The real cost of owning a home (opens in new tab)

Beyond financial costs, I was caught off guard at how much time home ownership took up. House maintenance and projects have taken up most of every single weekend of mine for the past few years.

Part of it is simply that I bought a house with more space than the places I usually rented. More to clean, more to maintain, more things that can go wrong, etc.

But the biggest thing is that I'm the only one in charge of maintenance. There's no one person I can call for every single problem. Keeping track of regular maintenance, performing that maintenance, and learning how to DIY things takes a lot of time. And even if I want to pay someone to do it for me, I still have to research contractors, coordinate estimates, and schedule the project. And I still need to learn enough about the project to determine whether they're doing it right!

Home ownership is definitely a lifestyle choice first and foremost more than a financial one.

The benefit of owning a home is almost always psychological, not financial. If you take the money you'd use for a down payment and mortgage and invest it instead (after paying rent) you end up in about the same place.

But the psychological benefits can be huge. You have much greater control over the place you spend most of your time. You can change it to your liking. You don't have to worry about rent increases or owner move ins or any of that other stuff that renters deal with.

And if you have kids, they get a sense of home and place.

But don't do it for financial reasons.

Beyond the financials, the psychological impact of both being able to make greater-than-superficial changes, and having extremely predictable payments for years without worrying about substantial rent increases, is substantial.

I redid/improved the bathroom to exactly what I wanted. I renovated the kitchen. I added paneling to the walls. I added a few outlets to rooms that needed more. I wouldn't do these things in an apartment, because rent could go up any year and exploit me for liking my home. Property value has gone up by 50% in the years since I bought.

On the other hand, renting comes with hidden (and some not so hidden) costs too.

The main one for me is the inherent precariousness that comes with renting. You don’t know how much longer you’re going to be able to stay in your apartment, whether that be due to rent hikes or the landlord deciding that they want to give the apartment to their nephew or any number of other things. The constant low level stress of knowing that you might need to go through the hell of apartment hunting and moving annually is awful.

It’s been much nicer to have a mortgage with more or less locked in monthly payment, even with the maintenance costs that come with the territory. It’s more predictable and frees up mental bandwidth for other things.

>"renting is just throwing your money away"

Unless you think landlords are running a charity, some part of your mortgage is going to them as profit (over a large enough sample of renters anyways), and some percentage of your rent is covering 'bad tenants' (which you're not, right?).

Their entire improvement section is also something renters tend to not think about. It's a weird situation when renting that you aren't incentivized in any way to make improvements to where you live. You might not even be allowed to.

With home ownership though, things like a modern kitchen, a shed, new laundry machines not only better your life today but also (likely) have some value add. Though you also get the luxury of being able to ignore the value add if you just really want to paint that room neon pink for some reason.

Ben Felix, a Canadian portfolio manager that does personal finance videos and podcast, has been arguing for years that rent versus buy is often a wash financially, and that you should make the decision for non-financial resasons.

* recent 2026 video: https://www.youtube.com/watch?v=aU7v87EhDBI

* 2025a: https://www.youtube.com/watch?v=j4H9LL7A-nQ

* 2025b: https://www.youtube.com/watch?v=lBG-g1CKfgs

* 2021: https://www.youtube.com/watch?v=q9Golcxjpi8

* 2019: https://www.youtube.com/watch?v=Uwl3-jBNEd4

The 2019 video goes over a handy "5% rule of thumb": start with the purchase price of home, take 5% of that: if your rent is less than that, better numbers-wise to continue renting (and investing the difference); if your rent is more, probably better numbers-wise to buy/own.

The company he works for created a tool to examine the numbers:

* https://research-tools.pwlcapital.com/research/rent-vs-buy

I am a DIY-er by nature with construction experience, I enjoy it, so when we wanted a bit more outdoor space, we moved from a suburban cul-de-sac to a slightly more rural property on some acreage, and chose an aged luxury home, feeling comfortable generally in my ability to be able to rehab it over time. After all, we're not in any sort of rush, and wanted the kids to experience putting work into the place where they live.

I misjudged the scale. Going from .5 acre to 10 I feel like the amount of time I spent on home and property maintenance before could all be allocated to just one bucket titled "nature." Mowing, whether it's lawn, meadows, trails, tree line, all on different schedules. Trees die, they fall, hang up. The volume of brush, invasive species, pulling it, burning it. When we bought it, I made a mental note: "we'll have to replace the driveway." That driveway is asphalt, and 1000 feet long. The quotes for that alone are in price territory of a luxury vehicle. Irrigation, 12 zones, repairing, winterizing. Septic is another ticking clock. When that goes, you're in for 5 digits. Don't have a suitable secondary location? Engineered system, multiply everything by like 3.

So remove that time from my schedule, that's what I have left for home improvement work.

We're deep into it and really enjoy aspects of it. But if I could talk to my pre-purchase self, I would advise that the scale difference is huge, and consider the amount of time that goes into baseline maintenance when deciding how much of a "fixer upper" to take on, especially when acreage is involved.

It is suggested to set aside 1%-3% of your home's overall value for repairs every year.

Most people do not do this, and many homes thus slowly degrade in value. It is a fast track way to destroy potential generational wealth.

Home repair issues also tend to be bursty (rule of three...). You'll have a few years of nothing that'll lull you into a false sense of security, then suddenly three major issues will come up. So far this year I've had nearly 10K in random expenses pop up (!!) and based on the life expectancy of my HVAC system I expect I'll have some more major expenses next year.

If there is one near to you, join a tool library. It is a huge savings over buying specialized tools for one off jobs. Tool libraries are an amazing community resource.

Find a good reliable handy man, even if you know how to do things yourself. Hopefully one you can trust with your door code so if your neighbors report running water while you are away on a trip you have someone you can call who you know will take care of it.

Your rent payments now, may be quite different in a few months. If you rent an apartment in a desirable location, which is far easier than owning a house in a desirable location, then rent payments are huge.

And comparable or worse than owning a house in farther out.

Your luck with landlords can wary a lot, and your rent payments may increase substantially with little notice. The landlord may also sell the building with either different management or repurpose it for something else and you will have to find a different apartment.

You may also suddenly have unpleasant neighbors. That is true with a house as well, but the distance between you and them is closer in an apartment.

As a dog lover, If you wish to have a big dog your may not be allowed to. If you want a yard to kids to play, you cant. If you want chickens you cant. (I know many in Denver who do) If you wish to install extra cooling /AC/heatpump you probably cant.

None of that negates your arguments fully, but the case is far from as black and white as you make it.

IMO most childless people would be better off renting (kids change the whole set of incentives). Exceptions would be people with hobbies that require a lot of space or a yard, and light sleepers.

A house means a better standard of living, but you definitely pay for it. I spent $25k replacing a fence at my house this year, and I'll need to spend another $20k to replace the air within the next few. The roof, another $30k, is coming up too. Where I live you can rent for quite awhile with $75k.

While it's true rent goes up over time, if you take the money you're not putting into a house and invest it, your investments will go up over time as well.

I was half expecting/hoping this would talk about the opportunity cost of owning a home. More precisely, owning a primary residence.

There are quite a few studies about this, but it is something which is not discussed broadly enough. But there is a inverse relationship between home ownership and income.

Because for most regions across the globe, once someone buys a home, they start looking for work that's in geographic proximity to their primary residence. And in most parts of the world, incomes generally tend to stagnate since higher paying jobs are almost always away from where people live.

Now a lot of people believe that they will pick the higher income, but the amount of logistics which goes into thinking about selling your home or renting it even often dissuades people from trying to look for a job which pays significantly more.

Interestingly, some multinational companies that I know of facilitate the entire transaction for their executives and senior managers when they need to move cities or countries because of this effect.

Owning a home for the purpose of investment and not living is a different matter, and the same effect isn't seen there.

