It’s hard not to hate being a home owner sometimes. It’s a constant struggle to keep sun and rain and bugs from turning a beloved home into a rotting pile of sticks. Homes want to decay. They do. And it’s only with a lot of money and weekend toil that they remain standing.
Right outside my office window, a small backhoe is rearranging dirt in my backyard. and three guys are putting the caps on a retaining wall. It was a costly, but necessary procedure. Gotta keep the water away. The water is slipping through the old tiles on the roof, too. On bad days, it sneaks into the closet in Ian’s room. I have a small stack of roof estimates on the corner of my desk.
Money on the house means no money for fun vacations. Instead of drinking a beer in a London pub or exploring the mountains in the Pacific Northwest or drinking girlie drinks on a Caribbean resort, we’ll have a wall. A fucking wall. I want a girlie drink!! UGHHHHH!!!
Is home owning a dumb idea?
I was playing with the rent v. buy calculator at the New York Times. If we could find a three bedroom home or apartment for $2,244, it would be better to rent. Yeah, that’s not happening in this area. So, I suppose our money is being spent wisely. But it sucks.
Apt. 11d 
Come over, I’ll make you girlie drinks!
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I don’t think I could afford to rent in my neighborhood, but it’s sort of hard to say. There aren’t many rentals and many of them are occupied by long-term tenants. Some old-school owners either have not noticed how much rents have gone up or have wisely decided to stick with existing tenants who they know will pay and not destroy the house. Somebody who read a real estate book and partnered with an experienced real estate guy (“experienced” in the sense of “has been convinced of real estate-related crimes”) managed to lease out a place on my street for about 200% of the cost of owning. His tenant had several illegal sub-tenants and, if the police are to be believed, some heroin. Also, there was an abandoned a dog in the garage when they left. I don’t know what has happened to the inside, but it’s been unleased since the fall and the workers have been in and out.
I keep expecting that the owner will go bankrupt soon, but he must have family money or something. He’s still paying the property taxes.
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That’s a pretty gutsy move in your neighborhood.
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Yeah… sigh. This is a very relevant subject for our family, since we made significant money buying, maintaining/fixing our first two houses then selling them. Then disaster struck when we bought a fixer-upper in PA and K lost his job at Big Pharma — there went all our hard-earned money to fix the third house so it could be sold once more! Sigh… (I think I’ll use this summary in a blog post 😉
Then we bought our current house in 2011, with 30% down (which “killed” my poor parents who lent us the money) and well within our spending limit which gave us a mortgage payment WAY lower than a rental. Too bad the house lost 30K of its value in the very first year of ownership when the market went further and further down in this state, so when we refinanced for a 15 year loan (with the incredible rate of 2.625%) we actually had to put 7K down! Thankfully the house is in good shape, but we’re having trouble with the gutters and, soon enough, the roof. And the yard is always lots of work, so I hear you! We’re haven’t had to spend a lot yet (and totally can’t afford it right now), but I know we will soon enough!
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I think renting long-term is probably a better fit for our family but unfortunately in the areas we would like to live in it doesn’t make financial sense.
We owned a home for seven years that we sold last year and we’ve been renting ever since. Our currently place is great but we have to leave because they are going to tear it down to put up two million dollar homes. When I learned this I started looking both for places to both buy and rent and there really is no comparison: you can get so much more for the same monthly payment buying versus renting. And yes, owning a home includes extra expenses that renting does not but even with that it’s not even close/
So we’re buying a house. A modest but very nice house that is totally affordable to us and in a neighborhood we like. When the kids are grown, I would love to move to a condo or townhome in a very urban neighborhood but for now I’m fine with the single family home we’ll be getting.
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This reminds me that I still need to replace the ceiling in the bathroom. We had a plumbing leak and it was soaked. I’ve just conditioned myself not to look up while in the bathroom.
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I just had this conversation with a colleague. He’s 28, with a good job but no wife/family (or even a dog). He was questioning the math. I argued he should just rent, especially since he may end up moving for work.
