dullard
Elite Member
- May 21, 2001
- 26,056
- 4,708
- 126
Houses have many intangibles. The positive ones include covered parking, less noise, more freedom, enhanced opportunites for things like gardening or parties, etc. But houses also come with enhanced reponsibilities such as lawn upkeep, maintanence of the house, taxes, liability, etc. The intangibles will vary with each person. I cannot say if the benefits outweigh the additional responsibilites for you.
As for the economic picture, it isn't as rosy as people tend to claim, nor is it as bleak as the opposite side tends to argue. Someone above mentioned that houses historically return about 1%. That is true (although I think it was closer to 1.5% last I looked). Thus, your money will do far better if it were invested in stocks or bonds or just about any other reasonable investment. That is a very good reason to have a modest house, so you can keep your money invested elsewhere.
But, you must spend money on shelter. This isn't a choice between investing in a house and investing in stocks. No, it is a choice between investing in a house vs using that same money towards apartments. If you only look at the first few years, the apartment argument almost always wins. But, Steppinthrax, try looking at the bigger picture. I'll roughly estimate what your costs would be in both situations.
5 years ago: apartment $600/month, house $1200/month (interest + principal + taxes + insurance).
Today: same apartment $729/month, same house $1200/month.
So far, it looks like the apartment wins hands down. But keep looking forward.
5 years from now: apartment $977/month, house $1200/month (interest + principal + taxes + insurance).
10 years from now: apartment $1247/month, house $1200/month.
15 years from now: apartment $1592/month, house $1200/month.
20 years from now: apartment $2031/month, house $1200/month.
25 years from now: apartment $2593/month, house $1200/month.
Hmm, things have changed a bit. But wait, after 30 years, if you kept the same standard of living, you'll have your house paid off (even if you move, as long as you don't cash out your equity).
30 years from now: apartment $3300/month, house $400/month (taxes and insurance only).
35 years from now: apartment $4224/month, house $400/month
40 years from now: apartment $5391/month, house $400/month
This is where you can see the advantage of home ownership economically. You can be retired and paying over $5k a month for that same apartment that you used to rent, or you can own your house outright and pay next to nothing when you are retired.
But, to gain the housing advantage, you need a modest and reliable home (ie do proper maintenance). If you get the most expensive, largest house, in the best neighborhood that your bank will allow while constantly renovating it with fads such as stone countertops, shag carpet, stainless steel appliances, popcorn ceiling, open floor plan, closed floor plan, etc, then you'll likely never break even on the house.
As for the economic picture, it isn't as rosy as people tend to claim, nor is it as bleak as the opposite side tends to argue. Someone above mentioned that houses historically return about 1%. That is true (although I think it was closer to 1.5% last I looked). Thus, your money will do far better if it were invested in stocks or bonds or just about any other reasonable investment. That is a very good reason to have a modest house, so you can keep your money invested elsewhere.
But, you must spend money on shelter. This isn't a choice between investing in a house and investing in stocks. No, it is a choice between investing in a house vs using that same money towards apartments. If you only look at the first few years, the apartment argument almost always wins. But, Steppinthrax, try looking at the bigger picture. I'll roughly estimate what your costs would be in both situations.
5 years ago: apartment $600/month, house $1200/month (interest + principal + taxes + insurance).
Today: same apartment $729/month, same house $1200/month.
So far, it looks like the apartment wins hands down. But keep looking forward.
5 years from now: apartment $977/month, house $1200/month (interest + principal + taxes + insurance).
10 years from now: apartment $1247/month, house $1200/month.
15 years from now: apartment $1592/month, house $1200/month.
20 years from now: apartment $2031/month, house $1200/month.
25 years from now: apartment $2593/month, house $1200/month.
Hmm, things have changed a bit. But wait, after 30 years, if you kept the same standard of living, you'll have your house paid off (even if you move, as long as you don't cash out your equity).
30 years from now: apartment $3300/month, house $400/month (taxes and insurance only).
35 years from now: apartment $4224/month, house $400/month
40 years from now: apartment $5391/month, house $400/month
This is where you can see the advantage of home ownership economically. You can be retired and paying over $5k a month for that same apartment that you used to rent, or you can own your house outright and pay next to nothing when you are retired.
