Why make a house a Home?
November 29, 2017 9:55 AM Subscribe
Lately, we've been thinking about buying a house in the next few years, but have come upon the existential questions of Why? Why do we *need* to buy a home? How will it better our lives? It doesn't seem to be worth the hassle, and almost feels like a societal push to buy. Bean-plating below the cut.
So we are:
- Mid-30s Hetero-Appearing-Queer couple, both accustomed to questioning traditions and expectations
- No kids happening
- No dogs happening
- Live in a medium size city
- Currently Rent in the neighborhood we would like to buy in
- Share a car and use public transport
- Both work fulfilling jobs and have local hobbies
As we've been starting to browse listings and talk about what we would want in a house, the question also comes up of WHY do we want to buy a house? All of the seemingly standard reasons ("It's Ours", "We don't want to deal with living with others", "You're just throwing away money by renting, plus a mortgage is cheaper", etc.) tends to have a very valid counterpoint that makes it no longer a strong reason:
- A mortgage in the area we are living will not be cheaper than our rent
- While both of us *can* be handy at fixing things, neither of us want to be and would rather throw money at a professional to fix it correctly the first time.
- Our landlord is really chill and open to discussing improvements to our apartment that we want to make
- He is also super quick on maintenance (both small and big scale)
- We don't need to invest in a yard or school neighborhoods for kids or dogs
- We generally don't mind living surrounded by others (we like living in a city).
- Real estate is not the 'sound investment' it was in our parents' day, and one of us has been burned before by having to sell for less than market value
- Up-keeping a house is EXPENSIVE, especially when we like quirky, older homes that have 'character' (read: potential issues).
- We're #DamnMillenials and need to ruin yet another market.
So other than this deep seated "This Is A Thing You Are Supposed To Do As An Adult", what's the point of buying a home?
If you own a house, why are you glad (or not) that you did?
What drove you to buy, and what makes home ownership "worth it" for you?
If you decided not to buy (or did and wish you hadn't), what were your reasons?
So we are:
- Mid-30s Hetero-Appearing-Queer couple, both accustomed to questioning traditions and expectations
- No kids happening
- No dogs happening
- Live in a medium size city
- Currently Rent in the neighborhood we would like to buy in
- Share a car and use public transport
- Both work fulfilling jobs and have local hobbies
As we've been starting to browse listings and talk about what we would want in a house, the question also comes up of WHY do we want to buy a house? All of the seemingly standard reasons ("It's Ours", "We don't want to deal with living with others", "You're just throwing away money by renting, plus a mortgage is cheaper", etc.) tends to have a very valid counterpoint that makes it no longer a strong reason:
- A mortgage in the area we are living will not be cheaper than our rent
- While both of us *can* be handy at fixing things, neither of us want to be and would rather throw money at a professional to fix it correctly the first time.
- Our landlord is really chill and open to discussing improvements to our apartment that we want to make
- He is also super quick on maintenance (both small and big scale)
- We don't need to invest in a yard or school neighborhoods for kids or dogs
- We generally don't mind living surrounded by others (we like living in a city).
- Real estate is not the 'sound investment' it was in our parents' day, and one of us has been burned before by having to sell for less than market value
- Up-keeping a house is EXPENSIVE, especially when we like quirky, older homes that have 'character' (read: potential issues).
- We're #DamnMillenials and need to ruin yet another market.
So other than this deep seated "This Is A Thing You Are Supposed To Do As An Adult", what's the point of buying a home?
If you own a house, why are you glad (or not) that you did?
What drove you to buy, and what makes home ownership "worth it" for you?
If you decided not to buy (or did and wish you hadn't), what were your reasons?
It is A-ok to keep renting! The big reason I enjoyed renting was that all of the maintenance was someone else's problem. But now that I own (again), I enjoy the ability to make things Exactly the way I want them, even if that involves relatively major things (and finding an excellent handyman who can Do those things helps). My big upside to owning was that it ended up being better financially - both because of the mortgage interest deduction reducing my taxes by more than I'd imagined and because I sold for much more than I bought for.
But really - if you like the location, like your landlord, and don't want the hassles that come with owning? Keep renting - it will make you no less of an adult. Heck, it will make you more of an adult because you're being thoughtful with your lives instead of doing the thing people Think they should do but don't always enjoy.
posted by ldthomps at 10:06 AM on November 29, 2017 [8 favorites]
But really - if you like the location, like your landlord, and don't want the hassles that come with owning? Keep renting - it will make you no less of an adult. Heck, it will make you more of an adult because you're being thoughtful with your lives instead of doing the thing people Think they should do but don't always enjoy.
posted by ldthomps at 10:06 AM on November 29, 2017 [8 favorites]
We are glad that we bought (in LA), but it was certainly a timing issue. It created equity in our house that is nice to have (assuming the market doesn't tank), and it allowed us to upgrade to a bigger house based on that equity. Our mortgage is lower than rent in this area, and it allows enough space for children that we couldn't get otherwise. The "not throwing money away on rent" has always been a compelling thing for me, but again, it's because our house value has gone up.
It is nice to have something you know is yours. However, I'm not handy either, and I'm finding it's very possible to be house-poor if you aren't careful when repairs are up to you.
In the end, I'm glad that we did it, because it turned out to be a good investment in a place that we don't share walls and have a fenced in yard. All things put together, it was a net gain all around in terms of money and quality of life. If any of the above did not attain, I'm not sure it would have been a good deal. For me, rent is worth it simply to know that I wouldn't have to worry about major repairs.
posted by SpacemanStix at 10:11 AM on November 29, 2017
It is nice to have something you know is yours. However, I'm not handy either, and I'm finding it's very possible to be house-poor if you aren't careful when repairs are up to you.
In the end, I'm glad that we did it, because it turned out to be a good investment in a place that we don't share walls and have a fenced in yard. All things put together, it was a net gain all around in terms of money and quality of life. If any of the above did not attain, I'm not sure it would have been a good deal. For me, rent is worth it simply to know that I wouldn't have to worry about major repairs.
posted by SpacemanStix at 10:11 AM on November 29, 2017
I was you for a really long time, until I realized how bad it would suck to be subject to the whims of the rental market as a retiree in the East Coast market. I'm looking at houses right now, and it will be payed off by the time I hit 65. I'm a young X'er, so a few years ahead of you, but if you're in a place where you plan to be for the long haul, then that's a pretty good reason to buy.
posted by backwards compatible at 10:13 AM on November 29, 2017 [10 favorites]
posted by backwards compatible at 10:13 AM on November 29, 2017 [10 favorites]
How long do you plan to stay in your city? I bought in 2008 in MPLS and could not buy now - housing prices have shot up everywhere, as have rents. If I did not own, I could very well be forced out of the city (which would hugely increase my costs since I'd have to buy a car) within five or ten years. Right now, my mortgage/insurance/taxes costs slightly less than a two bedroom apartment (which would be what we'd rent). This was not the case in 2008.
posted by Frowner at 10:17 AM on November 29, 2017 [1 favorite]
posted by Frowner at 10:17 AM on November 29, 2017 [1 favorite]
If we hadn't bought we wouldn't be able to stay near my husband's job. Rents in our area have gone way up since we bought, and our fixed mortgage has us locked into an affordable cost of housing. The repairs are a pain, no doubt. But for us it was a fortunate decision. When we're too old to work we'll have a place to live, at the very least.
posted by fingersandtoes at 10:20 AM on November 29, 2017 [5 favorites]
posted by fingersandtoes at 10:20 AM on November 29, 2017 [5 favorites]
For us it was primarily driven by security; even if the mortgage was 'more expensive' we were buying stability with that (I realize that this value may not be as important to you). Your area appears to be different, but we live in a hood that sees double-digit percentage increase on rent on a pretty regular basis (with signs of slowing, but not stopping). Even though our mortgage was slightly more than our rent, we get a long-term stability that we did not get with renting.
We've had chill landlords and difficult ones, and even chill ones who become difficult. Not having to deal with that dynamic was nearly priceless for us. I'd rather call a plumber to come out on a weekend and pay out the nose (or christ, just fix it myself) instead of having to jump through hoops to have things half-assed on a weird time schedule by a sketchy landlord.
The sense of permanence for us was really important, having had several years of moving almost every 6 months.
We didn't plan on it as A Thing, but the equity that we've built in the house just from owning it in a certain timeframe has been a boon too. Our house has appreciated by 6 figures or so in just a couple years. We're looking at that money to possibly finance a small business, help with some school expenses down the road for the kid, stuff like that. It's just a flexibility and value that we wouldn't have access to had we just been renting.
posted by furnace.heart at 10:22 AM on November 29, 2017 [5 favorites]
We've had chill landlords and difficult ones, and even chill ones who become difficult. Not having to deal with that dynamic was nearly priceless for us. I'd rather call a plumber to come out on a weekend and pay out the nose (or christ, just fix it myself) instead of having to jump through hoops to have things half-assed on a weird time schedule by a sketchy landlord.