Ironically, in the city of Chicago, if you’re primarily concerned about school decisions it makes sense to rent. If your kid gets into a good selective enrollment school halfway across town you can just pick up and move closer. The yards are all tiny anyway.
So many things in life that we all used to do ourselves are professionalizing. Where our parents mowed their own lawns, now many have lawn services. My mother thinks it’s SCANDALOUS that I have a maid service. We all eat take-out multiple nights a week. Perhaps home repair/maintenance is joining that list. Let the landlord worry about it!
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In my experience, most landlords do a far worse job at home maintenance relative to what I can do than take-out places do at cooking relative to what I can do. Bathroom ceiling aside (I’m horrible at drywall). Also, we’ve spent maybe $4,000 extra on various improvements to get about $600 in annual savings on utilities. Theoretically, there’s no reason improvements like that can’t be made to a rental property and paid for with higher rent, but it doesn’t seem to happen that way often around here.
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We had AMAZING maintenance when we were renting a house from my husband’s college for about five years (they replaced a water heater literally weeks before we were going to be moved out and the place was going to be torn down). Then we had a year of the crew I call the Muppet Baby Landlords. They hired maintenance people who were moonlighting from their real jobs, and it took forever to get them to do anything or to figure out what was causing problems. They left us with intermittent heating between Thanksgiving and Christmas 2012 when we had a little newborn at home because it took several different visits from a constantly changing cast of repair people to figure out the problem with the HVAC. They weren’t mean, they were just inexperienced and (I suspect) broke. I like a landlord with deep pockets. While our first year of homeownership was predictably expensive, we are definitely hiring a much better grade of tradesperson than the Muppet Baby Landlords did.
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“In my experience, most landlords do a far worse job at home maintenance relative to what I can do”
That’s actually true for me, in my last experience of renting (except for the short term summer rental that really was a rental of someone who was away on a sabbatical — they took better care of their house). And, as I’ve mentioned, we are truly terrible at maintaining houses (though, potentially, I shouldn’t say that publicly). I have to presume that our house is better built than I imagine it to be, since it is not actually falling down around our ears.
In our previous house, when we had an earthquake, my first thought, literally, was that the house must be falling down around our ears because we were doing such a terrible job maintaining it. That was an older house, with some serious issues. The people who bought it from us did a 8mo+ renovation project and have made it beautiful. They were the right owners for that house. We are great candidates for a high end property where all maintenance is done by someone else. But, when we rented, our landlords were basically happy as long as we paid our rents, and didn’t do any maintenance until something was literally falling apart (like buckets of water coming in through the roof).
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I am now a landlord, and our tenants are handy and willing/able to do a lot of home repairs themselves (he has a part-time job as a sexton). I just pay the bills for whatever they want to do. We really lucked out.
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I was constantly doing rent v buy calculations (still have spreadsheets on my computer) and we were never sure we were going to stay anywhere long enough to buy until we bought where we live now. Buying has been the right decision, for stability and location, enough so, that it stopped making sense to consider renting, even if it is costing us something to own.
(It’s probably not, because our house is a good investment for the area, but even if it were, it would be worth it, so I don’t have to nitpick with the calculators).
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I wonder if these calculators include the expense of couples therapy after one’s husband decides he must do all the drywall work himself? (Insert 14-month delay, followed by three days of contractors to finish the job.)
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Historically speaking, long-term companionate marriages are the anomaly, not ceilings with a small gap exposing some joists.
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I also have mixed feelings about DIY. My husband is reasonably good about small, non-cosmetic projects, but I grew up in a house my parents were building. We moved in once the roof was in (before there was even working plumbing) and they worked on it about five years and then stopped. I’m not saying they finished it–they just stopped working on it.
Hence, I feel that for cosmetic projects, we should wait until we have the money to pay somebody.
