Housing Costs

HydroSqueegee said:
i meant that 1500 is ALL of our bills. Not just electric and gas. Gas can range from $5 to $180, and electric goes from $40-$100 depending on the season.
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that's fucking awesome.

i'm loving the discussion guys. db you're definitely right that renting, even renting a house, can come out cheaper than owning. I read a story somewhere about a guy in Dallas who was pissed because his property taxes kept going up. He ran the numbers and found out he could rent a similar house for significantly less than he was paying to own one. He sold the house and moved. That's not always the case though. You've left the intangibles out of your calculations. No neighbours on the other side of the wall, the freedom to remodel if you want, a two-car garage and workshop, a private yard etc.
 
i think the real benefit of owning vs. renting is in establishing credit and reputation for yourself. that's where the true value is, i think. when people refer to renting as throwing money away, i think it is more referring to establishing a financial history for yourself. when you invest your money into your house, you can establish equity and all that good stuff.
 
When you own a home and make payments on it THEN sell it you are getting what you invested into back and you can put that towards another house. You just got a majority of you money back that you would never see when you rent.

How in the hell is renting cheaper if you own a house and sell it?
 
dbzeag said:
I was doing some number crunching because I don't feel like working today:

For the community of Lakewood, OH. A safe suburb of Cleveland with solid schools and community activities.

The average vacant house price is $122500.

The average vacant apartment rent is $524 a month.

Ignoring utilities and rent inflation or housing inflation, I found this out.

The cost of the house using a 30-year fixed mortgage (because 76% of lakewood has a mortgage) with 20% down using the cheapest rate in the city available and using the average property tax of $2186 the calculations work like this:

24500 (down payment) + 111258.56 (interest) + 98000 (loan amount) + 4043 (closing costs) = $237801.56. This is the sheer cost of the house without accounting for inflation. After 30 years of payment, no repairs are done to this, no utlilties paid on this, no home owners growth in the area.

The apartment costs look like this:

524 (monthly rent) * 12 (months) * 30 (years) = $188640 This is the sheer cost of the apartment during the same 30 year span. No cost increases, no utilities.

Right there from the bottom line you are saving $49161.56 by renting and not buying.

If you did it another way, the average mortgage for a house in Lakewood is $581.27. The average rent in Lakewood is again $524. Putting the difference in an ING account at 4.5% will yield $42739 after the 30 years. That does not roll up the costing costs either. Rolling in the closing costs at the start and saving monthly the difference, you would have $57881 at the end of 30 years.

I couldn't find any information on average utility bills for Lakewood, but the average age for a home in Lakewood is older than 70 years. Heating bills (90% of the city uses gas heating) will be high. There is also no landlord to take care of repairs when buying a house.

Something to take into account is that home price gain averages about 1.6% in Lakewood. That means the same home will be worth about $197218 at the end of 30 years.
That is a difference of $74718 from starting costs of the house value. Taking off from the bottom line of renting, that would be the house would be worth $25556.44 over renting.

So in conclusion, if you bought a house in a decent neighborhood (in northern Ohio), it would save you $25556 over the 30 years to buy a house, assuming no repairs or utility bills.

I maintain again you don't really lose that much renting.
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I don't know about you, but I've never heard of apartment rent not changing for 30 years. Nevermind, I just saw where you said where you were ignoring that. Why would you calculate the financial benefits of renting while deliberately ignoring certain fluctuations? Doesn't that make the entire thing completely irrelevant?

But anyway, the benefits of home ownership aren't simply financial, though with equity loans, equity releases, tax writeoffs, etc. it can be very beneficial. The main lure of home ownership is freedom. You have no freedom in an apartment. The owner can enter your home whenever they wish, you can't remodel or renovate if you wish, you may not even be able to purchase a certain kind of pet.
 
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When you rent you are subject to the desires of your current landord OR the new scummy one he sells your place to. Buying outweighs renting 3 to 1, just based on the aggravation factor alone.

You can't do what you want (ie painting, redecorating, renovating) to a rental property without paying hefty fines (ie losing your security deposit, plus some in some cases, depending on what you did) or doing a lot of work to restore it to it's original condition. And if you add any kitchen hardware, ceiling fans/light fixtures, or bathroom hardware it becomes the property of your landord as soon as you install it (ules you keep all the old crap and put it back, which reverts back to all the work restoring to original condition, plus you having to find somewhere to store it).

