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Eh, almost no one I’ve seen has ever spent less by moving to their own home. They’ll typically end up spending at least half of what they spent as rent just on

Eh, almost no one I’ve seen has ever spent less by moving to their own home. They’ll typically end up spending at least half of what they spent as rent just on things other than the mortgage (which would typically be much higher than the rent by itself). Now of course they often would get a larger, nicer place that’s exactly what they wanted, but let’s not kid ourselves that home ownership is somehow cheaper. It never is (except during the times when the prices went up no matter what).

ghaff 5y ago
At some point, though, the mortgage is paid off and maybe you're paying something like $1K/month for taxes and maintenance for a property that may have a decent amount of land if you're outside a city--an amount that isn't going to go up. (Taxes vary a lot of course although that is presumably reflected in area rents as well.) You may be right, especially absent property appreciation, but there's a lot of value in having a fairly predictable set of costs into an indefinite future absent really unpredictable problems. And not being forced to move at some point.
deleted 5y ago
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supernovae 5y ago
I bought my house for 225k, our neighborhood is selling for 650k now. My mortgage is much more affordable than the rents that have gone up over the years to more closely reflect the 650k pricing. But damn the taxes are gonna hurt everyone here... renter or owner (as the renter you're just covering them for the owner)
- TravHatesMe 5y ago
  Taxes are a function of municipal costs and the value of all properties. If they all go up equally in value and costs remain constant then your taxes should not increase
  - Spooky23 5y ago
    In theory, you are correct. In practice, in a city or area with different valuations it may vary. For example, in my city, 70% of households rent and half of those are in the hood. Bad neighborhood valuations are essentially a factor of Section 8 prevailing rent, and many properties fall off (as they stop meeting HUD standards) and get abandoned as they decay, because slumlords. The effect is that in a good neighborhood, your pro rata share of the levy always climbs, even without an increase in value.
    - TravHatesMe 5y ago
      Great point. I wanted to point that out though because some people assume that there is a proportional relationship between property value and taxes.
  - kelnos 5y ago
    In practice, though, that's not the case. In many jurisdictions you get yearly reassessments as to your home's value, and your taxes change to match that value. I don't think I've heard of a place where they decide to lower your taxes (or keep them the same) when your home value is reassessed higher, regardless of what's happening with municipal costs.
  - supernovae 5y ago
    My property taxes have gone up 10% year over year and in 2 years my property taxes will surpass my mortgage.
vel0city 5y ago
My home's mortgage + escrow payment is ~$200/mo more than the apartment I moved from. Of course there are additional costs, I now water a lawn in addition to my usual water usage, I have to factor in some savings for repairs, etc, so closer to ~$650/mo increase. But in the end I have 2.5x the square footage, a private yard/pool/grill vs. community, a two-car private garage with guaranteed electric vehicle charging, the ability to furnish however I wish, and to top it off much less reduced risk of housing inflation (a very real concern). Nine years ago in the same market where I own my house an apartment unit I used to rent was ~$900/mo. The same unit on the market today is $2,352/mo. Even if home values increase and my property taxes jump it won't jump that high.
- TravHatesMe 5y ago
  Fyi if all properties increase equally in value and municipal costs remain the same, so do your taxes.
  - vel0city 5y ago
    Yeah, but the taxes I pay is less than a quarter of my monthly outlay of mortgage+escrow. Even if my taxes double from my home's value doubling my monthly outlay won'd double. Meanwhile my rent will easily double, probably even more than that in the same market.
    - TravHatesMe 5y ago
      Sorry I meant to say that if all houses double in value, and municipal costs don't change, then your taxes do not change. Just because the value goes up does not imply that taxes go up.
      - vel0city 5y ago
        If they don't change the tax rate, and my home doubles in appraised value, my tax liability on the property doubles. True, the city might reduce tax rates if property values explode like that but they might also just continue to take in the revenue. ¯\_(ツ)_/¯ Another example of why its good to be active in local politics. FWIW, I live in Texas so this place gets a good chunk of its tax revenue from property taxes. The odds of them cutting the tax rate just because your house shot up in cost at least to me seems pretty low. This is one of the problems of gentrification, where long time owners find they are unable to continue owning in the $90k house they bought 20 years ago because now they pay property taxes on a $750k property.
Johnny555 5y ago
