57 points

On paper, owning a home is almost always more expensive than renting — about 14% more, on average, after factoring in expenses like insurance, taxes, and upkeep.

I’d be interested in seeing how they arrived at the 14% number.

When I bought my first home a couple of decades ago I moved out of my 1 bedroom apartment which I was paying a monthly rent of $700/month into a small starter home with a mortgage of $1000/month. 20 years later that exact same apartment rents for $1350/month. All of the years I lived there my house payment never rose higher than the $1000/month mortgage payment while the rent on the apartment apparently continued to increase year over year. Meanwhile I ended up selling the starter home for $110,000 than my purchase prices nearly 20 years ago.

So is their 14% number just calculated on the first month of each (renting vs buying)?

permalink
report
reply
31 points

Once you factor in things it mentions like insurance, taxes, upkeep along with others like a down payment then it’s very easy to see where the 14% numbers comes from. Frankly, I’m surprised it’s only 14%. There’s a lot of additional and hidden costs with home ownership.

permalink
report
parent
reply
45 points
*

The difference is those “costs” are going towards buying equity that you then get to keep. Maintaining a house is expensive but it is an asset that maintains value. This article really doesn’t seem to understand that which shows a very basic misunderstanding of the wealth math that goes into home ownership.

Renting may be cheaper month to month but you’re literally pouring that money down a black hole never to be seen in your hands again.

Granted, building equity doesn’t matter when you’re already have no cash paycheck-to-paycheck for either.

permalink
report
parent
reply
11 points

This is more of a case where the article doesn’t take the time to explain the nuance. Everyone knows home ownership increases equity. Which is why it costs more.

permalink
report
parent
reply
20 points

No, not all of them. Insurance, property tax, and maintenance do not go to equity.

permalink
report
parent
reply
4 points
*

I rent a house for $4600/mo. To buy this same house in the same neighborhood, it would be roughly $1.6m, tho prices are starting to fall a little on these higher cost neighborhoods, so let’s say $1.5m for a deal.

With a 20% down-payment on a 30 year fixed rate loan, it would be close to $10000/mo (including insurance and property taxes).

Also, the lions share of your mortgage goes to paying down interest for the first decade or so.

So let’s say $1k goes to principle per month. You’re still burning twice as much money owning as renting.

The only financial upside is that you may be able to sell for more than you paid. Minus Realtor fees, whatever renovations / maintenance you made over the years, etc.

The current market is insane.

Edit - so I’m not talking in complete generalities, I glanced at the interest/principal ratio. No idea how accurate this is.

After a year of mortgage payments, 31% of your money starts to go toward the principal. You see 45% going toward principal after ten years and 67% going toward principal after year 20.

https://www.americanfinancing.net/mortgage-basics/mortgage-payment-explained

I don’t know what the ratio is in the first year, maybe 100% interest?

So at a monthly payment of $9800, $7864 of which is towards mortgage, that’s $2437 / mo towards principal from years 2-9.

So essentially you’re burning $7363 instead of $4600 for the hope that your house increases in value when you sell it.

Fiscally speaking. There are a lot of other pros and cons to owning.

permalink
report
parent
reply
3 points

Once you factor in things it mentions like insurance, taxes, upkeep along with others like a down payment then it’s very easy to see where the 14% numbers comes from.

So you’re agreeing with me that they’re only comparing the first month of ownership of the house with the last month of renting? There’s no factoring in the long term rise in rents to their math?

There’s a lot of additional and hidden costs with home ownership.

