Explain to me why I'm wrong

amother

↑ Taupe ↓

Tue, Nov 21 2023, 9:52 pm

amother Outerspace wrote:

And my house went up about 30% in 20 years.
I pay almost 30K in property tax (you don’t get that back).
Every little broken thing, lawn to be watered, gutters to be cleaned, drip in the sink….. is my problem.

FYI, my parents bought their condo 30 years ago and theirs is up 10x what they paid.

Oh, and with antisemitism on the rise, I think like in Nazi Germany, we will not be able to sell our homes and have equity available to take.

Not everyone gets as lucky as you did where property values increase the way yours did.

even if someone doesnt get a ton of additional value on their home, they are still paying to own themselves rather than paying for someone else to own.

I don't disagree with you about antisemitism. We can only live bderech hatevah and daven to Hashem that we are doing the correct hishtadlus. If I sold my house and headed to Israel tomorrow, I would still not be better off financially because I have no job there and the housing market in Israel is horrific.

amother

↑ Taupe ↓

Tue, Nov 21 2023, 10:00 pm

amother Cinnamon wrote:

I dont have a head to do the math, but after paying off your mortgage, after paying interest to the bank on that mortgage, paying taxes, maintenance on house and property, you will probably have spent much more on the house than rent - but then you have the house to live in. Its NOT always financially better off from a purely financial point of view.

But the main difference is that you live in that house with property, instead of an apartment/basement for 30 years. You cant compare living in an apartment to living in a house. If you want to compare, then compare renting that same house to buying it. Or renting apartment to buying that apartment.

lets do the math.

lets say 3k a month for 30 years. add about 12k a year for repairs- some years more and some years less. so we are about 1.5 million spent.

since the mortgage is 3k we have to assume a pricier neighborhood so it can probably sell for 1.2 million?

plus take into account all the years lived in the house where you arent paying mortgage. lets say 10 years? so those years you are only paying about 1k a month rather than 3k a month.

so you are at 1.7 million spent?

lets say rent over those 40 years is 3k a month also? so you paid about 1.5 million to live there and you have zero to show for it. lets say its even less and you only paid 1.2 million for rent over the years.

You still made most of your money back by owning.

amother

Watermelon

Tue, Nov 21 2023, 10:45 pm

Op, I don't know but I've seen that those who purchased a home when they were young had more money when they were 60+. If they owned a few homes then they mostly rich by the time they reached retirement. No calculations. Just what life experience has taught me. Those who never bought were mostly poor once they married off their children.

amother

↑ OP

Tue, Nov 21 2023, 10:57 pm

amother Watermelon wrote:

We didn't buy so young. We saved for up before buying our home. I appreciate all these answers and the patient explanations. It sometimes feels like a sacrifice to buy and own a home and not so much a privilege.
The math as far as I know: bought the house for $650 Zillow says it's now worth 1.1 but who really knows. We did put in about $60k worth of work into the house (kosher new kitchen, redid one bathroom, and some other things). We owe $233k on it still and I believe our mortgage will be paid off in 2039.
Are these good numbers? Am I just overwhelmed by the upkeep costs and fantasizing about being able to use money to enjoy instead of always putting it into our house?

amother

↑ Taupe ↓

Wed, Nov 22 2023, 12:30 pm

amother OP wrote:

so you spent $710 on your house and its now worth over a million? I would say you are doing very well with this house.

based on the value and the amount you owe, you have 79% equity in the house. That is really good.

amother

↑ Cinnamon

Wed, Nov 22 2023, 6:33 pm

amother Taupe wrote:

Where can you pay the same amount of rent for the same amount as a mortgage!
If that was the case, it a no brainer that you should buy the house!
The main difference is always that rent is cheaper than a mortgage, because when you pay a mortgage you will eventually own the house. Then there is property taxes (and homeowners insurance) that will always go up, and still need to pay after you own your home - which can be as high as 20k in many places in NY/NJ.
You also forgot about downpayment, and closing costs, which you will need avaliable to pay front

amother

Oatmeal

Wed, Nov 22 2023, 6:49 pm

amother Taupe wrote:

You are also not factoring in inflation. If your payments are 3k a month today, in ten years from now your neighbors rent will likely have increased, while you're paying the same mortgage.

For example, I bought my house 25 years ago, and we had $1500 a month mortgage which we struggled to pay (included property tax). Even as property taxes went up, we are still paying less than the going rent for a similar house in my neighborhood. And added benefit that we are almost paid up on the mortgage so soon we won't have that expense at all.

amother

↑ Taupe ↓

Wed, Nov 22 2023, 6:50 pm

amother Cinnamon wrote:

Where can you pay the same amount of rent for the same amount as a mortgage!
Your math only works if that was the case - if that was the case, it a no brainer that you should buy the house.
The main difference is always that rent is cheaper than a mortgage, because you will eventually own the house. Then there is property taxes (and homeowners insurance) that will always go up, and still need to pay after you own your home - which can be as high as 20k in many places in NY/NJ.
You also forgot about downpayment, and closing costs.

where I live rent is way higher than mortgages.

Its hard to work with a hypothetical so I guess Ill give my own example in terms of math

We paid 80k for closing and downpayment.

our mortgage was $1500 from 2013 to 2020
our mortgage is 2k from 2020 to 2035 (refinanced for a lower rate and shorter term)

we paid about 150k in updates and repairs.

insurance and taxes are built into these numbers so far.

Yes we will have increased costs such as repairs and higher taxes and insurance but so far we are looking at approximately 715,000 paid.

Lets round up to 800,000 for the additional costs that I didnt factor in. maybe even 850k?

Currently our house doubled in value so we can get at least 600k for it and probably when we are ready to sell even more.

If I was paying rent over the years I would on average pay $2800-3000 a month in my area to rent a house like this. if I rent for 35 years I will pay about 1.1 million with nothing to show for it.

Here I am paying 850k and will probably get back close to 700k at the end if not more.

*caveat to the above, buying in this market is a different story. my rate is under 3%. people now are paying 8%. also housing prices are so high that mortgages may have surpassed rental rates and then your value is less. It is still usually worthwhile to buy but the financial piece is not as stark*

amother

↑ Taupe

Wed, Nov 22 2023, 6:56 pm

amother Oatmeal wrote:

right. another big factor. I have no idea how to factor in inflation though but it is definitely in favor of buying