# Stop trying to convince me to buy a house! **URL:** \ **Category:** The BBQ Pit\ **Created:** [August 19, 2010, 12:54am UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686 "2010-08-19T00:54:06Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![Evil\_Economist](https://avatars.discourse-cdn.com/v4/letter/e/c89c15/32.png) [@Evil\_Economist](https://boards.straightdope.com/u/Evil_Economist)\ **Post date:** [August 20, 2010, 6:53pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/81 "2010-08-20T18:53:10Z")
> [@begbert2](#): > > > [@Evil\_Economist](#): > > > > It’s not an argument in favor of retiring unless you test the counterfactual. What would have happened if he had rented and invested the difference? What would have happened to lifetime income if he’d been more free to move for higher-paying jobs? > > I seriously doubt that renting would have been millions of dollars cheaper, and there is not a chance in hell that he would have moved to a higher paying job. He was _already_ making very decent money, and strongly prefers consistency to frequent change. (As do I.) Let me throw some generic assumptions out there: The house is paid off, so let’s say it was bought 30 years ago Average house price in 1980 (30 years ago) was $68,700 Average downpayment was 20%, or $13,740 $13,740 invested in stock market index fund in 1980 would be worth $1.3 million today. Now, I’m not saying that your parents would have $1.3 million in stocks if they’d rented, in fact given their circumstances they’re probably the best possible case for owning over renting. I’m just throwing out numbers for people who think that renting is always worse than buying. ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [August 20, 2010, 6:56pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/82 "2010-08-20T18:56:53Z")
> [@Misnomer](#): > > > [@Malthus](#): > > > > I’m a home owner myself, and I love it; I can have my own wrought iron gate installed, and no-one can tell me not to; it’s my property, not someone elses’. > > In most neighborhoods around here, the Homeowner’s Association (HOA) could tell you not to. Inside your house you can do pretty much whatever you want, but there are often lots of rules about the exterior: types of fences, paint colors, even types of porch lights. The property manager/homeowner for one place I rented got in trouble with the HOA because the replacement windows didn’t have grids. > > You’re right about the rest, though: most of the time, when I catch myself thinking about buying a place it’s so I can decorate it as I wish. In my current rental, I often daydream about updating the kitchen and master bathroom, removing the horrible wallpaper in the downstairs bath, replacing some of the curtains/blinds, etc. (I watch too much HGTV). Of course, I also daydream about winning the lottery. 😃 > > Speaking of decorating, another downside to renting – at least, to renting townhouses/single-family homes – is that you don’t want to buy furniture specifically for the place where you’re currently living, because you never know if it will fit in the next place. Like, right now I have two couches in the living room, but I’m 99% sure that I’ll have to sell one of them when I move. I would never buy a sectional. And there’s a niche in my entry foyer that’s just begging for a big plant or a sculpture or something, but I’m disinclined to spend more than $30-40 bucks on whatever would go there (I never use the front door, and I don’t have visitors often) and I haven’t found anything nice for that little. Etc., etc. Thank goodness I’m not afflicted with an HOI. Seems to me to significantly reduce the value of home-owning, which lies at least in part in that sort of freedom, to have what amounts to a set of rules telling you what you can and cannot do by way of decoration. ---
**Author:** ![Bosstone](https://avatars.discourse-cdn.com/v4/letter/b/22d042/32.png) [@Bosstone](https://boards.straightdope.com/u/Bosstone)\ **Post date:** [August 20, 2010, 7:01pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/83 "2010-08-20T19:01:54Z")
> [@Malthus](#): > > Thank goodness I’m not afflicted with an HOI. Seems to me to significantly reduce the value of home-owning, which lies at least in part in that sort of freedom, to have what amounts to a set of rules telling you what you can and cannot do by way of decoration. Quite. It’s all the burden of a landlord with none of the benefits. ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [August 20, 2010, 7:05pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/84 "2010-08-20T19:05:22Z")
