this post was submitted on 04 Sep 2023
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Threw down over 20k in fixes so far in our first year of homeownership, and due to interest rates and closing costs, we don't really have the opportunity to move anywhere else without taking a significant financial hit.
You bet it's not for everyone.
Yeah but you know what, you always have a home. It is very unlikely the bank will ever foreclose on you, they rarely do that, even in 2008 almost nobody lost their homes.
But me, I lose my home on my landlords whim. At any given time I may have just 30 days to pack my life up and fuck off, and there's nothing I can do about it.
You have stable permanent shelter. Don't undervalue that just because you have to maintain it.
Um, you have rights depending on your country of I’m not mistaken
Rights that allow me just 30 days to pack up and leave.
Right now the news in my area is rife with "renovictions" and landlords kicking people to "move family in" but they never have to give any proof of those things. There is regulation, but there is no enforcement.
That certainly sucks. Can you sue for wrongful eviction? I know that's a thing where I'm at.
Definitely not undervaluing it, however it's worth pointing out that 20k is over a years worth of rent for a similar property where I'm at.
Are you renting month to month? Typically where I'm from you sign 1 year long rental agreements, so that is surprising to hear. Additionally, in some states, if the tenant has been living in a location for over a year, the owner has to give two months notice.
At the end of the day, being financially locked down to a location vs having a "permanent" home, as well as having the opportunity to move wherever you want vs having no permanent home are two sides of the same coins.
You don't have the opportunity to move where you want when you're paying 50% or more of your takehome on rent. As an owner you have way more opportunity because you have equity you can leverage if you want to move. Renters have no equity.
It is the furthest thing from two sides of the same coin.
That sounds like an income vs cost of living issue to me. It wouldn't really be feasible to move until many, many years in if you were making mortgage payments of 50% or more of your takehome.
Ngl in this imagined scenario where shelter is taking up 50% of your income, you're kinda fucked regardless of renting or owning. There's no way you'd be able to save enough money to replace the roof (25k?) Replace aging sewer pipes (9k to reline, maybe 15k to replace?) Or replace the windows (haven't gotten quotes for this yet, but I'm dreading it). You'll have to get financing for those fixes, so that's even more interest.
However if you get a better job elsewhere, it is far easier to take advantage of that opportunity if you rent.
You have no equity when renting, but you also haven't spent a cent on maintenance, and you don't have to deal with closing costs, taxes, and whatnot.
Imagined? Man, fuck you
Again. This sounds like more of an income vs cost of living issue than a renting vs owning issue.
Shelter taking up more than half your take home income is a rough place to be. If that's what you're going through I hope you're able to get into a better situation soon. Nothing much else to say, just the well wishes of a stranger on the Internet.
No because if I owned a home I would have equity. Spending 50% of your income on shelter is a lot easier to swallow if you're getting equity out of the deal.
If you're renting, you get fuck nothing, even though you're still spending money.
Out of a 2k+ monthly payment, $400 goes towards paying down the principal.
You know how much equity I'd have after 1 year? Less than 5k.
You know how much closing costs would be if I sold? Up to 32-40k.
I'd need about 8 years of living in the house to build enough equity to just break even when selling
This is of course not factoring in a single expensive maintenance item. New roof, new sewer pipes, new HVAC, new water heater will run you ballpark of 50k in maintenance costs, and those are just the big ticket items. Throw those in, and you wouldn't even break even moving after living somewhere for a decade.
If you're young and still establishing your career, it's better to have the ability to pursue better job opportunities across the country while renting. In my industry it's common for folks to find new, higher paying jobs every 3-5 years. Based on my assumptions made, if I move before 8 years, I'd have paid more owning a home than renting due to closing costs.
EDIT: This also doesn't factor in the closing costs you've paid as a buyer. I THINK mine were around 10k? I'll have to check. Google says average rates are between 3-6% of the loan amount so 10k is probably right. So add another 1-2 years before breaking even.
This is all assuming the value of your home doesn't change at all over time, which is an utterly retarded assumption.
The reality is if you bought at least 3 years ago, it's likely the value of your home has doubled already, putting your equity equal to your debt, without even accounting for mortgage payments in the meantime.
Oh you might also be interested to know that less-than-5k figure is about equivalent to what I can save every year as a renter. Except that's just my rainy day fund and it gets spent on extraneous costs and I hardly actually save anything at all.
So you're sitting pretty over there, despite your whining.
And if I didn't? Given the absolutely asinine bubble causing the cost of housing increase over the last three years, alongside the spike in interest rates, can you honestly say the value of a home will keep going up? Fwiw the estimated price of my place has dropped 20% since I bought it. I don't think this bubble is sustainable. The cost of rent has risen absurdly with no real cause.
Yeah that's fair. As I said earlier, I hope you're able to advance or switch your career to get to a better place. Many of my friends got jobs at the local uni to leverage the tuition assistance towards a practical degree to work towards a career change/advancement, and there's also the trades if you're able-bodied enough.
Then you still have a home which will almost certainly never be taken away from you.
And renters are still at the mercy of the landlord.
It's nice to come full circle like this in a discussion, it really helps to hammer my point home.
If you're going to ignore everything I said about being able to move within a decade for better job opportunities, sure.
I'm ignoring it because it was wrong.
I'm sorry if it's not true for your situation.
I don't think this is a constructive conversation, so I don't see a point in continuing. Hope you have a good day!