The sense of permanence for us was really important, having had several years of moving almost every 6 months.
We didn't plan on it as A Thing, but the equity that we've built in the house just from owning it in a certain timeframe has been a boon too. Our house has appreciated by 6 figures or so in just a couple years. We're looking at that money to possibly finance a small business, help with some school expenses down the road for the kid, stuff like that. It's just a flexibility and value that we wouldn't have access to had we just been renting.
posted by furnace.heart at 10:22 AM on November 29, 2017 [5 favorites]
I'd also caution you about making a decision based on how much you like your current landlord, as he could sell your place at any time.
posted by fingersandtoes at 10:23 AM on November 29, 2017 [20 favorites]
posted by fingersandtoes at 10:23 AM on November 29, 2017 [20 favorites]
Best answer: When you say a mortgage will not be cheaper, do you simply mean the cash amount you pay each month? If so, you're neglecting the value of accruing capital, and the value of the mortgage tax deduction. These two things make buying a good financial proposition for most people who can afford it.
The mortgage interest tax deduction is definitely not a sure thing at today's low interest rates. You need to do the math for your specific case. In my case it turned out to be less than the standard deduction so there was no point to itemizing.
Also, the maintenance costs (on the same sort of quirky older home you are talking about) were much more of an issue than any slight change in my taxes. Don't uproot a life you like for a tax deduction. I owned a house for a little more than a year. I was very lucky to have bought in a truly crazy market where even in that short time the price rose enough to offset the (ruinous) transaction costs of buying and selling, once I realized what a poor choice ownership was for me. In another market I could easily have been stuck there for years, slowly going broke trying to keep the place together (I've known many people in that situation). I am very happy to be renting again and will do so as long as I can afford it.
posted by enn at 10:25 AM on November 29, 2017 [4 favorites]
The mortgage interest tax deduction is definitely not a sure thing at today's low interest rates. You need to do the math for your specific case. In my case it turned out to be less than the standard deduction so there was no point to itemizing.
Also, the maintenance costs (on the same sort of quirky older home you are talking about) were much more of an issue than any slight change in my taxes. Don't uproot a life you like for a tax deduction. I owned a house for a little more than a year. I was very lucky to have bought in a truly crazy market where even in that short time the price rose enough to offset the (ruinous) transaction costs of buying and selling, once I realized what a poor choice ownership was for me. In another market I could easily have been stuck there for years, slowly going broke trying to keep the place together (I've known many people in that situation). I am very happy to be renting again and will do so as long as I can afford it.
posted by enn at 10:25 AM on November 29, 2017 [4 favorites]
I am pretty meh about the idea of owning something, and had a big freakout about owning property and being "tied down" right after I finalized my condo purchase. But I bought property, anyway.
One benefit of buying that I didn't anticipate at all, is that it now allows me to stay in my city with relative peace of mind. Similar to what Frowner said, my city has seen an insane increase in property prices, so much so that dual-income, no kids professional couples cannot seem to qualify for mortgages anymore. My friends have had to move to the suburbs, 30+ minutes away, because now the prices are out of reach in our city. Staying on as a renter is also a precarious situation to be in - lots of families getting reno-victed out of their reasonably priced rental units and find themselves unable to compete in a very tight rental market where rents are increasing faster than salaries can keep up, and the vacancy rate is something like 0.9%.
posted by tinydancer at 10:26 AM on November 29, 2017 [12 favorites]
One benefit of buying that I didn't anticipate at all, is that it now allows me to stay in my city with relative peace of mind. Similar to what Frowner said, my city has seen an insane increase in property prices, so much so that dual-income, no kids professional couples cannot seem to qualify for mortgages anymore. My friends have had to move to the suburbs, 30+ minutes away, because now the prices are out of reach in our city. Staying on as a renter is also a precarious situation to be in - lots of families getting reno-victed out of their reasonably priced rental units and find themselves unable to compete in a very tight rental market where rents are increasing faster than salaries can keep up, and the vacancy rate is something like 0.9%.
posted by tinydancer at 10:26 AM on November 29, 2017 [12 favorites]
I bought because I intend to own a home where I live for a long time and rent kept going up in the area at a rate that exceeded the cost of living/inflation rate by quite a bit. I've now got more or less the same "rent" indefinitely with only minor increases as taxes and insurance go up. I also can't be forced to move until I chose to - I've been in situations in the past where the property I lived in was sold to new landlords that either altered the lease when it came time to renew in ways that were unacceptable or decided to renovate to make the place more upscale such that I had to move out at the end of my lease to make way for the construction work.
But if your market isn't like mine or you just don't want to, there's nothing wrong with continuing to rent. Even if the investment pans out in the long run, locking a lot of your savings into a downpayment and the growing ownership of the house does make it harder for you to do other things.
posted by Candleman at 10:31 AM on November 29, 2017 [2 favorites]
But if your market isn't like mine or you just don't want to, there's nothing wrong with continuing to rent. Even if the investment pans out in the long run, locking a lot of your savings into a downpayment and the growing ownership of the house does make it harder for you to do other things.
posted by Candleman at 10:31 AM on November 29, 2017 [2 favorites]
Best answer: I think it's excellent that you're thinking this through and not assuming renting is the One Right Thing To Do, it definitely gets pushed that way and isn't always. That said, I'm glad we did buy.
At the time, we bought largely because my partner wanted to build a recording studio, which required a level of "being able to fuck around with the house's structure and interior" that not even the most accommodating landlord is going to provide. So our reason was pretty specific and not applicable to you. But he no longer has the studio, and I still think that if we ever move (which we surely will eventually if only because we'll get too old for all these stairs one day), I think I would still want to buy again vs. rent.
The things I enjoy specifically about owning my home vs. renting are:
- Freedom to do what I want in terms of decoration, landscaping, renovations, etc. and knowing that freedom doesn't depend on a specific landlord or property management company.
- Freedom to make tons of noise that I couldn't politely make in an apartment building (but could make in a rental house, so this is a relative thing)
- Not being priced out of my neighborhood, where house prices are slowly but steadily increasing
- Finding a place to rent with three cats was a giant pain, I hope to never have to deal with that again.
- No more fighting for street parking
- Having a predictable housing price locked in for fifteen years has been lovely, not having to worry about whether rent will go up.
Stuff I don't love has included:
- There will always be more repairs than you budgeted for. Always. I would buy newer construction despite my love for old houses, if I bought again.
- Sure, I bought into my neighborhood when it was cheap and now I have equity, but also I'm stuck with a terrible neighbor who hates me and we're going to be in a twenty-year feud until she dies, which is annoying.
- Being responsible for stuff like "replacing the sidewalk because the city decided it was time to replace the sidewalk but for me to foot the bill", which is not a thing that all cities do, but there's probably some annoying bullshit your city will make you responsible for as a homeowner.
- Public transit funding has waxed and waned over the years so for a while, that "great transit access" that was part of the reason we bought this place, stopped being so great. It's better again now but I can't count on it staying that way.
There's good stuff. There's bad stuff. The individual balance is really up to you two and your specific wants and values. Renting a house instead of an apartment worked well for us for several years before we bought, and might be a good idea for you two to test out living in a house.
posted by Stacey at 10:38 AM on November 29, 2017 [14 favorites]
At the time, we bought largely because my partner wanted to build a recording studio, which required a level of "being able to fuck around with the house's structure and interior" that not even the most accommodating landlord is going to provide. So our reason was pretty specific and not applicable to you. But he no longer has the studio, and I still think that if we ever move (which we surely will eventually if only because we'll get too old for all these stairs one day), I think I would still want to buy again vs. rent.
The things I enjoy specifically about owning my home vs. renting are:
- Freedom to do what I want in terms of decoration, landscaping, renovations, etc. and knowing that freedom doesn't depend on a specific landlord or property management company.
- Freedom to make tons of noise that I couldn't politely make in an apartment building (but could make in a rental house, so this is a relative thing)
- Not being priced out of my neighborhood, where house prices are slowly but steadily increasing
- Finding a place to rent with three cats was a giant pain, I hope to never have to deal with that again.
- No more fighting for street parking
- Having a predictable housing price locked in for fifteen years has been lovely, not having to worry about whether rent will go up.
Stuff I don't love has included:
- There will always be more repairs than you budgeted for. Always. I would buy newer construction despite my love for old houses, if I bought again.
- Sure, I bought into my neighborhood when it was cheap and now I have equity, but also I'm stuck with a terrible neighbor who hates me and we're going to be in a twenty-year feud until she dies, which is annoying.
- Being responsible for stuff like "replacing the sidewalk because the city decided it was time to replace the sidewalk but for me to foot the bill", which is not a thing that all cities do, but there's probably some annoying bullshit your city will make you responsible for as a homeowner.