> [@Evil\_Economist](#): > > > [@begbert2](#): > > > > I seriously doubt that renting would have been millions of dollars cheaper, and there is not a chance in hell that he would have moved to a higher paying job. He was _already_ making very decent money, and strongly prefers consistency to frequent change. (As do I.) > > Let me throw some generic assumptions out there: > > The house is paid off, so let’s say it was bought 30 years ago > Average house price in 1980 (30 years ago) was $68,700 > Average downpayment was 20%, or $13,740 > $13,740 invested in stock market index fund in 1980 would be worth $1.3 million today. > > Now, I’m not saying that your parents would have $1.3 million in stocks if they’d rented, in fact given their circumstances they’re probably the best possible case for owning over renting. I’m just throwing out numbers for people who think that renting is always worse than buying. The main economic advantage of a mortgage over (say) wise investing in stocks is somewhat non-rational, but nonetheless real: a mortgage acts as a _forced_ savings. It is true that a person could invest the money (don’t forget to subtract monthly rent) every month that they would have put into a mortgage, and depending on how the numbers crunch (ad the markets munch), come out even or ahead. But the fact remains that, without a bank breathing down your neck to pay each and every month, most people simply do not have the inclination to put investing first, and insure that they invest, each and every month, on the dot. It takes a lot more self-discipline to rent-and-invest and come out in the same place, retirement-wise. [That goes hand-in-hand with my favorite bit of saving advice: set up an automatic withdrawal, and simply live like that money you save and invest doesn’t exist - get used to living below your means.] ---
**Author:** ![Anne\_Neville](https://avatars.discourse-cdn.com/v4/letter/a/b9e5f3/32.png) [@Anne\_Neville](https://boards.straightdope.com/u/Anne_Neville)\ **Post date:** [August 20, 2010, 7:14pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/85 "2010-08-20T19:14:14Z")
> [@Malthus](#): > > Thank goodness I’m not afflicted with an HOI. Seems to me to significantly reduce the value of home-owning, which lies at least in part in that sort of freedom, to have what amounts to a set of rules telling you what you can and cannot do by way of decoration. The upside is that it also limits what your neighbors can do by way of decoration. Your neighbors’ outdoor decorating choices can impact your property value. A homeowners’ association can do something about a neighbor who chooses to decorate their yard with non-running vehicles, for example. Dealing with neighbors can be another downside to home ownership. If you’re renting, and your neighbors neglect their house and yard, it’s your problem only as much as it directly affects you. If it really bothers you, you can move. It’s not that easy for a homeowner, since being next door to an eyesore makes the house less attractive to potential buyers. I’m glad there’s no homeowner’s association in my neighborhood. Older neighborhoods may be a good bet, if you want to own a home but don’t want to deal with a homeowners’ association. ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [August 20, 2010, 7:18pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/86 "2010-08-20T19:18:34Z")
> [@Anne\_Neville](#): > > > [@Malthus](#): > > > > Thank goodness I’m not afflicted with an HOI. Seems to me to significantly reduce the value of home-owning, which lies at least in part in that sort of freedom, to have what amounts to a set of rules telling you what you can and cannot do by way of decoration. > > The upside is that it also limits what your neighbors can do by way of decoration. Your neighbors’ outdoor decorating choices can impact your property value. A homeowners’ association can do something about a neighbor who chooses to decorate their yard with non-running vehicles, for example. > > Dealing with neighbors can be another downside to home ownership. If you’re renting, and your neighbors neglect their house and yard, it’s your problem only as much as it directly affects you. If it really bothers you, you can move. It’s not that easy for a homeowner, since being next door to an eyesore makes the house less attractive to potential buyers. > > I’m glad there’s no homeowner’s association in my neighborhood. Older neighborhoods may be a good bet, if you want to own a home but don’t want to deal with a homeowners’ association. Yup, folks decorating the yard with burnt-out Buicks isn’t really a big problem in my neigbourhood, thankfully. 😉 To my mind, I’d rather trust the neighbours not to trash-up their yards, than have a HOI. ---
