What do you do? You sit in a house comfortably to ponder your future actions.
People who rent get kicked into the street to the searing heat or freezing cold and then they get criminalized for being homeless.
Not to diminish the woes of homeownership, but owning your own house already puts you in a tier of privilege that instantly disqualifies you from criticizing the people who are days away from sleeping in their car or under a bridge.
You don’t “sit in a house comfortably” if there’s water coming in, you’re potentially exposing yourself to mold as well.
Renters protection laws are the issue then, but it won’t make people financially able to own a house and having to spend money you don’t have on your house can make you end up on the street as well, the difference being that you will also have to go bankrupt in the process.
Bruh, lmao, my husband and I have been paying off new siding and new plumbing since October 2022. It’s costing us $2600/mon to live in a 3 bed/2 ba 1500 sqft home in a neighborhood that does not rate that much.
(To be clear, we had planned on the siding, the plumbing happened to be a surprise in the same month we were getting the siding done).
We also replaced all the windows & traded out the sliding back door for a French door in 2022 (pre plumbing fiasco. Also planned.)
In 2022 we spent $60K alone between those 3 projects. Over the years we’ve also done the roof/HVAC/Water Heater/Foundation, new flooring and new counter tops.
And now? We’ve just secured a rental and we’re selling this bitch. I’m so over home ownership. I’m over the saving and saving and saving and saving and saving for months only to have some $20K cost crop up out of nowhere and just wipe it all out. I’ll gladly pay someone more than the mortgage/property taxes to handle that shit, so I can put my savings away in a HYSA or something and not need it until worst-case scenario: our cars break.
HUGE PRIVILEGED DISCLAIMER: Were both active duty military, so we don’t have to worry about Healthcare costs wiping us out. YES, I wish that was available to everyone. YES, I vote for socialized medicine. Just wanted to throw it out there that I’m aware that others have concerns that I don’t have.
Most people here think that if renting magically went away, they could get a house and maintain it. From comments it seems also magical - almost like someone was to give a house to them the minute that renting was cut. Like, people will sell their houses and now there’s 50% of the population that needs to buy a home ASAP. The prices would get even more bonkers. After that temporary rise, nobody would build anymore - since it wouldn’t be profitable anymore to do that.
Not only that but some people just don’t want to own! We moved away while I was fully remote knowing full well that might be temporary, so what, I should have been forced to buy a house instead of renting? How would I have bought something else when needing to move back if the house I was forced to purchase didn’t sell quickly enough?
What’s funny as well is that home ownership to the level we’ve seen it since the 50s is an historical anomaly, even today there’s more home owners than there was 100 years ago so the people we see complaining are mostly people that wouldn’t be able to afford a house no matter what or that are young enough that it will just happen later on in their life or (based on what I’ve seen with many of my younger colleagues) that don’t want to start with what they’re actually able to purchase as a first home and instead want to start big and potentially never have to move again.
I mean, what I’d PREFERABLY like to see is a model like in large parts of Europe, where if you rent long enough, you are considered to own the apartment you’re normally renting. You still have to maintain it, but you do not have to necessarily pay rent (to my knowledge). I’d like to see more paths to owning your own space that is not necessarily a house - things like buying an apartment outright or a long-term lease that’s much harder to evict someone out of when you decide the rent needs to go up another $250.
It’s more that some homes will make the average person to bankrupt. Hell, even with rental units it’s not necessarily profitable to own. My friend calculated that he would be a million poorer after paying his mortgage if he bought a duplex and rented a unit instead of just continuing to rent and investing in an index fund.
Sounds like he’s not factoring in the money saved after the mortgage is done. I’ll be done in a little over a year then my housing costs drop to property tax and insurance. That’ll come to a little under 15% of what rentals in my neighborhood go for. Even with an aggressive withdrawal schedule an extra million wouldn’t make up the difference.
Edit: I also doubt his calculations. Maybe he’s not taking inflation into account? When I bought my house the mortgage, property tax, and insurance was a little more than renting a house in my neighborhood. Almost 19 years later, the mortgage is the same, the property tax has gone up about 25%, and the insurance has increased about 50%. Since the mortgage is the largest part by far my total costs have gone down significantly adjusted for inflation and they are only around 50% the cost of rent. Even counting maintenance and remodel costs I would have paid much more in rent over the years.
Edit 2: If I had invested my 5% down payment in the s&p in August 2005, with reinvested dividends, before taxes, it would only be 13.7% of my current home equity. Your boy’s math ain’t mathin’.
