Not an issue. We bought our house when I was pregnant - the people who lived in it were German expats being transferred back to Germany and foolishly didn’t do anything about it the very end, so they were desperate to sell. H low-balled them and to our surprise they accepted. We renovated the kitchen and master bath and finished the basement as a den / kids’ playroom but the house was totally livable from the get-go. Paid it off yours ago. No plans to move, but with the kids gone it’s really too big for 2 of us.
Our property taxes are high. I am not complaining though, I mentioned it because it is a question here.
It is convenient to live in a house though. It allows to take the equity loans. It allowed us to pay for Med. School and then when this was done, to buy a second home. The goal is to get rid of equity loan by the time we retire.
Well, everything is expensive, eating, driving, houses, kids. Life is expensive, but we still want to keep on living, right?
I am not sure what is actually an issue here, what kind of solution to this issue we are looking for here.
FlyMeToTheMoon said: “However, when you are renting, you are essentially throwing that money away. When you buy a house, it’s an investment.”
It is an investment, but not one that is guaranteed to rise in value.
Friends in our neighborhood moved up to a very large home at the very top of the bubble at a time when houses were increasing 50,000-100,000 in value every year. (Of course this was unsustainable, but people got swept away in the belief that houses always increase in value.) Their home almost immediately lost $250,000 in value, and has not recovered in the years since then. So now they are struggling to sell the house, which they need to sell. It has been on the market for 6 months, with several decreases in price. Right now they are working with a serious buyer whose (reasonable) offer is $170,000 below the price my friends paid for the house. This is the only offer they have had.
I do not think they would say their home was a good investment.
Real estate depends on the location. The last housing burst has proved to us renting is not throwing money away. That argument I’ve heard for years is not accurate particularly after the housing bubble.
Ummm, not in our area! We’d have to relocate out of the area to be able to bank any proceeds from our house, and our house has more than doubled in value since we bought it in 1998.
Our biggest ongoing expense now that we are done paying for college is medical expenses. That’s $20k/year every year.
Marian, I think 50% of take-home is way too much for rent (or mortgage). There wouldn’t be much margin for a 20-something with $25k in Stafford loans and a car payment. One of my kids could swing it (but refuses to – he still lives like a poor undergrad and still doesn’t drive), but the other one would have to hit the job lottery to be able to swing 50% rent plus loans, commute (no car), medical, phone, utilities, internet (no cable) and food.
I think the absolute numbers are more important than the percentages. The relevant question was whether my daughter could live on the portion of her pay that didn’t go to rent. She could.
Allow me to clarify my statement about a home being an investment. If you are in it for the long haul, it will be an investment. We purchased our home 25 years ago, and it has almost doubled in price. That includes the price drop in my immediate neighborhood over the past six months. Six months ago it was worth more. As I lament about the drop in price, my husband suggests it is of no concern to us, because by the time we will sell, prices will have increased. Even if we sold now, we would make a hefty profit.
But for those in our neighborhood who purchased a home 2 years ago and are selling for less than they purchased it for, yeah, not so great.
But another issue is, I would not want to live in an apartment. I need space and quiet. Not everyone has these issues.
Sometimes a rental is a better deal. If rent is less than what you would pay on mortgage interest, taxes and insurance, and utilities are included, it can be better. Just put an amount in the bank every month for “principal” and you may be better off. Your money can be invested and grow just like the value of a house.
In the early years of a mortgage, principal repayment is so small.
When you buy a house with a mortgage, you are renting the money in order to buy into a highly leveraged investment. If its value goes up, great (especially due to the leverage). If its value goes down, the leverage means that you can be in a negative equity situation.
The responses in this thread seem to be quite a bit different from the chatter in other threads about how people with $200,000+ income cannot afford to save for the kids’ college because housing is so expensive.
This thread is not start with just that premise. It was the $4 meal thread that started this thread.
