Deleted
Joined: Oct 5, 2024 9:31:02 GMT -5
Posts: 0
|
Post by Deleted on Jun 12, 2011 13:51:09 GMT -5
My wife loves watching HGTV and it is really starting to get to me when she is watching those homebuying shows and the future home buyer goes they want to buy because they want to stop "throwing money away"
Since when did renting become throwing money away? Don't you need a place to live? Somewhere to to stay?
|
|
Waffle
Senior Member
Joined: Jan 12, 2011 11:31:54 GMT -5
Posts: 4,391
|
Post by Waffle on Jun 12, 2011 14:09:39 GMT -5
The line of thinking is - yes of course you need somewhere to live. But if you are renting at the end of x number of years, you've got nothing to show for all that rent money - hence throwing money away.
Whereas if you buy, you've still lived someplace all those years, and (hopefully) at the end of the same period of time you have some equity built up in your home.
I'm not saying that it is or isn't correct thinking, just that's what the thinking is.
|
|
Deleted
Joined: Oct 5, 2024 9:31:02 GMT -5
Posts: 0
|
Post by Deleted on Jun 12, 2011 14:25:56 GMT -5
It's really hard to do the math on owning your own home. There are tax benefits to mortgages and property taxes and the hope of owning it outright if you're careful- but there are also monumental maintenance and improvement expenses over the years. Other benefits include somewhat fixed costs (mortgage P&I), the value of being able to live in it, and the somewhat fuzzy value of being able to do what you want with it because it's yours. I could argue in either direction for renting or owning although I happen to own for the aforementioned fuzzy reason as well as the fact that we could end up owning this house outright in 7 years.
"Throwing money away" on rent is a phrase realtors use to goad people into buying. Many who overpaid at the height of the boom and lost every dime they put into a down payments and improvements learned what it really means to "throw money away".
|
|
wodehouse
Familiar Member
Joined: Jan 10, 2011 16:35:08 GMT -5
Posts: 786
|
Post by wodehouse on Jun 12, 2011 14:36:05 GMT -5
good points from athena. Also, a home owner can really be boxed in by the ownership. It really limits flexibility to move where the jobs are if you are saddled with property. Generations ago people did not move throughout their lives to new areas as they do now. Of course, the old wagon train settlers did! But I think that in the past people did not move households like happens now. Owning property restricts this ability to relocate.
|
|
greenstone
Established Member
Joined: Jan 8, 2011 13:57:20 GMT -5
Posts: 353
|
Post by greenstone on Jun 12, 2011 14:57:20 GMT -5
"Throwing money away" renting is a very common and persistent misconception among most first time homebuyers. It's just another example of the lack of financial education in this country. It's a part of the American psyche to have the goal of homeownership but as Athena points out few are willing to do the complicated math involved. I've had friends IRL tell me that was their reason for buying a house and they don't want to hear anything to the contrary. And in fairness, sometimes it can be difficult to grasp until you're plunking down $50-$100 every weekend at Home Depot or Lowes. Before I bought my house, I did the rent vs buy calculations and given my lifestyle and disciplined approach to saving, it would be cheaper for me to be a renter. But I love having a place that is "mine" and there are so many benefits that are not financial that I feel it's worth it.
|
|
❤ mollymouser ❤
Senior Associate
Sarcasm is my Superpower
Crazy Cat Lady
Joined: Dec 18, 2010 16:09:58 GMT -5
Posts: 12,861
Today's Mood: Gen X ... so I'm sarcastic and annoyed
Location: Central California
Favorite Drink: Diet Mountain Dew
|
Post by ❤ mollymouser ❤ on Jun 12, 2011 15:11:52 GMT -5
With the way real estate prices are dropping in my part of central California, buying a home is looking more and more like "throwing money away." One story I read said that 2011 home prices in our area are now lower than 2000 prices. We bought in 2003 and our home value has dropped along with everyone else's ....
I suppose it's all a matter of perspective.
|
|
cronewitch
Junior Associate
I identify as a post-menopausal childless cat lady and I vote.
Joined: Dec 20, 2010 21:44:20 GMT -5
Posts: 5,979
|
Post by cronewitch on Jun 12, 2011 16:02:17 GMT -5
Renting and owning both have advantages.
Renting allows you mobility to downsize or upside frequently and move from place to place pretty freely. Great for young people finding what they like and can afford and establishing in a career. It is pretty cheap or can be and you often can live in small spaces without much furniture or tools or other things you might need in a house. If you belong renting and buy you can be throwing away money on moving cost, home improvements and other cost like increased utilities or turning down transfers. Buying a tiny home then having a couple of babies can cost tens of thousands in transaction cost, money down the drain.
Owning usually cost a lot more to get more space, a yard, the right own pets, improvements, maintenance, yard care, more furniture, etc. But if you are settled and will never need to move again in the long run it is a better deal.