His math takes everything but a maintenance budget on the duplex into consideration so he’s underestimating his losses.
I’m talking taking the surplus he needs to pay for the duplex vs his rent and continuously investing it over the next 25 years even when taking the average rent increase into consideration, not just the downpayment.
Well then, he must be blessed to live somewhere with very reasonable rents, and generous rent control, if he thinks he can save money renting for 20-30 years instead of paying a fixed mortgage plus other expenses.
Like I said in my first edit, although my expenses started out a bit higher than rent for a comparable house, 19 years of rent increases while my mortgage stays the same means I’d have to move to a shoebox on meth street to pay less than my mortgage now.
And it still seems like he’s not taking into account having a paid off asset with negligible housing expenses after the mortgage is paid off. In the case of a duplex, a money generating asset.
He’s taking everything into account and comparing to what he would expect to have if he sold it once the mortgage was paid.
You’re not taking into account that if he keeps it it appreciates at a slower rate than the average market return and that in the other scenario he’s got close to two millions he’s making interest on instead of having only an asset worth about 1 million at that point and no savings.
Ever heard of compound interest? 500$ in savings per month at 24 y.o. gets you 1.5m at 65, the same savings at 30 gets you 900k at 65 and 400k if you start at 40…
Lol, yes I’m very well aware of these things. I don’t like dropping personal information breadcrumbs, and I don’t find appeal to authority arguments convincing anyway so I’m just going to have to leave it at “trust me bro.”
Outside of a few edge cases, like planning on moving every couple years for work, lifetime costs of renting dwarf lifetime ownership costs. Unless he’s comparing an expensive house to a small, cheap apartment. An apples to apples comparison isn’t even close. Even if month one he can save $500, that savings will shrink every year and eventually his rent will be more than the expenses of a neighbor that bought years ago and not only won’t he have an extra $500 to save, he’ll be saving even less than he was before.
My parents moved into a large home in a desirable neighborhood when I was six months old. When I went to college, my cheap one bedroom apartment in a city with similar costs of living was only about $25 (in 90s $) less than their mortgage, taxes, and insurance combined. A few years later their mortgage was paid and they’ve spent over two decades paying less for taxes and insurance than they do for utilities.
If that $500 savings continues for 41 years (it won’t, see above), an extra 1.5mm, even with a ballsy withdrawal rate, adjusted for inflation 41 years from now (your example), wouldn’t make up for that, not even close. Take inflation the other way: $500 today is the equivalent of a little less than $160 in 1983 which would give you less than 500k today using your growth numbers (this is leaving out a lot of important things, by the way, but I’m going with your example numbers to keep things simple for you.)
I don’t know why you’re so invested in “your friend” being so much smarter than every financial advisor, and frankly, this sounds like some “I didn’t want to buy a house anyway” copium from someone that can’t get their finances together enough to execute a plan, but on the off chance this “friend” is in a position to buy and they really think this, you should suggest they consult a professional for their own good.
Guess you’re a finance genius that doesn’t get an annual raise :)
Your parents have their house as their savings after 25 years, if they had rented and invested the difference instead, they would have money on the market, the difference being that the market returns 7%/annum long term while houses appreciate under 5%/annum long term and that’s the increase in value vs initial cost, it doesn’t take what was spent in taxes and maintenance over that period.
Actual return on investment from buying a house isn’t that great long term, you spend the majority of your profit, you just don’t realize it because when you sell it’s a huge check you get an at once.
What if someone just wants to have a place to live and doesn’t want to pour money into the global extraction machine that index funds are?
Also saving $500 a month?? Lots of people pay half their salary on rent and the rest on food and bills - good on your friend for having the privilege to afford that but like what are the rest of the population supposed to do?
First, the 500$ number is used for comparison sake, the point is that my friend getting 1m to dump in the market all at once in 25 years doesn’t beat him investing the difference between a mortgage on the average duplex vs the price of the average apartment where he’s at.
Second, if you’re two people renting an apartment together and are unable to save 500$ a month then I’m sorry to tell you that you wouldn’t be able to afford owning a house either.
Third, if you plan to retire someday then you should start making your plan while you’re young and start investing. Even if you don’t do it yourself because you’ve got a pension fund at work, that money is in the markets so you’re not escaping it. If you plan to work until you die then have fun with that. If you don’t invest, whatever you’re saving under your pillow is just losing value over time.
What do you do? You sit in a house comfortably to ponder your future actions.
People who rent get kicked into the street to the searing heat or freezing cold and then they get criminalized for being homeless.
