Was Anyone Else As Stupid As Us (and probably 1/2 of my neighbors)

[DLgal]

I think it's always better to own than to throw money into something you'll never get back. You just have to be smart about what you buy and don't get in over your head. As much as we have spent on interest and upkeep we would still get every penny back and then some if we sold today. You can't say that if you rent.

And then where would you live?

At the end of the day, you have to pay to live somewhere.

You're also not accounting for the time value of money or inflation.

 

[DCLMP]

And then where would you live?

At the end of the day, you have to pay to live somewhere.

You're also not accounting for the time value of money or inflation.

Where would I live if I sold my house. I’d buy another one. I’m not sure what value there is in renting. My kids will hopefully inherit whatever property we own when we die.

 

[georgina]

Not everyone is cut out for home ownership. My 31 year old DS in the Seattle area will probably always be a renter, he has no interest in home ownership. His rent is roughly 1/3 of his take home pay, but he has no car and very few other expenses. Younger DD (28) in SF has made noises about buying a house with friends, which gives me some concern. She has a lot of stock and stock options in her tech company. Older DD and her DH have a house in Washington DC. All my kids (and us) live in high cost areas!

We just leased a car for the first time, it is an EV and we decided a lease for 3 years was a good option based on the evolving state of EV technology. I feel the same way as some here, leasing is like renting in that you have nothing at the end to show for it.

 

[DCLMP]

Not everyone is cut out for home ownership. My 31 year old DS in the Seattle area will probably always be a renter, he has no interest in home ownership. His rent is roughly 1/3 of his take home pay, but he has no car and very few other expenses. Younger DD (28) in SF has made noises about buying a house with friends, which gives me some concern. She has a lot of stock and stock options in her tech company. Older DD and her DH have a house in Washington DC. All my kids (and us) live in high cost areas!

We just leased a car for the first time, it is an EV and we decided a lease for 3 years was a good option based on the evolving state of EV technology. I feel the same way as some here, leasing is like renting in that you have nothing at the end to show for it.

We’ll cars always depreciate and housing usually appreciates. At least you get a brand new car every three years.

 

[DLgal]

Not everyone is cut out for home ownership. My 31 year old DS in the Seattle area will probably always be a renter, he has no interest in home ownership. His rent is roughly 1/3 of his take home pay, but he has no car and very few other expenses. Younger DD (28) in SF has made noises about buying a house with friends, which gives me some concern. She has a lot of stock and stock options in her tech company. Older DD and her DH have a house in Washington DC. All my kids (and us) live in high cost areas!

We just leased a car for the first time, it is an EV and we decided a lease for 3 years was a good option based on the evolving state of EV technology. I feel the same way as some here, leasing is like renting in that you have nothing at the end to show for it.

But you got the use of a car for less than what it would cost to purchase it, and you turned it in before maintenance began to become another expense.

Renting is simply paying a fee for use. That's what you are getting. The use of something.

A house is perpetually requiring money outlay, regardless. Unless you literally own the land under and are not subject to taxes of any kind, you are forever paying for the use of that house in some way.

When you mortgage a house, you are leasing it from the bank until you own it outright, and paying handsomely in interest for that, I might add.

Renting has been vilified for so long in this country that people really honestly believe the myth that it is always worse than buying a home. In fact, it can be far more lucrative financially to rent, and far less stressful as well. Renting was the norm here until after WW2, when the suburban flight happened because companies suddenly needed workers out in the boonies. They dangled home ownership as a perk to leaving the city centers. And marketed it as the "American Dream", and convinced everyone that it should be their ultimate goal. It was nothing more than a recruitment tool.