But, to gain the housing advantage, you need a modest and reliable home (ie do proper maintenance). If you get the most expensive, largest house, in the best neighborhood that your bank will allow while constantly renovating it with fads such as stone countertops, shag carpet, stainless steel appliances, popcorn ceiling, open floor plan, closed floor plan, etc, then you'll likely never break even on the house.
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Gunslinger08
Lifer
- Nov 18, 2001
- 13,234
- 2
- 81
I enjoy owning a home for a lot of reasons:
- I don't answer to a landlord and depend on them paying the mortgage/property taxes.
- My P+I payment will never go up.
- I'm in a detached home, so I don't have to deal with noisy neighbors or worry about being the noisy neighbor.
- I get to deduct a large portion of my mortgage payments from my taxable income. This will slowly decrease, but it's great for now.
- I can hang up pictures, mount TVs, paint, knock down walls, replace fixtures, add a deck, etc. without asking a landlord for permission.
- No one else has a key to my place. No unexpected visits or mysterious missing items.
- I will make money on it eventually. I bought last July, so I'm probably down a few thousand since then. The market will go back up eventually, and I'm in no hurry to move.
- I will own a home free and clear within 30 years or less. When I'm looking to retire, it will be nice to not have rent to pay. I can also use the vested equity to take out a loan in case of an emergency like cancer.
- I don't answer to a landlord and depend on them paying the mortgage/property taxes.
- My P+I payment will never go up.
- I'm in a detached home, so I don't have to deal with noisy neighbors or worry about being the noisy neighbor.
- I get to deduct a large portion of my mortgage payments from my taxable income. This will slowly decrease, but it's great for now.
- I can hang up pictures, mount TVs, paint, knock down walls, replace fixtures, add a deck, etc. without asking a landlord for permission.
- No one else has a key to my place. No unexpected visits or mysterious missing items.
- I will make money on it eventually. I bought last July, so I'm probably down a few thousand since then. The market will go back up eventually, and I'm in no hurry to move.
- I will own a home free and clear within 30 years or less. When I'm looking to retire, it will be nice to not have rent to pay. I can also use the vested equity to take out a loan in case of an emergency like cancer.
- Mar 20, 2000
- 102,402
- 8,574
- 126
we're way over invested in real estate. and the .gov encourages it by loading real estate with tax breaks, subsidized loans, etc.
SpatiallyAware
Lifer
- Sep 7, 2009
- 12,960
- 3
- 0
Aside from cost related issues, I bought a house too early in my career. When I had to find a job it really screwed me, and now I work ~40 miles away which sucks. I could probably sell my house or rent it, but what a PITA.
Where I live it's the exact opposite. I guess no one in this town has the credit rating to buy a house because the monthly payment is higher on renting.
Same here, MUCH cheaper to own. No way could I get a 3000 sq ft apartment for under the 1500/mo I pay now.
hanoverphist
Diamond Member
- Dec 7, 2006
- 9,867
- 23
- 76
Right, but it would still be cheaper to buy that single family home. You don't think the landlord would purposefully lose money on it, right?
meltdown75
Lifer
- Nov 17, 2004
- 37,548
- 7
- 81
I bought my house in 2003. I'm quite attached to it now. My wife left in April and it is finally starting to feel like something other than a graveyard. I bought her out, she got a nice equity payment of just over $30,000. ouch i know
It's a raised ranch and has great curb appeal.
My favourite things about owning it are:
- it's MINE
- it's my home base where I can do whatever I want without answering to anyone
- it's an investment, two new schools were built behind the subdivision and the property value should increase quite a bit in the next 10-15 years
- my basement is unfinished so I get to plan what to do down there. epic mancave plans
- big fenced yard
- attached garage i get to park my car in
- it has an alarm which makes me feel safe
i could go on..... my house kicks ass. i rented for 8 years... no thanks.
It's a raised ranch and has great curb appeal.
My favourite things about owning it are:
- it's MINE
- it's my home base where I can do whatever I want without answering to anyone
- it's an investment, two new schools were built behind the subdivision and the property value should increase quite a bit in the next 10-15 years
- my basement is unfinished so I get to plan what to do down there. epic mancave plans
- big fenced yard
- attached garage i get to park my car in
- it has an alarm which makes me feel safe
i could go on..... my house kicks ass. i rented for 8 years... no thanks.