A lot of discussion of the cons without discussion of the pros. For example: 1) your home is a hedge against inflation, your $2000 to interest sounds terrible when rent is $2500, but doesn't sound so bad if rent rises to $3500. If you live in your home for long enough, this is all but guaranteed. 2) your home is a leveraged investment. You may only be getting 4% per year in appreciation, but that's 4% gains on the total value of your home, not just your equity. If you have a 500,000 home that appreciates by 4%, that's 20,000 that you get directly, not the bank.

Interest rates sure have made it less of a good deal than it was ~5-10 years ago, but it's usually still worth it in the long run.

Owning a home is as much responsibility as having infant which never grows up, can never be potty trained. There are thousands of things that need to continuously monitored and maintained. Time, money, mindspace and the stress are the huge operational costs of owning a home. Property taxes, insurance and repairs/maintenance, these three are increasing YoY will cost 3X the initial cost over a 30 year mortgage.

There is no incentive for homebuilders to build better homes, once they sell, they don't deal with the ongoing costs in multiple dimensions.

I got my mortgage at 2.5% interest. The mortgage was about equal to all of the cash I had before buying, and I'm pretty sure I could (and should) have gotten a much larger mortgage before buying. Mortgages are essentially the only way for ordinary people to access that kind of credit. That's why buying a house is such a good deal. No one's lending an ordinary 30-year-old hundreds of thousands of dollars at 2.5% interest to plow into the S&P 500.

Of course, this kind of credit is _incredibly_ risky. People don't think of it this way, but a mortgage is essentially a massively leveraged bet on your local housing market. Which is already gives your risk profile an incredible lack of diversity. The most valuable thing you "own" in the time of your life when you buy a house is usually your future earnings potential, and your house will be the second most valuable thing you own. The thing is, both of these things are highly correlated with your local economy, so buying a house doubles down on your already high exposure to local economic conditions. People think of owning a home as a kind of boring, safe, low risk/low reward investment, but it's really exactly the opposite.

You come out ahead with home ownership if you buy the right-sized home and stay there. Homes almost always offer more space and utility for less than rent would, assuming the rental even allows you to do what you want to do with your home or at your home.

Staying put reduces the time and money you spend on borrowing, closing and moving, but most importantly, it keeps you from lifestyle inflation that is the biggest financial risk to homeowners or renters.

These are the dynamics in most of the United States in the broadest age range. They only break down a bit at the extreme low end (rooming with a bunch of people) and in the most expensive and house-constrained cities.

Relevant: https://www.nytimes.com/interactive/2024/upshot/buy-rent-cal...

If you're just looking at the numbers, it's worth doing the math. Obviously many things will be estimates.

Most people don't do apples to oranges comparisons, because a 2-bedroom, 1.5 bathroom you're living in is not comparable to a 3-bedroom, 2 bathroom, quarter acre house on a lot you're considering buying.

So it's obviously not just math, but also preference, or need.

Local house prices, tax rates, utility rates, services for maintenance and upgrade... they'll all vary greatly depending on the area. And if you're moving from an urban apartment to a suburban house, you're changing how much you'll drive, maybe even need an additional car. But maybe you turn in your rail pass, and decide to cook at home more, and eat out less.

If you think you can decide this based on a formula (or some folk wisdom), well you probably can, for yourself. But of course there's no one universal right answer that applies to most people, because there are too many variables and too many options.

I actually enjoy it much more than I thought I would.

I love tinkering and solving problems on the computer, and it's fun to have a space to do it with my hands in the real world. Learning the basics of carpentry to erect a fence, basics of plumbing and the various international fitting types to install a (from japan) bidet toilet, cat6 throughout the house and trench out to the garage, basics of hvac for a whole-house humidifier and smart thermostat (MN winters) -- have all felt like very fun projects.

Next project is probably trying to replace the plumbing up to our second floor bathroom with pex (water pressure upstairs is very poor).

Also helps that I have a very handy dad that I can fall back on to ask questions or help.

> I bought my home in Auburn, WA for $321k, and sold it a few years later for $333k. After all the costs to buy and sell it, I probably lost more money on it than I would have spent renting an apartment.

Any half-competent realtor will tell you that if you aren't going to stay in a house for 3+ years you will probably lose money on closing costs/fees.

Contrast this with my house, I stayed in it for ~6 years and the house went up ~$100K in value. During that time I put ~$50k into it (AC, Insulation, Pest, replaced some pipes).

But most importantly, it was mine. I did have to manage my own maintenance but I've lived through almost a decade of renting at differently places and the "included" maintenance is dog shit. At one point I had water in my kitchen floor such that as you'd walk water would come up through the seems in the vinyl for well over a month... on the 16th floor. I also had long streches where the elevators weren't working and every year they increased rent $50-$100/mo. Right as I was moving out they wanted to add a $25/mo pet fee and the removed our cable modems and made everyone use wifi-only (limit 10 devices). Yes, some of those could be avoid renting a house not an apartment but I've lived that life as well and it ain't all roses either.

TANSTAAFL. Maybe renting and owning come out about even for most people in most situations, but a lot of the "perks" of renting really sucked IMHO and I greatly preferred being in control of my own destiny, never having to ask permission, not feeling like a second-class citizen, not having the owners stop by or want to show off my unit to a prospective customer.

I have zero desire to go back to renting until it's time for nursing home/assisted living-type place for me.

These own-vs-buy comparisons always compare an idealized rental situation vs a concrete ownership situation. Its never realistic (although this article does acknowledge it: "My 1983 home had been used as a rental for years, so much of the maintenance had been neglected".

Specifically: people think about maintenance costs as a "con" in owenership, but its not like in the alternative (renting) you'll get all of those things for free. The owner just won't do any maintenance beside the bare minimum required by law.

I think 1% per year is insufficient for repairs. Even a paint job will cost more than that these days.

There's also a potential HOA fee, even in many neighborhoods with freestanding homes.

But there are tax benefits of home ownership too. The interest deduction used to very significant, although less now since they raised the standard deduction. There's also a $250K/500K non-taxable capital gains benefit when you sell a house for more than you paid.

I really like this analysis. Considering this is written for america, a lot of these points somewhat apply to germany. Over here homeownership is pretty difficult. I put that decision away until I'm 35 or 40 and absolutely have to stay in one place because of kids and so on. I feel like I have more psychological safety when I rent and can move away whenever I want to, have a pile of cash and investments that pay the rent for a decade. I can't wrap my head around pulling most of your savings into a loan and then paying more or equal monthly than what you would pay for rent...

I feel like renting your first 1-3 flats in different cities is a valuable learning experience. You will learn where you want to live, what is important in a flat, its layout and its utilities and materials. It will save you a ton of money longterm if you know how thick the walls, well isolated the windows, locality of things and many other facets have to be...

Renting won't match home ownership for few reasons.

First one already mentioned in the comments is you can be kicked out at any time within your rental agreement. I was "lucky" enough to get our rental sold two years ago and then again this year. Packing and looking for another rental with 2 months notice is not fun (and boxes smell).

Another difference is location and place itself. You'll have much fewer rentals in a very nice neighborhood, and even those that are rented out, are the worst - corner lots (3x gardening cost/effort), facing major roads or other things that make life less comfortable.

Rental condition is not under your control. At least in Seattle area owners I rented from didn't keep the house well maintained, which resulted in:

* roof leak (no moss treatment performed, grew and lifted shingles).

* 25 yo furnace "worked" until one midnight my family had to evacuate and call fire fighters due to CO alarms getting off. Four days without heating after that (owner offered to reimburse for the cheapest hotel nearby).

* Appliances are not replaced until they break. I looked at one property few weeks ago that had original once white appliances. I asked if owner is willing to upgrade them, the agent laughed at told us they will fix it if something doesn't work after we move in.

