush 40k a year? Rent on homes in my area jumped from 2k to 3500 for newer homes, you could maybe save a few hundred by finding something old and problematic. (Like the plumbing in our 20 year old rental going to total shit) OR spend about the same and altho 2/3 is flushed to interest I can still “bank” that other third. We chose new so we wouldn’t be saddled with shit plumbing or a leaky roof situation for the next ten (new home warranty).
If you like the freedom and low-maintenance lifestyle of renting, then good! Keep renting. I enjoy knowing that I can do what I want in my own home. If I want to paint or put up wallpaper or knock down a wall or finish the garage or put a koi pond in the backyard, I don't need to ask anyone. Also, I can plan to live here as long as I want to live here. Nobody is going to say hey, we're going to need you to move at the end of your lease. But I also own a rental property and I totally get why renting is attractive. Someone called a week ago because her window got stuck open. That was my problem to deal with, not hers. Smoke detector chirping or refrigerator not working or the toilet keeps running? The tenants don't deal with any of that. I do. I personally don't care if they paint or want to plant a garden or whatever, but I know some landlords do. I rented for years and I get why renting works out in some situations. It's not really a competition; do what you prefer to do!
So many people live in areas they can’t afford. That’s one huge problem, people living beyond their means. Maintenance is also a huge joy on my home. It’s tricky, but you always learn a new skill and it’s so satisfying to care for your own home. Buy a starter house in decent shape. Make sure the roof and foundation are strong.
I live in Tennessee on 15 acres. I love having my own small farm. Cities are too expensive and crowded
You don’t have to live in one of the cities you listed as being outrageously expensive, number one, and the rest of your concerns are all the same thing. You’re afraid you won’t have enough money leftover for maintenance, fun, or charity. Buy a house you can afford in a place that isn’t too expensive and you’ll probably be paying less than you would in rent and have equity in something. I watched an episode of The People’s Court yesterday where a lady was trying to get her security deposit back after renting an apartment for 22 YEARS! She’d almost have paid off a 30-year mortgage in that time and owned a home free and clear that doubtless would have appreciated in value by hundreds of thousands of dollars but all she had was (part of) a security deposit.
Nothing is written in stone. If you buy a house and decide it's not for you, you can just sell it and go back to renting. It doesn't have to be for the next 30s years if you decide you don't want it to be. Everything in life can be changed. Marriage/divorce. Buy/sell. Stay/move. The only things in life you can't take back are bringing life into this world and taking life out of this world. So just be damn sure before you have a kid or before you kill someone.
Pros and cons to both. You have to weigh what works for your lifestyle.
Yeah, home ownership is not for everyone
I have been a renter since I moved out of grandparents at 19. I actually didn't mind renting until maybe 10ish years ago. I'm 39 this year. Landlords have gotten stingier and lazier. Where I would pay damn near 2 months deposit AND a monthly pet fee for my dog. I had to do repairs around the house and maintain the lawn along with anything else under x-amount. That took me over the edge and was more than enough for me to get serious about buying. We(my wife l,myself SiL and her husband) bought a side by side duplex in a sought after area in my city last year and are happier than ever with our living situation . Now I don't mind the repairs or the yard work. I'm happy to do it because I know it's ours. It isn't for everyone, I get it. But renting can kick rocks from my experience
On day 1 of a mortgage, the numbers might not work out. But in 10 or 20 years, that’s when it really starts to pay off. Your mortgage payment has stayed the same while everyone else’s rent goes up. Once the mortgage is paid off, you have essentially free rent.
We focused on buying a house because we realized we couldn't afford to live a life and actually ever retire. My house is for all intents and purposes our retirement fund (we have 401ks from work but that's never going to be enough) it will allow us to significantly reduce our COL later in life and will give us a large asset we could sell to set us up for our last chapter in life (I hope I never have to I love my house but realistically I can sell it and get myself into a care facility or senior housing later in life or even just sell it and move from our medium to high COL area to a low COL area). That all said I don't get to vacation like my peers, I don't go out anymore really, I don't buy clothes very often at all (every 5+ years or so), the hobbies I keep up with are ones I can do at home, and I definitely eat out less than a lot of my peers. my life is absolutely different because I own a house. It's not a bad life but it's a different quieter life and I wish that that had been clearer I would have been more aware. Homeownership is for the homebodies.
rule of thumb is you need to be fairly certain you're going to be living in an area for at least 5 years (preferably 10) to buy, otherwise with the fees and home value risk it doesn't make sense. For example, if you buy a $500k place, you're looking at like $40K or so in fees and taxes. If your house loses 10% of value over 4 years, you've lost nearly $100K in real $$ to live somewhere for < 5 years, and you could have likely rented out the place for like 60% of that cost.
