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Let's see. My house I bought 12 years ago is now worth double what I paid for it - but I didn't pay full price because the house I sold prior cleared me enough

Let's see. My house I bought 12 years ago is now worth double what I paid for it - but I didn't pay full price because the house I sold prior cleared me enough to pay for nearly half of this house in one go. Now I live in a 2,400 sq ft midcentury ranch for a price that's less than people are now paying for a 2 BR apartment in my area. Yeah. Owning sucks! People talk about the flexibility of renting. I don't get it. You have to sign a 12 month lease. On average then you're 6 months away from being able to get out of your lease. In my area you can sell a house within 90 days and it's been that way for over 40 years! Of course now houses are on the market for 10 days and people are bidding them up - that's not normal, but still I can sell a house faster than I can get out of a lease. Don't even get me started on the difference owning vs. renting makes on your retirement planning! I live in a high tax area and my taxes are HALF of the rent of a 2 BR townhome! Renting makes no sense.

BugsJustFindMe 6y ago
> My house I bought 12 years ago is now worth double what I paid for it This is not as strong of a financial case as one might think. AAPL stock I bought less than 2 years ago is now worth more than double what I paid for it. If you don't want to have to pick a winner, the Nasdaq composite doubled in the past 2 years, and if you feel like the Nasdaq is too risky because of 2000 then the SP500 doubled in the past 5. All of the money that you spent up front on that house could have been invested elsewhere instead with better returns.
- hellisothers 6y ago
  True but you buy a house with leverage. So if you put 20% down and the house doubles in value your return is 500%, on top of being able to deduct your taxes and most of your monthly payment (as interest), and when you sell (after 2 years) you don’t pay taxes on $250k of the proceeds ($500k per couple).
  - dragonwriter 6y ago
    > True but you buy a house with leverage. You can buy stock with leverage, too. OTOH, buying a house with leverage, at least in a non-recourse state, exposes you to less downside risk.
    - hellisothers 6y ago
      True, but the govt won’t subsidize any of it and you can’t live in the stock :)
    - perl4ever 6y ago
      My impression is you can borrow significantly more (as a proportion) against real estate, and get better rates, generally speaking.
  - t0mbstone 6y ago
    You honestly think that all those 3 bedroom, 2 bath homes selling for $500K right now are going to be selling for a million in 2 years? They were selling for like $125K only a couple of years ago! This just doesn't seem sustainable. Nobody will be able to afford a house if this keeps up.
    - jjeaff 6y ago
      Obviously, it's location dependent but i keep saying that to myself as the homes in my area just keep going up. I assumed at $500k, it couldn't possibly go any higher. Now that those same houses are pushing $900k, I'm thinking they can't possibly go higher.
    - hellisothers 6y ago
      I used double as an example, nobody is making the argument that houses will double.
    - thehoff 6y ago
      I tend to agree, but we used to live (own) in a major city. We then moved only 4 years later and the house had gone up quite substantially (I couldn't believe it). Now 4 years after moving away I still check on that house and see it keeps going up and even though our savings has gone up, we can no longer afford that house anymore. After a few moves, we're now renting a home in a pretty far off suburb of another city and the prices in this area are starting to get out of hand. Witnessed by us starting to look after we decided we like it here. The houses in this market won't last a week and offers are way over list. But I still go back to, this can't keep up. Who is going to keep buying at this pace? Salaries certainly can't be keeping up with this?
- taylodl 6y ago
  True - but you gotta live somewhere. And I had 3 kids living at home so a 2 BR apartment wasn't going to cut it. So, paying the same as I'd pay in rent for less housing, enjoying tax breaks and doubling my asset value - that's a win!
- me_me_me 6y ago
  The man is living in the big house with plenty of room for hobbies and possibilities, that renting (high likely) prevents you from doing. He is living his life and you have virtual paper and potential gains. Owning a house is more than a bet against inflation and financial crash.
throw1234651234 6y ago
I mostly agree, but you are forgetting sales tax and fees. Maintenance is a thing too, if you aren't buying new.
paxys 6y ago
I have never owned property in my life. Have lived in 6 cities in 3 countries the last 11 years. All savings have gone into S&P 500, AAPL, TSLA, MSFT, SQ, Bitcoin, some tech IPOs. 401K/IRA is consistently maxed. My overall return on investment is probably multi-hundred percent (or more) by now. I personally don't find any of my decisions senseless.
- diogenescynic 6y ago
  Renters don't pay property taxes or maintenance either which is more money they can invest. I also don't have to worry about doing the lawn or other the plumbing and other hassles. The free cash flow and flexibility of renting seem more advantageous of buying and eventually not having a payment. Renters can always choose to buy something later with their liquid investments too, so it's not like they're locked out forever. I'd much rather invest in the S&P500 than some overpriced McMansion or 50 year old bungalow.
  - taylodl 6y ago
