The Siren's Call of Homeownership in America

Minarchist wrote:
MilkmanDanimal wrote:

Move 30-45 minutes further away.

A bit off-topic but worth noting that most people vastly underestimate the cost of doing that. Here's some fun with numbers.

This is where I fall, personally. Still renting at 30, no car and my commute is a 15-20 minute walk (which has dpwnsides, like today's 0 F weather, or bringing home groceries on my back). My rent is definitely my biggest expense, but generally expenses are kept to a minimum. I could see how I might be losing money in the long run or missing opportunities due to limited long distance mobility, but my resources are liquid and I have a fair amount of spare time.

DOOM

Enix wrote:

In some cases, renting is the more rational choice. It's potentially cheaper (because you're not on the hook for maintenance or repairs), and it's more flexible (you can up and go at most any time).

But you ARE on the hook for maintenance and repairs. They have to be done, one way or another. If you are renting, it simply means that the landlord prices the maintenance costs into your rent number. And if these costs go beyond that cushion, the landlord will raise your rent.

Minarchist wrote:
MilkmanDanimal wrote:

Move 30-45 minutes further away.

A bit off-topic but worth noting that most people vastly underestimate the cost of doing that. Here's some fun with numbers.

That's interesting as I have a 30-40 minute commute. Granted, the house I bought would've cost me another 100k or so if I had gone closer to work.

Yonder wrote:
MilkmanDanimal wrote:

Move 30-45 minutes further away. Buy a fixer-upper. The financial benefits of home ownership are pretty huge.

I would say that "buy a fixer-upper and fix it up" isn't a super fair comparison with "live in a rental" it's a better comparison with "live in a rental and get a second job".

Sure, it's a second job that will teach you skills that will be valuable for you and your loved ones for your entire life, the hours are pretty flexible, the pay can be quite good, and the commute is fantastic. Not only that but it's very rewarding. It's a great second job to get if you're so inclined, but it's still asking for a lot of effort over and beyond just living in a rental.

There's also a hole of indeterminate size in that. 30-45 minutes away is a pretty big commute. You're adding more money to your budget for gas, auto maintenance (more frequent purchasing of tires, possibly oil changes, etc... not to mention more mechanical issues), etc...

Ah, minhausered while I was writing that out, then writing and deleting a discussion on my personal situation!

DSGamer wrote:
Minarchist wrote:
MilkmanDanimal wrote:

Move 30-45 minutes further away.

A bit off-topic but worth noting that most people vastly underestimate the cost of doing that. Here's some fun with numbers.

That article is a favorite of mine, but I'm not sure how relevant it is on the West Coast or other areas where housing is going through the roof. My wife and I would literally have to sell our house at a loss and then spend 2 to 3 times what we pay now to move into central Portland. By my math we're better off toughing out the commute until the market recovers in our part of town. Even then I'm not sure that we would move closer in versus possibly moving elsewhere in the country or out of the country, if the opportunity presented itself.

Same here. Boston is stupidly expensive to live in or around. When I was idly looking at buying a place with my now-ex, we were looking at little condos that were in kinda-crummy areas for north of $270k. Even living within public transit range of the city is stupid expensive.

So why did I just start a job that's in the middle of Boston that requires an hour+ commute each way 3x a week? Because there just aren't any jobs in my field outside of Boston that pay decently. Major urban areas act like singularities, sucking all the better-paying jobs in toward them. I was definitely sad to give up my last job, which had "only" a 30-minute commute, but I couldn't say no to a significant pay bump.

What we really need is more jobs that allow working remotely. At that point, we could live where we like and can afford to, and not have to live where the jobs are.

obirano wrote:
Minarchist wrote:
MilkmanDanimal wrote:

Move 30-45 minutes further away.

A bit off-topic but worth noting that most people vastly underestimate the cost of doing that. Here's some fun with numbers.

That's interesting as I have a 30-40 minute commute. Granted, the house I bought would've cost me another 100k or so if I had gone closer to work.

Well, the number he collects is $125,000 over 10 years, which would more than cover that...plus the extra year or so you spent in the car, which has got to be worth something.

I'm not saying that no one should ever commute a long way to work, ever, but I do think people underestimate the cost of longer commutes when doing their cost/benefit analyses.

There have been a number of studies recently that have shown that there are often correlations between earning power and living close to the center of an urban area. If you're in an industry that changes a lot or requires some measure of networking then there's value in living near the center of town where you can go to meetups of various sorts, network with other people in your field, etc.