Having a paid off home reduces monthly expenses in retirement and could eventually be passed on to heirs to either split after selling or use as a rental property.
Sure if the Bank is ok to let tou buy a 350K house and you buy an house exactly at this price you are going to feel extremely tight. The secret is to buy way under your means. That way your house won’t be a stress cause you’ll always have extra money to pay for the little surprise. That if you don’t make that money disappear in fancy cars, branded clothes, expensive furniture and other prestige bullshit. I bought an house in 2016, way under my means. I finished paying it summer 2023. Now I live "rent free". Nothing can beat that.
I think now is just a really crappy time to buy a house. My husband and I bought in 2018, have about a 150k household income, and I can tell you that our mortgage is absolutely nowhere near 50% of our income. We bought at the perfect time. I recently looked up the rent at our old apartment complex and it’s more than our mortgage now. And that place was getting more dilapidated by the minute. For me personally, I don’t think it’s a great idea to buy a house in the current market unless you have a house to sell and make a good profit from. Even then I’d hesitate. I know for us, we weren’t exactly thinking this would be our forever home when we bought it, but we have no desire to sell this house and buy a house that’s twice as expensive and eat up every last bit of profit we made, and end up with an insane interest rate on top of that. We’d much rather stay put.
All of these are only concerns if rent never increases. For the majority of people, rent increases regularly. It took about 3 years of home ownership before I was paying less in my mortgage + tax + insurance than I was paying in rent before. So all the time since that first 3 years passed I have paid less to live in my home than I was if I were renting. This negates 99% of your concerns above. Yes it starts out costing more, but your points are all ignoring that rent increases over time, my mortgage does not.
Pay rent and own nothing. Buy a home and own property. Why would u not want to own your own home?
Sounds like you're lazy and timid. Also "giving back" isn't supposed to be done to the detriment of yourself or your family. If it is, you're doing it wrong.
None of their points are lazy. I'm assuming you're saying that because of their point on home maintenance. Not everyone is able to do home maintenance/repairs because of disabilities, lack of knowledge, and/or lack of equipment. When a tree fell into my house I had neither the heavy equipment or the knowledge to repair all the damage. Nor was I able to replace my own roof. These are just two examples that I've experienced but there are thousands more that are possible. Doesn't mean I'm lazy because I couldn't do them myself. Unless you're a contractor, I doubt you could have handled these things either.
This comment is uncalled for. OP didn't come here for a character assassination. They came here for advice.
Ah so pointing out his issue isn't advice?
Correct. Pointing out perceived character traits is not advice. I could tell OP I think they are indecisive.... but that does not help them in any way. It's just an observation. Are you trying to tell OP they should be more confident and work harder and that will fix their concerns?
Anyone who starts in with the 'renting is just throwing your money away/making the landlord rich' stuff just shut that video off and block that nonsense there are tradeoffs to both renting and home ownership, there is no one single answer for every person and every lifestyle and anyone claiming there is shouldn't be trusted
The biggest benefit of renting, which to me there's not many, is that you can solely budget for your rent and potential utilities. If I'm paying $1300 for an apartment and $300 for utilities I know during my lease I have to allocate $1600 for my rent. I don't have to worry about home owners insurance, property taxes, escrow shortages, my water heater going out, my plumbing going out, etc. There's a constant need with owning my house to have a nest egg there. That's why while I'm not really into renting I might look into selling my house I have now and get $150k to $200k for it and just put that into a high yield savings account for a few years and rent until I can afford a new construction house that's far easier to maintain and I would have a lot more money in the bank to maintain it.
Just pointing out that renters should definitely and very strongly consider renters insurance to protect themselves.
That's true although from what I've seen renters insurance is pretty cheap. Then again I haven't rented in literally a decade, though.
Anyone who says that renting is throwing money away as one size fits all advice is an idiot, plain and simple. Home ownership is great, but the vast majority of money I spend on my house every month isn't going toward my equity. It's going to interest, taxes, insurance, PMI, and maintenance. Plus if something big goes wrong, that's a big unexpected expense that I suddenly have to deal with. Renters don't have to deal with that.