 

[auralia]

While we are not in this situation be put down a contract in a new neighborhood right before covid for a house that wasn’t finished until 6 months into covid. They had to honor the contracted price. Our house now sells for 120k more than we paid for a new one like it and ours has many more upgrades. The big one is the new version has a much downgraded kitchen that eliminated a 25,000 island and table built in. Also we have a lot with just one neighbor and no one behind us, closest to the pool, walking path starts just next to our house. Mostly flat lot. Our interest rate is 2.6 percent…… anyone that bought our house or similar in the last year paid 120,000 more for much less house and interest rates are more than double or ARM. I couldn’t afford my house at todays rates and I anyone buying now I’m afraid will be under water or house poor unless they are quite wealthy. We are in the top 15% of earners in our state and couldn’t afford todays prices. Price per square foot before covid was about 110$ and now is about 145$

 

[DCLMP]

No one is vilifying renting, but there is a lot of money to be made in real estate. You are not preserving wealth by renting.

 

[ruadisneyfan2]

All you have to do to realize what a scam the real estate industry is is read any of the numerous articles written every week with a version of this same headline:

"Now is the best time to buy a house"

Like, really? Are you sure about that? In what universe?

And then when you read it, it says all these things:

1. Interest rates are actually not that high, historically.

-True, but home prices were ALSO never this high.

2. Home prices will continue to go up.

-FALSE...home prices don't always go up. They are going down in many areas right now.

3. Buying a home is the best way to create generational wealth.

-Again, false...that's a complete myth, based on how long the average person keeps a home before selling it.

4. It's better to build equity than pay your landlord's mortgage.

-This one doesn't take into account the VAST differential in rental prices vs. Monthly cost to own a home in the majority of the population centers in America. Also, this entire argument makes no sense. Do you say the same thing about dining in a restaurant? By doing that, you're just paying the restaurant owners lease, aren't you? So why is that okay? Paying rent is paying for a service: shelter plus all the trouble free repairs and maintenance. You aren't getting nothing for your money. In fact, you're getting flexibility with a fixed monthly cost with no surprises. Your rent is the maximum you will pay monthly. Your mortgage is the minimum you will pay monthly.

I think this argument really varies depending on where you live. Based on what you have described many times, where you live in CA is extremely expensive to buy anything and you have a very kind landlord who isn't trying to earn top dollar for her rental property, as most would. Not everywhere in the country is this way.

I believe homeownership isn't for everyone. My niece is in her mid 30s, single, and rents an apartment. I wouldn't try to convince her in a million years that buying a home is better for her. She also complains about her AC not working very well but how the maintenance guy for the apt complex doesn't do much about it. She isn't going to replace it because it isn't hers to replace so that's the trade off. She also can't turn the heat on until heat is officially turned on for the complex. That lack of responsibility for the property cuts both ways and also means lack of freedom of choice. You get what you get and if you don't like it, you have to move.

We are lucky that dh is extremely handy and can do maintenance and upgrades on just about everything on a home except concrete & roofing. He always says to own a home one should be either very handy of have plenty of money to pay others for the maintenance. People who don't fit into either of those categories should consider a condo or something similar that is very low maintenance if they really wanted to own.

I had a little chuckle at your restaurant analogy because we rarely go out to eat either. It costs a whole lot more than cooking at home. We go out to eat for special occasions such as birthdays, anniversaries, or a rare occasion when dh is working a lot of OT and just doesn't feel like cooking.

Who on earth says now is a good time to buy? Was this a TV commercial?

 

[DCLMP]

While we are not in this situation be put down a contract in a new neighborhood right before covid for a house that wasn’t finished until 6 months into covid. They had to honor the contracted price. Our house now sells for 120k more than we paid for a new one like it and ours has many more upgrades. The big one is the new version has a much downgraded kitchen that eliminated a 25,000 island and table built in. Also we have a lot with just one neighbor and no one behind us, closest to the pool, walking path starts just next to our house. Mostly flat lot. Our interest rate is 2.6 percent…… anyone that bought our house or similar in the last year paid 120,000 more for much less house and interest rates are more than double or ARM. I couldn’t afford my house at todays rates and I anyone buying now I’m afraid will be under water or house poor unless they are quite wealthy. We are in the top 15% of earners in our state and couldn’t afford todays prices. Price per square foot before covid was about 110$ and now is about 145$

Our mortgage has been at 800 dollars a month for 20 years. We haven't made an effort to pay it off early because it's so cheap. We could easily rent our house out for 2500-2700. It's something we might do if we move to Florida.