DanyBoy wrote:
Minarchist wrote:
MilkmanDanimal wrote:

Move 30-45 minutes further away.

A bit off-topic but worth noting that most people vastly underestimate the cost of doing that. Here's some fun with numbers.

This is where I fall, personally. Still renting at 30, no car and my commute is a 15-20 minute walk (which has dpwnsides, like today's 0 F weather, or bringing home groceries on my back). My rent is definitely my biggest expense, but generally expenses are kept to a minimum. I could see how I might be losing money in the long run or missing opportunities due to limited long distance mobility, but my resources are liquid and I have a fair amount of spare time.

Honestly, keep living this way. This sounds great to me.

Demosthenes wrote:
Yonder wrote:
MilkmanDanimal wrote:

Move 30-45 minutes further away. Buy a fixer-upper. The financial benefits of home ownership are pretty huge.

I would say that "buy a fixer-upper and fix it up" isn't a super fair comparison with "live in a rental" it's a better comparison with "live in a rental and get a second job".

Sure, it's a second job that will teach you skills that will be valuable for you and your loved ones for your entire life, the hours are pretty flexible, the pay can be quite good, and the commute is fantastic. Not only that but it's very rewarding. It's a great second job to get if you're so inclined, but it's still asking for a lot of effort over and beyond just living in a rental.

There's also a hole of indeterminate size in that. 30-45 minutes away is a pretty big commute. You're adding more money to your budget for gas, auto maintenance (more frequent purchasing of tires, possibly oil changes, etc... not to mention more mechanical issues), etc...

Ah, minhausered while I was writing that out, then writing and deleting a discussion on my personal situation! :lol:

Just wanted to clarify that while Milkman was talking about a 30-45 minute further commute to your first job, when I said "the commute is fantastic" I was referring to the second job, aka, fixing up your house. That doesn't require a commute at all! Lots of trips to Home Depot though, if you count that.

Yonder wrote:
Demosthenes wrote:
Yonder wrote:
MilkmanDanimal wrote:

Move 30-45 minutes further away. Buy a fixer-upper. The financial benefits of home ownership are pretty huge.

I would say that "buy a fixer-upper and fix it up" isn't a super fair comparison with "live in a rental" it's a better comparison with "live in a rental and get a second job".

Sure, it's a second job that will teach you skills that will be valuable for you and your loved ones for your entire life, the hours are pretty flexible, the pay can be quite good, and the commute is fantastic. Not only that but it's very rewarding. It's a great second job to get if you're so inclined, but it's still asking for a lot of effort over and beyond just living in a rental.

There's also a hole of indeterminate size in that. 30-45 minutes away is a pretty big commute. You're adding more money to your budget for gas, auto maintenance (more frequent purchasing of tires, possibly oil changes, etc... not to mention more mechanical issues), etc...

Ah, minhausered while I was writing that out, then writing and deleting a discussion on my personal situation! :lol:

Just wanted to clarify that while Milkman was talking about a 30-45 minute further commute to your first job, when I said "the commute is fantastic" I was referring to the second job, aka, fixing up your house. That doesn't require a commute at all! Lots of trips to Home Depot though, if you count that.

Oh, no, I figured that, I actually was referring to Milkman's statement and building upon yours with regards to "getting a second job". I knew what you meant, but add enough gas money into your commute and you may need another second job.

Heh. Both homes I've purchased have been <1 mile away from either a Lowe's or HD. This was not by accident.

Cool discussion. I always believed the biggest reason home ownership was pushed in the past was EQUITY! EQUITY! EQUITY! Equity was a nest egg for those that couldn't save a lot. Now a days that can't happen (at least not easily). I totally agree that renting can be good but I wonder what happens when you get up in years and one starts having work issues? (Unless you've saved your whole life which can be hard in today's world)

We rent a nice house right now because we just moved but we'll be looking to buy when that lease is up. A couple of reasons we are still down with the buying even though the equity game is done.

1)You can get pretty much exactly what you want. The house we rent now is in a nice, quiet neighborhood. It has some very nice features inside (details, etc). BUT no fence. We really need a fence now that our dog is getting bigger so he can play outside. Also, my wife had to put half of her kitchen stuff in the attic because the kitchen was small. (she loves to cook)

2)We live in a nice area where I feel I'll be able to work the rest of my life (Raleigh area). We just had a 2nd grand kid. We are getting close to that half way milestone. We really want to pick out a house that we can imagine having once we retire and have it paid off so we can use any retirement money on the fun stuff vice paying rent every month.