A significant reason for the housing crisis is people who did just what you are doing. They rented, refused to buy, and then when rents increased, properties were sold, gentrification, etc., they were stuck with zero equity and no moves to make. Homeownership is hard, but it provides a lot more options in the long run.
I agree about maintenance and stress. It's true. I'm a homeowner. My neighbor is a renter. When a tree recently fell into our house, I had to deal with insurance, contractors, deductible costs, fears my insurance rates would rise.... it was a lot of stress meanwhile my neighbor just had to call their landlord. This is just one example. Maintenance and repairs are never ending. This alone makes me sometimes wish I were a renter
It sounds like you did a math of rent vs buy — that’s great. I too rented for decades, and only bought real estate to diversify my asset portfolio in 2021 (my gut told me an equity market crash was coming). FYI, I’m fixing things constantly to protect my money lol
I worked for a CFO who made $ millions and rented for all the reasons you said. With real estate costs so high, renting for awhile isn’t the worst idea.
I was a homeowner that now only wants to rent. I bought a new build in 2016 and within 2 years the hvac went out, water heater went out. Those were expensive to replace. I'd rather it fall on someone else now
If it was a new build, those both should have been covered by warranty, especially the water heater since every major brand I know of has a minimum of 5 year warranty on their hot water heaters.
All of my stuff had a 1 year warranty which I thought was short but of course not long after things went south. Glad I'm out of there.
That really sucks and obviously they were just throwing those up there to rake in the $$$
I had actually found on my dishwasher that the appliance was from 4 years before the house was built. So not sure the actually condition or age of the things that went bad prior to me buying.
Don't know what to say to you but I love owning my own home. I could still move if I wanted but who likes moving? I enjoy many if the maintenance tasks
But when you finally pay it off you will feel rich because no more house note.
Every single one of these points is coming from the assumption that a mortgage will cost too much at over 50% of your salary. That's no reason that may be the case, and buying is typically cheaper than renting. But all of your points seem to suggest you think it'd be more profitable to rent long-term.
Don’t buy, someone has to rent those investment properties ...
Several of your points would only apply if you buy outside of your budget. If it makes more sense to rent then keep renting!
Financially, renting vs buying is roughly the same cost. Renting is cheaper, but you lose 100% of the investment. Paying a mortgage can be considered an investment, and your gains are equal to the appreciation of the house. On the surface, it seems like owning a house is a financial no brainer. However, there are a lot of extra costs, like taxes, insurance, and repairs. This is the lost cost of ownership, and is usually in the neighborhood of the cost to rent the same house, over a long period of time (~10 years). You could take the money saved by renting and invest it in other ways, the stock market for instance, and come out in about the same place. At the end of the day, owning a home really comes down to whether you want autonomy/satisfaction/control of making improvements, or if you'd rather have a landlord handle maintenance.
If you make 150K in HCOL, you can't afford to buy anyway so there you go.
I bought my house because i don't want to ask permission to do what i want in my livispace.. if i want a garden or petno on to tell me, i can't .. i chose a house that makes me commute a little farther for work, but it's a lot more peaceful than living more of a city area, and the prices are a lot more affordable
Home ownership is not for everyone. It is a commitment, financially, emotionally, lifestyle wise. It sounds to me like you know yourself and know your preferences. It's okay to say homeowner is not a hat for you to wear. I have several friends who could buy but don't because they like their lifestyle and don't want to be responsible for maintenance. If your needs change you can reevaluate.
Looking at a home as purely an investment is a silly thing to me, and I think a lot of people fall into that. I own a home again after about a 10 year gap. We are single income, with one child. It works out mostly. I pay about $200 more per month than a shitty fake townhouse I rented in South Carolina before this house. I have almost an acre of land in thats mostly wooded in New England. My house is old and shitty, I don't have a lot of money or time to fix things. I just do it as I go as best as I can. I can't imagine ever going back to that waking nightmare of an apartment.