This must be taking into account homes in the midwest bumblefuck idaho where nobody wants to live. If you play the real estate game smart you can come out way ahead.
hanoverphist
Diamond Member
- Dec 7, 2006
- 9,867
- 23
- 76
yes, if the local rent isnt high enough to pay his whole mort pmt he would have to either not rent it out (his rent expectations are too high) or take a loss and rent it out for less (at least part of it is paid)
JulesMaximus
No Lifer
- Jul 3, 2003
- 74,584
- 984
- 126
It has its ups and downs. For one thing, you are responsible for anything that goes wrong and fixing it yourself or hiring a contractor. On a positive note, I have a 30 year fixed mortgage so I have enjoyed "rent control" for the past 10 years. Honestly, I pay about $600 less a month than most 2 bedroom apartments go for around here but I have a 2,200sq ft 4 bedroom 3 bath house with a 2 car attached garage.
If you stay in the home for a longer period of time (10+ years) in a home, chances are you would make some money.
If you move frequently... you'll lose money. Amortization is a biatch.
If you move frequently... you'll lose money. Amortization is a biatch.
Anyone who tells you otherwise is probably an apartment dweller, or bought at the top of the market like an idiot.
surfsatwerk
Lifer
- Mar 6, 2008
- 10,110
- 5
- 81
meltdown75
Lifer
- Nov 17, 2004
- 37,548
- 7
- 81
n yusef
Platinum Member
- Feb 20, 2005
- 2,158
- 1
- 0
And buy an apartment.
Back on topic: my parents rent their residence and own a second house that they vacation in and will move to when they retire. The rental is $1400/month plus utilities, and similar houses in their neighborhood go for more than $500k. On the other hand, their vacation/retirement home cost $278k and is worth $100k less now.
Real estate is an investment. The market determines whether or not it's a good one.
Red Squirrel
No Lifer
Homes do cost more in the short run, but at least it's not money thrown away. You can always sell it later on for a smaller one. It's something you own. In 25 years or whatever time it takes to pay it, then you don't have any payments to do and only have your taxes and utilities/services to pay. You can always pay it off faster too. I have a 25year mortgage but I'm pretty sure I can pay it off before.
You also have way more freedom, you can do electrical, plumbing, structural changes etc to fit your needs. (of course some places require a permit and what not). You also don't have to worry about making too much noise, nor have others making too much noise.
When you rent you have to deal with the same issues as a house such as broken things but you have no control over how or when it's fixed. At least as a home owner if something breaks you can fix it as soon as you can. So if there's bad wiring somewhere or a pipe is leaky you can go right ahead and fix it. Lot of landlords don't really care and would leave such problem linger for a long time.
You also have way more freedom, you can do electrical, plumbing, structural changes etc to fit your needs. (of course some places require a permit and what not). You also don't have to worry about making too much noise, nor have others making too much noise.
When you rent you have to deal with the same issues as a house such as broken things but you have no control over how or when it's fixed. At least as a home owner if something breaks you can fix it as soon as you can. So if there's bad wiring somewhere or a pipe is leaky you can go right ahead and fix it. Lot of landlords don't really care and would leave such problem linger for a long time.
meltdown75
Lifer
- Nov 17, 2004
- 37,548
- 7
- 81
owning - paying your own mortgage
renting - paying the landlord's mortgage, or going into his pocket if it's already paid
you do the math.
renting - paying the landlord's mortgage, or going into his pocket if it's already paid
you do the math.
Lots of people buy apartments in FL. Especially old people. They call them condos. I hate them all.
For me, renting has proved better than owning - The way the market is where I live - the best I could afford is an upscale condo. No point as there is no land, you simply MUST be part of an HOA, and these old fuckers down here have nothing to do but (to quote jerry) - sit in these condos, pretend its not hot and enforce these rules!
Any house with land under $250k is in the ghetto here.
For me, renting has proved better than owning - The way the market is where I live - the best I could afford is an upscale condo. No point as there is no land, you simply MUST be part of an HOA, and these old fuckers down here have nothing to do but (to quote jerry) - sit in these condos, pretend its not hot and enforce these rules!
Any house with land under $250k is in the ghetto here.
geno
Lifer
- Dec 26, 1999
- 25,074
- 4
- 0
What's a can garden look like and do you think adding one would help my property value? :hmm:
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