What housing has cost me

[PFHC]

Just gonna leave this here:

Furnishings    $(5,633.13)
Home Improvement    $(56,549.99)
Home Insurance    $(2,858.98)
Home Services    $(1,385.97)
Home Supplies    $(2,841.31)
Lawn & Garden    $(2,608.51)
Mortgage & Rent    $(66,915.41)
Utilities                  $(12,201.74)
Other    $(1,357.53)
Total    $(152,352.57)
   
2012    $(35,354.20)
2013    $(22,957.11)
2014    $(37,429.94)
2015    $(43,158.32)
2016    $(13,453.00)
Total    $(152,352.57)

Rented for 2012, owned a 970 sq ft house since. Been remodeling as we go. Just finished our kitchen and ran the numbers on it to see how we fared on our estimated budget ($300 below!). Got to thinking and decided to run the numbers since we started tracking with Mint.

Holy-o-fuck. That's a lot of money.

[marty998]

Meh... we all need a place to live, and we all have to pay for it.

You would have paid rent all those years if you didn't own the house. At the end of it, you'd still be paying rent, at least by owning you'll have equity.

[PFHC]

I have a hard time "mehing" $152,000. I calculated I would have spent more like $60,000 if I were renting. And the equity I have "gained" in my house is about half what I have put into it when you combine mortgage and remodel, or about $60,000. So, I am $30,000 in the hole.

Not sure I would change a thing, just sobering to look at it this way. :/

[lakemom]

I have a hard time "mehing" $152,000. I calculated I would have spent more like $60,000 if I were renting. And the equity I have "gained" in my house is about half what I have put into it when you combine mortgage and remodel, or about $60,000. So, I am $30,000 in the hole.

Not sure I would change a thing, just sobering to look at it this way. :/

But the goal is to continue to live in the house (when no more expensive repairs/remodels are needed) as the equity continues to grow and the monthly payment never goes up (like it does with renting) and eventually the monthly payment goes away (which it never does with renting).  It is a shocking number though!  We did the same with our first home (a virtual gut job, one room at a time starting with all new wiring and plumbing before we moved in) and netted a whopping $3,500 when selling (after commission and paying off first and second and accounting for all the improvements we cash flowed as we went).  Needless to say, at 51 we have lived in a paid for house for 6 years now and its been a huge sense of relief and comfort.

[tobitonic]

^ It shouldn't bring you comfort; you could have been investing those additional mortgage payments (or even better, refinanced for another 30 years) and made so much money in the stock market in your 60s and 70s!

Oh, sorry, I've been reading too much forum nonsense lately about why you should never, ever, ever get back together pay off a mortgage. Of course, in the real world, there are a ton of benefits to *not* having a mortgage and a ton of things *more* important than maximizing every potential income stream.

PFHC, I'm pretty averse to spending in general, but I agree with the other 2 posters; you need to live somewhere. And something tells me you'd have spent the last several years while renting complaining about things renters do, like the instability of depending on a landlord or the lack of flexibility for homesteading possibilities or rising costs or this or that. Put me in the "meh" camp too. And reread your signature. :D

[pbkmaine]

I have a hard time "mehing" $152,000. I calculated I would have spent more like $60,000 if I were renting. And the equity I have "gained" in my house is about half what I have put into it when you combine mortgage and remodel, or about $60,000. So, I am $30,000 in the hole.

Not sure I would change a thing, just sobering to look at it this way. :/

I have found the same thing. In almost every case, I should have rented instead of buying.

Do you read this blog?
http://jlcollinsnh.com
He's firmly on the side of renting.

[soupcxan]

Utilities, insurance, and furnishings may be cheaper if you rent instead of buy, but those expenses are not zero if you rent. And the principal portion of your mortgage should also be excluded as it is not really an expense.

I don't care if owning is somewhat more expensive than renting, it is worth it not to have to deal with noisy neighbors or weird cooking smells in the hallway.

[WildJager]

I don't care if owning is somewhat more expensive than renting, it is worth it not to have to deal with noisy neighbors or weird cooking smells in the hallway.

Or you could, you know, rent a house and solve those same problems.