Anyone buying our house with 20% down would be paying 2700 a month. We could afford it but we wouldn't be spending 20k a year traveling. A lot of people are just working to pay a mortgage. We've been fortunate we've never been in that boat.

 

[ruadisneyfan2]

No one is vilifying renting, but there is a lot of money to be made in real estate. You are not preserving wealth by renting.

Yes! Friends of ours with a business buy properties quite frequently and rent them out. Beside the home they live in, they have multiple single homes locally they rent out. They also have a house at the shore and multiple rental properties at the shore. Now they started buying in FL during the pandemic and rent that out short term when they're not using it.

He is good at managing all of this stuff in addition to starting his business and running it. It's also a risk to take on but when they're gone, their kids will have plenty to inherit.

 

[ruadisneyfan2]

We could afford it but we wouldn't be spending 20k a year traveling. A lot of people are just working to pay a mortgage. We've been fortunate we've never been in that boat.

This is us. We could afford to buy our home in today's prices but we wouldn't be able to travel like we do, or save like we do now. We have been in that boat where we were just getting by but gradually things got easier. Salaries increase. The kids no longer attended daycare or camp. Now they're working young adults. They buy their own clothes & toys. The house is paid off.

 

[barkley]

Who on earth says now is a good time to buy? Was this a TV commercial?

i'm not hearing this either-quite the opposite. granted, i no longer live in close proximity to multiple brick and mortar real estate companies that are weekly littering my front porch with gifts attached to handwritten notes trying to entice us to list with them as happend to us constantly during '05 and '06 but i get almost daily mailers and texts and voice mails saying now is the time to sell (or if it's from a financial institution that it's the time to take advantage of my home's 'current value' and to take a home equity loan).

 

[DCLMP]

I

i'm not hearing this either-quite the opposite. granted, i no longer live in close proximity to multiple brick and mortar real estate companies that are weekly littering my front porch with gifts attached to handwritten notes trying to entice us to list with them as happend to us constantly during '05 and '06 but i get almost daily mailers and texts and voice mails saying now is the time to sell (or if it's from a financial institution that it's the time to take advantage of my home's 'current value' and to take a home equity loan).

Salespeople are always going to sell. Can you blame them? They gotta eat too.

 

[barkley]

I

Salespeople are always going to sell. Can you blame them? They gotta eat too.

i get that, it's just a trip to our mailbox has been so reminiscent of '05 and '06 down to the reappearance of time share offerings.

 

[DCLMP]

This is us. We could afford to buy our home in today's prices but we wouldn't be able to travel like we do, or save like we do now. We have been in that boat where we were just getting by but gradually things got easier. Salaries increase. The kids no longer attended daycare or camp. Now they're working young adults. They buy their own clothes & toys. The house is paid off.

I think we've all been there. When my kids were little and we were living off one salary. We were scraping by even with an 800-dollar mortgage. Like you said salaries increase, mom(me) starts working again, kids get more independent and life gets easier. That's how it should be.

I cut down to part-time two years ago and now I'm going back full-time. I'm trying to help kids with college expenses, cost of everything is going up, and call me crazy, but I still want to travel. If it wasn't for the inflation I think I could still manage all this working part-time, but nooo.... so back to work I go.

 

[ruadisneyfan2]

I think we've all been there. When my kids were little and we were living off one salary. We were scraping by even with an 800-dollar mortgage. Like you said salaries increase, mom(me) starts working again, kids get more independent and life gets easier. That's how it should be.

I cut down to part-time two years ago and now I'm going back full-time. I'm trying to help kids with college expenses, cost of everything is going up, and call me crazy, but I still want to travel. If it wasn't for the inflation I think I could still manage all this working part-time, but nooo.... so back to work I go.