**Author:** ![Eva\_Luna](https://avatars.discourse-cdn.com/v4/letter/e/e495f1/32.png) [@Eva\_Luna](https://boards.straightdope.com/u/Eva_Luna)\ **Post date:** [August 20, 2010, 7:25pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/87 "2010-08-20T19:25:38Z")
> [@Labrador\_Deceiver](#): > > > [@Captain\_Midnight](#): > > > > Do people literally “walk away”? Pack up their stuff and move out of the house? > > Not only do they walk away, but they also take with them several things that they don’t have a right to keep. If you ever walk through a foreclosure with agent, you’ll see all kinds of things stripped out of the place. And leave things that you wish they hadn’t. When I asked my friend, our real estate agent, whether she thought it made sense for us to look at foreclosed houses, she regaled me with stories about ones she’d viewed with other clients. Including the one where the previous owners had left _seven decomposing dog caracasses._ ---
**Author:** ![Ogre](https://avatars.discourse-cdn.com/v4/letter/o/ecb155/32.png) [@Ogre](https://boards.straightdope.com/u/Ogre)\ **Post date:** [August 20, 2010, 7:49pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/88 "2010-08-20T19:49:16Z")
Homeowner here, and loving it. ---
**Author:** ![The\_Flying\_Dutchman](https://avatars.discourse-cdn.com/v4/letter/t/9fc348/32.png) [@The\_Flying\_Dutchman](https://boards.straightdope.com/u/The_Flying_Dutchman)\ **Post date:** [August 20, 2010, 7:52pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/89 "2010-08-20T19:52:33Z")
One more thing. I understand that in America, you guys get a tax deduction on the interest portion of your mortgage cost. On a $300,000 home, @ 5% interest rate, that represents $15,0000 deductable income and at a say 25% tax rate should represent a saving of $3750 per annum or $300 per month for anyone considering making the jump. That is a car payment. ---
**Author:** ![Sattua](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sattua/32/11906_2.png) [@Sattua](https://boards.straightdope.com/u/Sattua)\ **Post date:** [August 20, 2010, 8:02pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/90 "2010-08-20T20:02:07Z")
I wish you’d buy my house. So I wouldn’t have to own it anymore. ---
**Author:** ![Evil\_Economist](https://avatars.discourse-cdn.com/v4/letter/e/c89c15/32.png) [@Evil\_Economist](https://boards.straightdope.com/u/Evil_Economist)\ **Post date:** [August 20, 2010, 8:09pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/91 "2010-08-20T20:09:14Z")
> [@The\_Flying\_Dutchman](#): > > One more thing. > > I understand that in America, you guys get a tax deduction on the interest portion of your mortgage cost. On a $300,000 home, @ 5% interest rate, that represents $15,0000 deductable income and at a say 25% tax rate should represent a saving of $3750 per annum or $300 per month for anyone considering making the jump. > > That is a car payment. In general that’s right, though there are a couple of caveats: First, You have the choice of a standard deduction or an itemized deduction. If you choose to deduct your mortgage interest you must give up the standard deduction of $11,400 (assuming a married couple). So, the tax benefit would only be 25% of $3,600, and because your interest payments decline over time it would eventually become worthless (big simplifications here re: itemizing that I don’t want to go into). Second, treating a reduced cost as income is like treating a sale as income: “Honey, I just made $100 by buying these shoes at half off!” Remember, you’re reducing an interest expense. Third, to the extent that this benefits homeowners, it’s a transfer of money from the generally poorer (renters) to the generally richer (homeowners) and is morally indefensible. ---
**Author:** ![Labrador\_Deceiver](https://avatars.discourse-cdn.com/v4/letter/l/7c8e57/32.png) [@Labrador\_Deceiver](https://boards.straightdope.com/u/Labrador_Deceiver)\ **Post date:** [August 20, 2010, 8:11pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/92 "2010-08-20T20:11:22Z")
> [@Eva\_Luna](#): > > > [@Labrador\_Deceiver](#): > > > > Not only do they walk away, but they also take with them several things that they don’t have a right to keep. If you ever walk through a foreclosure with agent, you’ll see all kinds of things stripped out of the place. > > And leave things that you wish they hadn’t. When I asked my friend, our real estate agent, whether she thought it made sense for us to look at foreclosed houses, she regaled me with stories about ones she’d viewed with other clients. Including the one where the previous owners had left _seven decomposing dog caracasses._ That’s insane. Don’t let her talk you out of looking at foreclosures, though. There are some spectacular deals out there. ---