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Rent vs. buy is one of those decisions that mix emotion with investment resulting in some people disregarding the financial implications and feel the need to own at all costs. We are so used to owning a home and having that expectation that you “should” be able to. And yet in other parts of the world (much of Europe), renting is a given. There are no value judgements attached to being a tenant.
You know how I blather on about the insane Vancouver real estate market, right? Think working class ‘hoods with 60 year old homes that are now worth millions – that’s unrenovated. Even a two professional income couple will never save enough for a down payment let alone be able to afford the mortgage.
As a result many younger folk are not interested in owning property – they are focusing on lifestyle. They work hard and are creative and entrepreneurial but not interested in owning a house. Others are buying with two or three other families and living together.
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“You know how I blather on about the insane Vancouver real estate market, right?”
One of my favorite subjects. Blather on.
“Think working class ‘hoods with 60 year old homes that are now worth millions – that’s unrenovated. Even a two professional income couple will never save enough for a down payment let alone be able to afford the mortgage.”
Yep.
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Some may remember the story of the guy with a patronage job, polishing the cannon in front of the county courthouse. It was a good job, decent pay with no heavy lifting, but he wasn’t getting ahead. So he saved his pennies, until he had enough to buy his own cannon, and went into business for himself. That is pretty much the story of homeownership (and self-employment, for that matter).
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We just put up a bunch of hooks in the vestibule, so all the kids’ jackets have a place. Didn’t have to ask anybody. The black tupelos we planted on the driveway fifteen years ago are looking swell, turn nice color every fall. I soak up a lot of envy from other guys for the shop I have in the old garage.
If rent versus buy is even CLOSE by the dollars, we will choose buy for sentimental reasons.
I also have dark imaginings that the thriftless redistributionists who run our government are gonna get around to taxing wealth real soon now (why did they all swoon over Piketty?) and it’s going to be harder to assess and to get political backing to tax housing services from an owned house than it will be to get backing for them to take a shive out of your 401k every year.
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“We just put up a bunch of hooks in the vestibule, so all the kids’ jackets have a place. Didn’t have to ask anybody.”
We put up hooks for coats and backpacks in our last apartment, but it was such a necessary move (because there was no entry closet and it was a small apartment for us) that we went ahead and did it without asking. The Muppet Baby Landlords were actually very happy it.
“The black tupelos we planted on the driveway fifteen years ago are looking swell, turn nice color every fall. I soak up a lot of envy from other guys for the shop I have in the old garage.”
Now there you got me–I wish somebody had planted a live oak in our yard 20+ years ago instead of the scrubby little trash trees we’ve got. We had the BEST tire swing hanging from a 60ish live oak at our old house rental up until we had to leave. We’ve managed to put up a hammock (like the cool kids!) in the back yard, but it’s nice to have a tree big enough for a swing or a tire swing.
“I also have dark imaginings that the thriftless redistributionists who run our government are gonna get around to taxing wealth real soon now (why did they all swoon over Piketty?) and it’s going to be harder to assess and to get political backing to tax housing services from an owned house than it will be to get backing for them to take a shive out of your 401k every year.”
I wonder about that myself. The good news is that our government moves really slooooowly, so you have a very good of getting yourself to Costa Rica with your money while they’re putting the finishing touches on the legislation. Look at Obamacare–you can see it coming a mile away.
I agree that there’s a lot to be said for dividing funds up between cash, house and traditional investments.
My husband’s Eastern European family had to pick up and leave everything a couple of times throughout the 20th century (both revolutionary Russia and martial law Poland, along with getting used to life with the communists in post-war Poland), so looking at their history, I think there is also a lot to be gained from investing in education (very carefully chosen, of course). Also looking at that history, I think it’s very important to be able to answer the question, “What can I do for people?” in a satisfactory way. (My husband’s grandfather made it through various 20th unpleasantness as a doctor, which worked very well at the time. Not sure it works quite as well today, but I think the general principle is important.)