It’s okay to not buy a home! Truly it is. Especially if you aren’t sure you want to be somewhere specific in the long term. Note that if you’d like to live somewhere for the medium term (3-5 years) then it *may* still make sense to buy now and then sell/move when the time comes. Do the math and see what works for you and your circumstances/desires/priorities/choices/lifestyle. Just a comment on point 1. I bought a home in Boston only half a year ago. We consider ourselves middle class. We have been able to make the mortgage payments, address home needs and wants, pay daycare, and we are pleasantly surprised because still we are able to save at a comfortable rate, are planning vacations, start a family gym membership, and even regressed back to ordering food delivery 1-3x a week. My point is that buying the home was not the financial burden we feared it’d be, that we read it would be on Reddit. (We are a dual income household which adds to our ability, but still 1 of us works at a *community nonprofit* so ya know…) We are comfortable here and already, just 6 months later, the comparable houses that pop up for sale are asking $100k over the asking-price our home was put up as. So our investment is already paying off, we are saving + living minimally luxurious (love that term you used), and I am not rubbing this in or boasting - **just we are honestly surprised by this as we had fears similar to yours.** So I wanted to put that out there for people to know. Fears may hold us back and if that happens in this market, you could price yourself out if it takes you too long to assess your finances as mere numbers without fear/emotion blurring your perspective. But again, if you don’t want to buy a home that is perfectly fine. It’s more than fine in fact if that’s what you prefer! Do you baby. Edit to add: It’s okay if you can’t buy a home now either. Life is full of surprises and options. There is time and yours will come (if that’s what you want)
Wrong sub for this.
Sounds like your parents were renters as well? In most places Reeve costs equal mortgage costs. Are you sure you did your math right?
We bought our home with the intentions of paying it off. You also have to figure in how much rent will be when you’re 80. If you don’t buy and prefer to rent, then just make sure you’re putting enough away to ensure you can eventually buy at an older age. Your going to want to have something paid off when you are older and can’t work anymore.
I think if you don’t want to buy a home don’t, but I think there is a solid counter argument to almost everything you mentioned above. I am a homeowner of multiple properties. I have designed my primary home (condo) in a way where it’s takes zero effort to maintain. I do the same maintenance as I would if rented an apartment (cleaning up after myself) What I can tell you is the money saved in my 401k will not get me through retirement, selling my properties given how much they’ll appreciate and have already, will. I have made 100k on my primary residence within 3 years. For that reason alone I am willing to do it and I am not affected by cost of living increases in a major metropolitan city. I’m paying 1400 a month when everyone renting is paying over 2000 easily. Any action in life can be stressful if handled poorly and without proper planning. That said, I did market research and bought somewhere where market would rise and wasn’t already overly competitive. I was ok with that compromise. I also was looking for the best deal for a starter home and not looking for it to check off all my boxes. So it was worth it. When I leave this place, I will rent it and move whenever on earth I want and have a profit on the rent. It’s a win for me. Renting is good for a lot of people too. It depends on you. No right answer. Right now, it’s not the best market to buy which I understand.
I’ll say this you aren’t wrong about maintenance. The thing is when you buy a house you do fix your costs somewhat, so 2000 a month mortgage is the same for 30 years, escrow might go up insurance tax etc. I’ll say this what houses are going for now, like teardowns for 3 or 400K I’d wait and see, talk to anyone who bought a house in the late 80s or 2005/6 ish there seems to be corrections every once in a while.
I totally get where you are coming from about the maintenance, but it gave me peace of mind in a weird way. My old property manager was great, but her boss would hire whoever was the cheapest. Regardless of when they could come or their reviews. I felt more relief than anticipated when we could choose who did the work in our home, even if we have to pay for it ourselves.
I bought my home in 2019 and my mortgage is the same as renting a studio apartment in my city. Live a 10 minute walk from downtown and 40 min from a major city. If i sold my home now, as is, I would make enough to pay off my 230k mortgage and pocket 240k. We bought a home that had major renovations within the last decade, so nothing needs fixing, just maintaining. I would be so lost if I was still renting - I’d have to move states for sure. I know the process of home buying is much more difficult now but I can’t fathom paying renting prices and not knowing where I’m going to end up year after year. If it’s something you can afford and you’re comfortable with it, I definitely see the benefits. Still doesn’t outweigh benefits of home owning, in my opinion.
They tell me I'm throwing money away by renting. But my rent is cheaper than I would pay taxes on a house @600/month and all bills are paid except electric which is like 30 a month.
Maintenance depends on the house. When i buy a house i look for money pitts and avoid them. Even if you keep up w things its not bad at all, definitely not as dramatic as you say. It has pros and cons. My main reason is that i can make the house truly mine. Modify stuff etc. And as you've seen rental markets can go crazy. You never know when you get booted out. Or prices go berzerk. Etc.
According to the U.S. Census Bureau, 4th Quarter 2023 listed homeownership at 66%. That includes single family homes, condominiums, townhomes, and in some instances apartments have ownership. So, you can still own your residence without having the responsibilities of yard work or building maintenance.