[somebody8198]

I feel like everyone here replying negatively is just trying to justify their own home ownership expenses. OP has a good point, which is that home ownership has a lot of hidden expenses. These are the things that the realtors don't tell you up front and people don't like to talk. Instead, you get these very simplistic assessments of "rent vs. buy" that tell you that you're "throwing away money" if you choose to rent an apartment instead of buying a condo or house because the monthly mortgage payment ends up being roughly equivalent to the rent. This is too simple of a view. It ignores all the upkeep costs of owning a house, plus the risk of the market in your area tanking and the home losing value. So much for your equity if you've already signed on for a 30 year adjustable rate mortgage for 200% of the value of the asset. Also, what happens if your household income drops and you can no longer afford the mortgage? That loan isn't going away. Owning a home is a huge responsibility and should not be looked at as merely an alternative to renting. It's a significant commitment.

I rent and have been doing so for eight years now, my entire adult working life. Renting is great for me at this stage of my life, and in the area where I live. I have very predictable expenses which allows me to invest money for the long-term. I know exactly how big my emergency fund needs to be – no risk of needing to replace the roof or hire a plumber or whatever. If I lose my job, no biggie, if I run through too much of my emergency fund I'll just sublet my apartment and move in with a friend until I can get back on my feet. If my income drops due to the job market or changing careers, I just sublet and move to a cheaper place. It's very, VERY easy for me to control my cost of living. The main reason I am in a high percentile for net worth for people my age is that I rented for years and lived with roommates, spending less than 10% of my take home pay on housing. The rest of that money was saved or spent on things that bring me joy, such as learning an instrument or taking classes. Besides, with my current lifestyle, I really don't spend that much time at home, so having a nice home isn't very important to me. I am single, I have no children, and no dependents, not even a pet. So it makes no sense for me to buy a house and fill it with furniture and other crap I don't need.

Someday, my situation may change and I may want to own a home. I think the main benefits of home ownership are:
a) Quiet -- if you own a house, not a condo, and have a large enough plot of land that you can reasonably be sure you won't overhear the neighbor's kid practicing bagpipes in the morning (this actually happened in the neighborhood where I grew up).
b) Equity -- yes, you own an asset that you can live in.
c) Freedom to do what you like. Start a garden. Install a gym in the garage. Tear out the floors if you want.

I think owning a condo is the dumbest thing you could possibly do, however. It combines the worst aspects of home ownership with the worst aspects of renting.

[franklin w. dixon]

I did a similar calculation recently because we are going to move to a bigger house and sell/rent our current house. I was curious what the net cost of the current house was (we have lived here for 39 months).

The purchase price of the house was $175,000 and cash to close was $37,000 (down payment plus whatever taxes and so on). The mortgage payment, including taxes and insurance, is $1150 per month. HOA is 100 per month. We have redone 1 bathroom ($2200) and replaced 2 appliances ($800). We will need to do a few cosmetic things before we rent or sell, like paint, carpet, tile in another bathroom. I'll estimate $3000 for that. We've paid ~5000 early towards the mortgage and the balance is 108,000. Conservatively, I'll estimate that we will receive $170,000 at sale, net of all taxes and fees.

So our costs have been:

37,000 cash to close
1150*39 = 44,850 monthly payments
100*390 = 3900 HOA dues
2200 + 800 = 3000 upkeep which would be responsibility of a landlord
3000 repairs to rent or sell
5000 early mortgage payments

96,750 total expenses. I'm not counting utilities etc because we would have paid those as renters.

Estimated cash to us after sale is 170k, less 108k to pay off the mortgage, leaving us with 62k.

So the net cost of living here for 39 months is 96,750-62,000 = 34,750, or $891 per month.

You can compare that to the rent we were paying previously ($1120 per month) or to the approximate rental value of this house ($1600 per month). So we come out ahead by $8,931-27,651, depending on how generous you feel. And that's for a duration of only 39 months; odds are very good that for a longer duration of residence the numbers would come out better.

In fact, the more I think about it, the more I'm inclined to convert to a rental rather than sell this house, both to avoid paying the steep fees and taxes associated with sale and because the math sure looks better from the landlord's side than from the tenant's...