- Public transit funding has waxed and waned over the years so for a while, that "great transit access" that was part of the reason we bought this place, stopped being so great. It's better again now but I can't count on it staying that way.
There's good stuff. There's bad stuff. The individual balance is really up to you two and your specific wants and values. Renting a house instead of an apartment worked well for us for several years before we bought, and might be a good idea for you two to test out living in a house.
posted by Stacey at 10:38 AM on November 29, 2017 [14 favorites]
My wife and I own our house, and we're millennials, but barely (early/mid 30s). My wife was gung-ho about owning, largely for emotional reasons (we're adults!) and I was somewhat on the fence about it. We found a neighborhood we liked and a house we liked, and the math worked out, so we bought it. We bought significantly less house than we could afford at the time. That turned out to be a very good idea, since it allowed her to take a chunk of time off of work when we had our kid and be a stay at home mom, which she had always wanted to do. And though rents and home prices continued to rise, particularly in our neighborhood, our cost of living stayed predictable and affordable, even on one income. We also timed things miraculously well, but of course you can't predict the future. We could sell our house today for 1.5x+ what we bought it for 6 years ago, but we just lucked out neighborhood wise. And that increase doesn't help us much if we want to stay in the same area, but it will be a boon if we decide to move elsewhere.
We have friends who bought new construction in a new development, and I get the sense from them that they feel like their house is a mill-stone around their necks. They bought as much as they can afford, and though they have twice the square footage we do, they are also doing yard work almost every weekend even now, two years after they bought the place. They have lots of fantasies about selling the place and joining #vanlife, but because new houses are still being built in the development, its hard to convince anyone to buy a home that has been lived in when they can pick out the countertops etc. for the same money.
We bought a place that had been redone lately (2000) and well, since we don't particularly like doing home improvement projects. All of the neighborhoods we looked at were largely full of hundred year-old homes, so everything had been redone, to varying degrees of skill. That's kept us away from most home renovation nightmares and time, though I did spend this morning before work patching up a hole a squirrel recently chewed in our eaves, so you can't escape some of that entirely.
posted by craven_morhead at 10:43 AM on November 29, 2017 [2 favorites]
We have friends who bought new construction in a new development, and I get the sense from them that they feel like their house is a mill-stone around their necks. They bought as much as they can afford, and though they have twice the square footage we do, they are also doing yard work almost every weekend even now, two years after they bought the place. They have lots of fantasies about selling the place and joining #vanlife, but because new houses are still being built in the development, its hard to convince anyone to buy a home that has been lived in when they can pick out the countertops etc. for the same money.
We bought a place that had been redone lately (2000) and well, since we don't particularly like doing home improvement projects. All of the neighborhoods we looked at were largely full of hundred year-old homes, so everything had been redone, to varying degrees of skill. That's kept us away from most home renovation nightmares and time, though I did spend this morning before work patching up a hole a squirrel recently chewed in our eaves, so you can't escape some of that entirely.
posted by craven_morhead at 10:43 AM on November 29, 2017 [2 favorites]
Best answer: I remember reading some investor advice person who pointed out that a house can be an investment, a home is an expense. I've been told by more than one person with a net worth orders of magnitude of mine that home ownership is a middle-class thing, you rent either because you can afford to make everything someone else's problem, or because you can't afford to buy.
There's a lot of subsidy for home ownership, take advantage of that if it makes sense for you (might be worth working out with a fee-based financial advisor), but: We moved in with the "we're going to die in this house, so we may as well make it our own" attitude, and a decade on have done a hell of a lot of customization, which is a lot of work that'll never be replaced by insurance if we're ever burned out, and really isn't as satisfying as we initially thought.
Most of the advantage of home ownership (aside from getting lucky or skillful about house appreciation by buying in the right market) is that it's enforced saving. If you're doing a good job of saving for retirement while you're renting, renting might be the right thing for you.
posted by straw at 10:48 AM on November 29, 2017 [3 favorites]
There's a lot of subsidy for home ownership, take advantage of that if it makes sense for you (might be worth working out with a fee-based financial advisor), but: We moved in with the "we're going to die in this house, so we may as well make it our own" attitude, and a decade on have done a hell of a lot of customization, which is a lot of work that'll never be replaced by insurance if we're ever burned out, and really isn't as satisfying as we initially thought.
Most of the advantage of home ownership (aside from getting lucky or skillful about house appreciation by buying in the right market) is that it's enforced saving. If you're doing a good job of saving for retirement while you're renting, renting might be the right thing for you.
posted by straw at 10:48 AM on November 29, 2017 [3 favorites]
The main reason I own a house is because it admittedly IS nice to build equity via those monthly mortgage payments. I will never say rent is throwing money down the drain but it is true that you aren't building equity that you can tap into later like you are in a house you own. You can use that equity as a loan to make improvements to the house, as a downpayment for a big purchase, in the event of an emergency, etc. It is a nice cushion to have.
That said, keep renting if you enjoy it and if your landlord is responsive to emergency issues. Home ownership IS expensive and stressful. I just spent a hefty five-figure sum having my entire sewer line dug up and replaced, and am about to drop $6k on a new tankless water heater. I hate having to take time out of my weekend for stuff like cleaning the roof and gutters (or pay someone to do it).
posted by joan_holloway at 10:54 AM on November 29, 2017 [2 favorites]
That said, keep renting if you enjoy it and if your landlord is responsive to emergency issues. Home ownership IS expensive and stressful. I just spent a hefty five-figure sum having my entire sewer line dug up and replaced, and am about to drop $6k on a new tankless water heater. I hate having to take time out of my weekend for stuff like cleaning the roof and gutters (or pay someone to do it).
posted by joan_holloway at 10:54 AM on November 29, 2017 [2 favorites]
Twenty years from now when I can't find a job because I'm an old woman and everything is automated, and I still don't have any money because I'm a woman and didn't invent nuclear fusion, I will not be homeless because I have a condo.
posted by Melismata at 10:59 AM on November 29, 2017 [15 favorites]
posted by Melismata at 10:59 AM on November 29, 2017 [15 favorites]
We bought a property because we wanted a combined workshop+house of a kind that's really hard to find, and this building was roomy enough for both of those functions, and had enough facilities in place that we could just start living there while building it into our dream home.
If your wishes aren't as specific, or just different from ours, and they can be fulfilled by renting... then it's fine to keep renting. There is no reason why we all need to have the same goals in life and buying is not inherently more 'adult' than renting.
posted by Too-Ticky at 11:02 AM on November 29, 2017
If your wishes aren't as specific, or just different from ours, and they can be fulfilled by renting... then it's fine to keep renting. There is no reason why we all need to have the same goals in life and buying is not inherently more 'adult' than renting.
posted by Too-Ticky at 11:02 AM on November 29, 2017
If you don't build equity in a house, it's a good idea to be building equity in retirement accounts. I built equity in a 2 family, sold it and now own a small house outright. I'm close to retirement and not having to pay a mortgage is pretty great. It's a big part of my retirement plan.
If you want to invest in property, a vacation home is an option, too.
posted by theora55 at 11:03 AM on November 29, 2017 [3 favorites]
If you want to invest in property, a vacation home is an option, too.
posted by theora55 at 11:03 AM on November 29, 2017 [3 favorites]
These might help in current or future decision-making:
- NY Times interactive buy or rent calculator, with lots of factors and sliders
- Realtor's rent or buy calculator is a single calculator focused on the break-even point for renting vs buying, as expenses build over years.
As for investing in a rental, that's another lot of questions and answers to hash out (manage on your own vs. hiring a management company). It can be worth-while, but it also can be a time- and money-sink, if you're not careful.
posted by filthy light thief at 11:17 AM on November 29, 2017 [4 favorites]
- NY Times interactive buy or rent calculator, with lots of factors and sliders
- Realtor's rent or buy calculator is a single calculator focused on the break-even point for renting vs buying, as expenses build over years.
As for investing in a rental, that's another lot of questions and answers to hash out (manage on your own vs. hiring a management company). It can be worth-while, but it also can be a time- and money-sink, if you're not careful.
posted by filthy light thief at 11:17 AM on November 29, 2017 [4 favorites]
I rented until about 6 months ago when my husband and I bought a condo. I was always okay with renting until I got priced out of buying in a city that I would've been happy to stay in, so Priority #1 upon moving to a lower cost-of-living city was to Not Let That Happen Again. We have just the right amount of space (2 bed/2 bath) for 2 adults with no kids, no pets, and frequent family visits. We had substantial savings and were able to buy our place with our savings and a loan from my mom, which we've paid back 75% of, and it is WONDERFUL to just have a few-hundred-dollar HOA every month now. We're not planning on staying in our new city forever (we'd like to retire early, in about ten years or so when I'm late 40s and my husband is mid 50s) so can hopefully either rent out our place or sell it when we're ready to be done.