There certainly are, but its very situational. A 100 year old home will have very different upkeep costs than a 10 year old home. A home in a hurricane zone will have different upkeep than one that isn’t.

permalink
report
parent
reply
2 points

Did you not read the comment? Property tax, insurance, and upkeep are all perpetual costs. The down-payment, closing fees, and potential mortgage insurance are the only up-front costs.

permalink
report
parent
reply
3 points

I mean neither of us know how they arrived at the 14% number. So your comparison is not really relevant and I would say it’s not a good one even. But in a generic/average month-to-month overview, home ownership is almost always more expensive.

permalink
report
parent
reply
12 points
*
Deleted by creator
permalink
report
parent
reply
3 points

Sounds like you have the fortune of living where these things are cheaper. In Ontario, home insurance is much higher and property tax being less than 1K a year is completely unheard of.

permalink
report
parent
reply
5 points

These are very region dependant. My state has no income or sales tax, but the property taxes are higher, my 1 acre with a mobile home is basically 3k. It’s almost certainly cheaper than renting, but you can’t just make sweeping statements like that.

permalink
report
parent
reply
1 point

Only $1k/year in property taxes? I found this really hard to believe, then looked it up to find that Boston has one of the lowest property tax rates in the nation at an average of .49%. Consider yourself lucky I suppose, most of us are paying quite a bit more yearly. If the home you own is in fact a condo, I guess this makes more sense.

permalink
report
parent
reply
1 point

The property tax on my house is $7000/year… and that is with a fixed assessment from 12 years ago. If I were to buy my house today, my tax would be $21000/year.

permalink
report
parent
reply
1 point

Less relevant in a condo

permalink
report
parent
reply
4 points

It’s just talking about the first month / year. Assuming that only inflation is effecting prices to keep things simple the price of renting goes up over time with inflation, while a mortgage stays constant dollar wise, and since a dollar is worth less over time the payment is less.

Combine this with building equity the net cost of owning a home goes down over time while renting goes up. The question is when do those two lines meet, eg. If you bought a home now how long would it take to be paying the same as renting. Maybe it’s 5 years, maybe 10 or 15 depends on the market, judging by the article it seems that period is getting longer as the starting point for a mortgage is really high and will take a while to recover.

permalink
report
parent
reply
3 points

Replace central air: $8k Deadwood 40+ year old trees: $6k Remove & replace concrete driveway without killing the 80 year old pine who’s roots are buckling it: $8k Remove particle board siding and replace with vinyl: $12k New water heater (+ new requirements for not having a pressure bomb in the house): $3k

Owning a home for three years has been more expensive than renting for a couple decades. Sure the mortgage is $500 a month less then rent, but the loans/credit card + interest for all the above is killing us.

Seriously considering one of the brand new apartments in the up and coming district for only $2k a month if we can sell the money pit with outdated everything!!

permalink
report
parent
reply
10 points
*

For me, I’m in a condo that we bought with a 15-year mortgage during the pandemic. My mortgage (including escrow/taxes and insurance) plus HOA fees is about $2100/month. My old apartment (including monthly pet fee) was more than that when I lived there. It’s currently listed for $2500/month (big complex, not necessarily my unit).

I promise all y’all I’m not spending $400/month on homeowner-specific costs. And, I could reduce my monthly cost by moving to a 30-year mortgage instead of a 15-year mortgage.

Edit: looked up my old apartment again. Holy shit, it’s listed for $2750, which doesn’t include a pet fee.

permalink
report
parent
reply
28 points

Cost of materials and demand for contractors. Even if you DIY it, everything is 3x as expensive as it was before covid. The price of lumber never really went back to where it was before covid. Its clearly price gouging.

permalink
report
reply
0 points

Lumber prices are actually currently where they were for much of 2018.

permalink
report
parent
reply
14 points

Yeah thats an interesting statement right?

Because when I look up a chart I see the same thing.

But when I go to buy lumber, and especially sheet materials, its all still 2.5x - 3x what I was paying in 2019. So as an individual which should I believe? The lived experience I have is the one that took the money out of my account when I bought the lumber.