One of my coworkes did the same for her kids. She's been PT for years but now needed more income to help with college.
I have around 9 years left until I'm eligible for Medicare. I'd like those last 4-5 years to be part time. It seems like it would be a nice compromise between having income and still having extra time to care for myself, exercise, and have a more robust social life than what I currently have time to do.
Life is short. No one ever looks back on their life saying, "If only I had spent more time at work."

 

[gottalovepluto]

I think it's always better to own than to throw money into something you'll never get back.

Absolutely not. What you own matters because a house can be a far, FAR deeper money pit than a rental. In a rental you’re out your rent. In a house you can be out tens of thousands of dollars if you bought a lousy house just fixing all the crap that breaks, and you lose about 10% straight up off the price you paid for the house in commissions and misc fees between your purchase and sale of the house and of course there is the cost of maintenance. Which most people underestimate. In my neighborhood in CA you can drive around and see what houses were recently bought because their yards look like crap. They bought great houses- but they stretched so far they can’t even afford the gardening to keep it up. I shudder to think what differed maintenance is piling up inside the houses.

 

[DCLMP]

Absolutely not. What you own matters because a house can be a far, FAR deeper money pit than a rental. In a rental you’re out your rent. In a house you can be out tens of thousands of dollars if you bought a lousy house just fixing all the crap that breaks, and you lose about 10% straight up off the price you paid for the house in commissions and misc fees between your purchase and sale of the house and of course there is the cost of maintenance. Which most people underestimate. In my neighborhood in CA you can drive around and see what houses were recently bought because their yards look like crap. They bought great houses- but they stretched so far they can’t even afford the gardening to keep it up. I shudder to think what differed maintenance is piling up inside the houses.

I agree that’s a stretch. I’m not sure why that’s make renting a better investments.

 

[SleepyDeb]

Could be worse.
1. When we were first married and thinking of buying a house, mortgages were running at about 14.5% and house prices were doubling every 12 months in our area. (We didn't buy at that point.)
2. Some one I know bought a house with a 5 year balloon payment. I.e., nice low rate with the balance of the mortgage due in 5 years all at once, thereby allowing them to buy a house that was out of their price range. The intent was that they would refinance in 5 years. These were possibly the most financially irresponsibly people I've ever known and, despite making a nice income, were always living pay check to pay check. It was a disaster I knew would happen from the day they told me about their "creative" solution. They didn't lose the house, but it was really close.

Bear in mine that there's likely to be a ton of houses in your neighborhood for sale in 5 years, thereby reducing the sale price. If you need to sell, you're going to want to be one of the first to do so, not one of the last.

 

[ruadisneyfan2]

Could be worse.
1. When we were first married and thinking of buying a house, mortgages were running at about 14.5% and house prices were doubling every 12 months in our area. (We didn't buy at that point.)
2. Some one I know bought a house with a 5 year balloon payment. I.e., nice low rate with the balance of the mortgage due in 5 years all at once, thereby allowing them to buy a house that was out of their price range. The intent was that they would refinance in 5 years. These were possibly the most financially irresponsibly people I've ever known and, despite making a nice income, were always living pay check to pay check. It was a disaster I knew would happen from the day they told me about their "creative" solution. They didn't lose the house, but it was really close.

Bear in mine that there's likely to be a ton of houses in your neighborhood for sale in 5 years, thereby reducing the sale price. If you need to sell, you're going to want to be one of the first to do so, not one of the last.

I remember my dad telling me while I was in HS about balloon payments regarding a friend/coworker. How it's all great until the 5 year mark, but then what? These loans sound predatory and should be illegal. I think they're only good if somone knows they'll only be living somewhere for a couple of years and they're pretty sure they'll make money off the sale. That's too many what ifs for my comfort level. We had a fixed rate 30 year in the beginning and a few years later refinanced with a 15 year. We thought that was risky enough.