If you look at the home as a long-term investment, it's almost always cheaper than renting since your mortgage stays the same, while rents almost always rise. You may be paying more in mortgage+taxes+insurance+maintenance when you buy the house, but 10 year later, rents have almost certainly gone up.
- WarOnPrivacy 5y ago
  > If you look at the home as a long-term investment, it's almost always cheaper than renting since your mortgage stays the same, while rents almost always rise. We had our monthly house payment more than double due to hurricane insurance increases. This even tho our particular area hasn't had a landfall in 100 years & gets hit less than DC, NYC, etc.
  - Johnny555 5y ago
    but apartment building owners didn't see a corresponding increase?
    - Spooky23 5y ago
      Landlord insurance goes up but only covers the structure and costs less, while homeowners covers more perils and contents.
      - Johnny555 5y ago
        Yes, but in an area with such a hurricane risk that it led to an increase so great that it more than doubled someone's home mortgage, it would have had to have had a large impact on landlord's structure insurance, raising rents. For someone with a $1000/month house payment, that's $24,000/year in extra premiums. If that's a $200,000 house, in 10 years the extra premium would cover the house... I don't see how landlords could escape levying a rent increase when faced with such a huge increase in insurance prices.
        5y ago
dragontamer 5y ago
But you don't "lose" or "spend" the equity portion of your mortgage bill. That's the difference. If you have a $2500/month mortgage, by year 10 or so that's probably $1000 equity + $1500 interest. The "interest" portion gets tax-deducted (so you get a portion of it back), while the $1000 equity is literally yours. When you sell the house, that's the portion you get back. --------- So really, $2500/month mortgage (after a few years of living there) is really a $1000 cost + $1500 forced savings account. Then some maintenance / taxes on top of that. Since you're building equity while living in a home, a $2500 mortgage is in fact far far cheaper than a $2500 rental. ------- If this is confusing, then think about the "down payment" when you first get the mortgage. A $100,000 down payment may have cost you cash, but its not like the down payment disappears. When you sell the house and close the mortgage, that $100,000 comes back to you (plus all the equity you gained).
- missingrib 5y ago
  You are ignoring costs that are truly just lost and don't exist with a rental payment, like repairs and insurance and HOA, etc.
  - dragontamer 5y ago
    But I'm not ignoring them. I'm currently paying a $1600 / month mortgage, of which $1000 is principal, $400 is interest and $200 is escrow (tax / insurance) in an area with $2000/month rent. So I'm really paying $600 / month for interest, tax, insurance. It's another $1400/month before I get to rent prices. And even with a new roof and new deck last year, I'm no where close to renters prices in terms of actual cost. Especially considering that I had no maintenance costs in 2019 (lucky year) And those $2000/month apartments are literally my next door neighbors. I get way more room than them, a private garage and lots of other benefits. (Those apartment dwellers occasionally ask me if they can park in my driveway when space runs out. That's how close they are.).
    - splitstud 5y ago
      And 10 years from now inflation will have only increased the tax and insurance. In almost any locale, buying is inarguably the better option.
Spooky23 5y ago
It is. Not only is our house cheaper than a decent 3 bedroom apartment, but we’ve been here about 15 years and will own the place free and clear in ~5.
spfzero 5y ago
You can definitely spend less when your mortgage is paid off. But I'll admit that part of my reason for buying was to prevent the situation where I might be living on a fixed income some day, and having my rent go up every year. That seemed like a good thing to try to prevent. Buying a house requires a high monthly payment, which remains constant over time, and one day ends. Renting requires a high monthly payment that rises over time, sometimes unpredictably, and never ends.
- splitstud 5y ago
  You'll be spending less in 3 to 5 years than others pay to lease, and building equity besides.
sjg007 5y ago
It’s not day to day cheaper but you hope net zero in the end and maybe you make some profit. If you have a down payment to otherwise invest then maybe renting is ok…
ramesh31 5y ago
>let’s not kid ourselves that home ownership is somehow cheaper. It never is (except during the times when the prices went up no matter what). It's important to take into account the intangibles of buying vs. renting. It's not just a straight up financial calculation. Buying makes your living situation far more stable than renting. If I miss my rent for 3 months, I'll be getting a knock from the sheriff and put out on the street. If I miss my mortgage for 3 months it can take over a year to be foreclosed on. On top of that, buying puts you in a community of owners. It's a completely separate population from renters. People are far more incentivized to act civil and be considerate of their neighbors when everyone owns and lives somewhere long term. Not to mention the ability to renovate, add on, and otherwise make a house into a home. Buying is an emotional decision as much as it is financial.