**Author:** ![Tom\_Scud](https://avatars.discourse-cdn.com/v4/letter/t/f08c70/32.png) [@Tom\_Scud](https://boards.straightdope.com/u/Tom_Scud)\ **Post date:** [August 20, 2010, 8:17pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/93 "2010-08-20T20:17:29Z")
> [@Labrador\_Deceiver](#): > > > [@Eva\_Luna](#): > > > > And leave things that you wish they hadn’t. When I asked my friend, our real estate agent, whether she thought it made sense for us to look at foreclosed houses, she regaled me with stories about ones she’d viewed with other clients. Including the one where the previous owners had left _seven decomposing dog caracasses._ > > That’s insane. > > Don’t let her talk you out of looking at foreclosures, though. There are some spectacular deals out there. We actually bought six months ago, so that’s water under the bridge. ---
**Author:** ![Eva\_Luna](https://avatars.discourse-cdn.com/v4/letter/e/e495f1/32.png) [@Eva\_Luna](https://boards.straightdope.com/u/Eva_Luna)\ **Post date:** [August 20, 2010, 8:34pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/94 "2010-08-20T20:34:09Z")
> [@Tom\_Scud](#): > > > [@Labrador\_Deceiver](#): > > > > That’s insane. > > > > Don’t let her talk you out of looking at foreclosures, though. There are some spectacular deals out there. > > We actually bought six months ago, so that’s water under the bridge. Besides which, she knows me and our parameters very well, and we were not in a position to deal with any huge maintenance surprises, etc. It was a thoroughly considered decision. ---
**Author:** ![Labrador\_Deceiver](https://avatars.discourse-cdn.com/v4/letter/l/7c8e57/32.png) [@Labrador\_Deceiver](https://boards.straightdope.com/u/Labrador_Deceiver)\ **Post date:** [August 20, 2010, 9:23pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/95 "2010-08-20T21:23:23Z")
> [@Eva\_Luna](#): > > > [@Tom\_Scud](#): > > > > We actually bought six months ago, so that’s water under the bridge. > > Besides which, she knows me and our parameters very well, and we were not in a position to deal with any huge maintenance surprises, etc. It was a thoroughly considered decision. Yeah, they require a good bit of searching, and the ability to move quickly. I’ve seen a bunch of stuff in move-in condition, but wasn’t able to get an offer in quickly enough. The patience has paid off for me, but most people don’t have time to search properties full-time. ---
**Author:** ![Miltonyz](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Miltonyz](https://boards.straightdope.com/u/Miltonyz)\ **Post date:** [August 21, 2010, 9:38am UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/96 "2010-08-21T09:38:26Z")
> [@](#): > > Average downpayment was 20%, or $13,740 > $13,740 invested in stock market index fund in 1980 would be worth $1.3 million today. I show that for 13,740 to turn into 1,300,000 in 30 years you are looking at an interest rate of 16.3%. At a more realistic figure of 9 percent I show that the investment to be worth about 182,279. I found the statistics online for home rental costs 1980-2001. 1980’s average rental was about 3600 a year. The payment on a house with the stats you listed with an 8% mortgage would be about 4760 a year. The first year that it would be cheaper to own the house would be 1988 with an average rental cost of 5040 vs. the fixed cost of 4760. Setting any possible investment income aside the first year you would make back your 13000 initial down payment would be 1999. By 2010 you would be up by about 44,400 of savings vs renting, not counting investment income from the initial down payment. I could not find the rent figures for the year 2002-2007 so this is not correct to the dollar. If you invested your yearly savings from 1988 until 2010 at a 9% interest rate you would have 167,425 in your index fund. This is a vary crude and rough outline. I did not enter costs on the homeowner side such as repairs, taxes and insurance. I also did not include the interest expense tax break or the property tax credit’s you could get from the feds and state. On the renters side I did not include the security deposit and the various fees that would occur from time to time moving. It appears from these very rough numbers that renting as a whole would net you around an extra 15k or so of more liquid assets. However I suspect that your house value would have climbed enough to bridge that 15k gap. EDIT: BTW I saved my spreadsheets. If anyone wants to look over my work I will gladly email it to them. ---
**Author:** ![Anne\_Neville](https://avatars.discourse-cdn.com/v4/letter/a/b9e5f3/32.png) [@Anne\_Neville](https://boards.straightdope.com/u/Anne_Neville)\ **Post date:** [August 23, 2010, 2:40pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/97 "2010-08-23T14:40:43Z")
[New York Times article on why a house may not be as good an investment now as it was over the past 20-30 years.](http://www.nytimes.com/2010/08/23/business/economy/23decline.html?src=me&ref=homepage) There’s no law of nature that says houses always have to go up in value, or have to go up in value faster than inflation. Don’t buy a house assuming that there is such a law. Assuming you can use your house’s rising value as an ATM is also a bad idea these days (well, it probably always was, but now it’s obvious why it’s a bad idea). ---