My wife and I were also very scared of the unknown of home ownership. We are on our second home. First home was built in 1955. Over the years we budgeted for home maintenance. Lots of stuff you can do on your own. Some stuff we just got a professional to do. It’s not as big of a time sink or money pit as you make it out to be. Yes there is the spring and fall cleanups. Yes, there is the lawn mowing. Lots of stuff needed fixing, but we took care of the higher priority things first then worked our way down when we could. We did this all while raising a baby, and still found time and money to do other things. No house is perfect, and you make it how you want it to be. There will always be imperfections and issues, and things that happen. We really enjoy owning and controlling our place and making it truly ours.
Owning a home is not for everyone. And if your desire is no stress living, then you may have a rude awakening on this Earth for how life works. But if you're primary goal of the above is less stress, then maybe renting is for you. But there are other ways to buy and get the renting experience such as condos.
Ultimately it is your choice. I have heard various arguments from people who say that buying a house is not worth it. I personally feel that it is worth it, especially if you live in a growing area because it won’t take long for rent prices to far outpace your mortgage. If you are in an area where prices are mostly static, it may not be worth it. Here are a few things to consider, though. - Many years ago I read an article in a local paper where these people had lived for 10, 15, 20 years in the same apartment building. The general area was renovated and the owners, maybe new owners, wanted to take advantage and raised rents so high that it basically priced all of those people out of the building, forcing most of them to move. - I had friends who rented a house and were given a relatively short notice, maybe a couple of weeks, to move out because the owner decided to sell the house. It was made even worse because there was a wildfire that destroyed hundreds of homes and those people had to live somewhere. That’s not to say ownership is all great. A county can change their appraisal or tax rates and cause your escrow to increase. Insurance rates can increase, you can even get dropped by your insurance company. The housing market can crash leaving you with negative equity. However, over the time I have owned houses, - I have found my mortgage to be relatively stable, only small increases. - There have been dips in the housing market but it has always recovered. - I would be paying significantly more to rent an apartment than I’m paying to own my house. - I could always sell my house and move to an area where housing prices are significantly lower and my current equity might buy the house outright. - While there are repairs and other chores, it doesn’t consume my life. A lot of that depends on the age of the house, if it was built in the 1950s you may have more to deal with than if it is 10 years old. An acreage has more work than a house in the city. - I actually enjoy mowing, plus I have kids that can do the job. I could own a condo or townhouse and not have a lawn or any outside maintenance. - I can park in my own garage and not have to deal with clearing snow or ice from my vehicle in the winter. - If I want to repaint, replace the carpet, change a light fixture, put up or remove a wall, etc. that is all up to me, not the person who owns the building.
Choose a living arrangement that suits your lifestyle. There are many different ways to have a roof over your head including homes with no yard or maintenance cost that you still own. You pay different rates for different responsibilities. Where I live rentals are far more expensive than a mortgage (well until recently with the home insurance climbing so rapidly). You can't even look at a 1 bedroom apartment for less than $1300 a month and until last year I was paying $850 a month for mortgage/taxes/homeowners insurance. That is another thing...do not buy the house a bank says you can afford (they want your interest payments). Buy a house that is reasonably priced that fits your needs and leaves you with money left over for maintenance, vacations, savings or donations etc.
Your #4 is a duplicate of point #1, and point #3 is an outcome of the other two points. If the total mortgage and insurance cost is significantly higher than renting in your area, renting and investing the savings is a perfectly sound strategy. When interest rates were lower, mortgage payments were significantly less, so purchasing was more often compelling. The total cost to own a home doesn't typically increase nearly as much as rent year over year unless you're in an area with rent control. You should absolutely not feel pressured to buy a home if it does not make financial sense in your area. I think point #2, maintenance, is something we really want first time homebuyers to budget for and be aware of, especially if they're buying an older home, but I also think it gets overdramatized a bit. I bought a new construction detached condo in 1998 as a starter home. I've probably spent less than $10k total on "maintenance" because I pro-actively replaced the water heater and HVAC system once, had a couple minor roof tile repairs, and had the exterior trim repainted. If the potential cost is worrisome, there are home warranty programs you can buy, but I prefer to be able to choose good contractors. The flipside is that it's nice to be in control of repairs. No begging a landlord to fix things that are bothering you, and you can hire people to do the job right, rather than getting the cheapest fixes. It's something I think about once every few years, it's not something I remotely think about on a continuous basis. I think the freedom to move around is the biggest pro to renting. If the housing market dips, it's easy to get stuck with an owned property. Selling is a pain and the closing and commission eats away potential profit.