ghaff 5y ago

At some point, though, the mortgage is paid off and maybe you're paying something like $1K/month for taxes and maintenance for a property that may have a decent amount of land if you're outside a city--an amount that isn't going to go up. (Taxes vary a lot of course although that is presumably reflected in area rents as well.) You may be right, especially absent property appreciation, but there's a lot of value in having a fairly predictable set of costs into an indefinite future absent really unpredictable problems. And not being forced to move at some point.

deleted 5y ago

[deleted]

supernovae 5y ago

I bought my house for 225k, our neighborhood is selling for 650k now. My mortgage is much more affordable than the rents that have gone up over the years to more closely reflect the 650k pricing. But damn the taxes are gonna hurt everyone here... renter or owner (as the renter you're just covering them for the owner)

TravHatesMe 5y ago
Taxes are a function of municipal costs and the value of all properties. If they all go up equally in value and costs remain constant then your taxes should not increase
- Spooky23 5y ago
  In theory, you are correct. In practice, in a city or area with different valuations it may vary. For example, in my city, 70% of households rent and half of those are in the hood. Bad neighborhood valuations are essentially a factor of Section 8 prevailing rent, and many properties fall off (as they stop meeting HUD standards) and get abandoned as they decay, because slumlords. The effect is that in a good neighborhood, your pro rata share of the levy always climbs, even without an increase in value.
  - TravHatesMe 5y ago
    Great point. I wanted to point that out though because some people assume that there is a proportional relationship between property value and taxes.
- kelnos 5y ago
  In practice, though, that's not the case. In many jurisdictions you get yearly reassessments as to your home's value, and your taxes change to match that value. I don't think I've heard of a place where they decide to lower your taxes (or keep them the same) when your home value is reassessed higher, regardless of what's happening with municipal costs.
- supernovae 5y ago
  My property taxes have gone up 10% year over year and in 2 years my property taxes will surpass my mortgage.

vel0city 5y ago

My home's mortgage + escrow payment is ~$200/mo more than the apartment I moved from. Of course there are additional costs, I now water a lawn in addition to my usual water usage, I have to factor in some savings for repairs, etc, so closer to ~$650/mo increase. But in the end I have 2.5x the square footage, a private yard/pool/grill vs. community, a two-car private garage with guaranteed electric vehicle charging, the ability to furnish however I wish, and to top it off much less reduced risk of housing inflation (a very real concern). Nine years ago in the same market where I own my house an apartment unit I used to rent was ~$900/mo. The same unit on the market today is $2,352/mo. Even if home values increase and my property taxes jump it won't jump that high.

TravHatesMe 5y ago
Fyi if all properties increase equally in value and municipal costs remain the same, so do your taxes.
- vel0city 5y ago
  Yeah, but the taxes I pay is less than a quarter of my monthly outlay of mortgage+escrow. Even if my taxes double from my home's value doubling my monthly outlay won'd double. Meanwhile my rent will easily double, probably even more than that in the same market.
  - TravHatesMe 5y ago
    Sorry I meant to say that if all houses double in value, and municipal costs don't change, then your taxes do not change. Just because the value goes up does not imply that taxes go up.
    - vel0city 5y ago
      If they don't change the tax rate, and my home doubles in appraised value, my tax liability on the property doubles. True, the city might reduce tax rates if property values explode like that but they might also just continue to take in the revenue. ¯\_(ツ)_/¯ Another example of why its good to be active in local politics. FWIW, I live in Texas so this place gets a good chunk of its tax revenue from property taxes. The odds of them cutting the tax rate just because your house shot up in cost at least to me seems pretty low. This is one of the problems of gentrification, where long time owners find they are unable to continue owning in the $90k house they bought 20 years ago because now they pay property taxes on a $750k property.

Johnny555 5y ago

If you look at the home as a long-term investment, it's almost always cheaper than renting since your mortgage stays the same, while rents almost always rise. You may be paying more in mortgage+taxes+insurance+maintenance when you buy the house, but 10 year later, rents have almost certainly gone up.

