The premium for homeownership has grown in recent years as home insurance, upkeep, and high mortgage rates skew the buying vs. renting math.
  • Free_Opinions@feddit.uk
    51·
    1 hour ago

    Highly dependent on where one lives I guess. My friend just rented a new apartment and his rent is over double what my mortage payments are. That’s also money he is never getting back where as in my case my house is paid in about 15 years after which I own the damn thing and the monthly mortage payment drops off entirely. Excluding mortage, the montly cost of owning my house is 275€ which includes water and electricity.

    • Raiderkev@lemmy.world
      3·
      45 minutes ago

      It’s not about what your mortgage payment is. Interest rates are significantly higher now. See how much the same house costs at the current price and interest rates. Most likely it’s significantly higher now as both rates and prices have increased.

      • Free_Opinions@feddit.uk
        1·
        39 minutes ago

        My mortage payment is 520€/month including interests which are tied to Euribor12 and change once a year. My interests now are less than they were a year ago.

  • arglebargle@lemm.eeEnglish
    251·
    9 hours ago

    I am confused, my thought process went like this:

    So it’s more expensive to own then rent?

    Unless you own it and rent it out to others?

    Nobody would be a landlord if a dwelling cost more to maintain then to rent out.

    So something doesn’t add up.

    • LengAwaits@lemmy.world
      2·
      2 hours ago

      I agree, and came in here to say the same thing. I think the data is being skewed by the fact that many (not all, of course) rental properties are subdivided into multiple units (or built that way in the first place). People commenting about how it’s considering modern costs, well, they must not have read the first two sentences of the article:

      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.

      But the difference has grown much more extreme in recent years as just about all homeownership costs have ballooned.

      The only way you can arrive at that 14% number is if you’re averaging in multi-unit apartment buildings. Very few, if any, landlords are out there subsidizing their non-family tenants by charging less than the normal costs of ownership. If most landlords are losing money year over year, well… at that point just sell the property.

    • Pacattack57@lemmy.world
      3·
      3 hours ago

      I believe they are taking into account the cost to purchase these days since interest rates are higher, ergo high mortgage payments.

      As someone else mentioned most landlords have locked in rates at this point. Not many new landlords.

    • Not_mikey@slrpnk.net
      19·
      8 hours ago

      Most landlords bought the place earlier when home prices and mortgage rates were lower, or they just own the place outright and don’t make any mortgage payments.

      This article is about choosing whether to buy at current rates or rent at current rates. If you bought a place 10 years ago for half the price it’s worth now and a 2% interest rate then you’re probably going to be paying less then renting

  • Dorkyd68@lemmy.world
    41·
    10 hours ago

    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

      • Dorkyd68@lemmy.world
        3·
        6 hours ago

        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

  • partial_accumen@lemmy.world
    468·
    11 hours ago

    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)?

    • grysbok@lemmy.sdf.orgEnglish
      4·
      6 hours ago

      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.

    • Sundial@lemm.ee
      313·
      11 hours ago

      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.

      • empireOfLove2@lemmy.dbzer0.comEnglish
        284·
        11 hours ago

        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.

        • Wrench@lemmy.world
          2·
          6 hours ago

          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.

            • agamemnonymous@sh.itjust.works
              1·
              3 hours ago

              For me, insurance and property tax work out to about 1/3 of my former rent (which was a smaller place than my current home). My mortgage by itself is about the same as my former rent. Based on what another commenter said about the typical percentage of payment toward interest (69% after 1 year, 55% after 10 years, 33% after 20) after a year my money-in-the-black-hole is roughly even to renting with about 1/4 of my total payment going straight to equity. After 10 years that goes up to 1/3 into equity, after 20 it’s about 1/2.

              Yes, my total payment is higher, but the home is larger; if I’d made a more horizontal move, the equity building rate would be more favorable. Additionally, I rented that space for 4 years and the rent went up 30%. The main thing to increase my payments now would be an increase in property taxes, which reflect an increase in property value. Personally, I felt very different about a 30% increase in rent than I’d feel about a property value increase that would bump taxes enough to raise my current payment 30%.

              All I really did was convert some of what I’d save normally into the form of real estate. Home values typically increase about 3-5% annually, which is pretty comparable to most investment instruments. And I get the material benefit of a neat house to enjoy in the meantime, instead of some holdings with zero non-monetary value.

              It’s not necessarily the right move for everyone. I am particularly handy, so my maintenance costs are lower than they might be for others. But so far as money-in-the-black-hole and equity are concerned, I’d imagine most people who can shoulder the up-front costs would break even pretty quickly, interest included.

          • cybervseas@lemmy.worldEnglish
            4·
            10 hours ago

            Property taxes are still partly tax deductible. Also even at my low mortgage rate of 3%, I get about $450/mo. back via the mortgage interest tax deduction, worth about $300/mo. over the standard deduction IIRC. I am not sure if they factor these things into the 14% number.

              • partial_accumen@lemmy.world
                4·
                9 hours ago

                It’s not common for people to itemize any longer after Trump’s tax updates a few years ago

                The Tax Cuts and Jobs Act (TCJA) of 2017 Trump passed put in place permanent tax cuts for corporations and temporary tax cuts for individuals. The individuals tax cuts expire next year in 2025 so in 2026 the current standard deduction for single filers of $14,600 drops to $8,300. For joint filers is currently $29,000 and dropping to $16,600. source

                Unless these tax cuts for individuals are renewed, we might see many more folks itemizing again because the standard deduction is too small again.