[undercover]

I prefer owning a home and always will for the income-producing capability. If I want to rent out a few rooms, I can.

I think a lot of people (especially renters) over exaggerate home maintenance. Yes, it's work, and it can be a bitch, but you can also be selective on what you "fix" and "maintain". In 30 years, my dad has probably put $30k of maintenance/repair into his 2300 sqft house. That includes a roof, hardwood flooring throughout, a new heating system, appliances, etc. And to be honest, everything except the roof was completely optional. It's also a ranch style home and far too big for what he ever needed, so the roofing expense is disproportionally large. I wouldn't buy a house without hardwood floor or some type of stone. Screw replacing carpet. Sure, the place is outdated and needs updated, but my point is that it's completely optional to do those things. Never had a leak that insurance didn't cover. Never had a problem with electrical, structural, etc. As far as actual "repairs" and necessary fixes, it is far less than $30k.

I know there are many benefits to renting, but to each their own. I'd rather have a paid off place in a place I love rather than job hop.

OP, keep in mind that with renting, you'd still be looking at furnishings, utilities, supplies, etc. Also keep in mind that your $60k improvements were completely discretionary. Even in San Francisco, it wouldn't take $60k to take a non-functioning house under 1000 sqft to functional. In general, you should appreciate the benefits you get from housing more than sweating the numbers. I think it's extremely unproductive to track these expenses and compare them to what you could've done. It's not like you can go back in time. You can only compare what you have to what your choices are now.

[Metric Mouse]

Is everyone including property taxes in their numbers? Seems that that one wasn't mentioned by the OP as a line item, and no one else has specifically mentioned it separately from sales tax so I was just wondering.

And utilities? You've got to be joking me. They aren't even comparable in an apartment and a house. Furnishings could be similar, assuming that your house is the same 800 square feet an apartment is. Don't forget to add in things like lawn care or snow shoveling. Just like house maintenance, these activities take time as well as money - at an hourly rate a home owner is way behind. There are many benefits to home ownership; but mathematically one pays for them in lost opportunity costs and lower over-all returns on investments.  For some people it's worth it for the upsides - but it's rarely optimal.

I can say the largest financial mistake I've ever made is buying a house. Like Knaak, I too would have been much better off from a financial perspective had I chosen to remain renting.  Everyone makes tradeoffs in their life - the trade off to home-ownership for many is months or years of cube slavery.

For instance: 30K in repairs/renovations over 30 years is 100K in lost opportunity costs, so don't forget to subtract that from the sale price of the home...

[chemistk]

I have found the same thing. In almost every case, I should have rented instead of buying.

Do you read this blog?
http://jlcollinsnh.com
He's firmly on the side of renting.

Glad to see someone here brought up Mr. Collins. This one's my favorite one to cite to people when owning vs. renting ever comes up.

http://jlcollinsnh.com/2013/03/20/roots-v-wings-considering-home-ownership/

As with all things, there is no "one size fits all" answer to this debate. It's hard to defend the merits of home ownership when they're intangible benefits seen only to you. Folks with families have an easier time understanding why some people will stick with a place even when it's costing them an arm and a leg.

[PFHC]

Hey y'all. Thanks for the thoughtful replies.

My intent in posting this information was not to say, "woe is me", nor was it to start a discussion on home-ownership vs renting. I just wanted to let those who may not know that owning a house is frigging expensive!

As I mentioned, I don't think I would change a thing. We are very fortunate to have been able to meet our savings goals while living in this home and absolutely hemorrhaging money at it. Unless something changes, that will likely continue for at least two more years.

The house is wonderful, the neighbors a dream, and we have had so much fun and made so many memories living there and doing the work. Yes, I could have retired 2-5 years earlier, but if I get down to it, I would have to say that things like that are why I work.

[Kwill]

I just wanted to let those who may not know that owning a house is frigging expensive!

Thanks. It's been a helpful reality check to read your post and the replies. I'm not in a position to buy right now, and it's good to be reminded of the positive aspects to renting, even if on the whole you're happy with your purchase.