I grew up in Puerto Rico where houses are made of concrete or concrete blocks. Maintenance was lower because there were not much issues with termites, water damage, shingles, etc. My house made it through a category 5 hurricane with minor damage to the windows and some flooding. Now I live in a house made of wood in Georgia. I’m exhausted from all the maintenance and the extreme nickel and dime-ing from everyone. I bought new five years ago and the house now needs to be fully painted, a new A/C evaporator, and some other minor stuff. So, about $20K worth of “maintenance”. This plus the stress of having to live with the hopes that a hail storm does not hit and ruins my shingle roof. I’m hoping to sell it and rent until I move back to the island and live in a proper solid home. I would build a house here with concrete but code does not allow it.

With a mortgage, you are forced to save money. In other words you have no way around being disciplined. So yes in theory you could probably make more money with aggressive investing, but chances are most people would risk too much and lose a lot and never have the mental discipline of saving the excess they have no matter what happens in their life.

For me, the biggest 'cost' seems to be peace of mind. I rent my place, and even thinking about all this home owner sh!te gives me a headache.

To each their own, and I'm probably pissing money away, but I want to live with the feeling that I can quit this 'housing subscription' (that's what it is, just another subscription) within a month and not even have to think about it.

Great article, love that you enumerated all the costs in buying a home. I don't like how renters romanticize home ownership and fail to understand how many costs are involved.

> You've probably heard someone say something to the effect of "renting is just throwing your money away". Don't believe it. It's a glib statement that simply isn't true.

No, the statement is completely true: 100% of your rent money goes to someone else, and you also don't get any asset to sell later on.

However, this statement doesn't exist in a vacuum. You need some place to live, and you have to compare the cost of renting to the cost of owning.

To give an example, the typical rent in Toronto is $1000~2000/month, and the typical home ownership cost (including principal, interest, taxes, and maintenance) is $2000~3000/mo. We can just pretend that both are around $2000/mo.

If owning is still $2000/mo but suddenly rent is $500/mo, then renting suddenly becomes a great deal - even though you are still literally "throwing money away". You can use that differential $1500/mo to invest in a savings account, stocks, etc.

And speaking of that, I realized that the biggest cost in owning a home isn't the mortgage (and you correctly pointed out that paying down the principal doesn't change your net worth). The biggest cost is the opportunity cost of the down payment, when you could have instead invested in the stock market at 7~10%/year.

Continuing with the Toronto example, if you bought a home for $500k with 20% down, then the counterfactual if you had continued renting is that the $100k chunk of money could've generated $7000~10000/year = $580~$830/mo, which is a substantial fraction of the $2000/mo rent.

Shoutout to this article again: "You Are Naturally Short Housing" https://thezikomoletter.wordpress.com/2012/12/10/you-are-nat...

OP seems to disregard the fact that equity in the house is basically a pile of cash you can live inside of. If you're renting you're paying some premium for the landlord to pay their mortgage interest and pay down their own principal. The cash flow is lumpier for ownership (fewer, bigger expenses) and your risk concentration is greater (you're committed to a single asset). But ultimately that stuff is all priced into rent, plus a premium for your landlord to have "passive income".

If you're able to own a rental property in today's economy it feels like you'd have to be stupid to not be able to make above-market returns

The long-term promise of buying a house isn't necessarily "number go up" but "after 25 years you own it outright".

A big reason why people believe one should own their own home (or that it is prudent to do so) is due to the historical fact that land has gone up in value in many countries with strong population growth (such as the United States).

As the population of the US starts decreasing (due to lower immigration, and historically low birth rates) and the urbanization trend completes, it's unclear why the value of land should go up, and therefore why real estate should increase in value.

The rest of the debate is very dependent on things like tax treatment (e.g. SALT and property taxes), personal preference (stability of fixed rent vs right to stay forever/customize), and transaction costs.

The article details costs and leaves two big ones out. First, opportunity cost: lot of folks rent instead of own on the basis of keeping assets in higher-performing market sectors. Second (and perhaps actually an expression of the first), anything that prevents a working professional from changing cities can exert downward pressure on future economic opportunity.

Last summer I was reminded of the dichotomy of owning vs renting during the crazy heat wave in NY.

Both my coworker and I had AC issues. For him, he called his landlord and that was it in terms of hassle. He then went after his landlord for a rent reduction due to the AC being an issue for a week.

I instead had to buy a portable unit as a stopgap while I dealt with finding contractors to give me quotes on a new central air system which cost 5 figures and probably 20 hours of time.

I'm not from the US but I find some of these numbers ridiculous.

$515.50 per month for property taxes? That seems soo high. What does this cover - garbage collection, what else?

> Cut down trees that were too close to the house: $2,800

I could've likely flown to the US, cut down your trees for a few hundred and flown back home for that much money. Why so expensive? I'm beginning to question the other numbers.

> Replaced leaking faucet: $185

Can't you do it for like 5-10 $ yourself? If you don't have any tools, maybe spend 20 $ for tools? The author even says he replaced his own faucet - I don't get it at all. Or are we talking about a fancy top of the line faucet?

I realize repairmen cost a lot but that seems like a LOT. And I get that in the US you have to have lots of insurance and inspections and whatnot, but... it still seems high.

The buy/rent decision is quite complex for many reasons, but two overlooked factors are:

1) When a bank loans you $1e6 to buy a house, they are effectively deputizing you to act as a money manager: they allow you to make an investment that will hopefully appreciate more quickly than the interest rate. There are many other investments that have this property (e.g. the stock market), but banks won't loan to you to invest in them!

2) A mortgage acts as a forced savings rate: you pay the bank every month, and when you're done after 30 years, you have a large asset. So a large mortgage is (for some people) a good psychological commitment mechanism that imposes financial discipline.

I had a rental which was great up until the last 2 months where the landlord sent a prospective tenant to view it twice a week.

No regard for my personal privacy. At a point a real estate agent just walked into my home without any notice. Even after this the showings continued.

I’ve had truly awful landlords and some very good ones.

Although unless you own a house in the woods it seems like someone needs to mess with you. You’re hoa fines you for not mowing enough , etc.

It depends on a lot on your timing with the market. This guy (from TFA) sold in 2007; I bought my first house as a (fairly dire) fixer-upper in 2008. I sold it in 2016, after it had more than doubled in value (partly due to improvements we'd made, partly due to market improvements). I bought the next house as a (cosmetic) fixer-upper in 2016, and sold it in 2020, after the pandemic had multiplied its value by 1.5x. Now I own outright, pay no mortgage, and my property tax is less than 1% where I live. Yes I got lucky on timing on both ends of the 12 years, but not selling into a down market (if you can help it, of course), buying with an eye to potential increase in value, and being willing to take advantage of market conditions are all things that can work in your favor.

> the total settlement costs were about 3% of the value of the home

> That's $12,777.92 to get the loan.

This is something I don't quite understand when people talk about homes: they just bought a $425,930 home. If they're getting a 30-year mortgage with a 20% down payment they will pay a total of $902k at current mortgage rates. The closing costs are such a tiny fraction of what you're spending. You wouldn't go into a store and refuse to buy a $40 item when you realize you need to pay $3 in sales tax, why would you be bothered by having to pay 3% of the home's value or 1.4% of what you will end up paying in the end?

Same thing with property taxes: my home-owning friends complain about property taxes like they're some huge imposition. OP is paying $515/month in property taxes. My rent has gone up by more than that in the past 3 years that I've been in my current apartment.

That being said, I appreciate this post for the breakdown of all the expenses. I'm considering becoming part of the land-owning elite, so this is useful.