If you can afford to buy a house and all the accoutrements that go with that, you can afford to save.

If you can't afford either, well... sh*t.

Gorilla.800.lbs wrote:
Enix wrote:

In some cases, renting is the more rational choice. It's potentially cheaper (because you're not on the hook for maintenance or repairs), and it's more flexible (you can up and go at most any time).

But you ARE on the hook for maintenance and repairs. They have to be done, one way or another. If you are renting, it simply means that the landlord prices the maintenance costs into your rent number. And if these costs go beyond that cushion, the landlord will raise your rent.

On the other other hand, you're not on the hook for those often expensive repairs immediately. My family rents, and a not insignificant part of the reason for that is that we have a fairly limited income and something like a water heater or dishwasher going toes up would put a crushing strain on our finances to fix. By renting, that's absolutely factored into our monthly rent payments, but when something goes awry it can actually get taken care of.

DanyBoy wrote:

If you can afford to buy a house and all the accoutrements that go with that, you can afford to save.

If you can't afford either, well... sh*t.

I will say this, houses are often liked "forced savings" for people who aren't good at saving. That's one of the main graces of buying. If you're like a 70% responsible grown up, but can't close the gap on that last 30%, putting your rent into a house for 30 years can guarantee you have something. You're not wrong, though. I think I've read articles that renters putting the money they save by not maintaining a house into savings do just as well financially over the long haul. Sometimes better.

Minarchist wrote:
obirano wrote:
Minarchist wrote:
MilkmanDanimal wrote:

Move 30-45 minutes further away.

A bit off-topic but worth noting that most people vastly underestimate the cost of doing that. Here's some fun with numbers.

That's interesting as I have a 30-40 minute commute. Granted, the house I bought would've cost me another 100k or so if I had gone closer to work.

Well, the number he collects is $125,000 over 10 years, which would more than cover that...plus the extra year or so you spent in the car, which has got to be worth something.

I'm not saying that no one should ever commute a long way to work, ever, but I do think people underestimate the cost of longer commutes when doing their cost/benefit analyses.

Very true. This did allow us to get out of the renting situation that we disliked though, so there was some benefit there. I don't mind the drive as traffic isn't bad here and I enjoy living in the woods area that I do. The drive is my opportunity to decompress to a point.

Edit: not saying buying a house was the best decision at the moment, but it was something we wanted and the area allowed it to happen.

No idea where it fits into this conversation in terms of who I should quote, but I think I'm gathering that my fiancee and I have a very healthy perspective on expectations for homebuying. Our combined gross income is solidly middle class, and given expenses and everything, we've determined that we're likely to be looking for a home with a hard price ceiling of $130k so that we can make sure that we're also putting a solid monthly payment into a savings account for home expenses (repairs, maintenance, appliance replacement, whatever). That's on the medium-to-low end of home price in our area for middle class homes.

Sizewise, I'd be thrilled with 1500sqft, but am willing to consider smaller. Our only true requirements are 1.5 bathrooms (the .5 can consist of a second toilet in a basement that we'd need to build a bathroom around, but I'd strongly prefer a true .5 bathroom in addition to the full one), 3 bedrooms, a garage, and central air/heat. Everything else is negotiable (doesn't hurt that I'm enough of a handyman type that I can do work on modifying the home if needed).

This is in comparison to just about everyone else I know who's middle class and looks down their nose at any home under $150k. Several of the people either of us knows through work have bought more expensive homes than we're looking at on less household income than we make (one of my coworkers bought a $240k-ish house last year on a combined household income of around $100k - that's terrifying to me). I like to think that I'm setting us up for success by being modest in our expectations.

DSGamer wrote:
DanyBoy wrote:

If you can afford to buy a house and all the accoutrements that go with that, you can afford to save.

If you can't afford either, well... sh*t.

I will say this, houses are often liked "forced savings" for people who aren't good at saving. That's one of the main graces of buying. If you're like a 70% responsible grown up, but can't close the gap on that last 30%, putting your rent into a house for 30 years can guarantee you have something. You're not wrong, though. I think I've read articles that renters putting the money they save by not maintaining a house into savings do just as well financially over the long haul. Sometimes better.

