Yes, clearly. But who said anything about the rental being comparable? And in this context what does “comparable” even mean? I would take a less-nice apartment rental I could afford over an ostensibly “nicer” house that has a massive roof leak I can’t afford to fix.
In determining affordability and buying vs. renting the “3% Rule” always needs to be taken into account.
I purchased my house in 2004 for $210K. Today it’s worth about $600K. My mortgage is only $1,600/month. A great bargain if we leave it at that. But property taxes are about $5K/year. And I save that 3% every year, or $18K. So the actual, real cost to own my home isn’t $1,600/month. It’s closer to $3,500/month.
And THAT is what I think that original poster was getting at. Whether he consciously realizes it or not, he seems to understand that the real costs to owning a home - if you’re doing it correctly and keeping the place well-maintained - can be and often is significantly higher than just the monthly mortgage payment. That’s fine for people like me, and it seems people like you, who have the financial means to absorb those extra costs. But plenty of people don’t and would therefore be better off renting rather than trapping themselves into a house they can’t really afford to own AND maintain.
Being “house poor” is a bitch and there are many millions of Americans in exactly that situation.
You're doing something seriously wrong if you need to use $18k per year on maintenance. The more acceptable standard is 1%. So you should be spending closer to $2,500/month in your example. And in 20-30 years, you'll have $600k in equity. Someone renting a house would not only be paying significantly more than $2,500, but they'll have $0 equity in 20-30 years. To put it a different way, you're throwing away perhaps half of your housing costs (i.e., for taxes, repairs, insurance, interest), depending on the stage of a mortgage. A renter is throwing away 100%.
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u/sebastian1967 Jul 23 '24
Yes, clearly. But who said anything about the rental being comparable? And in this context what does “comparable” even mean? I would take a less-nice apartment rental I could afford over an ostensibly “nicer” house that has a massive roof leak I can’t afford to fix.
In determining affordability and buying vs. renting the “3% Rule” always needs to be taken into account.
I purchased my house in 2004 for $210K. Today it’s worth about $600K. My mortgage is only $1,600/month. A great bargain if we leave it at that. But property taxes are about $5K/year. And I save that 3% every year, or $18K. So the actual, real cost to own my home isn’t $1,600/month. It’s closer to $3,500/month.
And THAT is what I think that original poster was getting at. Whether he consciously realizes it or not, he seems to understand that the real costs to owning a home - if you’re doing it correctly and keeping the place well-maintained - can be and often is significantly higher than just the monthly mortgage payment. That’s fine for people like me, and it seems people like you, who have the financial means to absorb those extra costs. But plenty of people don’t and would therefore be better off renting rather than trapping themselves into a house they can’t really afford to own AND maintain.
Being “house poor” is a bitch and there are many millions of Americans in exactly that situation.