Stupid people spend more than 1/2 their income on housing

[Themightytom]

You don't generally buy a house until your dick already has a home.

That should spend some time in my signature.

[Broomstick]

Okay, the apartment you have is MUCH larger then anything I've seen around here.

Must be a geographical difference

Quite likely.

Apartment sizes in this area range from one room (my first apartment was one room approximately 3.5 x 4 meters) to places two or three times larger than what I have - of course, price varies, too.

Hence, one must be careful what and how one is making comparisons. Apartments often come with amenities not commonly found in houses, such as large, in-ground pools, gyms, game rooms, playgrounds, etc. that would significantly increase the price and cost if they were added to a house.

[Singular Intellect]

Makes me realize just how bloodly lucky I am that right now I'm living in a shared home paying $700 in rent, considering what I'm making.

I very badly want to buy a home because renting is basically throwing your money away, but I have no intention of doing so until I consider myself very finicially secured.

Right now I'm going to save as much money as I can and focus on paying off my debt as quickly as possible, which I've cornered onto a single credit card (my tax owing I still need to figure out though...).

[Eulogy]

I very badly want to buy a home because renting is basically throwing your money away, but I have no intention of doing so until I consider myself very finicially secured.

Evidence, please?

[Singular Intellect]

I very badly want to buy a home because renting is basically throwing your money away, but I have no intention of doing so until I consider myself very finicially secured.

Evidence, please?

Evidence...for what?

[Broomstick]

I very badly want to buy a home because renting is basically throwing your money away, but I have no intention of doing so until I consider myself very finicially secured.

Do you have a roof over your head? Protection from the elements? A secure place to put your stuff?

Then you're NOT "throwing your money away", you're using it to purchase shelter.

[Themightytom]

Evidence, please?

Evidence...for what?

soetimes I think people take the demands for evidence a liiiiitle too far but he might ahve been asking for evidence that you throw your money away renting. Obviously renting can produce a non monetary return, and in fact a rent to own hosue can be renting with the option of using the money down towards a mortgage. That idea kind of appeals to me actually.

[Singular Intellect]

I very badly want to buy a home because renting is basically throwing your money away, but I have no intention of doing so until I consider myself very finicially secured.

Do you have a roof over your head? Protection from the elements? A secure place to put your stuff?

Then you're NOT "throwing your money away", you're using it to purchase shelter.

Ok, let me rephrase: How much of your money do you get back from renting? How much do you get back from buying? Obviously in both cases you are purchasing shelter and whatnot.

My point is as long as you are able to keep up with payments while buying a home, you can't go wrong, even if it's actual value plummets. The worst case scenario is you lose the house and all the money you put into it. As opposed to losing all the money you put into renting by default.

Even if you only got 1% of the value of your home back, that's 1% more than renting, isn't it?

[Kanastrous]

I neglected to factor property taxes into the cost of ownership.

With the addition of property tax, monthly expense starts to fringe into rent a studio apartment territory.

So yes, I could rent a small apartment in this neighborhood for what this place costs.

[Broomstick]

I very badly want to buy a home because renting is basically throwing your money away, but I have no intention of doing so until I consider myself very finicially secured.

Do you have a roof over your head? Protection from the elements? A secure place to put your stuff?

Then you're NOT "throwing your money away", you're using it to purchase shelter.

Ok, let me rephrase: How much of your money do you get back from renting? How much do you get back from buying? Obviously in both cases you are purchasing shelter and whatnot.

You actually get back nothing from your house unless you sell it. If you're buying a house as an investment that's one thing, but most people are (or should be) buying a house to live in.

My point is as long as you are able to keep up with payments while buying a home, you can't go wrong, even if it's actual value plummets. The worst case scenario is you lose the house and all the money you put into it.