In theory this is true, but in practice it seems that an astonishingly large percentage of home buyers don't stay in one house long enough to pay it off. Due to 30-year (or longer!) loans, even if they stay in one place 10 years they have a fairly negligible amount of equity relative to the purchase price. Then they move and generally use that equity as a downpayment on another house. Repeat 2-3 times, maybe throw in a home equity loan or two to help pay for the 2.2 kids' college tuitions, and you're retiring 8 years in to a 30-year mortgage with only 25% equity in the house. Or, if you unluckily retire in 2008, 0% equity in the house.

It's one of the reasons that Dave Ramsey pushes paying down mortgages early so hard. Technically it's a worse monetary decision assuming you otherwise invest that extra money and manage it well. In other words, if a robot is managing the finances, it's better to ride the mortgage as long as possible and invest. People, of course, don't usually think that way.

Spoiler:

This is not to start a war on whether or not Dave Ramsey's advice is generally good; just pointing out that financial-type people understand most humans don't make the "technically correct" long-term decision.

I have actually been watching all this stuff on Tiny Houses and kind of feel like it would work really well for me. $10k for a house, spend a little money on a piece of property to hook things up to it, lots of yard space by default? Probably wouldn't work if I ever found a spouse, but I could pay that off in three years of tax returns and bonuses.

Duoae wrote:
Jonman wrote:

Enhanced Steam tells me I've payed nearly $2k to Steam alone, and I'm going to assume there's another few hundred bucks in there from Steam keys purchased elsewhere. Boom - there's a significant portion of my downpayment.

That's a bit misleading though. When did you sign up to Steam? 2004 like most of us? Are you saying that you would have done nothing that cost money in all that time and years that you were playing games in order to save that money?

I seriously doubt it.

You should doubt your assertion. Because it's wrong.

My first Steam purchase was at the start of 2013 (when I traded in my filth-encrusted console-jockey onesie for the pristine white tunic of the PC master race). Now Steam has three-hundred-and-something games in it with my name on them.

What I'm saying is that were I looking to squirrel away some cash towards a downpayment for a house, I could have looked to my copious gaming habit as a source of those funds. I suspect that I'm not alone in this community, which is kind of the point. This community is largely made up of people who funnel too much of their disposable income into their hobby, to varying degrees.

My point was that home-ownership isn't as far out of reach as it may seem if you're willing to make the necessary sacrifices.

Farscry wrote:

No idea where it fits into this conversation in terms of who I should quote, but I think I'm gathering that my fiancee and I have a very healthy perspective on expectations for homebuying. Our combined gross income is solidly middle class, and given expenses and everything, we've determined that we're likely to be looking for a home with a hard price ceiling of $130k so that we can make sure that we're also putting a solid monthly payment into a savings account for home expenses (repairs, maintenance, appliance replacement, whatever). That's on the medium-to-low end of home price in our area for middle class homes.

Sizewise, I'd be thrilled with 1500sqft, but am willing to consider smaller. Our only true requirements are 1.5 bathrooms (the .5 can consist of a second toilet in a basement that we'd need to build a bathroom around, but I'd strongly prefer a true .5 bathroom in addition to the full one), 3 bedrooms, a garage, and central air/heat. Everything else is negotiable (doesn't hurt that I'm enough of a handyman type that I can do work on modifying the home if needed).

This is in comparison to just about everyone else I know who's middle class and looks down their nose at any home under $150k. Several of the people either of us knows through work have bought more expensive homes than we're looking at on less household income than we make (one of my coworkers bought a $240k-ish house last year on a combined household income of around $100k - that's terrifying to me). I like to think that I'm setting us up for success by being modest in our expectations.

This is really pernicious, honestly. The looking down your nose at people for their home purchases. All of this stuff is so personal. I have my opinions that strongly veer towards renting, but I wouldn't begrudge someone making a small home or cheap home purchase just because of it not being fancy enough. I would advice against tackling a house that needs a lot of work unless you're prepared to do that work. But otherwise I think that kind of mentality is really something that's really broken about our society. It's amazing that in 100 years we've gone from outhouses and houses without refrigeration to looking down on people who don't have a marble island kitchen and all stainless-steel appliances.

Demosthenes wrote:

I have actually been watching all this stuff on Tiny Houses and kind of feel like it would work really well for me. $10k for a house, spend a little money on a piece of property to hook things up to it, lots of yard space by default? Probably wouldn't work if I ever found a spouse, but I could pay that off in three years of tax returns and bonuses.