Also, it is AMAZING to not have upstairs neighbors stomping around at all hours of the night.
posted by jabes at 11:19 AM on November 29, 2017 [1 favorite]
Also, it is AMAZING to not have upstairs neighbors stomping around at all hours of the night.
posted by jabes at 11:19 AM on November 29, 2017 [1 favorite]
Best answer: Drat you, filthy light thief, for beating me to the NY Times calculator.
All I've got left, now that my showpiece link is taken, grr! is this YT video segment from the "Adam Ruins Housing" episode of "Adam Ruins Everything." In a nutshell, buying makes you less flexible to changing your life or moving, and it's years before the benefits of accumulating equity really kick in. It'll also sock your savings from that down payment.
posted by Sunburnt at 11:23 AM on November 29, 2017 [9 favorites]
All I've got left, now that my showpiece link is taken, grr! is this YT video segment from the "Adam Ruins Housing" episode of "Adam Ruins Everything." In a nutshell, buying makes you less flexible to changing your life or moving, and it's years before the benefits of accumulating equity really kick in. It'll also sock your savings from that down payment.
posted by Sunburnt at 11:23 AM on November 29, 2017 [9 favorites]
Response by poster: Oh man, Sunburnt, that Adam Ruins Everything encapsulates so many of my feelings that I couldn't vocalize past "This doesn't seem like all it's cracked up to be". Thanks for that find!
Thank you for your feedback, everyone!
posted by RhysPenbras at 11:28 AM on November 29, 2017 [1 favorite]
Thank you for your feedback, everyone!
posted by RhysPenbras at 11:28 AM on November 29, 2017 [1 favorite]
Best answer: When you say a mortgage will not be cheaper, do you simply mean the cash amount you pay each month? If so, you're neglecting the value of accruing capital, and the value of the mortgage tax deduction. These two things make buying a good financial proposition for most people who can afford it.
Please, OP, do not make a decision either way until you understand that the math is considerably more complicated than this. The NYT calculator includes the factors I'm about to mention, but, given the importance of such a purchase, I really think it's important to understand the financial implications in a more general way. When I see comments that suggest that owning is almost always a win because you "accrue capital" or suchlike, I want to sit down, bury my face in my hands, and weep. The number of people who got their fingers blown off in the mid-2000s because they didn't understand the math is heartbreaking to contemplate.
When you purchase a house, you are forgoing the return you might earn on your down payment (and any differential between rent and total expenses of ownership, including mortgage, repairs, etc.) in any other asset. I will use my own example. Right now I have $x in a non-retirement investment account, invested in a couple of different funds that have returned y% in the past five years. If I were to buy an apartment, I would basically need to use $x (minus taxes on the gains) for that down payment. That account would be gone. I would no longer be earning y% (or whatever the funds will earn in the future). Instead, I am hoping for appreciation on the property. The historical record is difficult to analyze because of the bubble years and areas, but mostly you are not going to outperform a broad market index in a single residential real estate purchase. You are also trading liquidity and diversity for illiquidity and extreme concentration, which means more risk, which means you ought to be getting better returns, viewed through this lens only. You mostly aren't.
Further, assuming rent and mortgage are exactly the same, the amount of principal you're paying off, and thus equity you're accruing, is quite low in the early years. Most online mortgage calculators will give you an amortization schedule. Look how much of your payment goes to interest and how much to principal early on. That, plus the nontrivial transaction costs, means that you won't be seeing most of the benefits unless you hang on to the property for a while. (Only you know how likely that is.)
This is definitely not to say that no one can profit from residential real estate or that there aren't compelling reasons to buy residential real estate that outweigh financial optimization. And of course all of these calculations require a certain degree of fortune-telling, which no one is actually capable of, so everything should be considered with a healthy margin of uncertainty. That does often make the decision to buy one legitimately driven by personal preferences and plans. But please do not be misled into thinking that buying residential real estate can generally confidently be said to be the superior decision from an objective financial point of view. You're essentially choosing between concentrating your money in a single asset or putting that money elsewhere. By playing with the assumptions (which the NYT calculator lets you do), you can see in what scenarios you're likely to do better in the former than in the latter. Once you understand (as best you can given previously-mentioned inability to foretell the future) the financial implications, then you can weigh them properly against the many pluses and minuses people have mentioned here (and there are more, actually).
(Me, I look, but right now I can't quite afford anything I like well enough to vaporize the thousands and thousands of dollars in fees and costs to move into and to give up the security I feel from having that $x where it is. I could go either way ultimately, but probably not in this overheated market. I definitely don't consider owning residential real estate some kind of sine qua non for adulthood. I feel plenty grown as it is.)
posted by praemunire at 11:56 AM on November 29, 2017 [18 favorites]
Please, OP, do not make a decision either way until you understand that the math is considerably more complicated than this. The NYT calculator includes the factors I'm about to mention, but, given the importance of such a purchase, I really think it's important to understand the financial implications in a more general way. When I see comments that suggest that owning is almost always a win because you "accrue capital" or suchlike, I want to sit down, bury my face in my hands, and weep. The number of people who got their fingers blown off in the mid-2000s because they didn't understand the math is heartbreaking to contemplate.
When you purchase a house, you are forgoing the return you might earn on your down payment (and any differential between rent and total expenses of ownership, including mortgage, repairs, etc.) in any other asset. I will use my own example. Right now I have $x in a non-retirement investment account, invested in a couple of different funds that have returned y% in the past five years. If I were to buy an apartment, I would basically need to use $x (minus taxes on the gains) for that down payment. That account would be gone. I would no longer be earning y% (or whatever the funds will earn in the future). Instead, I am hoping for appreciation on the property. The historical record is difficult to analyze because of the bubble years and areas, but mostly you are not going to outperform a broad market index in a single residential real estate purchase. You are also trading liquidity and diversity for illiquidity and extreme concentration, which means more risk, which means you ought to be getting better returns, viewed through this lens only. You mostly aren't.
Further, assuming rent and mortgage are exactly the same, the amount of principal you're paying off, and thus equity you're accruing, is quite low in the early years. Most online mortgage calculators will give you an amortization schedule. Look how much of your payment goes to interest and how much to principal early on. That, plus the nontrivial transaction costs, means that you won't be seeing most of the benefits unless you hang on to the property for a while. (Only you know how likely that is.)
This is definitely not to say that no one can profit from residential real estate or that there aren't compelling reasons to buy residential real estate that outweigh financial optimization. And of course all of these calculations require a certain degree of fortune-telling, which no one is actually capable of, so everything should be considered with a healthy margin of uncertainty. That does often make the decision to buy one legitimately driven by personal preferences and plans. But please do not be misled into thinking that buying residential real estate can generally confidently be said to be the superior decision from an objective financial point of view. You're essentially choosing between concentrating your money in a single asset or putting that money elsewhere. By playing with the assumptions (which the NYT calculator lets you do), you can see in what scenarios you're likely to do better in the former than in the latter. Once you understand (as best you can given previously-mentioned inability to foretell the future) the financial implications, then you can weigh them properly against the many pluses and minuses people have mentioned here (and there are more, actually).
(Me, I look, but right now I can't quite afford anything I like well enough to vaporize the thousands and thousands of dollars in fees and costs to move into and to give up the security I feel from having that $x where it is. I could go either way ultimately, but probably not in this overheated market. I definitely don't consider owning residential real estate some kind of sine qua non for adulthood. I feel plenty grown as it is.)
posted by praemunire at 11:56 AM on November 29, 2017 [18 favorites]
Owning a home can be a good deal if you're planning to live in the same place a long time (ideally until you pay it off) and the place is generally desirable (which means real estate values continue going up). This makes it an investment as well as a place to live. The longer you stay in the house, generally, the better an investment it works out to be. But, if you move too soon, you'll incur transaction costs that wipe out most of your profits. But, on the up side, your first $250,000 in profit from the sale of a home ($500,000 for a married couple) is not taxed, which helps.
Another advantage is that rents go up, but your mortgage payment (assuming a 30-year fixed rate) does not. On the other hand your property tax will go up with your home's value.
If you manage to retire with a paid-off house, you will only pay property taxes on it. Those may be substantial compared to what you're paying in property taxes now... but they will be a lot cheaper than the rent on a similar house in 30 years! Then, if you need additional retirement income, you can take out a reverse mortgage on the house. (The bank pays you monthly, then gets the house when you die.)
The downside is that you are responsible for all repairs on the house. If you buy relatively new construction, you may not have any major expenses for many years. If you buy an older home, all bets are off. We needed a new roof this past summer: $35,000 (and that was a deal). The minor upside to that is that improvement does go into the cost basis of your house: essentially my wife and I can now clear $535,000 on the sale of the house without paying taxes. On the other hand, if you never sell, you'll never realize that savings.
posted by kindall at 12:07 PM on November 29, 2017
Another advantage is that rents go up, but your mortgage payment (assuming a 30-year fixed rate) does not. On the other hand your property tax will go up with your home's value.