I for example bought a house in 1985 for what I was paying in rent. I was single and 35 years old bought a 3bedroom two bath 1140sq ft house. I didn't improve it at all but put on new roof, gutters and painted it the first 7 years. I sold it then for more than I paid including all fees, my mortgage was an ARM starting at 11.25% so I had already paid it off. I did things in that house I couldn't have done in my apartment. I got a roommate that paid over half my mortgage payment, owned several rabbits, cats, and dogs and grew a nice garden. All in all a very good idea for me at that time.
Current house bought in 1992 hasn't given me the same value it is worth more than I paid but I could have lived for less as a renter. Still not bad, payments keep changing when I keep refinancing but I got a lot of equity out and am currently paying 612.47 when apartments are more and my roommate is paying more than that. If I never want to move again I can live here even without a roommate for less than rent. I also have things renters don't normally have like a 6 car garage and over half an acre. It still probably cost more than rent since I have expenses besides payments.
For people who don't want to move for decades and don't upgrade everything all the time owning is cheaper over 30 years especially if they buy a small place the size they would have rented.
|
|
Deleted
Joined: Oct 5, 2024 9:31:02 GMT -5
Posts: 0
|
Post by Deleted on Jun 12, 2011 16:05:37 GMT -5
I do think the "throwing money away" attitude (and line) is a leftover from the 1950s and 60s. People tended to put down DEEP roots in a community. They often lived in one house for not only the time it took to pay the mortgage but all of their lives. Sure, they had to do maintenance, but "updating" wasn't really that popular. You lived with the small kitchen and outdated colors. To be honest, most of your friends had the same layout and colors since their parents were basically the same age.
I am more amazed watching HGTV what people expect for $150,000 today. They want stainess steel appliances, hardwood floors, granite countertops, and awesome decks. These are people buying what is a lost-cost house no matter where they are buying. Even in my LCOL area, a house for $150,000 is likely older and needs work.
|
|
april47
Familiar Member
Joined: Jan 8, 2011 18:44:29 GMT -5
Posts: 512
|
Post by april47 on Jun 12, 2011 18:41:42 GMT -5
There was a House Hunter on a little while ago on HGTV. A newlywed couple with a long list of wants (they called them "needs") on a limited budget. So the house had new black granite counters with some sparkles in it. Not a lot but scattered around. The little wife said it was ugly. The hubby said that was not their taste but they could change it before they move in. Talk about picky! That was upgraded granite that probably cost a fortune!
|
|
Deleted
Joined: Oct 5, 2024 9:31:02 GMT -5
Posts: 0
|
Post by Deleted on Jun 12, 2011 18:58:15 GMT -5
Renting allows you mobility to downsize or upsize frequently and move from place to place pretty freely. Great for young people finding what they like and can afford and establishing in a career. I think that's been a big problem in this recession. People are stuck in one area when they might be able to get a job elsewhere, because their house is underwater and they don't have cash to bring to the table. I got a great relo package from a GE sub in 2003 that included buying my old house at a value agreed to by 2 appraisers if I couldn't sell it in 6 months, but I doubt there are many of those deals around anymore and it still wouldn't help if you had negative equity.
|
|
midjd
Administrator
Your Money Admin
Joined: Dec 18, 2010 14:09:23 GMT -5
Posts: 17,720
|
Post by midjd on Jun 12, 2011 19:17:55 GMT -5
That's what happened to our sellers... we got this house at a steal because their relocation package was only good for 3 months, and they didn't get the house listed until Month 3. I felt pretty bad for them, they had to leave quite a bit (including the dog - she's a sweetie!) because they ended up in a 1br apartment in Texas. Judging from the tax and property records, they ended up with maybe $6K from the sale (they'd lived here 10 years)... but he still had his job. I guess that's something.
|
|
garion2003
Familiar Member
Joined: Feb 20, 2011 15:48:25 GMT -5
Posts: 758
|
Post by garion2003 on Jun 12, 2011 21:02:02 GMT -5
I hear the arguments a lot too. I approach the issue with the mindset of "I need a place to live" not "I need an investment". So I rent. I'm single and not that handy, and don't want to deal with upkeep, plowing, mowing, painting, etc. I also like the feeling of being mobile and not tied down to anything. Now I know this means I'll never have equity, so I'm trying to save more for retirement now while I can.
|
|
april47
Familiar Member
Joined: Jan 8, 2011 18:44:29 GMT -5
Posts: 512
|
Post by april47 on Jun 12, 2011 22:47:21 GMT -5
It is assumed that you need that paid for house when you retire. The real estate taxes were so high on my last house(Texas) that even if the house WAS paid for, taxes, insurance, higher utilities and upkeep would be more than a very nice apartment in a senior complex. I am retired, no house and no regrets.
|
|
|
Post by BeenThere...DoneThat... on Jun 12, 2011 23:41:20 GMT -5
...we have almost always rented at or below what it took to expense a small home in the same area... so from a financial point of view, we would've been throwing money away by owning...