This is a super-useful article, and there are many cases where the cost of buying, owning, and selling a home is higher than that of renting. But sometimes ownership costs less than renting, and often—generally when you stay long enough—it can cost a lot less. One place in this article that hints why is when he says that in 2011 his mortgage was $2,329.92, whereas now 15 years later it's $2,440.48. That is a tiny crawl upward, nowhere near the rate of inflation. If he'd been paying $2,329.92 monthly in rent in 2011, he'd now be paying about $4,100. Inflation hits renters much harder than homeowners. Appreciation (a form of inflation) tends to help homeowners more than hurt them. Nerdwallet's rent vs buy calculator is quite sophisticated and can help you reason about your own situation. https://www.nerdwallet.com/mortgages/calculators/rent-vs-buy...

Some other costs that may incur:

- Pool

- HOA

- HOA (if the community belong to larger community association that maintains things like park)

Summerlin area in Las Vegas for example have summerlin association you pay HOA to in addition to your residential HOA.

Not surprised ownership is not cheap in the US.

West EU here, bought a new, architecturally wrong (yikes) house in 2012. I knew its conception would spell trouble, and sadly I was not disappointed on this part almost right off the bat. But the location and the price (right on the aftermath of the 2008 financial crisis and economical fallout / market bottom) were good.

After 14 years it cost an average of $130 per month on maintenance, mainly to correct on multiple occasion the conception issues aformentioned after the 10y warranty. Utilities are about $170 per month. And taxes are now about $1700 per year (rise 3-4% every year)

This $250k purchase must have cost less than $2k in fees, the credit was... well no credit. Spent almost 100% of my savings except some cash for my business. On the overall this house cost me less than $500 per month so far. Not really surprising for a new house, certainly.

And its market value rose by 60% in 14 years.

Yep, ownership is (was ?) very profitable in the west EU, mind the location.

Financially, in very few cases renting actually makes sense.

Assuming of course you make an informed purchase of a home given your particular circumstances.

Most homes in the US appreciate in value, unless you live in rural Pennsylvania.

I also believe buying early forces you to be more financially responsible and makes purchasing your first family home later in life a lot easier.

So I always recommend young people to make the sacrifice and buy a place.

Your first home doesn’t need to be your dream home.

My first place was 700 sqf in a very shady area of the city, but it came with sweet tax abatements for several years and the area improved a lot but the time I sold.

There are always opportunities like that in almost every city in America, even in today’s market.

Been thinking about this a lot. Curious what the rational folks of HN would suggest for me. Fact pattern:

- I'm in the 25-30yo range, single male

- Living with parents because I can; there's no friction and I mostly enjoy it. And I'm saving a ton of money.

- Remote senior SWE for a non-FAANG, but still doing around $200k/yr between my W2 and a few other things

- NW somewhere around 400-500k.

I could easily go buy a house, it just seems like... a trap? Home prices are stalled at a little over 7x median household income, a bit above where they were in 2006 [0]. Everyone who tells me to buy property seem less like they have my best interest in mind and more like they're either repeating the cult saying of the last 50 years, or they're invested in a class of bigger fools existing.

I fear the one-two punch of me becoming unemployable (AI is getting _really_ good at even the niche stuff I do) and the market crashing. I'm glad I don't have dependents to worry about; even more glad I don't have a mortgage to service.

If I had to go live on my own, the napkin math I've been doing, even ignoring closing costs and house maintenance costs, is that I can rent a house for cheaper than I can buy a similar house in my area. This is "in the long run"; meaning at the end of 30 years I will have higher net worth having rented than bought, with conservative estimates of market performance and aggressive estimates of rent increases and house value appreciation.

It all just seems nuts. I see people my age working at grocery stores (a good and honorable line of work) who are buying houses and I don't understand how they make ends meet.

Am I stupid?

[0]: https://www.longtermtrends.com/home-price-median-annual-inco...

In the US, median homeowner tenure is about 12 years. If the local price-to-rent ratio is high, (greater NYC metro for example) then you may have to stay 20 years to come out ahead financially. In a case like that, renting can be a very attractive strategy for building wealth.

Yikes! I know that this is "normal" here in the U.S., but the guy paid over $26K just to sell his home. We sold our home with a "quit-claim deed" and only paid a lawyer $600 to write it up and make it kosher. Buyer was THRILLED not to have to pay all the ridiculous fees a normal sale entails... (and yes, I know that a bank might have a hard time creating a loan for that type of sale, but it worked for us)

The decision to buy vs. rent is completely dependent & goal dependent. If you're in the bay area, buying really only makes sense if you have kids and want them to be in a good public school district. Otherwise, many houses are oversized and have extremely high repair costs. Finding a good rent controlled unit could be better, especially if you find a landlord who will repair things.

And anybody who is saying their property value went up, so it was worth it, you really couldn't know that at the time. It wasn't a given (tbf neither is the market going up). Also, it's not like the property actual increased in value due to some quality upgrade, it's due to artificial scarcity. If the political winds change to encourage more housing, that trend could reverse.

There are arguments that you can customize a house you own more and that's true, but that's not a financial argument. I don't think a lot of big renovations pencil out anymore the way people expect. Paying X to renovate a kitchen doesn't increase the value of the house significantly over X anymore because the costs are so high and the high inflation erodes your dollar value much more quickly than in the past.

interesting enough to read this. One thing that is not talked about is why would homes just keep going up, i understand the math behind it and what appreciation does to a home value. where is the cap that a visually home is 150k but market value over the three previous years has gone up 4% for example. This makes sense for high value areas, and upcoming areas. My confusion lies in the market value and negative equity. separate the mortgage "rate" and "market value, est home value" We can expect some gain is a guarantee, this could be 20% or 4% in 5-7 years of residing. The chilling wonder of rates exceeding 4%-6% is temporary as we saw previously in the 80's and 90's. Someone can argue that indeed this is a natural cycle of mortgage financing, however my conclusion is to draw attention of the the span of time that mortgage rate have stayed high and the implications of inevitably adjusting to lower rates by the feds. The president has persisted to lower the rates regardless of the Chair's decisions. Lower rates cannot be done alone. The market also needs adjusting at the same time. Sure by adjusting the rates will have an immediate effects on the market as well, but not large enough.

Those that have updated and added additional features to their home did so with materials and services bought during high pricing. It is true that a deck built a year ago is going to be 20% less for example. later when selling a home how will this reflect on the bigger picture for the total price. Let alone the market when the cooling takes affect you will owe more than what the home is worth lets say. So my confusion is brought by a conversation with a coworker. Stated that he wanted to buy a home at 21 years old i said that unless you have a family and know that you will be stable in that location for arpox 5-7 years that sure, however when the market cools and your locked in mortgage rate is XX% how will you sell you home and come out even or even +.

Response: equity

me: you mean negative equity!

response: homes are only going up.

me: to what a million dollar for a two bedroom, one bath dwelling located in a busy street and minimal parking and adjacent to neighboring property.

He seemed convinced, he seemed to convince me that i was wrong.

I'm old enough to have owned a number of homes in a number of jurisdictions, so I'd caution that these numbers will differ significantly depending on where you live. For example, insurance is hugely influenced by fire risk, so a rural or semi-rural home can easily cost 4-5x as much to insure (and some insurers will give you "please go away" quotes, so it's important to shop around).

Similarly, taxes will depend on the locality, loan costs depend on the lender and the loan amount. Utility costs in SFBA can be easily 4-5x higher than elsewhere in the US, etc. So your totals could be easily 30% or 300% of what's outlined in the article.

The one important point that the article makes is that your ongoing costs will also vary dramatically depending on how much work you're willing to do yourself, especially in high-regulation, high-labor-cost areas such as SFBA. A basic job, such as replacing a leaky flush valve, can be hundreds of dollars in plumber costs, or $19.95 if you go to Home Depot. Hiring a painting contractor can cost thousands. Etc, etc.

I've also seen several homeowners outright taken advantage of. My main example in the US are various "mold remediation" contractors, who can help you in some really bad situations, but they're just as happy to charge you $20,000 to do nothing of value based on vague fears.

People seem to have very strong feelings about the subject (myself included), and some seem to think there's only one correct conclusion.