If you manage to retire with a paid-off house, you will only pay property taxes on it. Those may be substantial compared to what you're paying in property taxes now... but they will be a lot cheaper than the rent on a similar house in 30 years! Then, if you need additional retirement income, you can take out a reverse mortgage on the house. (The bank pays you monthly, then gets the house when you die.)
The downside is that you are responsible for all repairs on the house. If you buy relatively new construction, you may not have any major expenses for many years. If you buy an older home, all bets are off. We needed a new roof this past summer: $35,000 (and that was a deal). The minor upside to that is that improvement does go into the cost basis of your house: essentially my wife and I can now clear $535,000 on the sale of the house without paying taxes. On the other hand, if you never sell, you'll never realize that savings.
posted by kindall at 12:07 PM on November 29, 2017
For me, it boils down to money. I am very grateful that we bought a house 9 years ago, in the currently crazy housing market that is Portland. There's no way I would be able to afford a house at the current rates. Our job situations have also changed drastically since we bought, and I'm glad that our current mortgage payment is way lower than a rent payment would be. At the time we bought, our mortgage was indeed higher than the rent we were paying, but as time goes on, rent prices go up, and your mortgage stays pretty much the same.
Even better, after 30 years, you no longer need to pay your mortgage because you now own the house. If you're currently 35, that means by the time you're 65, and wanting to retire from your jobs, you'll have one less expense on your hands. For me, the chance to be debt-free on our house about 15 years from now is worth being tied to our current property. Yes, there are property taxes and upkeep, but I still feel more comfortable with those than with rent.
I also hate moving. I love knowing that I won't be kicked out of my place at a landlord's whim.
We thought that we'd stay in our house 5 years and then find another, but honestly, we picked a good house to begin with, and plan to stay here a while (we're at about 9 years so far). In our city, at least, starter homes are harder to find anyway, so we just looked for a good long-term house. We ended up in a neighborhood we didn't really know, but it's worked out fine. It is what you make of it.
I would do it again in a heartbeat. But I always knew I wanted to own. I bought my first place at age 27. If neither of you feels tied to buy a house, then maybe it isn't for you. Just know the pro's and cons of what you're choosing. Maybe invest in long-term care insurance too, because if you need to live in an assisted living facility later, those are expensive, and the best way to pay for that care is to sell your house when you move in.
posted by hydra77 at 12:30 PM on November 29, 2017 [4 favorites]
Even better, after 30 years, you no longer need to pay your mortgage because you now own the house. If you're currently 35, that means by the time you're 65, and wanting to retire from your jobs, you'll have one less expense on your hands. For me, the chance to be debt-free on our house about 15 years from now is worth being tied to our current property. Yes, there are property taxes and upkeep, but I still feel more comfortable with those than with rent.
I also hate moving. I love knowing that I won't be kicked out of my place at a landlord's whim.
We thought that we'd stay in our house 5 years and then find another, but honestly, we picked a good house to begin with, and plan to stay here a while (we're at about 9 years so far). In our city, at least, starter homes are harder to find anyway, so we just looked for a good long-term house. We ended up in a neighborhood we didn't really know, but it's worked out fine. It is what you make of it.
I would do it again in a heartbeat. But I always knew I wanted to own. I bought my first place at age 27. If neither of you feels tied to buy a house, then maybe it isn't for you. Just know the pro's and cons of what you're choosing. Maybe invest in long-term care insurance too, because if you need to live in an assisted living facility later, those are expensive, and the best way to pay for that care is to sell your house when you move in.
posted by hydra77 at 12:30 PM on November 29, 2017 [4 favorites]
Response by poster: Hydra77 - excellent points, thank you.
I should clarify that we do have other retirement focused investments (even a pension!) and investment plans for long term care as we will not be having children and aren't interested in relying on burdening extended family with our elder care. A purchased house/home would only be a small part of a greater retirement plan.
posted by RhysPenbras at 1:01 PM on November 29, 2017 [1 favorite]
I should clarify that we do have other retirement focused investments (even a pension!) and investment plans for long term care as we will not be having children and aren't interested in relying on burdening extended family with our elder care. A purchased house/home would only be a small part of a greater retirement plan.
posted by RhysPenbras at 1:01 PM on November 29, 2017 [1 favorite]
I think it's probably nearly always moronic to buy a house, unless you're rich. The only legit good thing about it is that my mortgage payment is going to stay the same, whereas rent was going to creep up and up and up--oh, and I'm not at the mercy of my psycho landlord, who cut down a big, always-laden grapefruit tree everyone loved that had probably been there since nineteenfiftysomething. Yes, it was right up against the building but below the roofline, no big limbs; a hurricane was not going to cause it to knock down the building and any reason he may have had to cut it was a garbage reason. Now I have a grapefruit tree, two fig trees, an orange tree, and countless pineapples. Fuck you, Stathi, you evil fruit-hating stormcowering vampire. The week I moved out I re-grouted the lovely old 1940s countertop in the apartment kitchen that I never asked Stathi to fix because I knew he would have sledged it and replaced with formica. (I knew this because of 1. the other units in the building, and 2. what he did to my formerly perfect 1940s bathroom.)
Everything about owning other than fixing the monthly payment is terribly, stupidly expensive and precarious, but it feels safer. Which is really weird. Apartment dwelling is somewhat precarious and feels precarious. Home"ownership" is really precarious but feels safe.
All that gloating about how I'm growing tons of fruit notwithstanding, having a yard is a major pain in the ass. Eventually I'll get it together to plant no-fuss groundcover and ornamental grasses everywhere I haven't planted a tree or a pineapple, but I can't think about that, now: I have to deal with the roof. Then gutters and French drain so the driveway will stop flooding the garage. Then I have to paint. Then it's more fence maintenance. But before I get to the end of my current list and can finally tackle the yard, the washer or the stove will die or my neighbor will crash his car into the porch. Something will always happen. It's kind of exciting, in a sick way. It helps if you have masochistic tendencies or are a risk seeker or both.
posted by Don Pepino at 1:24 PM on November 29, 2017 [5 favorites]
Everything about owning other than fixing the monthly payment is terribly, stupidly expensive and precarious, but it feels safer. Which is really weird. Apartment dwelling is somewhat precarious and feels precarious. Home"ownership" is really precarious but feels safe.
All that gloating about how I'm growing tons of fruit notwithstanding, having a yard is a major pain in the ass. Eventually I'll get it together to plant no-fuss groundcover and ornamental grasses everywhere I haven't planted a tree or a pineapple, but I can't think about that, now: I have to deal with the roof. Then gutters and French drain so the driveway will stop flooding the garage. Then I have to paint. Then it's more fence maintenance. But before I get to the end of my current list and can finally tackle the yard, the washer or the stove will die or my neighbor will crash his car into the porch. Something will always happen. It's kind of exciting, in a sick way. It helps if you have masochistic tendencies or are a risk seeker or both.
posted by Don Pepino at 1:24 PM on November 29, 2017 [5 favorites]
Best answer: The main reason that I buy rather than rent is that I don't like people touching my stuff and telling me what to do. Of course, just owning a house doesn't fully accomplish that, but it does reduce that sort of thing. My mortgage company doesn't have a key to the house or tell me what cosmetic and (usually) structural changes I can make. I've got a breeding colony sized bat house, a composting system, a mishmash stone/concrete patio and a big lawn murdering xeriscape project that I'm slowly working on, and several other things that probably negatively affect the market value, and that most landlords wouldn't let me do. That kind of thing is really important to me, and makes it worthwhile for me to own.
Other factors:
Both of the houses I've bought had investment potential. My first house was nearly condemned before I bought it, and I did a whole lot of work on it. It did not end up gaining much equity, partly because I didn't really finish the project, but moreso because the neighborhood took a serious downturn. Counting the money I spent (never mind the time) on improvements, I'm sure I lost money on it overall. My current house, though, has been much more profitable, in part because property values in general have increased, and in part because I've made some improvements that positively affect the market value.
But every now and again, I really envy people who rent. I'm pretty good at DIYing most things, but some stuff, I can't or won't do, and those expenses can just pop up out of seemingly nowhere. Earlier this year, we had two unrelated but really expensive plumbing emergencies back to back, and there's another major, tear up the street job that's going to need to be done sometime before terribly long. I wish that were someone else's problem. (Hey, I'll let you 'test drive' home ownership by taking care of that issue if you want!)
Also, it would be nice to just be able to move without having to go through the whole thing of selling the house. I don't currently want to, but it kind of sucks not having the option.
So when it comes down to it, the potential (and remember it's only potential) financial benefits are balanced out by financial burdens and the loss of flexibility. The decision really comes down for me to the "You're not the boss of me" factor, but I am unusually prickly about that sort of thing.