**Author:** ![Anaamika](https://avatars.discourse-cdn.com/v4/letter/a/5f9b8f/32.png) [@Anaamika](https://boards.straightdope.com/u/Anaamika)\ **Post date:** [August 23, 2010, 3:12pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/98 "2010-08-23T15:12:30Z")
I have been nagged and positively harassed all of my life about owning, too. Right now I rent a single family home in uptown Albany, in a very nice neighborhood, five or less minutes from major shopping centers, but when I get home it’s quiet as pie, for $800 + utilities. It’s just me and my SO and a gecko and a turtle, so we don’t use a lot of utilities. We are happy. When my thermostat was broken, the landlord fixed it. We do all of the minor repairs and they do anything major. I don’t pay taxes or anything like that. I want to buy a house…maybe. In ten years, perhaps. I’m 34, I’m young yet, and don’t feel I am in a financial position to own one. I think if you want to buy a house, more power to you, but too many people just follow the formula: grow up-go to college-get married-have a kid-buy a house-have another kid-buy a dog without thinking about any of it, really, and deciding whether any of it is necessary. ---
**Author:** ![kiz](https://avatars.discourse-cdn.com/v4/letter/k/7feea3/32.png) [@kiz](https://boards.straightdope.com/u/kiz)\ **Post date:** [August 23, 2010, 7:10pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/99 "2010-08-23T19:10:49Z")
> [@E-Sabbath](#): > > I’m sitting in the same place right now. My parents keep telling me to buy a house. I live in New York. I couldn’t afford the _taxes_ on the house, let alone the house. If I wanted to own a house, I’d have to quit my job, find a new job, and go move somewhere else. Possibly out of state. > > I can’t find anything that isn’t falling apart for less than 150k, and the taxes are horrible. I could try a condo… but the maintenance fees would be equal to the mortgage, and the cost is still the same. I’m in a similar situation – inherited my mother’s house. It’s paid off. I’m responsible for everything else. However, the property tax in this keeping-up-with-the-Joneses town is killing me. I simply don’t make enough money to cover it PLUS the general upkeep PLUS, god forbid, if something needs repairing. Every time I mention selling and either renting or moving to a less expensive area, I get the refrain, “You’ll never live as cheaply as you do now because you have no mortgage!” And, yeah, I also get the “Your monthly rent in this area would equal a mortgage payment – why would you want to throw that away?” I’m almost 50 years old. I don’t have children. I’m the only one left in my immediate family. Nobody is going to inherit this house after I go. If I stay here I can kiss my life savings goodbye paying the (\*#@^@&^ property tax, never mind upkeep. Then once that runs out, what then? ---
**Author:** ![Anne\_Neville](https://avatars.discourse-cdn.com/v4/letter/a/b9e5f3/32.png) [@Anne\_Neville](https://boards.straightdope.com/u/Anne_Neville)\ **Post date:** [August 23, 2010, 7:46pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/100 "2010-08-23T19:46:46Z")
Owning a house costs more than the monthly mortgage payment. There are taxes, utilities (which may cost more as you get a bigger house), highly variable maintenance costs, and upkeep such as mowing the lawn or paying someone else to do it. Plus, you have to worry about the value of the house. That includes stuff like the quality of the schools in the area, even if you don’t have any kids and don’t plan to have any. Renters don’t have those issues (some of them do pay utilities, though). You can get stuck in a house, and be unable to move without losing a lot of money or taking a hit on your credit report. If your house’s value declines (as they sometimes do), you can find yourself unable to get enough money to pay off the mortgage by selling the house. If you walk away, you get a hit on your credit report. Even if you don’t have a mortgage, you can be in a situation where you can’t sell your house for enough to buy another house you’d be willing to live in. You can’t just wait until your lease runs out and then move if you find you’re in a lemon of a house. You have to find someone else who will take that house off your hands (or rent it from you) before you can leave. A renter who wants to move doesn’t have to care who will be there after they’re gone. [Previous page](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686.md?page=4) [Next page](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686.md?page=6)