        • Sundial@lemm.ee
          9·
          11 hours ago

          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.

      • fishpen0@lemmy.world
        11·
        11 hours ago

        insurance

        I was shocked as a homeowner to find that home insurance is not that much more expensive than renters insurance, especially for a condo where the HOA is sharing a large amount of the cost

        taxes

        I mean, especially if you’re already a homeowner and your assessment is years old, this amounts to less than $1k/yr.

        Using the above poster’s example both of those costs annualize out to still be cheaper than rent

        It’s actually horrifying how fast rent has gone up. Our mortgage in Boston went from being $1000mo more than average rent to $500mo under average rent in only two years. Even with the tax hike we just passed in my town, my total cost of ownership is far below renting even accounting for the savings we set aside for upkeep and emergencies

        Plus this whole time we’ve been improving the property. We now have solar on a 0% apr loan and don’t have electricity bills anymore and the mo billing for the panels is less than our old electric bills. We also used a state program to replace all the insulation and windows at cost with another 0 apr loan. So our gas bill is now only ~$80-100 compared to the $400-500 gas bill in the shithole apartments around here with 200 year old paper insulation. And if we want we can use another state program to replace our furnace with a heat pump and lower that further.

        So our relative cost went down even more as utilities keep going up and renters have zero control over their homes energy usage

        • AEsheron@lemmy.world
          4·
          10 hours ago

          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.

          • fishpen0@lemmy.world
            3·
            10 hours ago

            At the same time. If sales tax has always been that high then it would be silly to not realize that cost is baked into the local rents in the same region

            Certainly in my town where taxes were just hiked, every landlord is going to hike rent accordingly in September (it’s a Boston thing that 90% of leases always end in September)

        • Sundial@lemm.ee
          3·
          10 hours ago

          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.

      • partial_accumen@lemmy.world
        53·
        11 hours ago

        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.

        • Sundial@lemm.ee
          3·
          10 hours ago

          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.

          • partial_accumen@lemmy.world
            1·
            9 hours ago

            I had a long reply typed out exploring the various aspects and raising questions to the methodology and applicability of the advice in the article to different groups of people in different geographies and stage of life. However the tone of replies seems to just want to accept the article as is. Its a yahoo finance article, so the depth is pretty shallow and only speaks in broad generalizations. Your reply is doubling down on exactly that. There’s nothing wrong with that per se, but it looks like the there isn’t a desire in this thread to explore it any further.

            So we’ll just accept the article answer which you summarize well: “generic/average month-to-month overview, home ownership is almost always more expensive.”

            Conventional wisdom says keep renting folks and don’t question it.

        • pearsaltchocolatebar@discuss.online
          3·
          10 hours ago

          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.

          • partial_accumen@lemmy.world
            2·
            9 hours ago

            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.

            I read the comment. It doesn’t address the question. “Over what period of time?”

            Are they judging on owing a house for 30 years vs renting for 30 years or are they judging owning house for 1 year vs renting for 1 year?

    • Not_mikey@slrpnk.net
      2·
      8 hours ago

      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.

    • Vacationlandgirl@lemmy.world
      1·
      7 hours ago

      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!!

  • TropicalDingdong@lemmy.world
    23·
    11 hours ago

    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.

  • Today@lemmy.world
    11·
    11 hours ago

    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?

  • FuryMaker@lemmy.worldEnglish
    51·
    10 hours ago

    Yeah, but, after X years you own your house.

    After X years of renting, you got nothing.

    • GiddyGap@lemm.eeOP
      3·
      10 hours ago

      Depending on where you live, much or all of that value goes away if it’s 35-50 percent more expensive to own. Especially if you choose to invest the savings.

    • almar_quigley@lemmy.world
      31·
      9 hours ago

      That’s some rich dad poor dad BS. Means nothing if you can’t afford the additional y cost over renting, plus with interest rates where they’re at……so much of that monthly payment is still going nowhere.

      • aesthelete@lemmy.world
        21·
        8 hours ago

        You don’t have to pay the mortgage in thirty years and eat the entirety of the interest. I paid mine off in three.

        There’s no way I’m not saving money over renting at this point. I pay less than $1000 a month to live in a place that would cost $4000 a month to rent.

        • meliaesc@lemmy.world
          3·
          6 hours ago

          What year did you buy your home, and what cost? What is it worth today on Zillow or your site of choice?

          • aesthelete@lemmy.world
            1·
            2 hours ago

            I bought in early 2020 and it’s now worth about 50% more than it was.

            I kinda lucked out, because I bought right before everyone realized that we were screwed with COVID and were going to be stuck in their houses because the government had no idea what they were doing. I say “kinda lucked out” because I watched Trump deliver a speech as the stocks tanked in the corner, and realized he had no idea how to handle it. After watching it I turned to my spouse and said, “I know it sounds crazy, but I think we should buy a place right now.” I also had been looking for some time and realized that mortgage rates were near all time lows.

            All time low rates + stuck in small places = everyone that can buy a bigger place will buy a bigger place.

            • meliaesc@lemmy.world
              1·
              31 minutes ago

              Ah, very wise. You must see how people didn’t get matching 50% raises, matched with even higher interest rates… unfortunately the time of paying off your home early might be behind us, at least for a long while.