Not to diminish the woes of homeownership, but owning your own house already puts you in a tier of privilege that instantly disqualifies you from criticizing the people who are days away from sleeping in their car or under a bridge.
You don’t “sit in a house comfortably” if there’s water coming in, you’re potentially exposing yourself to mold as well.
Renters protection laws are the issue then, but it won’t make people financially able to own a house and having to spend money you don’t have on your house can make you end up on the street as well, the difference being that you will also have to go bankrupt in the process.
deleted by creator
Bruh, lmao, my husband and I have been paying off new siding and new plumbing since October 2022. It’s costing us $2600/mon to live in a 3 bed/2 ba 1500 sqft home in a neighborhood that does not rate that much.
(To be clear, we had planned on the siding, the plumbing happened to be a surprise in the same month we were getting the siding done).
We also replaced all the windows & traded out the sliding back door for a French door in 2022 (pre plumbing fiasco. Also planned.)
In 2022 we spent $60K alone between those 3 projects. Over the years we’ve also done the roof/HVAC/Water Heater/Foundation, new flooring and new counter tops.
And now? We’ve just secured a rental and we’re selling this bitch. I’m so over home ownership. I’m over the saving and saving and saving and saving and saving for months only to have some $20K cost crop up out of nowhere and just wipe it all out. I’ll gladly pay someone more than the mortgage/property taxes to handle that shit, so I can put my savings away in a HYSA or something and not need it until worst-case scenario: our cars break.
HUGE PRIVILEGED DISCLAIMER: Were both active duty military, so we don’t have to worry about Healthcare costs wiping us out. YES, I wish that was available to everyone. YES, I vote for socialized medicine. Just wanted to throw it out there that I’m aware that others have concerns that I don’t have.
Most people here think that if renting magically went away, they could get a house and maintain it. From comments it seems also magical - almost like someone was to give a house to them the minute that renting was cut. Like, people will sell their houses and now there’s 50% of the population that needs to buy a home ASAP. The prices would get even more bonkers. After that temporary rise, nobody would build anymore - since it wouldn’t be profitable anymore to do that.
Not only that but some people just don’t want to own! We moved away while I was fully remote knowing full well that might be temporary, so what, I should have been forced to buy a house instead of renting? How would I have bought something else when needing to move back if the house I was forced to purchase didn’t sell quickly enough?
What’s funny as well is that home ownership to the level we’ve seen it since the 50s is an historical anomaly, even today there’s more home owners than there was 100 years ago so the people we see complaining are mostly people that wouldn’t be able to afford a house no matter what or that are young enough that it will just happen later on in their life or (based on what I’ve seen with many of my younger colleagues) that don’t want to start with what they’re actually able to purchase as a first home and instead want to start big and potentially never have to move again.
I mean, what I’d PREFERABLY like to see is a model like in large parts of Europe, where if you rent long enough, you are considered to own the apartment you’re normally renting. You still have to maintain it, but you do not have to necessarily pay rent (to my knowledge). I’d like to see more paths to owning your own space that is not necessarily a house - things like buying an apartment outright or a long-term lease that’s much harder to evict someone out of when you decide the rent needs to go up another $250.
deleted by creator
Captain clueless here never heard of a money pit.
Some homes aren’t worth owning, dude get a clue.
Some homes aren’t worth owning therefore extorting people through rent is justified. Fuck’s sake, do you even listen to yourself?
It’s more that some homes will make the average person to bankrupt. Hell, even with rental units it’s not necessarily profitable to own. My friend calculated that he would be a million poorer after paying his mortgage if he bought a duplex and rented a unit instead of just continuing to rent and investing in an index fund.
Sounds like he’s not factoring in the money saved after the mortgage is done. I’ll be done in a little over a year then my housing costs drop to property tax and insurance. That’ll come to a little under 15% of what rentals in my neighborhood go for. Even with an aggressive withdrawal schedule an extra million wouldn’t make up the difference.
Edit: I also doubt his calculations. Maybe he’s not taking inflation into account? When I bought my house the mortgage, property tax, and insurance was a little more than renting a house in my neighborhood. Almost 19 years later, the mortgage is the same, the property tax has gone up about 25%, and the insurance has increased about 50%. Since the mortgage is the largest part by far my total costs have gone down significantly adjusted for inflation and they are only around 50% the cost of rent. Even counting maintenance and remodel costs I would have paid much more in rent over the years.