    Landlords aren't in business to lose money. There's property tax being paid on your property. There's maintenance being paid for on your property. You're paying for it all - you're just getting it in a single bill. From a property tax standpoint you're effectively paying it but you're not able to deduct that from your earnings for income tax purposes. You don't have to worry about mowing the lawn unless you want to. Where I live the annualized cost of lawn care is $67/month. You can even have maintenance taken care of for you - replace appliances, plumbing, electrical, heating/cooling - the whole works - and that'll cost you between $100-$150 per month. Even with those additional costs I'm only paying $300/month more than those renting a 2 BR apartment having less than half the space. The end of your comment is important too - you don't want to overpay for a house. Sometimes renting is a good short-term strategy to wait-out an anomalous market or determine long-term market direction so you can avoid an expensive mistake. Renting is also a good strategy if you believe you'll be moving soon. The rule-of-thumb is don't buy unless you're going to be staying for five years.
deckard1 6y ago
> I can sell a house faster than I can get out of a lease. Closing on a house = pain. You have inspections, appraisal, loan applications, contingencies, counter offers, staging, open houses, closed showings, and at least an entire day of signing papers. It takes nearly a month on average to close on a house. That's not a passive month either. If you're selling, you'll need to vacate your house for showings at whatever day and time is convenient for the buyer. And if you're moving to another house you get to do this twice. I've found an apartment, signed a lease, and moved in in a single weekend before. You can also find leases shorter than 12 months. And if your landlord isn't a total jerk (or some giant faceless private equity company) then you can usually talk to them as reasonable adults do. Even better if you have a potential replacement lined up for your rental. Breaking a lease isn't a crime. You can do it, if you need to.
- me_me_me 6y ago
  You are building a strawman to support your views, and I can as easily build one against the renting. Dealing with landlord is a pain. You have to adhere to contracts often no pets, even putting up a painting is an ordeal. Not to mention rent increases. Owning a house is a bigger responsibility with way bigger rewards and freedoms. Also your rent money is not sucked out into the void.
perl4ever 6y ago
The main issue with owning as far as I'm concerned is the transaction costs involved in buying or selling. I never considered owning until I had the opportunity to save in the ballpark of 50% or more versus renting and I thought there was a good probability I would never move again. If I moved, I'd expect it would cost at least 6% of the value of my home. Maybe more like 10%. I can't imagine buying with the expectation of moving in the forseeable future. This is what lack of flexibility means. Getting out of a lease might have a cost, but nowhere near as much. You also may not relate to markets where there is no particular trend in prices over and above inflation. My home is almost 30 years old and has not appreciated except maybe temporarily this past year. Most of the country/world is not SF or Vancouver. Finally, your penultimate sentence sounds like you may not be paying interest on a mortgage, which obviously is a significant addition to expenses. And there are a lot of little things that add up if you make a spreadsheet, when you own rather than rent. Constant maintenance too. Oh and "within 90 days" implies any time of year is as good as any other - I'm not particularly knowledgeable, but I would have assumed that you have a much better chance if you put a property on the market in the spring, so practically speaking, the window is once a year, like a 12 month lease, no?
manigandham 6y ago
The foundational economic concept is risk and volatility mitigation, and it's found everywhere from home insurance to leasing private jets. Real estate is just another asset. Ownership means responsibilities. Renting is great for those who want to minimize those responsibilities with the associated overhead and surprises, and lease terms vary wildly with some being as short as a few weeks. Arbitrary comparisons don't really challenge anything about the fact that renting and buying are just different financial operations that you can tailor to your specific situation. There's no right answer.
voisin 6y ago
Your point on the time to get out of a lease vs house is just one issue. There are significant in-and-out costs in terms of lawyers, realtors, etc that exist only when selling. And unless you hold for a longer period, and your market is strong, your gain may either not exist or not be sufficient to cover these friction costs.
andrepd 6y ago
Did you even read the damn article? > Those losses aren’t equitably distributed, either: Nearly 2 million mortgages are underwater in the U.S., and they’re disproportionately concentrated in Black and Latino communities. Tenants in coastal cities, meanwhile, know the pain of forking over more and more rent every year, unable to save for a down payment and living at the mercy of sometimes unscrupulous landlords. > The housing situation is only getting worse—more expensive, more inequitable, more precarious. As prices have continued their climb in the country’s most economically dynamic regions, it’s no longer feasible for working-class residents to seek out the best opportunities there. Instead, younger and lower-income residents are being pushed out to places where jobs are less plentiful and lucrative > Largely as a consequence of housing prices, Generation X held less than half as much wealth in 2019 as Baby Boomers of the same age did two decades earlier, and Millennials are on course to hold even less. I'm glad it worked out for you bud. Just remember there are 6,999,999,999 more people on this planet besides yourself.