I absolutely endorse your decision to not buy a house.
posted by ernielundquist at 1:55 PM on November 29, 2017 [5 favorites]
Other factors:
Both of the houses I've bought had investment potential. My first house was nearly condemned before I bought it, and I did a whole lot of work on it. It did not end up gaining much equity, partly because I didn't really finish the project, but moreso because the neighborhood took a serious downturn. Counting the money I spent (never mind the time) on improvements, I'm sure I lost money on it overall. My current house, though, has been much more profitable, in part because property values in general have increased, and in part because I've made some improvements that positively affect the market value.
But every now and again, I really envy people who rent. I'm pretty good at DIYing most things, but some stuff, I can't or won't do, and those expenses can just pop up out of seemingly nowhere. Earlier this year, we had two unrelated but really expensive plumbing emergencies back to back, and there's another major, tear up the street job that's going to need to be done sometime before terribly long. I wish that were someone else's problem. (Hey, I'll let you 'test drive' home ownership by taking care of that issue if you want!)
Also, it would be nice to just be able to move without having to go through the whole thing of selling the house. I don't currently want to, but it kind of sucks not having the option.
So when it comes down to it, the potential (and remember it's only potential) financial benefits are balanced out by financial burdens and the loss of flexibility. The decision really comes down for me to the "You're not the boss of me" factor, but I am unusually prickly about that sort of thing.
I absolutely endorse your decision to not buy a house.
posted by ernielundquist at 1:55 PM on November 29, 2017 [5 favorites]
We just bought, and it was clearly the right financial decision for us (mortgage is cheaper than either of our rent was before), but there are still downsides.
Since we started looking The House has been like an extra hobby that we can’t give up. What shall we do tonight? Work on The House. This weekend? The House. We had budgeted for some repairs, including a water heater in about five years; turned out we were in the house less than five weeks before it died. And even before we moved in, the house got broken into— they took the washer, dryer and fridge. Which insurance paid for (minus deductible)— but it didn’t pay for the time we had to spend getting a new one, letting various contractors in to fix the busted door, etc.
We also have been totally amazed at the giant industry surrounding home ownership — as sort of reluctant capitalists it’s been a weird sector to interact with. (Buy a couch! Buy a whole couch set! Don’t think about what good you might do elsewhere in society with that money!) And this is the above-board people— the number of stupid scams you will get (house purchase via mortgage is public record!) is kind of stunning, and for a while you can’t not answer the phone/read your mail because plenty of legitimate people associated with the mortgage process may need to contact you.
That having been said, it was the right choice for us anyhow, and likely would have been emotionally (eg we built a custom desk in our office room that can’t be removed unless we destroy it— couldn’t have done that renting and it is exactly the desk we want) even if it wasn’t so clear financially. Part of this though is that we bought less house than we could have, so water heater and other surprised haven’t been too awful. If we were in a more expensive market, or had gotten a bigger house, the emotional benefit would have been smaller as well as the finances looking worse.
posted by nat at 1:55 PM on November 29, 2017 [1 favorite]
Since we started looking The House has been like an extra hobby that we can’t give up. What shall we do tonight? Work on The House. This weekend? The House. We had budgeted for some repairs, including a water heater in about five years; turned out we were in the house less than five weeks before it died. And even before we moved in, the house got broken into— they took the washer, dryer and fridge. Which insurance paid for (minus deductible)— but it didn’t pay for the time we had to spend getting a new one, letting various contractors in to fix the busted door, etc.
We also have been totally amazed at the giant industry surrounding home ownership — as sort of reluctant capitalists it’s been a weird sector to interact with. (Buy a couch! Buy a whole couch set! Don’t think about what good you might do elsewhere in society with that money!) And this is the above-board people— the number of stupid scams you will get (house purchase via mortgage is public record!) is kind of stunning, and for a while you can’t not answer the phone/read your mail because plenty of legitimate people associated with the mortgage process may need to contact you.
That having been said, it was the right choice for us anyhow, and likely would have been emotionally (eg we built a custom desk in our office room that can’t be removed unless we destroy it— couldn’t have done that renting and it is exactly the desk we want) even if it wasn’t so clear financially. Part of this though is that we bought less house than we could have, so water heater and other surprised haven’t been too awful. If we were in a more expensive market, or had gotten a bigger house, the emotional benefit would have been smaller as well as the finances looking worse.
posted by nat at 1:55 PM on November 29, 2017 [1 favorite]
Since we started looking The House has been like an extra hobby that we can’t give up. What shall we do tonight? Work on The House. This weekend? The House.
Yes. I can't emphasize this enough. Was a homeowner, now a renter, not tempted to ever go back.
Unless you really like working on houses, like LIKE like. Because Fixing the House is your new hobby now, forever. And sometimes while you're fixing something you'll find something else you have to fix before you fix the first thing...
I chafe at the control my landlords have over me, but at least I do whatever the fuck I want on weekends, and it's not fixing the goddamn house.
posted by fiercecupcake at 2:28 PM on November 29, 2017 [5 favorites]
Yes. I can't emphasize this enough. Was a homeowner, now a renter, not tempted to ever go back.
Unless you really like working on houses, like LIKE like. Because Fixing the House is your new hobby now, forever. And sometimes while you're fixing something you'll find something else you have to fix before you fix the first thing...
I chafe at the control my landlords have over me, but at least I do whatever the fuck I want on weekends, and it's not fixing the goddamn house.
posted by fiercecupcake at 2:28 PM on November 29, 2017 [5 favorites]
Best answer: I used to rent, then I bought a house, then I rented again. Now I own a vacation house (my late fathers house) and continue to rent for my primary residence. I am probably rich for my other demographic considerations. My landlady is 93. My rent hasn't gone up in ten years. I live in Vermont and my heat is included in my rent. I could definitely not own and live in a home for this amount of money. It is definitely a precarious situation. I love the hell out of it. That said, at a future point where I need to move on, I will probably buy something tiny. I live in a market that is the opposite of hot.
Apartment dwelling is somewhat precarious and feels precarious. Home"ownership" is really precarious but feels safe.
This is my feeling. I am a woman who lives alone (have a partner who does not live with me and is not planning to) no kids, no pets. I travel for work. I have anxiety. Having my house and its general infrastructure be someone else's problem while i am away is huge for me. I go away summers and fuss with a house I own which is way more trouble than I would want to deal with year round. It's definitely a JOB. I get a lot of mansplainy lectures from fixit people there, even well meaning fixit people who I generally like. My landlady just hollers at these dudes and that is mostly okay with me. Home ownership works for a lot of people but it definitely doesn't work for me, and even in my income/assets bracket, renting isn't really a dumb choice.
posted by jessamyn at 2:30 PM on November 29, 2017 [5 favorites]
Apartment dwelling is somewhat precarious and feels precarious. Home"ownership" is really precarious but feels safe.
This is my feeling. I am a woman who lives alone (have a partner who does not live with me and is not planning to) no kids, no pets. I travel for work. I have anxiety. Having my house and its general infrastructure be someone else's problem while i am away is huge for me. I go away summers and fuss with a house I own which is way more trouble than I would want to deal with year round. It's definitely a JOB. I get a lot of mansplainy lectures from fixit people there, even well meaning fixit people who I generally like. My landlady just hollers at these dudes and that is mostly okay with me. Home ownership works for a lot of people but it definitely doesn't work for me, and even in my income/assets bracket, renting isn't really a dumb choice.
posted by jessamyn at 2:30 PM on November 29, 2017 [5 favorites]
In general I love owning my house (for any/all of the reasons given above by other users) but the out-of-left-field expenses sometimes get me down.
For example, someone hit my house with a trolley and the quote to repair was under my deductible but I couldn't just leave it un-fixed, so my savings took a tiny hit.
But more importantly I had a surprising experience recently. My homeowner's insurance company sent me a letter saying, "hey, you have the option to switch to so-and-so as a new underwriter and you'll save $X/year" and I said, "Sure, why not?" Well, the "why not?" came a few weeks later when I got a letter from the new underwriters saying, "We had someone check out your property and you need to have your house repainted within 30 days or we consider this a breach of blah blah blah" which is NOT an expense I expected to have at any point in the near future. At least my house is now a color that my wife and I both love, but ... yeah. Things happen to your house that you never expect or weren't smart enough to anticipate, regardless of how smart you are, and if you don't have a good chunk of savings it can be a real source of stress.
posted by komara at 2:30 PM on November 29, 2017
For example, someone hit my house with a trolley and the quote to repair was under my deductible but I couldn't just leave it un-fixed, so my savings took a tiny hit.