If you are in an apartment you have to deal with noisy neighbors, broken appliances, rent raises, renovations at early hours, new landords, dimishment of property value, having to park your car next to Jimmy the door dinger, having to fight for a parking spot close so you don't have to tote groceries a city block w/your 18mo old in tow because Jimmy decided to throw a super bowl party and invite 30 people over and they took all the good spots.

You can have your lawn look like you want it, and not have Jimmy's 3yr old daughters playschool car, roller skates, barbie doll parts, and crayons scattered across your door stoop after he had her for the weekend and didn't care to pick up after her.

You can have a gas grill anywhere on your property you like (ie you aren't restricted by close living ordinances like a lot of apartments). Heck you can even build a bbq pit if you so choose. You can plant a tree, or have a garden, or work on your car in your driveway if you choose to.

Money aside, owning your own home is by far the more logical choice. It's your's to do with as you please, when you want, as you want. You don't have to worry about bothering your neighbors by making small noises (like banging on the wall while hanging a picture at midnight if you choose, renovating at any hour you decide/have time to, or have your buddies over watching a ballgame).

Convience, peace of mind, and less stress outweigh money for me everytime.

That and in 10 yrs, 20 yrs, 30 yrs .. you have no idea what your home will be worth. Areas change and prices fluxz, usually up. Most don't go down. FL is only going down because of recent hurricane activity and people are scared.
 
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For the past 10 years, Lakewood has been a consistant 1.6% rise in home value. I say that's very flat.

I personally have never had an issue renting. Every place I have been in allows you to paint walls. Most allowed small pets (most with a fee of course). Having people around you in a high rise is actually a good thing because it is more social and your heat bills (if you have to pay for that) are cheaper. High rises usually have amenities as well like gym or pool that most homes don't have.

I guess I am just frustrated with the blind argument "buying is better than renting". I don't think it is financially. And I can argue other factors for it as well.
 
dbzeag said:
For the past 10 years, Lakewood has been a consistant 1.6% rise in home value. I say that's very flat.

I personally have never had an issue renting. Every place I have been in allows you to paint walls. Most allowed small pets (most with a fee of course). Having people around you in a high rise is actually a good thing because it is more social and your heat bills (if you have to pay for that) are cheaper. High rises usually have amenities as well like gym or pool that most homes don't have.

I guess I am just frustrated with the blind argument "buying is better than renting". I don't think it is financially. And I can argue other factors for it as well.
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Again, 30 years from now your rent will be exponentially more than it is now. You can't just ignore that, especially when trying to prove a point that financially it can make much more sense to rent.
 
Yep, I enjoy swimming/laying out at a residential size pool with 35 other people, plus their 10 kids.

I also enjoy using their gym equipment that no one ever disinfects, like they do at a major health club.

I also enjoy being told what size dog I can own, plus pay them a hefty fee on top of what I paid for the dog. PLus having to sidestep to get around everyone elses poop they leave lying all over the place while I'm trying to walk my dog.

I'll rent a house, but it'd have to be one nifty ass apartment w/ so many ammenities that my eyes would roll back into my head to get me in one of those again :lol:.
 
April23 said:
When you own a home and make payments on it THEN sell it you are getting what you invested into back and you can put that towards another house. You just got a majority of you money back that you would never see when you rent.

How in the hell is renting cheaper if you own a house and sell it?
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it'll either depreciate or require paid maintenance, e.g. replace a/c, water heater, upgrade appliances, paint, landscape, replace deck etc. plus property taxes and insruance are never returned through a sale. If your property taxes are bad enough it can work out to be more expensive than renting. It's rare for it to be more, but it's totally possible, and owning isn't as big a benefit as most people think. One big bonus is the tax writeoff.
 
Sarcasmo said:
Again, 30 years from now your rent will be exponentially more than it is now. You can't just ignore that, especially when trying to prove a point that financially it can make much more sense to rent.
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Exactly. For the most part rent/mortgage costs are usually similar. What you get with a house is insulation. If you choose a 30 year fixed, the rent will NEVER go up.
 
dbzeag said:
For the past 10 years, Lakewood has been a consistant 1.6% rise in home value. I say that's very flat.