BugsJustFindMe 6y ago

> My house I bought 12 years ago is now worth double what I paid for it This is not as strong of a financial case as one might think. AAPL stock I bought less than 2 years ago is now worth more than double what I paid for it. If you don't want to have to pick a winner, the Nasdaq composite doubled in the past 2 years, and if you feel like the Nasdaq is too risky because of 2000 then the SP500 doubled in the past 5. All of the money that you spent up front on that house could have been invested elsewhere instead with better returns.

hellisothers 6y ago
True but you buy a house with leverage. So if you put 20% down and the house doubles in value your return is 500%, on top of being able to deduct your taxes and most of your monthly payment (as interest), and when you sell (after 2 years) you don’t pay taxes on $250k of the proceeds ($500k per couple).
- dragonwriter 6y ago
  > True but you buy a house with leverage. You can buy stock with leverage, too. OTOH, buying a house with leverage, at least in a non-recourse state, exposes you to less downside risk.
  - hellisothers 6y ago
    True, but the govt won’t subsidize any of it and you can’t live in the stock :)
  - perl4ever 6y ago
    My impression is you can borrow significantly more (as a proportion) against real estate, and get better rates, generally speaking.
- t0mbstone 6y ago
  You honestly think that all those 3 bedroom, 2 bath homes selling for $500K right now are going to be selling for a million in 2 years? They were selling for like $125K only a couple of years ago! This just doesn't seem sustainable. Nobody will be able to afford a house if this keeps up.
  - jjeaff 6y ago
    Obviously, it's location dependent but i keep saying that to myself as the homes in my area just keep going up. I assumed at $500k, it couldn't possibly go any higher. Now that those same houses are pushing $900k, I'm thinking they can't possibly go higher.
  - hellisothers 6y ago
    I used double as an example, nobody is making the argument that houses will double.
  - thehoff 6y ago
    I tend to agree, but we used to live (own) in a major city. We then moved only 4 years later and the house had gone up quite substantially (I couldn't believe it). Now 4 years after moving away I still check on that house and see it keeps going up and even though our savings has gone up, we can no longer afford that house anymore. After a few moves, we're now renting a home in a pretty far off suburb of another city and the prices in this area are starting to get out of hand. Witnessed by us starting to look after we decided we like it here. The houses in this market won't last a week and offers are way over list. But I still go back to, this can't keep up. Who is going to keep buying at this pace? Salaries certainly can't be keeping up with this?
taylodl 6y ago
True - but you gotta live somewhere. And I had 3 kids living at home so a 2 BR apartment wasn't going to cut it. So, paying the same as I'd pay in rent for less housing, enjoying tax breaks and doubling my asset value - that's a win!
me_me_me 6y ago
The man is living in the big house with plenty of room for hobbies and possibilities, that renting (high likely) prevents you from doing. He is living his life and you have virtual paper and potential gains. Owning a house is more than a bet against inflation and financial crash.

throw1234651234 6y ago

I mostly agree, but you are forgetting sales tax and fees. Maintenance is a thing too, if you aren't buying new.

paxys 6y ago

I have never owned property in my life. Have lived in 6 cities in 3 countries the last 11 years. All savings have gone into S&P 500, AAPL, TSLA, MSFT, SQ, Bitcoin, some tech IPOs. 401K/IRA is consistently maxed. My overall return on investment is probably multi-hundred percent (or more) by now. I personally don't find any of my decisions senseless.