Edit 2: If I had invested my 5% down payment in the s&p in August 2005, with reinvested dividends, before taxes, it would only be 13.7% of my current home equity. Your boy’s math ain’t mathin’.
His math takes everything but a maintenance budget on the duplex into consideration so he’s underestimating his losses.
I’m talking taking the surplus he needs to pay for the duplex vs his rent and continuously investing it over the next 25 years even when taking the average rent increase into consideration, not just the downpayment.
Well then, he must be blessed to live somewhere with very reasonable rents, and generous rent control, if he thinks he can save money renting for 20-30 years instead of paying a fixed mortgage plus other expenses.
Like I said in my first edit, although my expenses started out a bit higher than rent for a comparable house, 19 years of rent increases while my mortgage stays the same means I’d have to move to a shoebox on meth street to pay less than my mortgage now.
And it still seems like he’s not taking into account having a paid off asset with negligible housing expenses after the mortgage is paid off. In the case of a duplex, a money generating asset.
He’s taking everything into account and comparing to what he would expect to have if he sold it once the mortgage was paid.
You’re not taking into account that if he keeps it it appreciates at a slower rate than the average market return and that in the other scenario he’s got close to two millions he’s making interest on instead of having only an asset worth about 1 million at that point and no savings.
Ever heard of compound interest? 500$ in savings per month at 24 y.o. gets you 1.5m at 65, the same savings at 30 gets you 900k at 65 and 400k if you start at 40…
Lol, yes I’m very well aware of these things. I don’t like dropping personal information breadcrumbs, and I don’t find appeal to authority arguments convincing anyway so I’m just going to have to leave it at “trust me bro.”
Outside of a few edge cases, like planning on moving every couple years for work, lifetime costs of renting dwarf lifetime ownership costs. Unless he’s comparing an expensive house to a small, cheap apartment. An apples to apples comparison isn’t even close. Even if month one he can save $500, that savings will shrink every year and eventually his rent will be more than the expenses of a neighbor that bought years ago and not only won’t he have an extra $500 to save, he’ll be saving even less than he was before.
My parents moved into a large home in a desirable neighborhood when I was six months old. When I went to college, my cheap one bedroom apartment in a city with similar costs of living was only about $25 (in 90s $) less than their mortgage, taxes, and insurance combined. A few years later their mortgage was paid and they’ve spent over two decades paying less for taxes and insurance than they do for utilities.
If that $500 savings continues for 41 years (it won’t, see above), an extra 1.5mm, even with a ballsy withdrawal rate, adjusted for inflation 41 years from now (your example), wouldn’t make up for that, not even close. Take inflation the other way: $500 today is the equivalent of a little less than $160 in 1983 which would give you less than 500k today using your growth numbers (this is leaving out a lot of important things, by the way, but I’m going with your example numbers to keep things simple for you.)
I don’t know why you’re so invested in “your friend” being so much smarter than every financial advisor, and frankly, this sounds like some “I didn’t want to buy a house anyway” copium from someone that can’t get their finances together enough to execute a plan, but on the off chance this “friend” is in a position to buy and they really think this, you should suggest they consult a professional for their own good.
“That saving will shrink every year”
Guess you’re a finance genius that doesn’t get an annual raise :)
Your parents have their house as their savings after 25 years, if they had rented and invested the difference instead, they would have money on the market, the difference being that the market returns 7%/annum long term while houses appreciate under 5%/annum long term and that’s the increase in value vs initial cost, it doesn’t take what was spent in taxes and maintenance over that period.
Actual return on investment from buying a house isn’t that great long term, you spend the majority of your profit, you just don’t realize it because when you sell it’s a huge check you get an at once.
What if someone just wants to have a place to live and doesn’t want to pour money into the global extraction machine that index funds are?
Also saving $500 a month?? Lots of people pay half their salary on rent and the rest on food and bills - good on your friend for having the privilege to afford that but like what are the rest of the population supposed to do?
First, the 500$ number is used for comparison sake, the point is that my friend getting 1m to dump in the market all at once in 25 years doesn’t beat him investing the difference between a mortgage on the average duplex vs the price of the average apartment where he’s at.
Second, if you’re two people renting an apartment together and are unable to save 500$ a month then I’m sorry to tell you that you wouldn’t be able to afford owning a house either.
Third, if you plan to retire someday then you should start making your plan while you’re young and start investing. Even if you don’t do it yourself because you’ve got a pension fund at work, that money is in the markets so you’re not escaping it. If you plan to work until you die then have fun with that. If you don’t invest, whatever you’re saving under your pillow is just losing value over time.