But more importantly I had a surprising experience recently. My homeowner's insurance company sent me a letter saying, "hey, you have the option to switch to so-and-so as a new underwriter and you'll save $X/year" and I said, "Sure, why not?" Well, the "why not?" came a few weeks later when I got a letter from the new underwriters saying, "We had someone check out your property and you need to have your house repainted within 30 days or we consider this a breach of blah blah blah" which is NOT an expense I expected to have at any point in the near future. At least my house is now a color that my wife and I both love, but ... yeah. Things happen to your house that you never expect or weren't smart enough to anticipate, regardless of how smart you are, and if you don't have a good chunk of savings it can be a real source of stress.
posted by komara at 2:30 PM on November 29, 2017
Best answer: I recently purchased a condo. I had a lot of complicated feelings about it (stuff like fundamental ethical opposition to the capitalist notion of houses as an investment or just the basic idea that land can be owned, personal issues around discomfort with my changing socio-economic status over my adult life, worry about being or feeling tied down, etc.). I purchased the condo because I live in an area where rents are increasing and quality of service by landlords has been decreasing (and also tenant protections are minimal, to say the least), so it made practical sense for me. And also I liked the idea of being able to do renovations to make the place more like how I wanted. I bought a condo rather than a detached house because, even though I like the idea of having a yard of my own, I know that I don't have the time for all of the house and yard maintenance stuffs. With the condo, the condo association is responsible for all of the exterior and grounds maintenance. My particular condo is also right in town, walkable to work and my coffee shop, yet on a dead end street in a nice little bowl that shelters it from noise and traffic, and that along with some of the specifics of the layout and view from my porch and such made it a nicer place to live than the available rental options (eg. I now at least have a front porch type space, providing that transition between private and public space that is useful for building local communities).
I expected to continue to be quite ambivalent about owning. I initially did think I had perhaps made a mistake. Surprisingly, despite having a couple fairly major maintenance and other issues to deal with within the first half year, I am now unambivalently happy about my choice. In my case, my mortgage plus condo fees comes out to about the same monthly expense as rent, and I'm adding on to that by borrowing money for some renovations/repairs, so it is going to be more expensive for a couple years. But the renovations/repairs are going to make it a very nice home that I got to design a bit myself, which I'm excited about. And I don't have a landlord. I did not realize beforehand exactly how nice it is to not have a landlord, or how easy it would be to get used to not having a landlord. I've had several quite good landlords in the past, too. But let me tell you, it is so nice to not have a landlord.
posted by eviemath at 4:41 PM on November 29, 2017 [3 favorites]
I expected to continue to be quite ambivalent about owning. I initially did think I had perhaps made a mistake. Surprisingly, despite having a couple fairly major maintenance and other issues to deal with within the first half year, I am now unambivalently happy about my choice. In my case, my mortgage plus condo fees comes out to about the same monthly expense as rent, and I'm adding on to that by borrowing money for some renovations/repairs, so it is going to be more expensive for a couple years. But the renovations/repairs are going to make it a very nice home that I got to design a bit myself, which I'm excited about. And I don't have a landlord. I did not realize beforehand exactly how nice it is to not have a landlord, or how easy it would be to get used to not having a landlord. I've had several quite good landlords in the past, too. But let me tell you, it is so nice to not have a landlord.
posted by eviemath at 4:41 PM on November 29, 2017 [3 favorites]
So other than this deep seated "This Is A Thing You Are Supposed To Do As An Adult", what's the point of buying a home?
For me permanence was a big factor. I moved apartments every 6 months in my teens and twenties, sometimes because I wanted to and sometimes because I had to and each time was such a huge upheaval. My environment (like..inside, not the Earth) is SUPER important to my general happiness and something always felt not quite right about renting. I love decorating and always managed to make each rental feel homey but like, INSIDE I knew it wasn't really mine so it just all felt temporary. Also we do have dogs (no kids, ew) and my husband has a lot of hobbies and I smoke a lot of weed so ownership is more conducive to those things.
If you own a house, why are you glad (or not) that you did?
Yeah! We're on our second house. Our first one was outside of Atlanta and we got it for $90k and sold it 5 years later for $161k so we are VERY glad we did that, plus it was nice to have a big place we owned that was so cheap. Our mortgage was like $700 and we'd previously been renting a smaller, worse place for more money than that. Our current house is outside of Portland, OR and the rental market here is SUPER crazy so even though we're paying over twice what we used to, it's still less than we'd be paying for rent here. I really, really like knowing that we're the boss of our own house, even the part where we're responsible for repairs. Even my best landlords were pretty cheap and my husband is very handy, so this works much better for us. But for reals a lot of it for me is more emotional than factual--it just feels better to me to be in my own house.
What drove you to buy, and what makes home ownership "worth it" for you?
I guess I covered all of this but basically:
House #1: Driven to buy because it was cheap but also definitely because it seemed like the next step in our relationship and a smart investment. I knew I wanted to move and figured we'd be able to make some money at some point.
House #2: Wanted to settle down and not have to move again for a LONG time since it was such a pain in the ass to go 3000 miles. We already knew we were good homeowners and this house is a lot newer than the old one so figured it'd be easier to own.
It's worth it to me for a lot of reasons that don't apply to you! We save money, I love the house, I know I don't want to move for a while, I don't want anyone to boss me around or show up unannounced, and I like the control.
posted by masquesoporfavor at 5:22 PM on November 29, 2017
For me permanence was a big factor. I moved apartments every 6 months in my teens and twenties, sometimes because I wanted to and sometimes because I had to and each time was such a huge upheaval. My environment (like..inside, not the Earth) is SUPER important to my general happiness and something always felt not quite right about renting. I love decorating and always managed to make each rental feel homey but like, INSIDE I knew it wasn't really mine so it just all felt temporary. Also we do have dogs (no kids, ew) and my husband has a lot of hobbies and I smoke a lot of weed so ownership is more conducive to those things.
If you own a house, why are you glad (or not) that you did?
Yeah! We're on our second house. Our first one was outside of Atlanta and we got it for $90k and sold it 5 years later for $161k so we are VERY glad we did that, plus it was nice to have a big place we owned that was so cheap. Our mortgage was like $700 and we'd previously been renting a smaller, worse place for more money than that. Our current house is outside of Portland, OR and the rental market here is SUPER crazy so even though we're paying over twice what we used to, it's still less than we'd be paying for rent here. I really, really like knowing that we're the boss of our own house, even the part where we're responsible for repairs. Even my best landlords were pretty cheap and my husband is very handy, so this works much better for us. But for reals a lot of it for me is more emotional than factual--it just feels better to me to be in my own house.
What drove you to buy, and what makes home ownership "worth it" for you?
I guess I covered all of this but basically:
House #1: Driven to buy because it was cheap but also definitely because it seemed like the next step in our relationship and a smart investment. I knew I wanted to move and figured we'd be able to make some money at some point.
House #2: Wanted to settle down and not have to move again for a LONG time since it was such a pain in the ass to go 3000 miles. We already knew we were good homeowners and this house is a lot newer than the old one so figured it'd be easier to own.
It's worth it to me for a lot of reasons that don't apply to you! We save money, I love the house, I know I don't want to move for a while, I don't want anyone to boss me around or show up unannounced, and I like the control.
posted by masquesoporfavor at 5:22 PM on November 29, 2017
Just to address a couple of the objections I've seen a few times here...
If you don't max out what you can stretch to afford to buy a house (not something I recommend doing under any circumstances), fixing the house doesn't have to become your hobby, and the yard doesn't have to be a pain in the ass.
We bought our first house about 15 years ago, and I did my last yard work 14 years and 9 months ago. Literally. We hired a landscape maintenance company to take care of it for us. It's not very expensive, and it's one less thing to worry about. Some people enjoy yard work, I do not, so I outsource it.
Similarly, when repairs other than the most minor come up, I hire someone to deal with it. In 15 years of home ownership, I'd say I've averaged less than five days a year on actual home projects, and that's all stuff I did because I wanted to. Could I do more myself? Sure. But I don't like to, and someone who does it for a living will probably do a better job, so I outsource once again. Part of this is also not buying super old houses ("with character") that regularly need tons of maintenance.
Yes, it's cheaper to do this stuff yourself. But if you plan it into your budget, it's totally fine. You just have to consider it as part of your financial equasion, and make the decision for yourself whether it's worth it or not. But I think people are too quick to claim that home ownership is terrible for these reasons without adequately exploring the alternatives.
posted by primethyme at 9:19 PM on November 29, 2017 [3 favorites]
If you don't max out what you can stretch to afford to buy a house (not something I recommend doing under any circumstances), fixing the house doesn't have to become your hobby, and the yard doesn't have to be a pain in the ass.
We bought our first house about 15 years ago, and I did my last yard work 14 years and 9 months ago. Literally. We hired a landscape maintenance company to take care of it for us. It's not very expensive, and it's one less thing to worry about. Some people enjoy yard work, I do not, so I outsource it.
Similarly, when repairs other than the most minor come up, I hire someone to deal with it. In 15 years of home ownership, I'd say I've averaged less than five days a year on actual home projects, and that's all stuff I did because I wanted to. Could I do more myself? Sure. But I don't like to, and someone who does it for a living will probably do a better job, so I outsource once again. Part of this is also not buying super old houses ("with character") that regularly need tons of maintenance.