Wrong. It is possible to lose the house, your equity, and still owe money on it. For instance - you have a nice job, you make your payments easily... and one day your house burns down to the ground - but the mortgage doesn't go away. Of course, if you're at all intelligent you have insurance, but insurance seldom truly covers ALL the costs, and you have to live somewhere else while rebuilding which costs you money, AND you still have a mortgage

As opposed to losing all the money you put into renting by default.

Even if you only got 1% of the value of your home back, that's 1% more than renting, isn't it?

You have clearly bought into the meme that home ownership is always the best. To repeat some of the points I have made earlier:

1) You have to maintain your home. You do not have to maintain a rental. When my building needed a new roof I didn't have to pay for it (nor did my rent go up). This may or may not be important to you, but for someone with very little give in the budget a fixed rate for housing costs each month might be preferable to fixed-with-occasional-additional-expenditure.

2) Someone who is physically unable to maintain a home (I'm talking about major things, not daily housecleaning) may well be better off renting rather than paying for snow removal, lawn mowing, repairs, etc. My parents went this route - when they could no longer keep up with maintaining a house they sold it and became renters.

3) Renting can be significantly cheaper than owning - this is good if you have a reason to economize on living arrangements now in exchange for something else important to you. Maybe you're pursuing an education. Many pilots I know rent a small apartment and buy an airplane, a purchase which tends to become more valuable with time provided you make any effort to care for it. I had a friend during and after college who loved to travel and had been many places in the world, to every continent but Antartica - she liked renting, then when she went on a major trip she'd put everything into storage and not have to worry about a residence while she was hiking through Tibet. Mind you, I don't recommend this for everyone, but it really is the case that not everyone wants to own a house and some, indeed, would see it as a burden.

To be honest, MOST people would benefit purchasing a house they can actually afford (part of the problem is too many bought more than they could afford) rather than renting but it's not the only route to follow in life.

[aerius]

Renting isn't necessarily throwing money away, let me explain. The homes my wife & I would like to buy are currently sitting at around $400-450k, and let's say we want to put down a nice ~30% downpayment to make our monthly payments more manageable and secure a better interest rate, plus we might be able to shorten the term on the loan saving even more interest. So that's around $130k or thereabouts.

So let's say we score a $420k home, property tax will come out to $3700, utilities will be another $3000-5000 depending on the weather, cable, phone & internet adds another $1000, and another $1000-1500 for insurance. Total cost, $9000 or so.

My rent right now is $12k a year, it includes everything, buying a home means I save $3000, or do I? Let's take my downpayment fund, which is $130k and dump it into a 1 year term deposit at my bank, which at the moment has around 3% interest. That gives me a handy $3900 in interest every year, which means I actually come out ahead by $900 a year if I rent. And that assumes nothing ever needs fixing on my home.

[Darth Wong]

Renting isn't necessarily throwing money away, let me explain. The homes my wife & I would like to buy are currently sitting at around $400-450k, and let's say we want to put down a nice ~30% downpayment to make our monthly payments more manageable and secure a better interest rate, plus we might be able to shorten the term on the loan saving even more interest. So that's around $130k or thereabouts.

So let's say we score a $420k home, property tax will come out to $3700, utilities will be another $3000-5000 depending on the weather, cable, phone & internet adds another $1000, and another $1000-1500 for insurance. Total cost, $9000 or so.

My rent right now is $12k a year, it includes everything, buying a home means I save $3000, or do I? Let's take my downpayment fund, which is $130k and dump it into a 1 year term deposit at my bank, which at the moment has around 3% interest. That gives me a handy $3900 in interest every year, which means I actually come out ahead by $900 a year if I rent. And that assumes nothing ever needs fixing on my home.

You forgot about property tax. You'll probably pay at least $5000 a year on property taxes for a home like that, whereas you actually get a property tax credit for being a renter.

[Singular Intellect]

Ok, let me rephrase: How much of your money do you get back from renting? How much do you get back from buying? Obviously in both cases you are purchasing shelter and whatnot.

You actually get back nothing from your house unless you sell it. If you're buying a house as an investment that's one thing, but most people are (or should be) buying a house to live in.