Renting an apartment and owning a home have so many differences that it doesn't make much sense to compare the two.

Many people seem to assume they'll be moving every few years, but if you want to stay in the same place for life the equation looks very different. I hope to be done paying the mortgage around the same time I'm too old to work for a living, and if that lines up it's a pretty big win on the own instead of renting side.

There are lots of often overlooked costs to own a home. I have been 15 years in my place, and now I get some advantages e.g. my loan is fixed so the monthly cost is roughly the same as 15 years ago... in a place like San Francisco, it is nice.

The property tax goes up slightly every year, but not faster than inflation.

There are recurring things to maintain (repaint every ~10 years), the roof has been patched about 10 years ago, might need a new coat eventually.

Completely missed the tech-heavy features of owning your own home:

Wire your network however you like. Those walls are yours.

Invest in as much solar power as you want. The only limit is the sun itself.

Want to be a Ham? Be a ham. The antenna goes wherever you want.

Charge your EV as long as you want. The EV charger is yours and only yours.

Also, do you want a cat? A dog? A massive tree? Just get it. Nobody can say no.

> My 1983 home had been used as a rental for years, so much of the maintenance had been neglected.

This quote is ironically a weighty argument for why living in a rental sucks, even if it nets out the same or better on paper.

>You've probably heard someone say something to the effect of "renting is just throwing your money away". Don't believe it. It's a glib statement that simply isn't true. There are so many hidden costs to home ownership that most people who have never owned a home don't know about.

I appreciate your saying all you said. I just want to add on, the ownership picture is even uglier. (what I'm about to say will break your brain, frequently to the point of downvoting; don't blame the messenger for the bad news you don't want to hear.)

When you buy a house or a condo apartment, you now have the right to rent it out to other people. That rent would be income to you, and you are entitled to it.

if instead you choose to live in this piece of property you just bought, it is an identical financial situation to you being the payer of the rent. Owning the property did not eliminate rent (the monthly rental value of your property) from your budget.

Now, you are paying the rent to yourself, so isn't that break-even? well, it needs to be compared to the opportunity cost of the capital you had to put down and the interest you need to pay on the mortgage.

due to many govt subsidies for homeowners, it can work out in your favor, but at the same time the stock market does offer higher returns. But more importantly, why are non-homeowners on a very large scale being expected to subsidize wealthier homeowners in the form of an unfair tax burden?

> You can save a lot of money in maintenance and repairs by doing your own work whenever possible. I replaced the drain pump in my dishwasher, replaced a leaking kitchen faucet, replaced the control board on my HVAC system, do all my own yard work, etc.

This is where the margins of home ownership open up. Doing your own yard work also has added benefit of giving you routine awareness of potential issues around your property before things become much more expensive. Irrigation and drainage issues are usually obvious when you are standing right on top of them. I would argue that if you aren't willing to push a mower around your property, you might not want to own that property.

Also, DIY yard work also forces you to maintain various tools and skills that are extremely useful for adjacent applications. For example, lawnmowers and standby generators tend to have similar principles of operation. The tool and knowledge I use to gap the spark plugs for my mower works just as well for the generac.

Over short term windows it’s very possible for renting to make more sense. Over the long term it’s very difficult for renting to come out ahead. If you’re talking about the same town over say 20 years then the chances of renting coming out ahead is near zero.

In the US at least the tax system is also heavily setup to favor home ownership. Mortgage interest and real estate taxes (which are baked into rent) are tax deductible for the home owner and not for the renter. That’s another big difference that adds up over time.

For my twenties, the biggest cost would have been opportunity. I was able to switch jobs multiple times in different states before meeting my fiancee. Renting allowed me to be far more adventurous than I would have been.

This doesn’t factor in the growth in the value of your house, which mostly happens tax free (in the uk at least)

We bought our house 10 years ago and it’s basically doubled in value since then. Which is way more than the money I’ve spent on interest.

It seems like this is also based on buying somewhere with a super low deposit, which I agree is probably a bad idea.

Some of us get lucky and it is financially beneficial. I bought my house right before the housing market spiked so the value of my house almost tripled. It has since gone down a bit but it will be a boon if I ever sell. The rent at the apartment I was at was equal to my mortgage payment but now if I wanted to rent that apartment, it is 4x my mortgage. I also have an EXTREMELY low rate (2.5%) because of my credit.

I save almost 6 figures of money per year of owning versus renting just because of timing. I guess the moral is: get lucky or optimize your living situation for how you want to live instead of worrying about cost (unless it's huge)

For me personally, I used an LLM to build out a financial model with different macro and financial input variables (e.g. mortgage rates, if I rented rooms, HOA, home appreciation rate, etc). These factors changed my projected return differently on a 10, 30, 50 year time horizon for renting vs owning

I recommend everyone who's making this decision to do something similar as an additional perspective. So many variables will be dependent on location, personal finances, and goals

Buying a home is a hedge against inflation.

Renting has no similar protections. Your choices are, "Pay the (increased) rent" or "Move"

Famous article by JL Collins: https://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terri...

Another thing to keep in mind is the lumpy nature of costs, meaning you need to have access to cash to pay for multiple major maintenance projects in one year. My largest single-year expenditure for maintenance was 25k in a LCOL area pre-pandemic. That would probably translate to 50k today. If you have to dump that on a credit card, good luck digging yourself out of that hole.

It's common to hear that renting means you might need to move at the end of any 12-month period. Well, that cuts both ways. You have the option to move away at the end of any 12-month period too. Lots of folks had to turn down job offers in the aftermath of the housing crisis because of their homes.

Aren't quite a few of these concerns alleviated by owning a condo?

Is the author accounting for the equity built up? Cash has to go out whether it’s a mortgage or rent. With a mortgage you are building equity. This changes the true math when you sell (leaving aside your ability to now get a HELOC).

> I bought this house new, and didn't live there very long

End of story. That's the entire conversation right there.

Note how much money he made on the house he lived in for a decent amount of time... (~330k, minus minor investments on repairs)

Renting is better than buying if you're not going to live in the house for any real duration (real meaning 5+ years).

Otherwise... at least in the US... the financials around 30 year mortgages and a target inflation rate mean buying is going to work in your favor.

Will this blow up at some point? Meh, maybe? But for now, owning is FAR better assuming you actually hold onto the property. The longer you hold, the better it gets.

Houses are almost allways bigger then something you rent… well that might be because you would not afford the rent of the large property, and the whole comparison falls apart.

I don’t share this experience at all. I bought a fully finished new house in Japan, and I haven’t had to do or pay anything extra (other than mortgage and yearly tax) for the past 6 years.

Maybe it is different if you buy an old house?

I enjoy the maintenance, doing what I can myself, trying to learn if I don't know. When the house was renovated (read rebuilt internally completely), we chose to stay in it during the works. It was fascinating. And, houses (usually) increase in value. Some more than others.

While this is true, I think the bar should be lower - the real question should be "and how does it compare to renting" - there is very possibly a universe where owning is cheaper than renting even if your home depreciates. Because paying some amount for years to be left with a fraction of what you put in is better than getting none of what you put in.

However many of us knowingly exceed that point. For example we pay ~$500/mo over that point. Though there is no really comparable rental, we definitely could have chosen a more cookie cutter rental to be about +$6000 / year.

HOA fees can get so extremely high I don’t understand what people are paying for - 300, 400, I saw 800$ on some property.

> I currently pay $515.50 per month for property taxes.

I currently pay almost $2500/mo in property taxes here in SF (about $100/mo in parcel taxes). FML.

This article does not mention the opportunity cost of all the home equity you accumulate, which is frequently a big component of the overall cost of ownership.

The cost of having to live under the boot of a landlord is immeasurable. The freedom of not having a landlord is priceless.

people might scream about corporates owning housing - but one thing that's a blessing is if corporates sink their money into apartment blocks | buildings instead of single family homes.

you can rent for multiple years at a favorable rate - then save some money into the stock market.

however in america - people have been fed the propaganda you need to live in a single family home.