Yes, it's cheaper to do this stuff yourself. But if you plan it into your budget, it's totally fine. You just have to consider it as part of your financial equasion, and make the decision for yourself whether it's worth it or not. But I think people are too quick to claim that home ownership is terrible for these reasons without adequately exploring the alternatives.
posted by primethyme at 9:19 PM on November 29, 2017 [3 favorites]
Response by poster: Thank you, everyone, for your input!
posted by RhysPenbras at 5:21 AM on November 30, 2017
posted by RhysPenbras at 5:21 AM on November 30, 2017
It's going to come down to not only your finances but your preferences and values.
How stable are your jobs? How much do you like your city? How important is it to you to have control of your own space? How much do you hate having to deal with unexpected problems? Do you like to move or hate it with a fiery passion?
If you decide to buy, be extremely comprehensive in your financial calculations and budgeting. The mortgage company/realtors will try to upsell you. Do not let them tell you what you can afford: YOU tell THEM what you can afford, and stick to your guns. Be ready and willing to walk away from a house. Do not get emotionally attached until it's yours for real, deal done and papers signed.
Don't be Young!Me, and get bait-and-switched at your closing because you've already given notice and have to be out of your current place next week and you spent every cent you could pull together just BUYING the house already, so when they give you a crappy ARM instead of the fixed rate you signed a contract for, you cave to the pressure and sign anyway and regret it for the next 10 years.
Renting can be right for you. Buying can be right for you. But be wily and cagey and suspicious and don't let your emotions trap you.
posted by oblique red at 12:44 PM on November 30, 2017 [2 favorites]
How stable are your jobs? How much do you like your city? How important is it to you to have control of your own space? How much do you hate having to deal with unexpected problems? Do you like to move or hate it with a fiery passion?
If you decide to buy, be extremely comprehensive in your financial calculations and budgeting. The mortgage company/realtors will try to upsell you. Do not let them tell you what you can afford: YOU tell THEM what you can afford, and stick to your guns. Be ready and willing to walk away from a house. Do not get emotionally attached until it's yours for real, deal done and papers signed.
Don't be Young!Me, and get bait-and-switched at your closing because you've already given notice and have to be out of your current place next week and you spent every cent you could pull together just BUYING the house already, so when they give you a crappy ARM instead of the fixed rate you signed a contract for, you cave to the pressure and sign anyway and regret it for the next 10 years.
Renting can be right for you. Buying can be right for you. But be wily and cagey and suspicious and don't let your emotions trap you.
posted by oblique red at 12:44 PM on November 30, 2017 [2 favorites]
Best answer: A big part of the impulse to buy is that most people don't save. Yeah, in theory you're better off plowing every cent into a tax-advantaged retirement account and letting the stock market hoist you into wealth and privilege. And yet, even among the fortunate minority holding 401(k)s, half have balances under $25K. That's not even one year of income, despite an unprecedented 9-year economic expansion and exploding stock market valuations. So people don't save on their own.
But they do buy houses. You can't get out of the house payment by changing jobs and forgetting to set up your 401(k) contributions. The return, on average isn't great, but particularly in California there are plenty of people who would never save a million dollars in a retirement account but are sitting on houses that are yielding far, far more in free rent and tax subsides than they would ever be able to draw from their cash savings. The extreme illiquidity of real estate is actually an advantage, because if it were sitting in an account it would get spent. When you add in the restrictive zoning that's the rule in many desirable areas, it really becomes somewhat foolish for a certain type of person not to buy the biggest house they can afford to own. Because if you save like most people, rent will continue to increase at or above inflation and you will not have enough income to stay in the area. The house may be a risky, expensive asset with poor returns that's hard to tap, but it's also a forced savings plan, and a lot of the time that is better than the alternative.
Your hard-won skepticism is well-founded, to be sure. Buying a house and then moving is an easy way to undo years of savings, as you found. The majority of foreclosures in the crash came from people with ordinary mortgages, not risky ones.
posted by wnissen at 3:04 PM on November 30, 2017 [1 favorite]
But they do buy houses. You can't get out of the house payment by changing jobs and forgetting to set up your 401(k) contributions. The return, on average isn't great, but particularly in California there are plenty of people who would never save a million dollars in a retirement account but are sitting on houses that are yielding far, far more in free rent and tax subsides than they would ever be able to draw from their cash savings. The extreme illiquidity of real estate is actually an advantage, because if it were sitting in an account it would get spent. When you add in the restrictive zoning that's the rule in many desirable areas, it really becomes somewhat foolish for a certain type of person not to buy the biggest house they can afford to own. Because if you save like most people, rent will continue to increase at or above inflation and you will not have enough income to stay in the area. The house may be a risky, expensive asset with poor returns that's hard to tap, but it's also a forced savings plan, and a lot of the time that is better than the alternative.
Your hard-won skepticism is well-founded, to be sure. Buying a house and then moving is an easy way to undo years of savings, as you found. The majority of foreclosures in the crash came from people with ordinary mortgages, not risky ones.
posted by wnissen at 3:04 PM on November 30, 2017 [1 favorite]
Lots of good arguments above. It's particularly worth noting that buying is often much more irreversible than renting, and has a lot more initial costs - thus you need access to capital.
Everyone talks about "throwing money away" with rent. This is not exactly true unless you are independently wealthy and can buy a house outright, you have two choices
You Rent the Money or You Rent the Space
However, if you get fixed-term, long length mortgage and have good credit, the cost of renting of money is often cheaper than renting the space.
Also, because the mortgage rate is fixed, your MAJOR cost is fixed. If you live in a major metropolitan area, then rent increases can cripple you, or landlords can decide just to not renew....and then you're subject to the whims of an often hot or competitive rental market.
Other costs are maintenance -which can be potentially crushing for a house, but if you buy a good,well-managed condo or co-op, those costs are mitigated by sharing the risk with other apartment dwellers. Maintenance costs (usually wrapped into "co-op/hoa/tax" or assessment fees) can increase but there are many more cases of capricious rent increase than capricious raises in these fees.
So, aside from "ownership, making it 'mine' and equity" - usually the most cited reasons for buying, the main reason why we bought a co-op was to avoid crazy rent increases or the whims of landlords while minimizing our exposure to crushing maintenance costs of ownership.
posted by lalochezia at 3:12 AM on December 1, 2017 [1 favorite]
Everyone talks about "throwing money away" with rent. This is not exactly true unless you are independently wealthy and can buy a house outright, you have two choices
You Rent the Money or You Rent the Space
However, if you get fixed-term, long length mortgage and have good credit, the cost of renting of money is often cheaper than renting the space.
Also, because the mortgage rate is fixed, your MAJOR cost is fixed. If you live in a major metropolitan area, then rent increases can cripple you, or landlords can decide just to not renew....and then you're subject to the whims of an often hot or competitive rental market.
Other costs are maintenance -which can be potentially crushing for a house, but if you buy a good,well-managed condo or co-op, those costs are mitigated by sharing the risk with other apartment dwellers. Maintenance costs (usually wrapped into "co-op/hoa/tax" or assessment fees) can increase but there are many more cases of capricious rent increase than capricious raises in these fees.
So, aside from "ownership, making it 'mine' and equity" - usually the most cited reasons for buying, the main reason why we bought a co-op was to avoid crazy rent increases or the whims of landlords while minimizing our exposure to crushing maintenance costs of ownership.
posted by lalochezia at 3:12 AM on December 1, 2017 [1 favorite]
For obscure reasons I was recently looking at the Wikipedia page for the concept "ontological security", defined as "a stable mental state derived from a sense of continuity in regard to the events in one's life" and "a sense of order and continuity in regard to an individual's experiences".
The page refers to an article called "Ontological Security and Psycho-Social Benefits from the Home: Qualitative Evidence on Issues of Tenure" in the journal Housing, Theory and Society with the following quote:
posted by mbrock at 8:59 AM on December 2, 2017 [2 favorites]
The page refers to an article called "Ontological Security and Psycho-Social Benefits from the Home: Qualitative Evidence on Issues of Tenure" in the journal Housing, Theory and Society with the following quote:
It has been said that people need the confidence, continuity and trust in the world which comprise ontological security in order to lead happy and fulfilled lives, and furthermore that ontological security can be attained more through owner occupied than rented housing.The abstract of the paper sounds a bit more nuanced, but the general idea resonates with me.
posted by mbrock at 8:59 AM on December 2, 2017 [2 favorites]
This thread is closed to new comments.
It was also true for a long time that the value of most housing appreciated, so one made a profit when one sold. This is less true, but still often true, now. If you don't think this is true for your neighborhood, you might not want to take the risk, but even a small loss at sale might be worth the advantages I listed above, over time.
Anecdata: I have bought seven and sold six domiciles in Texas, New Jersey, New York and Maryland. I made a profit (albeit tiny in one case) on all but one of these, and even on that one the loss was offset over time. I am also a lot older than you, so YMMV.
posted by ubiquity at 10:06 AM on November 29, 2017 [5 favorites]