Some examples: This was $15 in 2019/20: https://www.homedepot.com/p/15-32-in-x-4-ft-x-8-ft-Sheathing-Plywood-Actual-0-438-in-x-48-in-x-96-in-20159/206827282

(You might get a different price. For me, its $26)

And this was $25 in 2019/20: https://www.homedepot.com/p/3-4-in-x-4-ft-x-8-ft-Hi-Bor-APA-Rated-Sheathing-Pressure-Treated-Plywood-95360/202087831 (You might get a different price. For me, its $60)

Non-treated 2x4 were $2, and treated were $3.5 in 2019/20: https://www.homedepot.com/p/2-in-x-4-in-x-96-in-2-Premium-Grade-KD-HT-Stud-058449/312528776 https://www.homedepot.com/p/2-in-x-4-in-x-8-ft-Standard-Better-Hi-Bor-Pressure-Treated-Lumber-95344/202087781

(You might get a different price. For me, its $4, and $6)

Its a reflection of the same presentation that the Democrats tried to make about the economy: “Look at these abstract metrics disconnected from your lived experience, they say that the economy is great!”

But thats irrelevant if the most reliable form of data I have, my lived experience, disagrees with it. The reality is I live in an old house and it needs some serious repairs. I have to put some of them off because the cost of materials is just ridiculous, let alone trying to find contractors to do work at anything less than robber baron prices.

permalink
report
parent
reply
-3 points

You probably have to look at the price that Home Depot is paying for it, not the price they’re charging you.

permalink
report
parent
reply
10 points
*

The price of lumber never really went back to where it was before covid.

https://tradingeconomics.com/commodity/lumber

The price in at the start of 2020 was ~$377.55 per thousand board feet.

https://www.bls.gov/data/inflation_calculator.htm

$377.55 in January 2020 is $460.34 in July 2024 dollars.

The price of lumber in July 2024 was $423.27.

So it’s gotten back down to and fallen below pre-COVID-19 prices in real terms.

It does look like the price has risen from July 2024 to November 2024, so it’s presently higher, but it has not stayed above pre-COVID prices since the end of COVID-19.

permalink
report
parent
reply
4 points

See my response to the reply above this one.

permalink
report
parent
reply
1 point

What I’m seeing is that prices for lumber today are fairly flat based on location. Back in 2019, someone in AZ might pay $2 per 2x4 while someone in OK might pay $3. It was very variable depending on where you bought. Today, just about everyone has to pay $3.75 per 2x4.

permalink
report
parent
reply
5 points

Yeah, it sucks and really fucks with the “building equity in your home” narrative that updating/remodeling has. Now every fucking thing costs so much, that is very unlikely I get back out what I pay for updates in a home sale price later on. It seems like even maintaining your home is for the ultra-rich, now.

permalink
report
parent
reply
5 points

Building equity through improvements has pretty much always been a lie, the win was enjoying that improvement. The vast majority of improvements don’t actually net a higher sell value than their cost.

permalink
report
parent
reply
1 point

That’s definitely true to an extent! Like if you’re looking at spending several hundred dollars on a new tub or something for your bathroom when it’s already pretty updated, you’re not going to see much return for that. But if your bathroom is straight outta the mid 80s and hasn’t been updated at all, you’ll probably get more bang for your buck that way (very long-term speaking).

Or things like replacing the roof or old AC units, or honestly just painting and replacing light switches, can add a bit to the eventual sales price. Not a ton, but not nothing. It’s all things a buyer will potentially weigh when looking at your home. Just like they will…questionable diy decisions lol

permalink
report
parent
reply
9 points

By February, I will have put $100k into a house in stuff that’s nearly invisible - replace fence, repair leaking pool equipment, stabilize foundation, repair plumbing, and replace exterior ‘wood’ that was really watelogged mdf. My mom paid $220k 11 years ago. I’ve inherited it - and the $130k mortgage balance. My son is helping me by living there and covering the mortgage payment and I’m pulling money out of retirement to make repairs. It would likely take another $100k to update the 1980s kitchen, bathrooms, electrical, and 20 yr old hvac. Oh yeah, plus $10k/yr in taxes and insurance! Anyone want to buy a house?