Somebody may say, “but patriotism!”, but there really does come a time when you have to be ready to leave with the shirt on your back and not look behind you, because bad things are about to happen. It is a question, how can you tell when that’s starting, but I think Dr. Dean’s “They are not Americans!” might possibly be one of the first swallows.
http://www.powerlineblog.com/archives/2014/05/howard-dean-republicans-arent-american.php
I don’t think it’s time to panic, and it may never be time, but there is a lot to be said for staying somewhat liquid and being at least mentally prepared for the fact that circumstances may change very suddenly and for the worse.
Unfortunately, a house is hard to sell quickly, so that’s a black mark against it.
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Republicans have been saying that liberals aren’t American for a long time. Not that I would agree with Dean (though I didn’t watch the video) – if you’re a citizen, you’re American, no matter what. But conservatives no longer get to define what being “American” means, which is nice. The stupidity of the “America – love it or leave it” argument is only evident when you’re the one who’s not loving it at the moment, I guess.
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This is absurd in a variety of ways.
Given that the marginal tax rates for higher incomes, inheritance taxes, and capital gains taxes are all very much lower than they were during Reagan’s presidency, worrying about wealth taxes seems like a huge over-reaction on your part.
Second, if you are worried about government taxing of wealth instead of just bitching to the wind, you really want to keep your wealth in as mobile of a form as possible. “I’m afraid of government confiscation so I’m going to anchor my assets to the ground with several tons of concrete” isn’t a winning strategy. (For non-financial reasons, try not to have a house that is mobile.)
Lastly, I’m not sure what you mean by “housing services from an owned house,” but there’s already a mechanism for assessing and taxing real estate. It not always real exact on the assessing part, but I can assure you it works very well as far as the getting money part.
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MH, I can’t tell you how much I appreciate your ongoing efforts at civility here. I realize how much this is a struggle for you.
Here’s a Tyler Cowen column which lays out his ideas that wealth taxes – more than today’s – are on the horizon: http://www.nytimes.com/2013/07/21/business/wealth-taxes-a-future-battleground.html?_r=0
Yes, property taxes constitute something of a wealth tax, but they are assessed against the dollar value of the dwelling and are spent to provide local public services. The rich tend to skate, because they are in wealthy areas where ALL the dwellings are of high value. That’s very different from taking 2 per cent per year of the value of a house and using it for all the public schools in the state, for example. Fresno gets nuthin’ from the property taxes paid in Atherton. The assessment process is as you note inexact, and I dont get dinged for the pleasure and implicit income I get from my trees and my vestibule hooks and my shop.
We do have a family story about the value of mobile assets – my wife’s grandfather was a major specialist in a Vienna hospital, and people came to be treated from places like England, France, Belgium, Turkey. So he had those patients deposit his fees in his bank in London. And when the eager and assiduous young Gauleiter of Vienna, Adolf Eichmann, said well, the filthy Jews could leave but they couldn’t take their money with them – he could scoot. He did scoot, it was good!
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That piece didn’t talk about any tax being likely to increase in the United States except the capital gains tax, which, as I mentioned, is already well below what it was when I was growing up.
I realize that property taxes don’t go to the state, but states do very much redistribute to poorer areas, especially for the schools. I expect that to continue to increase, at least around here. There are places where the property tax rate is 6%, which what happens when a large portion of the property in a district is close to valueless.
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There’s a persistent buzz of talk from the cool kids about a wealth tax.
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Because it has actually been done in other countries in recent years.
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Yay for wife’s grandfather!
That’s why I always feel creeped out when people point to other people with assets abroad as being “unpatriotic.” What are you planning to do to us that you need us to have all our assets in-country? The question answers itself. It’s like burglars who complain about how untrusting everybody is, locking their doors.
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McMegan has a nice piece up about how hard it is to get at taxing things: it’s really more fun to be a professor than an accountant, but if the income is the same, they pay the same taxes: http://www.bloombergview.com/articles/2014-05-20/taxing-a-professor-s-privilege
and I see this as not-very-tangentially related to the pleasure I am taking in my trees.
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