The numbers miss a key aspect - risk management

Landlords do whatever the hell they like with zero consequences. Thats not a game I’d like to play with a 40 year horizon of unknowns.

With a mortgage the risk is interest rates. And on that I’m confident I can carry far more exposure than my peers. So if that blows up in my face then the entire country’s financial system is cooked anyway

This is nonsense.

The person counts the 12 month escrow prepayment during closing as "cost to get a loan" It's not. It's the cost of 12 months of taxes and insurance on your property.

Also notable is the "1 year insurance premium" either they're double counting the escrow, or this 1 year insurance premium is mortgage insurance where the bank makes you take out insurance to protect them. This can be prepaid, split paid, paid monthly, or you could put down 20%.

The lender makes you purchase title insurance for them, but this person also purchased title insurance for themselves. This is mostly just pure profit for the title company. The cost for the insurance is for the company to do the research, if they found an issue, they wouldn't insure the bank. Buying it for yourself is mostly just lighting money on fire.

A lot of those closing costs are shoppable, you can find better lenders. Before closing, you're given a truth in lending disclosure with all this carefully spelled out. If you don't do even basic due diligence, I question if you have the financial literacy to own a home.

I'll also note, they didn't mention in their closing costs paying for a home inspection (beyond termites). This is likely why they had to pay for real repairs on the house.

One of their "repairs" is new water pipes. There's no reason listed for this, but this is often pushed by door to door salesmen telling you need to do it to protect your property/health and is mostly, like all door to door sales, a scam.

That note about counting the cost of heating and cooling is similarly nonsense. They claim "apartments are almost always smaller than houses" which isn't true, and count electricity rate increases as cost of ownership, rentals have to pay that too. They also assert, with clearly no evidence that heating and cooling is half their electric bill. There's easy ways to figure this out, an emporia can do it easily.

The whole premise is flawed. They note that in the beginning only 20% of their payment goes to principle and A) you can control that (bigger downpayment so no PMI, less interest), bigger more frequent payments or a shorter loan, and B) exactly 0% of your rent payment goes to your principle.

This might better be an examination of "can I afford a mortgage with the same rent payment as I make today" and the answer, not surprisingly, is no, if your rent payments are a the top end of what you can afford.

You experience more than 100% of all of these costs as a renter, while you have none of the up-front costs and less liability you also have no agency and no equity. It can be a trap though, as selling isn't free and if you didn't have enough equity built up you can end up losing money to move. Some housing ends up as rentals because of this, makes more sense to not sell and to rent it.

Renting is definitely the better option for certain people, if you intend to move often, or want to live in an apartment your overall costs are likely to be lower. If you want a single-family home and don't want to move often (or be moved out) Buying is worth it. Even setting aside the satisfaction of home ownership if you can mange to pay off your property you pretty much can't live cheaper at the same scale.

that said I've rented, I've owned, and I've been a landlord and I'd take home ownership in a heartbeat. It's not all rosy, and being responsible for maintenance is no joke but not being subject to the affairs or whimsy of someone else's finances along with the pride and sense of actual ownership is is wonderful.

No one mentioning you can borrow against an asset. Unless you have a massive portfolio of stcok, you usually aren't going to be able to borrow against it (at least on favorable terms).

PSA: it’s probably time to change your furnace’s filter

It's interesting to put this article in the context of all the local-model vs. frontier-subscription inference discussions occurring recently.

How can anyone (financially) justify the cost of owning your own compute?

How can anyone (ideologically) justify the cost of not owning your own means of compute?

> After all the costs to buy and sell it, I probably lost more money on it than I would have spent renting an apartment.

Don't tell that to real estate permabulls, even the idea of a landlord making money for a month or two between them paying banks for homes is a whole diatribe.

Money in the toilet! They surmise, as if trading equities wasn't an option, or any other way to make money faster wasn't an option. As if other leveraged investments don't exist. As if leveraged investments that can optionally generate cash flow don't exist. As if they aren't such poor traders that they need the extremely slow collateral calls of real estate to survive.

Because one of the dozen middlemen fumbled the bag, the real estate flipper had to pay rent for a month! Woe! They couldn't live in yet another suboptimally located suburb far away from stimulation or economic center, instead of some of that that capital to rent somewhere in the middle of where people would actually want to live while putting the rest in equities or a productive business

This is an excellent post for folks just getting into the homeownership racket: what is pitched as a necessity for wealth creation and an “easy” transaction with nothing but upsides is - unsurprisingly - a nuanced and complicated financial transaction that has no guarantee of upside.

A few things I’d note to add more data points to the pile:

* Property tax caps like the OP discusses are likely to go away in the near future. Having been artificially capped for so long with so much uncaptured asset appreciation, communities are having to face either serious cuts in services or to seek permission in raising property taxes. If you’re buying a “forever home”, ask yourself if you could still afford it with 2x or 3x the property tax bill; if not, you might not be ready to weather the disruptions ahead

* Rent has skyrocketed alongside home prices, making both untenable (local housing jumped 50% in home prices during COVID, while rent has appreciated about the same over the past ten years; wages have not kept pace with either). Some states have tried forcing higher density housing near mass transit, but those have been blocked or lawyered around; now tenants are pushing to rent caps, terrifying landlords. The point is that pricing in the near future is going to be incredibly volatile as asset prices and rents adjust to meet what workers can afford instead of what financial models spit out, and that’s going to impact your own home prices accordingly

* The primary benefit of home ownership going forward isn’t likely to be asset appreciation so much as stability. For those of us who want to put down roots, owning our homes is critical; for folks happy to move around and explore, renting is far preferable. I would strongly caution against the old adage of “buy if you’re living there for 4+ years”, as there’s no guarantee you’ll come out ahead anymore and may be better off renting

* Most “affordable” housing stock will require repairs anywhere from 20 to 50% of its purchase price, especially in older regions of the country. Do not waive inspections when buying a home or you’re likely to miss a five or six-figure repair - like an oil tank that’s leaked into the foundation, for instance.

“Smart” people always tell us to rent. But ask any regular person if they’d rather own a home or rent and they will say own. Who cares about xyz costs or a lower investment return. The entire point is to have a stable base from which you and your family can thrive.

> You can save a lot of money in maintenance and repairs by doing your own work whenever possible.

True. But even if you have the physical ability, skills, tools, and equipment handy - you can spend a lot of time on maintenance & repairs. Just ask anyone who's done yard work for a few years, or has repainted a house, or ...

If you have some spare cash flow, you can pay extra principal on your loan. Since early years are mostly interest, this can make a big difference in ultimately paying off the loan early if you plan to live there that long.

It's true that there are hidden costs to owning but get this: Those costs exist regardless of who owns the house! When you rent, you are still paying those costs, but you don't have an asset when you're done. You actually have to pay more in taxes and insurance on a rental!

When you buy, you will pay a certain amount for 15-30 years, and then you only have to pay for the continuing maintenance. When you rent, you will pay a certain amount every month forever regardless of whether the property is paid off or needs any maintenance.

For renting to be a better deal than owning, one of two things has to be true:

1. Your landlord is losing money

Or

2. The rental market is dominated by landlords who own outright, or bought long enough ago that their cost is much lower than the cost of owning is now.

I’ve never seen #1 happen, and the only place i’ve lived where #2 was the case the market has now adjusted and it’s very much not true anymore.

The Repair section of the article could have been mitigated by a inspection and negotiation before buying.

Always negotiate repairs into the offer price.

It stands to reason that owning must be cheaper than renting an equivalent place over the long term, unless the guy renting to you made a poor investment. But you're usually not comparing equivalent places when you make the comparison.

> About 80% of your first mortgage payment is interest.