permalink
report
reply
8 points

But you’re building equity! /s

permalink
report
parent
reply
12 points

repair leaking pool equipment

You have a pool. You are already head and shoulders above most people, including people who are also mortgaging a property.

permalink
report
parent
reply
6 points

It’s green and has been unusable for most of this year. It’s essentially a pond.

permalink
report
parent
reply
17 points

We livin in a new gilded age, bruh.

permalink
report
reply
78 points
*

As a homeowner what weighs me down most is insurance, by a large margin. It keeps increasing while the coverage decreases. It’s a huge racket in my opinion

permalink
report
reply
50 points

Racket.

A racquet is what you hit your insurance adjuster with when you’re tired of his racket.

permalink
report
parent
reply
8 points

Do you live in Florida?

permalink
report
parent
reply
6 points

Oklahoma 🙃rates go up each year due to tornados, at least that’s what they say. Even though i live in a heavily populated area that’ll never get hit.

I had to put a new roof on cause of softball sized hail caused by the infamous may 2013 storm that damn near leveled Moore Oklahoma. But other than that, no storm damage ever

permalink
report
parent
reply
16 points

Even though i live in a heavily populated area that’ll never get hit.

I don’t think tornadoes care.

permalink
report
parent
reply
4 points

That’s what the people living in Dallas said. Then a tornado hit the middle of a dense neighborhood.

permalink
report
parent
reply
1 point

Have you shopped other companies for rates? I switched earlier this year and cut my insurance costs by more than half! Was fucking ridiculous how it just kept climbing.

permalink
report
parent
reply
1 point
*

I live near the coast where we never get tornadoes because the weather is moderated by the water or something, but now we’re getting a couple tornado watches every season - they’re coming

permalink
report
parent
reply

News

!news@lemmy.world

Create post

Welcome to the News community!

Rules:

1. Be civil

Attack the argument, not the person. No racism/sexism/bigotry. Good faith argumentation only. This includes accusing another user of being a bot or paid actor. Trolling is uncivil and is grounds for removal and/or a community ban. Do not respond to rule-breaking content; report it and move on.


2. All posts should contain a source (url) that is as reliable and unbiased as possible and must only contain one link.

Obvious right or left wing sources will be removed at the mods discretion. We have an actively updated blocklist, which you can see here: https://lemmy.world/post/2246130 if you feel like any website is missing, contact the mods. Supporting links can be added in comments or posted seperately but not to the post body.


3. No bots, spam or self-promotion.

Only approved bots, which follow the guidelines for bots set by the instance, are allowed.


4. Post titles should be the same as the article used as source.

Posts which titles don’t match the source won’t be removed, but the autoMod will notify you, and if your title misrepresents the original article, the post will be deleted. If the site changed their headline, the bot might still contact you, just ignore it, we won’t delete your post.


5. Only recent news is allowed.

Posts must be news from the most recent 30 days.


6. All posts must be news articles.

No opinion pieces, Listicles, editorials or celebrity gossip is allowed. All posts will be judged on a case-by-case basis.


7. No duplicate posts.

If a source you used was already posted by someone else, the autoMod will leave a message. Please remove your post if the autoMod is correct. If the post that matches your post is very old, we refer you to rule 5.


8. Misinformation is prohibited.

Misinformation / propaganda is strictly prohibited. Any comment or post containing or linking to misinformation will be removed. If you feel that your post has been removed in error, credible sources must be provided.


9. No link shorteners.

The auto mod will contact you if a link shortener is detected, please delete your post if they are right.


10. Don't copy entire article in your post body

For copyright reasons, you are not allowed to copy an entire article into your post body. This is an instance wide rule, that is strictly enforced in this community.

Community stats

  • 14K

    Monthly active users

  • 10K

    Posts

  • 199K

    Comments