WarOnPrivacy 5y ago
> If you look at the home as a long-term investment, it's almost always cheaper than renting since your mortgage stays the same, while rents almost always rise. We had our monthly house payment more than double due to hurricane insurance increases. This even tho our particular area hasn't had a landfall in 100 years & gets hit less than DC, NYC, etc.
- Johnny555 5y ago
  but apartment building owners didn't see a corresponding increase?
  - Spooky23 5y ago
    Landlord insurance goes up but only covers the structure and costs less, while homeowners covers more perils and contents.
    - Johnny555 5y ago
      Yes, but in an area with such a hurricane risk that it led to an increase so great that it more than doubled someone's home mortgage, it would have had to have had a large impact on landlord's structure insurance, raising rents. For someone with a $1000/month house payment, that's $24,000/year in extra premiums. If that's a $200,000 house, in 10 years the extra premium would cover the house... I don't see how landlords could escape levying a rent increase when faced with such a huge increase in insurance prices.
      - 5y ago

dragontamer 5y ago

But you don't "lose" or "spend" the equity portion of your mortgage bill. That's the difference. If you have a $2500/month mortgage, by year 10 or so that's probably $1000 equity + $1500 interest. The "interest" portion gets tax-deducted (so you get a portion of it back), while the $1000 equity is literally yours. When you sell the house, that's the portion you get back. --------- So really, $2500/month mortgage (after a few years of living there) is really a $1000 cost + $1500 forced savings account. Then some maintenance / taxes on top of that. Since you're building equity while living in a home, a $2500 mortgage is in fact far far cheaper than a $2500 rental. ------- If this is confusing, then think about the "down payment" when you first get the mortgage. A $100,000 down payment may have cost you cash, but its not like the down payment disappears. When you sell the house and close the mortgage, that $100,000 comes back to you (plus all the equity you gained).

missingrib 5y ago
You are ignoring costs that are truly just lost and don't exist with a rental payment, like repairs and insurance and HOA, etc.
- dragontamer 5y ago
  But I'm not ignoring them. I'm currently paying a $1600 / month mortgage, of which $1000 is principal, $400 is interest and $200 is escrow (tax / insurance) in an area with $2000/month rent. So I'm really paying $600 / month for interest, tax, insurance. It's another $1400/month before I get to rent prices. And even with a new roof and new deck last year, I'm no where close to renters prices in terms of actual cost. Especially considering that I had no maintenance costs in 2019 (lucky year) And those $2000/month apartments are literally my next door neighbors. I get way more room than them, a private garage and lots of other benefits. (Those apartment dwellers occasionally ask me if they can park in my driveway when space runs out. That's how close they are.).
  - splitstud 5y ago
    And 10 years from now inflation will have only increased the tax and insurance. In almost any locale, buying is inarguably the better option.

Spooky23 5y ago

It is. Not only is our house cheaper than a decent 3 bedroom apartment, but we’ve been here about 15 years and will own the place free and clear in ~5.

spfzero 5y ago

You can definitely spend less when your mortgage is paid off. But I'll admit that part of my reason for buying was to prevent the situation where I might be living on a fixed income some day, and having my rent go up every year. That seemed like a good thing to try to prevent. Buying a house requires a high monthly payment, which remains constant over time, and one day ends. Renting requires a high monthly payment that rises over time, sometimes unpredictably, and never ends.

splitstud 5y ago
You'll be spending less in 3 to 5 years than others pay to lease, and building equity besides.

sjg007 5y ago

It’s not day to day cheaper but you hope net zero in the end and maybe you make some profit. If you have a down payment to otherwise invest then maybe renting is ok…

ramesh31 5y ago

>let’s not kid ourselves that home ownership is somehow cheaper. It never is (except during the times when the prices went up no matter what). It's important to take into account the intangibles of buying vs. renting. It's not just a straight up financial calculation. Buying makes your living situation far more stable than renting. If I miss my rent for 3 months, I'll be getting a knock from the sheriff and put out on the street. If I miss my mortgage for 3 months it can take over a year to be foreclosed on. On top of that, buying puts you in a community of owners. It's a completely separate population from renters. People are far more incentivized to act civil and be considerate of their neighbors when everyone owns and lives somewhere long term. Not to mention the ability to renovate, add on, and otherwise make a house into a home. Buying is an emotional decision as much as it is financial.