Housing costs are not a big burden for us. We live in a high cost area (metro NYC) with high property taxes. We bought a comfortable but modest house for much less than we could have borrowed for, and have lived in it for 15 years. We will live in it until we want to move to a condo. We also chose to live in a decent but not super high-end suburb. Schools were perfectly fine and met my D’s educational needs. I worked as a public school teacher in New Jersey for a while, and I know you do not have to live in Milburn or Basking Ridge for your child to get a good education here. I do not believe you have to spend 700K or more to buy into a decent school district in the NYC suburban area. It is a lifestyle choice, not a necessity for children’s wellbeing.
I think we will be able sell our house for a reasonable price when the time comes, because our area has diversified employment options, decent if not stellar schools, and access to various forms of public transportation.
I enjoy watching HGTV as much as anyone, but for me, it’s home-improvement industry marketing fantasy, not the standard. That helps too. I’d rather spend discretionary income on other things besides mortgage and taxes.
For 20 years I have owned too much house. It is a great house, and it has been a pleasure and pride to live in and a burden to keep up, as well as kept me house poor. Finally, I have an offer in on a place that is less than half the square footage, and 1/3 less taxes. The property taxes are what have done me in, in addition to 5 more years on a mortgage. The assumption that you should pay property taxes based on what things are selling for around you, no respect to income, I find maddening. As well as impoverishing. However, I have used this place like a bank, refinanced many times and taken money out for college cost It has besen a burden, and opportunity as well as a place to live. Time now to save a little, and rid myself of excessive responsibility.
Low interest rates have made all this possible, and made home ownership profitable. If you have been around for a few decades, you probably remember mortgage rates above 10%. That they have fallen so far, has made all the difference. For those who are younger, I’d be in horrible financial shape if I’d had to bow to the demands of the rental market. No equity, no opportunity.
Not completely sure of the OP’s initial question, but for us, the biggest housing cost is the maintenance and upgrades. We’ve owned this house for 20 years. Paid it off 5 years ago. And the biggest bonus is that where we live, at my age, I just qualified for something that goes into effect next year, lowering our taxes by, wait for it, 70%. So its very affordable to stay here. House is probably currently worth double what we paid for it. We’ve done some upgrades, but there are more to be done.
While we might like at some point to consider living near our s’s, where they live is really unaffordable for us, without it putting a significant crimp in our retirement plans/lifestyle. The cost of the house itself, compounded by the taxes, would be prohibitive. So for now, we stay put. We live in a lovely area. Its just across country from the boys.
I don’t believe that equity and home ownership are the only things that equal opportunity. In fact, there have been times in my life that those two things would have equaled bondage to my family if we had owned instead of rented.
We have move 7 times in the 24 years we have been married. Three of those times since the housing bubble burst in 2008.
If we had owned a home during that time, then we may have had to say no to new opportunities, friends, and lifestyles, because we may not have been able to sell one house for what we needed and definitely could not have afforded to own two homes.
There are many ways to define opportunity. You may chose to define it through home ownership and that may be OK for you.
I choose to define it through the relationships I make with new people I meet.
Where our S will likely live will be unaffordable to us. We are quite sure this will likely be the case.
One idea we have is to live not very far from a city where there is a major airport. Hopefully, if we visit him (or, less likely , if he visits us – this will likely be the case only when we are too old to travel), it will be one hop by plane. But this is just our wish.
I live like 1 hour from my adult kid and I don’t see her that often even she said the same thing, she doesn’t see me that often even when I work nearby. Too busy with work, too many deadlines, too many parties, I mean they are young, I don’t think they like to spend time with us. Except when it’s hot and all these kids want to go somewhere for a nice pool and we will see them. Otherwise, it’s the same as they live 400 miles away.
DS lives about an hour from his inlaws. They do see them pretty often (holidays, birthdays and other events come up).
I actually noticed that S would be “too idle” when he visited us in the past few years. This is partly because we have moved to a new city. But it is also because, like you said, the young adults may not like to spend time with us. (They like to spend time with their BF/GF/SO/friends of similar age.)
@ CountingDown,
I did just that, sold the house and moved to a condo - same county, different zip code, walk to Metro - got 1000 sq ft less space for $25K less than what house sold for. My taxes are higher here, but I can lock and leave when I travel and with underground parking, no more snow removal before my 7am shift start (no snow days off when you work in an ER).