Is it common in US?? In France the current rates are about 3,5% fixed rate, meaning in your first payment on a 25 years loan you pay about 55% interests. Which I think is pretty high already!

What kind of rate do you have to end up paying 80% of interests in your first payment?

> You've probably heard someone say something to the effect of "renting is just throwing your money away".

Then skip to the bottom:

> I bought my current home in 2011 for $420k, and the Zillow currently estimates its value at $757k. I've put a lot of money into it catching up on maintenance, repairs, and improvements, but the appreciation will definitely exceed whatever I've put into it when I decide to sell it.

There you go.

The only counterexample is one that's a truism: author bought at $321k and sold at $333 a few years later. Real estate is a long term investment, same as the funds you'd choose for a retirement account. In both cases if you're buying/selling short term you missed a very important implied premise in the conversation.

There's also the difference of Condo vs Home.

Something I've been eyeing is the All In One Loan or FirstPosition HELOC where you take a HELOC on the entirety of the homes value, then use that credit account as your daily spending account.

It's a higher interest rate, but then you only get charged on the amount you have actually borrowed which ideally would be get lower and lower.

If anyone has any feedback on it I'd love to hear it

One thing the author does not think about is end of life depreciation. When you retire and drain your investment funds they very quickly will disappear and stop producing value, especially at any sustained rate. A house has none of these issues. Costs are relatively constant. Rent on the other hand. Well. Anyone who rents knows the cost goes up and will keep going up, if not simply for increased utilities. Another way of course is to die quickly once you retire but then what’s the point of savings anyway?

That's the cost of renting money (mortgage), not owning a home. I saved up cash and bought my home in cash. I did not have closing costs. Only the seller did. My closing cost was the price of the home.

I don't plan to sell. I'm not "investing" in the house. I'm living in it. Essentially, my home eliminates the biggest portion of my monthly expenses. I hope my home value goes down, a lot. Then I pay less on the one expense I do have associated with it: property taxes.

For me, it is about stress and time (and money). I hate to say this because I don't want to upset anyone (really just trying to help, not perfect), but we created HomeSpark.AI to try to reduce the stress/time/money blackhole from personal experience. What my contractor was doing didn't feel right, so I had to hire a "auditor" of sorts who wrote a 47 page report of the issues. Didn't relief the stress but did relieve the uncertainty. Then I said that has to be an easier way with AI. I just ran into this issue with an oil pressure gauge for my whole house generator. The AI gave me the part, video and where to buy/cost for part. $30 and 20 minutes later installed - before that I had no idea other than call a guy. Sorry not trying to shill anything , just hope to be helpful.

Having your own home and property where no one on earth can tell you how to live: priceless.

Maybe home ownership is becoming a luxury, but humans don't exist in financial spreadsheets. The intagibles of SFH ownership are worth literally everything to me after a lifetime of renting.

It's also absolutely a class differentiator in the US. If you're behind on your rent and getting evicted, that's seen as a personal moral failure. If you're behind on your mortgage and getting foreclosed, it's considered a tragedy, and there are many options for support like forebearance. Just look at what happened during COVID; red state renters were getting knocked on by the sheriff within 90 days, while it can take years for someone to lose their house.

People act like owning a home and coming out financially ahead is an inviolable law of physics. It is not. Buying a house is like purchasing an option to have something at a set price in the future. That option can be overpriced to the point where it is not profitable.

This isn't to say that there are not emotional aspects to owning, but that is a separate discussion.

And yet the property will appreciate in value, barring the implementation of a land value tax, and negate those extra charges the article's author is enumerating. One can borrow against one's property and reinvest in the property and you'll still make money. No bank or credit union will ever turn down land as collateral for a loan because in this economic paradigm land remains the safest and best investment. Nothing there is really relevant and skeptical r

The housing industry is the one industry that makes healthcare look efficient. Next time you buy a house visit your titling company. White Collar daycare. Great coffee though. And free pens, nice ones.

Another point not really mentioned in here is the type of home. Buying a condo has absolutely been the worst decision of my life.

It was our first home after getting married. The condo HOA will probably go down as the most disfunctional HOA in California history - not exaggerating. It has/will cost an obscene amount of time/money that I will never get back.

Buying is cheaper than renting in most of the country, it's only in coastal markets with exceptionally high home prices that this isn't true. There's a basic formula you can use called "price-to-rent" that helps you calculate this for your area. Where I currently live I was able to buy a house for $285k that would cost $2500/mo to rent in the current market, which is an extremely favorable price-to-rent ratio. If the ratio is not over 20, it's better to buy in your market.

While it may not be well known to many, there are mid-sized cities all across the middle of the country where you can buy houses as cheaply as $150k in this year of our lord 2026, but rent generally will be no less than $1000/mo. Private equity and software like RealPage have had a nationwide impact of driving up rental costs, but this hasn't necessarily caused housing prices to skyrocket in places in middle America where there aren't a lot of natural reasons to want to move there.

So sure, owning a home might cost more than renting on paper in California, but that's not true in a lot of parts of the country. Even then, the financial aspects aren't the only parts that matter.

> My 1983 home had been used as a rental for years, so much of the maintenance had been neglected.

The author is acknowledging a reality without acknowledging it, also. Rentals are not well cared for. Most landlords do not keep up with repairs, maintenance, and improvements, and you are going to get to deal with the poor quality of living situation as a renter as a consequence. You get to control this when you own your home, and while it is an expense, it's a fair expense you can manage yourself.

All those costs are baked into your rent by your landlord (who had/has to pay them).

The difference is that after 30 years you can own the house and have a low-cost place to live in your old age (not free, you still have prop taxes, repairs, etc.), whereas with rent you have nothing. That is significant.

But really, the biggest benefit of paying a mortgage is related to the value of money.

Over 30 years your rent will increase substantially in then-current dollars, while your mortgage remains fixed. Which means that it essentially gets cheaper over time.

Consider that the US national average rent in the US was ~$550-$600 30 years ago, and is ~$1700-$1800 today.

This is a South African take on owning a home.

Author is correct that if you don’t live in the house long, the overheads such as transfer duties and legal fees make it somewhat expensive.

But over here we have a pretty high interest rate of around 10% and comparatively high inflation rate, which makes the initial purchase of a house be a bit challenging, but if you start paying more than the minimum as soon as possible you can find yourself in a financially more comfortable position.

My bank allows me to have something they call an access facility on my bond account (the account for the debt on my house). With this I can transfer extra money into my bond at any time and I can draw this extra money out at any time too, this extra money counts as extra paid on the principal.

This essentially means that any extra money I put in it is worth about 10% p/a in terms of the interest it saves me.

They calculate interest per day so even if extra money sits in there for only a few days, depending on the amount the interest saved could be worth a coffee or possibly a meal.

Although I settle my credit card every month, everything I route through it and don’t have to pay back interest free for the next 30-45 days is essentially saving me that portion of interest on my bond, so easily over a percent. And that’s before credit card rewards.

And while I don’t recommend this except for the most financially disciplined as it is a little precarious feeling, I have a second credit card which I’m able to settle using my first credit card, this adds yet another 30 days of essentially interest saving to me.

It’s a great way to save for something big over say a year or two, even if you draw everything you deposited out again two years later, it’s saved you from the interest in the meantime, so you’re still better off.

Then there is the effect of inflation. If you’ve been able to put a good amount extra into your bond each month, you will find that after 5 years or so it’s probably less financially burdensome than renting.

This is because since you bought the place, property prices have gone up, so has rent and so has your salary, but your principle debt has not increased with it, meaning you’re paying no more than you were 5 years ago for the monthly instalments, but due to inflation it is comparatively less expensive.

Anyway, that’s the financials aspect, but on the quality of life aspect, a few years ago we finally bought a house that should be very nice for our family for the next 20-30 years, in terms of size, comforts and security.