|
|
|
Post by BeenThere...DoneThat... on Jun 12, 2011 23:43:23 GMT -5
I hear the arguments a lot too. I approach the issue with the mindset of "I need a place to live" not "I need an investment". So I rent. I'm single and not that handy, and don't want to deal with upkeep, plowing, mowing, painting, etc. I also like the feeling of being mobile and not tied down to anything. Now I know this means I'll never have equity, so I'm trying to save more for retirement now while I can. ...equity, schmequity... if you're making payments to purchase stock or some other performing asset, you're likely better off than the neighbor with equity locked up in their home... imo... ETA: ...other than that, I agree with everything you posted... ;D
|
|
happyscooter
Senior Member
Joined: Jan 5, 2011 9:04:06 GMT -5
Posts: 2,416
|
Post by happyscooter on Jun 13, 2011 7:22:05 GMT -5
April, I think I saw that episode. Remember the one where the guy said he would rip it (granite) out before they moved in and the realtor laughed and said 'I won't let you take this granite out.'
Growing up my parents never owned a house. They always rented. Until I was 11 years old. Then it was a truly fixer-upper. That was in the 70s. Before fixer-uppers existed. So when DH and I got married, I was grateful to have carpet on the floor and doors on the closets.
|
|
garion2003
Familiar Member
Joined: Feb 20, 2011 15:48:25 GMT -5
Posts: 758
|
Post by garion2003 on Jun 13, 2011 7:50:24 GMT -5
Thanks, Beenthere - I try to look at it that way too. I'd much rather have equity in the market than in a house I can't take with me when I change jobs!
|
|
Deleted
Joined: Oct 5, 2024 9:31:02 GMT -5
Posts: 0
|
Post by Deleted on Jun 13, 2011 8:08:54 GMT -5
For me renting works really well right now. I have a better quality of house than I could/would buy, absolutely LOVE being able to call the maintenance man when something needs fixing and I am a good tenant so the landlord keeps the rent low to keep me. I know the owner is making money off of me, but I get more for my money from him than I did from the bank.
|
|
Plain Old Petunia
Senior Member
bloom where you are planted
Joined: Dec 21, 2010 2:09:44 GMT -5
Posts: 4,840
|
Post by Plain Old Petunia on Jun 13, 2011 11:29:13 GMT -5
I bought my current home in 2007 and I regret it. I should have kept renting. I "threw away" a lot of money.
|
|
hurley1980
Well-Known Member
I am all that is wrong with the world....don't get too close, I'm contagious.
Joined: Dec 23, 2010 17:35:06 GMT -5
Posts: 1,959
|
Post by hurley1980 on Jun 13, 2011 11:53:23 GMT -5
I bought my current home in 2007 and I regret it. I should have kept renting. I "threw away" a lot of money. Ditto (except I bought mine in 2009). My family was always of the same mindset that OP mentioned...if you're renting, you're throwing money away. I'm a single woman with no kids who had never pushed a lawn mower or planted a flower in my life. I also couldn't afford much more than an older home that needed updates. I try not to think about how much money I'm throwing away each year on updates and contractors to do work for me....I would probably start to cry. I also miss spending money on fun things on my weekends, like shopping and wine tasting, versus spending money at home depot on paint, tools and gardening junk....all to make my house look barely presentable. Lesson learned I guess....
|
|
8 Bit WWBG
Administrator
Your Money admin
Joined: Dec 19, 2010 8:57:29 GMT -5
Posts: 9,322
Today's Mood: Mega
|
Post by 8 Bit WWBG on Jun 13, 2011 16:03:47 GMT -5
If you are a long term renter during a time when rents and mortgages for comparable places were similar, then you may have been throwing money away.
If you bought and lost a lot of value in the last few years, renting looks pretty smart.
Also remember cawiau: they never have smart/savvy people on those shows, because we don't make for as much entertainment. Although you and your wife should TOTALLY try to get on the show because they would absolutely dig the dynamic. She would be talking about how she could decorate and all the things she can't wait to buy, while you would be trying to reel her in with what it would cost. I'd watch that.
|
|
Plain Old Petunia
Senior Member
bloom where you are planted
Joined: Dec 21, 2010 2:09:44 GMT -5
Posts: 4,840
|
Post by Plain Old Petunia on Jun 13, 2011 16:31:23 GMT -5
<< equity, schmequity >>
Well said.
|
|
Deleted
Joined: Oct 5, 2024 9:31:02 GMT -5
Posts: 0
|
Post by Deleted on Jun 14, 2011 12:54:17 GMT -5
We've bought for both financial and emotional reasons.
I think if you plan on owning a house for 10 or more years you'll do fine. We've moved around quite a bit and while we viewed two of the homes as "forever" homes, we were still smart enough to structure our financing such that if we needed to rent out the house we could. That was a smart move on our part since that's exactly what happened. We were very happy with our Bay Area house; definitely could have lived there forever but it made sense to take the relo to AZ. So we rented that out and bought in AZ with the idea that was going to be our retirement house. After 6 years there again it made sense to relocate.
You can stay mobile but you really do have to think about what you're doing when you buy and structure your financing.
|
|