I quite agree there. My point is that if you do sell the home, you likely get a good chunk of change back from it if you have stayed there long enough, or more optimistically, make money on the home if it goes up in value.

My point is as long as you are able to keep up with payments while buying a home, you can't go wrong, even if it's actual value plummets. The worst case scenario is you lose the house and all the money you put into it.

Wrong. It is possible to lose the house, your equity, and still owe money on it. For instance - you have a nice job, you make your payments easily... and one day your house burns down to the ground - but the mortgage doesn't go away. Of course, if you're at all intelligent you have insurance, but insurance seldom truly covers ALL the costs, and you have to live somewhere else while rebuilding which costs you money, AND you still have a mortgage

People who don't invest in something intelligently don't exactly get pouring sympathy from me, honestly.

And quite frankly, pointing to examples of extreme disaster that totally fucks someone over (especially those who have't prepared for it) is akin to pointing out the statistical death rate of people in cars and trying to use that as an arguement 'cars are bad'.

As opposed to losing all the money you put into renting by default.

Even if you only got 1% of the value of your home back, that's 1% more than renting, isn't it?

You have clearly bought into the meme that home ownership is always the best.

Nice strawman. Just where did I say 'buying is always the best option'? I said "renting is basically throwing your money away", as in there is potential for it to be used far more effectively, like home ownership where you can get monetary return, even in relatively unfavorably circumstances (like lower home value than when you bought it). That situation obviously isn't going to apply to absolutely everyone, and I was speaking primarily for myself to boot.

To repeat some of the points I have made earlier:

1) You have to maintain your home. You do not have to maintain a rental. When my building needed a new roof I didn't have to pay for it (nor did my rent go up). This may or may not be important to you, but for someone with very little give in the budget a fixed rate for housing costs each month might be preferable to fixed-with-occasional-additional-expenditure.

I agree, that's why I didn't take the position 'buying is always the best option for everyone' that you falsely accused me of.

2) Someone who is physically unable to maintain a home (I'm talking about major things, not daily housecleaning) may well be better off renting rather than paying for snow removal, lawn mowing, repairs, etc. My parents went this route - when they could no longer keep up with maintaining a house they sold it and became renters.

See above.

3) Renting can be significantly cheaper than owning - this is good if you have a reason to economize on living arrangements now in exchange for something else important to you. Maybe you're pursuing an education. Many pilots I know rent a small apartment and buy an airplane, a purchase which tends to become more valuable with time provided you make any effort to care for it. I had a friend during and after college who loved to travel and had been many places in the world, to every continent but Antartica - she liked renting, then when she went on a major trip she'd put everything into storage and not have to worry about a residence while she was hiking through Tibet. Mind you, I don't recommend this for everyone, but it really is the case that not everyone wants to own a house and some, indeed, would see it as a burden.

See above.

To be honest, MOST people would benefit purchasing a house they can actually afford (part of the problem is too many bought more than they could afford) rather than renting but it's not the only route to follow in life.

See above.

[Darth Wong]

And quite frankly, pointing to examples of extreme disaster that totally fucks someone over (especially those who have't prepared for it) is akin to pointing out the statistical death rate of people in cars and trying to use that as an arguement 'cars are bad'.

Actually, the argument resulting from the statistical death rate of people in cars is that "cars are dangerous", which is absolutely correct unless you're a blithering idiot who can't accept reality. That's why we have a shitload of laws regulating the design, construction, and operation of motor vehicles. Just how rare do you think these "extreme disaster" scenarios are?

[Singular Intellect]

And quite frankly, pointing to examples of extreme disaster that totally fucks someone over (especially those who have't prepared for it) is akin to pointing out the statistical death rate of people in cars and trying to use that as an arguement 'cars are bad'.