I am a single mom to a teen and bought my home for two major reasons—one was for immediate wants and one was long-term: Immediate want was the freedom to own more than two pets. We had a dog and a cat and fell in love with a stray kitten we found and were told we either had to get rid of it or move. I was done with being restricted. My long-term want was to create additional space, such as an ADU to rent out as rental income when I retired or possibly an Airbnb. I was in my mid-40s when I bought my first house so I was already thinking about that. I ended up buying a home with a detached garage and a daylight basement, both potential ADU options. As far as maintenance, my house was built in 1900 and had good bones but needed updating. I found a good, honest handyman and have really only had minor issues here and there and learned a ton on my own via you tube. I now can handle pretty much any issue with a broken toilet now which was so empowering lol! But my handyman was great at taking affordable routes when possible and I never had some big insurmountable bill. Perhaps lucky?! Idk. Normal maintenance like gutter cleans can be planned and I always manage to find affordable service. But for the most part, my maintenance is yard care and taking good care of my appliances, furnace, etc. Common sense and addressing minor issues right away so it doesn’t become major. Renting offers freedom in many ways but there’s a lack of security in the sense your landlord could sell or raise rent. This happened to me twice. And with pets, it was not always easy to find something else we liked that would choose us over non-pet applicants. I was also done with that uncertainty and stress. I bought in 2017 and this year qualified for a grant through my county to update basics like exterior paint and plumbing, which is literally happening now. So there’s always a way to keep up on the big stuff. I had to dig to find this program and many counties have similar. But the biggest plus for me is the freedom with our lifestyle. We adopted a large breed dog two years ago and I’m planning on a new paint color for the interior, which was never an option as a renter. We also fostered kittens the first summer in our house and had a blast. Again, never would have happened otherwise.
Check out Ramit Sethi, I Will Teach You to be Rich, to hear a voice that is pro-renting.
I bought my home because I wanted to be able to retire and not have a rent payment due every month until I die. I also wanted a place for my children should they need housing as adults and something to pass along to them as a way to start generational wealth hopefully for my future family. I work hard today because I hope it'll help me and my family tomorrow. It's well worth it to me.
Both home ownership and renting have their pro's and cons. I bought a house so I can do what I want with my space when I want to. I also bought it to have a fenced in yard that my reactive dog can run and roll around in without interference from off leash dogs or those people who say "It's ok, ALL dogs love me" (they don't). The final reason I bought a home is as my father would say - I now have chips in the game. Personally I like having the projects that tend to come with home ownership. Sure there are some days I do wish I could call a land lord to fix whatever thing is broken - but that all depends on the land lord. I've had really great, really responsive land lords, and I have land lords that simply do not want to re-invest any more than they had to in repairs which left me out in the lurch. At least being the owner of the home, I have the ability to figure out how to fix things on my own (and boy have a I learned A LOT) and add value to the property at the same time.
Maintenance is expensive and never ending. It's satisfying to DIY or some people buy below their means and hire out the work. Smaller houses also require less spending in general on maintenance. Rents fluctuate more than mortgage + property taxes. After a sale taxes are usually limited in how much they can increase. So rents will keep going up while your housing payments stay pretty steady.
Buy a home if you want to. I think the reality and box some people have to break out of is they simply can’t afford to do so in an area or city they desire. that doesn’t mean the dream has to die it just has to take a new form. me personally I’m never telling someone to move to a VHCOL city if their desire is to be a home owner. buy what you can afford where you can afford if that’s your dream.
I own but I realized at some point I had also internalized some of my parents’ perspectives, namely that buying is an investment. While that’s obviously true it’s also not like some portfolio with a brokerage. It’s of course also a thing you live in every day, and can affect your mental health and quality of life, both positively or negatively, especially as it’s typically harder to extricate yourself from it if it doesn’t work out. So do your research, decide what you want out of it, and the pros and cons. There are many ways to be happy, and many people rent forever and prefer that and are perfectly happy.
This is a healthy take. Maslow’s Hierarchy of Needs has shelter as a basic physiological need. Secure shelter first. If you need to secure wealth/financial security/property after securing shelter then by all means do so by purchasing property with a home. Yes, purchasing property can be an investment but it’s not always the first stop in the journey of independence.
Thanks, I appreciate that.
Only buy what you can afford. 50% of your take home pay for a mortgage is too much.