Renting Vs. Buying

[Monster]

It highly area specific...
I live in AZ where you were a fool not to buy for most of the last decade... may still be. The market is growing so fast there aren’t enough houses. That and property tax and HOI is low. Just always ensure you buy what you can keep should hard times hit. Airtime was right... don’t buy what you can afford... buy what you need but do the homework on the area.

 

[IBleedBearsBlood]

Also, I think most people in this thread seem to be better off than your average American. Most people today don't have anywhere close to 20% to put down on their home to avoid the PMI. PMI is the definition of throwing money away, because you are literally paying more money for nothing extra in return. Paying interest in general is "throwing money away." Same goes with taxes.

The "median priced home" these days is about 260K. Lets say someone did put down 20% on a 30-year mortgage.... Over the life of that loan, they'd pay roughly 170k in interest. You can say it's easy to just pay it off sooner, but again, most people can't, and most people will be paying PMI as well, so that will just be an additional cost. Is this all not "wasted money" as well?

I know my parents bought their home for 150,000 in the mid-90's, and it's worth 350,000 right now. However, it's only worth that much because of the improvements they made to the house. And in the 25 years they've had it, I would guess that they'd spent about 100k in repairs and remodeling. They did a lot when they first bought the house because it wasn't in the best of shape, and then again about 15-20 years later when they needed to update a lot of things. And they did it all themselves, along with the help of family members. When you add in how much they've spent on taxes and interest, the amount spent on repairs/remodeling in addition to the taxes and interest paid is more that than the 200k they would make by selling the home. And it's still not paid off actually, so they wouldn't even get the full 200k, assuming it sells for what it's worth anyway.


In reality, most people who ultimately sell their homes will be lucky to break close to even, after taking into account all the extra costs that went into owning a home.

Again, some quick math:

You buy a 250k house, and put 20% down. Lets say your interest rate is 4%, which is pretty good. Over the course of 30 years, you put in 393,000 to pay off the house. Add in the taxes you've been paying in meantime, and that's now 500,000. Add in insurance, and that's 525,000. Lets say the home was in pretty good condition and you didn't have to put much in for repairs, so over 30 years you put in 30k. That brings you to a total of 555,000.

You'd have to hope your house sells for more than two times what it was when you first bought to break even. Again, a lot of people aren't lucky to have this happen.

I agree about PMI. But I do believe your still paying for it one way or another. If you decide to wait on buying a house so you can come up with the 20%, you still will be wasting money on renting. So your losing while you save the 20%. So basically it’s still like your paying for the PMI. You’ll lose something somewhere.


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[airtime143]

It highly area specific...
I live in AZ where you were a fool not to buy for most of the last decade... may still be. The market is growing so fast there aren’t enough houses. That and property tax and HOI is low. Just always ensure you buy what you can keep should hard times hit. Airtime was right... don’t buy what you can afford... buy what you need but do the homework on the area.

I grew up out there... I remember when apache junction was dirt that they were giving away and Gilbert was just a bump in the road.

When I went back for my 10 year High school reunion, I wanted to run out to the river where I used to hang out as a kid and get a couple goodies from tortilla flats.
This was before GPS, so I had to rely on memory.
Jumped on the superstition, and headed east- back in the day, it ended by Power road, and we would just zip to the end and go north- nothing but desert and the occasional road side stand.

I over shot it by about 10 miles before I realized the expressway had been extended, and I was floored at the build up out there. A shit ton of people must have made a shit ton of money out there with that land. That 10 miles was just as built up and populated as where I grew up.

Is the valley still growing or has it slowed?

 

[LordKOTL]

Also, I think most people in this thread seem to be better off than your average American. Most people today don't have anywhere close to 20% to put down on their home to avoid the PMI. PMI is the definition of throwing money away, because you are literally paying more money for nothing extra in return. Paying interest in general is "throwing money away." Same goes with taxes.

The "median priced home" these days is about 260K. Lets say someone did put down 20% on a 30-year mortgage.... Over the life of that loan, they'd pay roughly 170k in interest. You can say it's easy to just pay it off sooner, but again, most people can't, and most people will be paying PMI as well, so that will just be an additional cost. Is this all not "wasted money" as well?

I know my parents bought their home for 150,000 in the mid-90's, and it's worth 350,000 right now. However, it's only worth that much because of the improvements they made to the house. And in the 25 years they've had it, I would guess that they'd spent about 100k in repairs and remodeling. They did a lot when they first bought the house because it wasn't in the best of shape, and then again about 15-20 years later when they needed to update a lot of things. And they did it all themselves, along with the help of family members. When you add in how much they've spent on taxes and interest, the amount spent on repairs/remodeling in addition to the taxes and interest paid is more that than the 200k they would make by selling the home. And it's still not paid off actually, so they wouldn't even get the full 200k, assuming it sells for what it's worth anyway.