One of my neighbors was featured on one of those shows recently. Pay attention to the after-they've-moved-in segment of the show. My neighbors ended up putting a full-sized refrigerator on the deck of their new tiny house because the under-counter dorm fridge didn't work for a family of four. You might be better off getting a trailer/manufactured home. Those things are pretty stout these days, and prefab can be a lot cheaper than stick-built.

I really dig the tiny house concept. But the reality, especially if you have any stuff at all (including food and clothes), is a lot more complicated.

That said, modern houses are ridiculous. Who needs a 20-by-15 master bedroom? Sure, I spend about 7 hours a day in my bedroom, but I'm asleep for approximately 6 hours and 55 minutes of that time.

Enix wrote:

That said, modern houses are ridiculous. Who needs a 20-by-15 master bedroom? Sure, I spend about 7 hours a day in my bedroom, but I'm asleep for approximately 6 hours and 55 minutes of that time.

Sure, but who needs more than a 10x10 hovel for a family of four? After all, that's still how much of the world lives. This is the same kind of attitude of thinking "everyone who drives faster than me is crazy and everyone who drives slower than me is an idiot." People are different. They want different things. Why begrudge it?

Minarchist wrote:

Why begrudge it?

Because they exploded the entire economy a few years back.

Minarchist wrote:
Enix wrote:

That said, modern houses are ridiculous. Who needs a 20-by-15 master bedroom? Sure, I spend about 7 hours a day in my bedroom, but I'm asleep for approximately 6 hours and 55 minutes of that time.

Sure, but who needs more than a 10x10 hovel for a family of four? After all, that's still how much of the world lives. This is the same kind of attitude of thinking "everyone who drives faster than me is crazy and everyone who drives slower than me is an idiot." People are different. They want different things. Why begrudge it?

Eh, there is a balance between "live and let live" and pushing past against relentless brainwashing and taking advantage of our stupid lizard brains to create a rampant consumerist culture that is not only financially harmful to the consumerist directly, but has troubling ramifications for the sustainability of our world economy and the ability for those living in 10x10 hovels to get a piece of the pie.

I don't know where that balance is, but it's somewhere.

My neighbors ended up putting a full-sized refrigerator on the deck of their new tiny house because the under-counter dorm fridge didn't work for a family of four.

See, whereas I would think a family of four would be a bad idea for a tiny house. I'm talking for while I'm solo.

Demosthenes wrote:
My neighbors ended up putting a full-sized refrigerator on the deck of their new tiny house because the under-counter dorm fridge didn't work for a family of four.

See, whereas I would think a family of four would be a bad idea for a tiny house. I'm talking for while I'm solo. :)

Something a little like this I assume?
IMAGE(http://offbeattenn.com/wp-content/uploads/2014/05/Chris-Lee-Full-Scale-Falcon-Cockpit-1.jpg)

I guess the question there is what is considered "reasonable" in your part of the world. I don't know who would even decide it. I feel as though some of the houses I see people buying around here make little to no sense, but that is just me.

OG_slinger wrote:
Minarchist wrote:

Why begrudge it?

Because they exploded the entire economy a few years back.

Who's to blame? The idiot who took the loan or the idiot who offered it?

obirano wrote:

I guess the question there is what is considered "reasonable" in your part of the world. I don't know who would even decide it. I feel as though some of the houses I see people buying around here make little to no sense, but that is just me.

OG_slinger wrote:
Minarchist wrote:

Why begrudge it?

Because they exploded the entire economy a few years back.

Who's to blame? The idiot who took the loan or the idiot who offered it?

When we bought our first house, we wanted to borrow somewhere in the neighborhood of $200K. The loan officer said we were approved for $650K.

The housing bubble was like the NASDAQ bubble; people somehow assumed things would go up forever.

obirano wrote:
OG_slinger wrote:
Minarchist wrote:

Why begrudge it?

Because they exploded the entire economy a few years back.

Who's to blame? The idiot who took the loan or the idiot who offered it?

For the housing collapse? Both.

But the vast majority of the blame should go to the real estate agents, loan officers, banks, etc. who either pressured or enabled homebuyers to buy much more than they could really afford (and what they needed) largely because they'd make more money from the transaction.

Wall Street also sent a powerful signal to banks and lending institutions that they'd take any mortgage that could be generated, regardless of people's actual ability to pay them off.

That also sent an incredibly distorted market signal to home builders, who continued to build large and expensive homes.