We also bought a house with an old interior and renovated it, making the bathrooms and kitchens modern and how we wanted them. Was also able to chase conduits into all the walls (brick and mortar houses are the norm here) so that every room has CAT6 going to it.

If you're paying a mortgage you're not owning it. The author is wrong from the onset.

This is mostly the real cost of borrowing money, not the real cost of owning a home. What's more, it could be argued that these costs are actually directly associated with NOT owning the home.

When I was a homeowner (I recently exited), I found it incredibly discouraging how every vendor who came over for this or that looked at you like a walking sack of dollar bills after driving up to your home in a brand new pickup truck. When you do hire them, the owner never even shows up for a final inspection. There's a large part of the economy who knows their customers will treat their equity like a bank and prices accordingly.

>You've probably heard someone say something to the effect of "renting is just throwing your money away". Don't believe it. It's a glib statement that simply isn't true.

If you take literally anything away from this article, this opening line is it. People who say this bought their house decades ago and have no clue what the present situation is.

If you're in SF and weighing this decision, it's easy to get tilted in the buy direction because the rental stock is so horrific. Landlords have very little incentive to update properties or provide basic amenities that people take for granted in other major cities (good luck getting a washer/dryer).

Not aure anyone else mentioned it but good luck keeping a big dog in a rental unit.. or any other animals for that matter. Gardens are a pain as well...

My house is twice the size of my last apartment and my utility bill is half. apartments just generally don't have as good insulation or as efficient HVAC at least where I live.

The person also discounts the impact of horrible neighbors, stomping and barking at all hours of the day. That can happen in houses but they are not right next to you

This isn't an overly apples-to-apples comparison. It factors in costs like "updating your kitchen", making things more stylish, etc.

The author also seems to assume you'll be paying more to heat and cool your house because if you're renting you're in an apartment? Just down the road from him, four of the five homes I rented before buying in 2021 are larger than the home we bought.

"Less than 21% of my monthly payment is going towards paying off the loan" - well, yes, because it is front-loaded with interest. And as you get through the loan, 80%+ will be paying off the loan.

Maybe different loans are different, but generally your home insurance and property taxes are rolled into the mortgage (and often paid on your behalf by the servicer) - indeed, it seems like there's a double dipping of breaking down his mortgage payment and the component that is tax and then saying below "I currently pay $515 in taxes monthly".

There absolutely are additional costs to owning a home, to be very clear.

But there's definitely a contingent (and this post isn't the "worst" of them) that likes to paint home ownership as nothing more than opening your check or pulling out a credit card every month for "the next four digit expense".

Especially in Western Washington where the property market 2010-2020 was "a good one". (I put down 10% and at the contractual "year-and-one-day" on my loan for the soonest I could remove PMI I was able to because I'd hit 20% equity on value increase - only making my regular payment), something that he benefits from, too:

> I bought my current home in 2011 for $420k, and the Zillow currently estimates its value at $757k. I've put a lot of money into it catching up on maintenance, repairs, and improvements, but the appreciation will definitely exceed whatever I've put into it when I decide to sell it.

I zero'd out almost all these costs by building a shack myself and leaving it uninsured. Maintenance cost almost zero because I own all the tools and much the spare materials already form building the house. Cost of house $60,000 post COVID, there is a similar ready-built house next to me for sale almost $300,000.

Is there someplace that takes all of these inputs. Then graphs them over 10 or 20 years and include some adjustment for inflation? I didn't see in article any discussion about mortgage rates versus appreciation versus inflation.

Article did sum all the inputs/outputs, and came out at loss. I'm just wondering if there is some other trends over 10 or 20 years that make the house better.

Yep. Yet many on here (and other specific online forums) will tell you that your only options should be owning a home or renting an apartment because they don't feel the single family home they desire is within their price range, and resort to advocating for short-sighted, draconian policies as an means to an end that is favorable for them.

where does OP live? these costs are absurd lol

I've come to the conclusion that high housing prices are pretty much the root of most of our problems and is probably the biggest factor in increasing wealth inequality. I came across the housing theory of everything recently [1][2]. Disappearing third spaces, out-of-control inflation. homelessness, etc can all be traced back to housing affordability being the primary factor.

I tend to abhor buying vs rent calculators. I always have. Why? Because of inelastic demand. You can't opt out of the housing market. Well you can. It's called being homeless. If you rent, you have in effect taken a short position on the housing market. If house prices go down, rents tend to follow and you're better off than those that bought. If house prices go up, you're worse off. That's a short position.

So, by buying a house, all you're doing is closing out a short position. You might argue "but you still win or lose depending on the housing market's movement" but that's not actually true. Why? Because if all houses double in value, you still own 1 housing unit's worth of wealth. You're actually no better off. Who is? Corporate landlords and those that own swathes of houses. But your "investment" in tdhe housing market is used to buy your vote. You have a tendency to become a NIMBY. You tend to think of rising house prices as "good" despite the ultimately destructive effect on society.

Once again, China has been proven to be correct. Xi Jinping said back in the 2010s "houses are for living, not for speculation" [3]. Remember the trillion-dollar Evergrande default? Have you seen Western coverage of Chinese "ghost cities" or how the Chinese real estate market has been in turmoil like it's a bad thing?

All that happened was that Xi quietly popped the real estate bubble and made it more difficult and expensive to own more than one home. Prior to Xi's reforms, property speculation was rampant. It's going to take years for that correction to work itself out but it is ultimately a good for China as a whole.

Oh and one nitpick about the "costs" of home ownership from this post. A lot of the things like the repairs are cash outlays but they also tend to improve the value so that's more of an ivnestment than an expense.

[1]: https://worksinprogress.co/issue/the-housing-theory-of-every...

[2]: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6571818

[3]: https://en.wikipedia.org/wiki/Houses_are_for_living,_not_for...

You will own nothing and be happy.

I have a ~2000 sq foot ranch. A new roof was $25k. New siding was $55-85k depending on the material (vinyl vs james hardie). Gutters are $7k. I had a bunch of trees removed and a forestry mulcher out: $7k.

Everything is so fucking expensive.

> "renting is just throwing your money away".

yep, it is.

i bought my home and went from paying 650 euros/month for a single room and sharing the rest of the flat with a roommate (in his own room) to paying 430 euros/month for my whole flat (in the same city, btw).

fast forward a few years and:

- the same room now goes for around 700-900 euros/month (post covid inflation)

- my mortgage price would have stayed the same (fixed interest rate)...

- ... except i paid it in full before time (and saved a ton on interest)

- my flat is now worth a lot more than i paid id (again: post-covid inflation)

nowadays i'll be kinda braggy, i'm leaving the dream: i work in tech, i have a very good salary and all of my fat paycheck stays in my pockets.

having a mortgage with a fixed interest rate meant i could plan around the payments i had to make.

and don't get me wrong: i'm 34, i'm not a boomer.

they say that renting gives you optionality. well... i can still easily sell my flat and move elsewhere OR, hear me out... i can rent it.

Rent goes up every year, your mortgage goes down. 30 years of renting and you’ll have nothing except more renting. With buying, you’ll own a house. That house is now effectively free to live in, as a rentoid still has to pay rent and make repairs to avoid losing their deposit.

What a meaningless slop article.

I'm firmly in the renting camp and I'll only own a home if I can buy some land and build it, probably. From a US perspective, I see too many people buy a house because that's what they're "supposed" to do since that's the American Dream. They end up with projects every weekend, stressing about repairs, and dealing with random BS from the local government and Karens.

I also despise the culture around owning a home and the insane things that we do to prop it up. Zoning restrictions, absurd mortgage terms (what other country does 30-year fixed rates?), overbearing building codes all so we can live up to this arbitrary life goal of Owning A Home.

Maybe I missed it in the article but it doesn't seem to mention that you deduct mortgage interest on your taxes in the US?

This isn't something you get renting and it effectively lowers your monthly payment.