In reality, most people who ultimately sell their homes will be lucky to break close to even, after taking into account all the extra costs that went into owning a home.

Again, some quick math:

You buy a 250k house, and put 20% down. Lets say your interest rate is 4%, which is pretty good. Over the course of 30 years, you put in 393,000 to pay off the house. Add in the taxes you've been paying in meantime, and that's now 500,000. Add in insurance, and that's 525,000. Lets say the home was in pretty good condition and you didn't have to put much in for repairs, so over 30 years you put in 30k. That brings you to a total of 555,000.

You'd have to hope your house sells for more than two times what it was when you first bought to break even. Again, a lot of people aren't lucky to have this happen.

About the only thing you can get out here for that is a cheap condo which is basically a re-purposed apartment...unless you want to live so far out in the boondocks your commute takes hours.

It's not that I'm against the idea of buying, either. But with the housing market what it is especially out here you're paying a fuckton for not that much--significantly more than what renting a similar place gets you. If buying works for you, great. But I'm not about to spread myself financially over 30 years with the housing market what it is right now...it'd be buying high.

 

[BNB]

About the only thing you can get out here for that is a cheap condo which is basically a re-purposed apartment...unless you want to live so far out in the boondocks your commute takes hours.

It's not that I'm against the idea of buying, either. But with the housing market what it is especially out here you're paying a fuckton for not that much--significantly more than what renting a similar place gets you. If buying works for you, great. But I'm not about to spread myself financially over 30 years with the housing market what it is right now...it'd be buying high.

Yeah, some places are pretty ridiculous.

Like I said in one of my previous posts, the cheapest house near me is listing for 190k right now, and it's in bad shape. If I bought it, I'd have to spend an easy 20-30K on repairs and remodeling to make it look pretty decent, and that would be just on the inside of the house.

There are some nice condos near me going for 150K, but the HOA is ridiculous.

 

[LordKOTL]

Yeah, some places are pretty ridiculous.

Like I said in one of my previous posts, the cheapest house near me is listing for 190k right now, and it's in bad shape. If I bought it, I'd have to spend an easy 20-30K on repairs and remodeling to make it look pretty decent, and that would be just on the inside of the house.

There are some nice condos near me going for 150K, but the HOA is ridiculous.

Yeah. Think condos that are repurposed apartments (not townhomes) going for 350k or more and couple in fascist HOA's with dues from 300 or more per month...on top of taxes and all that.

Bleh.

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[Monster]

I grew up out there... I remember when apache junction was dirt that they were giving away and Gilbert was just a bump in the road.

When I went back for my 10 year High school reunion, I wanted to run out to the river where I used to hang out as a kid and get a couple goodies from tortilla flats.
This was before GPS, so I had to rely on memory.
Jumped on the superstition, and headed east- back in the day, it ended by Power road, and we would just zip to the end and go north- nothing but desert and the occasional road side stand.

I over shot it by about 10 miles before I realized the expressway had been extended, and I was floored at the build up out there. A shit ton of people must have made a shit ton of money out there with that land. That 10 miles was just as built up and populated as where I grew up.

Is the valley still growing or has it slowed?

Oh yea... I live in the West Valley and they are now butting up against the white tank mountains national park. The 303 is in and to the south off I10 major distribution and manufacturing centers are popping up like crazy. Surprise was mostly fruit groves not to long ago... you would never know that now. I bought in 13 for the low 200s... get cash offers in the mail weekly with the last being over 300K... that’s in 50 months... No point selling as I’d just spend it on the next house and we like this one. At least for another 7-10 years... then the kids will be out of college and fully on their own. May sell it at that time, get a small one on a golf course elsewhere, don’t need it but hey... why not. I know home buying is area specific but this has been a home run. My payment including tax and insurance is bit over 1200 a month. (You couldn’t rent for that). You won’t get that now as rates were around 3% at the time. We like hitting open houses on occasion and I’m amazed how many Cali plates are there. It’s not slowing either... Maricopa County has been one of the nations fastest growing areas over the last decade... last year it passed Harris TX as number one in the nation.
The growth makes it a goldmine if you’re in a position to sell...

https://businessfacilities.com/2017/03/maricopa-county-az-nations-fastest-growing-county-2016/