diogenescynic 6y ago
Renters don't pay property taxes or maintenance either which is more money they can invest. I also don't have to worry about doing the lawn or other the plumbing and other hassles. The free cash flow and flexibility of renting seem more advantageous of buying and eventually not having a payment. Renters can always choose to buy something later with their liquid investments too, so it's not like they're locked out forever. I'd much rather invest in the S&P500 than some overpriced McMansion or 50 year old bungalow.
- taylodl 6y ago
  Landlords aren't in business to lose money. There's property tax being paid on your property. There's maintenance being paid for on your property. You're paying for it all - you're just getting it in a single bill. From a property tax standpoint you're effectively paying it but you're not able to deduct that from your earnings for income tax purposes. You don't have to worry about mowing the lawn unless you want to. Where I live the annualized cost of lawn care is $67/month. You can even have maintenance taken care of for you - replace appliances, plumbing, electrical, heating/cooling - the whole works - and that'll cost you between $100-$150 per month. Even with those additional costs I'm only paying $300/month more than those renting a 2 BR apartment having less than half the space. The end of your comment is important too - you don't want to overpay for a house. Sometimes renting is a good short-term strategy to wait-out an anomalous market or determine long-term market direction so you can avoid an expensive mistake. Renting is also a good strategy if you believe you'll be moving soon. The rule-of-thumb is don't buy unless you're going to be staying for five years.

deckard1 6y ago

> I can sell a house faster than I can get out of a lease. Closing on a house = pain. You have inspections, appraisal, loan applications, contingencies, counter offers, staging, open houses, closed showings, and at least an entire day of signing papers. It takes nearly a month on average to close on a house. That's not a passive month either. If you're selling, you'll need to vacate your house for showings at whatever day and time is convenient for the buyer. And if you're moving to another house you get to do this twice. I've found an apartment, signed a lease, and moved in in a single weekend before. You can also find leases shorter than 12 months. And if your landlord isn't a total jerk (or some giant faceless private equity company) then you can usually talk to them as reasonable adults do. Even better if you have a potential replacement lined up for your rental. Breaking a lease isn't a crime. You can do it, if you need to.

me_me_me 6y ago
You are building a strawman to support your views, and I can as easily build one against the renting. Dealing with landlord is a pain. You have to adhere to contracts often no pets, even putting up a painting is an ordeal. Not to mention rent increases. Owning a house is a bigger responsibility with way bigger rewards and freedoms. Also your rent money is not sucked out into the void.

perl4ever 6y ago

The main issue with owning as far as I'm concerned is the transaction costs involved in buying or selling. I never considered owning until I had the opportunity to save in the ballpark of 50% or more versus renting and I thought there was a good probability I would never move again. If I moved, I'd expect it would cost at least 6% of the value of my home. Maybe more like 10%. I can't imagine buying with the expectation of moving in the forseeable future. This is what lack of flexibility means. Getting out of a lease might have a cost, but nowhere near as much. You also may not relate to markets where there is no particular trend in prices over and above inflation. My home is almost 30 years old and has not appreciated except maybe temporarily this past year. Most of the country/world is not SF or Vancouver. Finally, your penultimate sentence sounds like you may not be paying interest on a mortgage, which obviously is a significant addition to expenses. And there are a lot of little things that add up if you make a spreadsheet, when you own rather than rent. Constant maintenance too. Oh and "within 90 days" implies any time of year is as good as any other - I'm not particularly knowledgeable, but I would have assumed that you have a much better chance if you put a property on the market in the spring, so practically speaking, the window is once a year, like a 12 month lease, no?

manigandham 6y ago

The foundational economic concept is risk and volatility mitigation, and it's found everywhere from home insurance to leasing private jets. Real estate is just another asset. Ownership means responsibilities. Renting is great for those who want to minimize those responsibilities with the associated overhead and surprises, and lease terms vary wildly with some being as short as a few weeks. Arbitrary comparisons don't really challenge anything about the fact that renting and buying are just different financial operations that you can tailor to your specific situation. There's no right answer.

voisin 6y ago

Your point on the time to get out of a lease vs house is just one issue. There are significant in-and-out costs in terms of lawyers, realtors, etc that exist only when selling. And unless you hold for a longer period, and your market is strong, your gain may either not exist or not be sufficient to cover these friction costs.

andrepd 6y ago

Did you even read the damn article? > Those losses aren’t equitably distributed, either: Nearly 2 million mortgages are underwater in the U.S., and they’re disproportionately concentrated in Black and Latino communities. Tenants in coastal cities, meanwhile, know the pain of forking over more and more rent every year, unable to save for a down payment and living at the mercy of sometimes unscrupulous landlords. > The housing situation is only getting worse—more expensive, more inequitable, more precarious. As prices have continued their climb in the country’s most economically dynamic regions, it’s no longer feasible for working-class residents to seek out the best opportunities there. Instead, younger and lower-income residents are being pushed out to places where jobs are less plentiful and lucrative > Largely as a consequence of housing prices, Generation X held less than half as much wealth in 2019 as Baby Boomers of the same age did two decades earlier, and Millennials are on course to hold even less. I'm glad it worked out for you bud. Just remember there are 6,999,999,999 more people on this planet besides yourself.