I personally have never had an issue renting. Every place I have been in allows you to paint walls. Most allowed small pets (most with a fee of course). Having people around you in a high rise is actually a good thing because it is more social and your heat bills (if you have to pay for that) are cheaper. High rises usually have amenities as well like gym or pool that most homes don't have.

I guess I am just frustrated with the blind argument "buying is better than renting". I don't think it is financially. And I can argue other factors for it as well.
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it's a lifestyle decision also. you're talking about highrise living and everyone else is talking about a single family home. what's not being addressed is that you can buy condos and you can rent houses. if you like highrise living you should compare the cost of buying a condo in a highrise to the cost of renting in one. plug in all the numbers for your area and see which comes out on top. (assuming highrise condos are available in your area)
 
fly said:
Exactly. For the most part rent/mortgage costs are usually similar. What you get with a house is insulation. If you choose a 30 year fixed, the rent will NEVER go up.
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property taxes increase. so can insurance costs.
 
Sarcasmo said:
Again, 30 years from now your rent will be exponentially more than it is now. You can't just ignore that, especially when trying to prove a point that financially it can make much more sense to rent.
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i don't think it would be exponentially more. wouldn't it be linearly or geometrically more?
 
Jonny_B said:
it'll either depreciate or require paid maintenance, e.g. replace a/c, water heater, upgrade appliances, paint, landscape, replace deck etc. plus property taxes and insurance are never returned through a sale. If your property taxes are bad enough it can work out to be more expensive than renting. It's rare for it to be more, but it's totally possible, and owning isn't as big a benefit as most people think. One big bonus is the tax writeoff.
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Certain improvements can definitely boost a home's value, including elements of landscaping. My folks bought theirs for $180k in 1990, and today it's worth about $450k. Of that appreciation, tens of thousands lie in the landscaping and exterior management of the home. You just have to be smart about what you do. And of course the house is yours and/or your benefactors forever, with a finite mortgage, whereas you'll be paying increasing rent forever in an apartment.

Of course in some areas and lifestyles it makes more sense to rent. Everyone knows that. Honestly, who didn't already know that?
 
dbzeag, even if all the math you did didn't leave out several important factors I can see your point. It sucks to buy a house in Cleveland, OH. Actually, I believe it sucks to buy a house in Ohio period. Anyone wanna buy a house in Ohio? I have one. It's nice. Only 2 years old.

Anyway, here in Maryland IBWIP bought a condo for 89K about 6 years ago. We have replaced the windows and done some work to the bathroom. It probably cost around 15k to do all that. At this point we have probably spent about 22K in interest on the place (which I might add has all been tax deductible). Our condo association fees have cost us about 22K. So total we are looking at about 148k for our condo. The estimated market value of our condo right now is about 225k. I'm not sure how we've lost out here. We get to borrow against the equity if we want. We have a place to live that we can do whatever we want with. According to some, we live in one of the top 10 most desirable places to live in this country.

If we rented in this community our rent would be about $1500 a month for a comparable place. Over 6 years that's 108K. We would have absolutely nothing to show for that right now. I think we are incredibly lucky and we have not wasted any money or time.
 
Jonny_B said:
it's a lifestyle decision also. you're talking about highrise living and everyone else is talking about a single family home. what's not being addressed is that you can buy condos and you can rent houses. if you like highrise living you should compare the cost of buying a condo in a highrise to the cost of renting in one. plug in all the numbers for your area and see which comes out on top. (assuming highrise condos are available in your area)
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Actually ya'll are lookin at it wrong.

Think of buying in terms of a savings account... it's all about what you can get OUT of your purchase at the end of a period of time, you weigh that against earned interest rates and that's how you figure whether it's better to rent or buy.

If you live in a flat market, you're not going to see much in terms of equity growth on your house, so you're better off with putting your money in a savings account, if you live in a hot market then the money you put into your house will actually gain value over time and you'll get a higher return on the sale of your house than a savings account.

You can live in a flat market and be pissing your money away on a mortgage just as much as you would rent.
 
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