Actually, the argument resulting from the statistical death rate of people in cars is that "cars are dangerous", which is absolutely correct unless you're a blithering idiot who can't accept reality. That's why we have a shitload of laws regulating the design, construction, and operation of motor vehicles.

I quite agree, hence never having said vehicles aren't dangerous.

Just how rare do you think these "extreme disaster" scenarios are?

I don't have statistical figures on hand, therefore I can't really hazard a guess. I'll risk it and say you're probably much more likely to be killed in a car crash than lose your house and still have to pay for it.

[Darth Wong]

And quite frankly, pointing to examples of extreme disaster that totally fucks someone over (especially those who have't prepared for it) is akin to pointing out the statistical death rate of people in cars and trying to use that as an arguement 'cars are bad'.

Actually, the argument resulting from the statistical death rate of people in cars is that "cars are dangerous", which is absolutely correct unless you're a blithering idiot who can't accept reality. That's why we have a shitload of laws regulating the design, construction, and operation of motor vehicles.

I quite agree, hence never having said vehicles aren't dangerous.

So you think it's not "bad" for a device to be so dangerous that it is implicated in fifty thousand deaths per year? What is your threshold of "bad"?

Just how rare do you think these "extreme disaster" scenarios are?

I don't have statistical figures on hand, therefore I can't really hazard a guess. I'll risk it and say you're probably much more likely to be killed in a car crash than lose your house and still have to pay for it.

Ah, so you ridiculed the concern for such people based on a completely unjustified assumption of the rarity of this scenario, which you simply pulled out of your ass. Got it.

[aerius]

Bloomberg link on foreclosures

Excerpt:

U.S. foreclosure filings more than doubled in the second quarter from a year earlier as falling home prices left borrowers owing more on mortgages than their properties were worth.

One in every 171 households was foreclosed on, received a default notice or was warned of a pending auction. That was an increase of 121 percent from a year earlier and 14 percent from the first quarter, RealtyTrac Inc. said today in a statement. Almost 740,000 properties were in some stage of foreclosure, the most since the Irvine, California-based data company began reporting in January 2005.

So that's 1 in 171 households in the US who just lost everything. If they live in one of the states where mortgages are partial or full recourse loans, the banks can go after them, repo their cars, and garnish their wages for the rest of their lives until the mortgage is paid off in full.

Fun fact, banks are now offering re-fi packages for people who are behind on their payments, but buried in the small print there's a clause converting the non-recourse mortgage to a full recourse loan.

[Darth Nostril]

Tell that to the people who have been flooded out two years in a row in the UK, although if they'd been paying attention they might have noticed their houses were situated right in the middle of flood plains.
(hint to house buyers : the dead giveaway is right there in the name - "flood plain", it's not called that without good reason.)

[Darth Nostril]

*Dammit, accidently deleted the quote I was referring to*

Just how rare do you think these "extreme disaster" scenarios are?

I don't have statistical figures on hand, therefore I can't really hazard a guess. I'll risk it and say you're probably much more likely to be killed in a car crash than lose your house and still have to pay for it.[/quote]

[Darth Nostril]

If some passing mod could kindly fix my quotes screwup above, I'm going to bed now & hope I don't accidentley kill someone out of absentmindedness tomorrow.

[Darth Wong]

Are people that intimidated by social self-consciousness that they'll lock up 50% of their income in paying for a house?

Absolutely. It's built into our genetic code. Think of all the animals which use colourful plumage to attract mates even though it also attracts predators; they are literally risking a violent death in order to attract mates. What is an irresponsible mortgage compared to that?

You don't generally buy a house until your dick already has a home.

You sure about that? I don't know what the numbers are, but I've known guys who did precisely that.

And if she's that shallow and self-conscious, consider a more evolved/educated/intelligent/mature home for him.

That's easy to say in abstract theory. But "shallow and self-conscious" are present in shades of grey, not an on/off switch. Everyone likes to show off, to varying degrees.

[Singular Intellect]

I quite agree, hence never having said vehicles aren't dangerous.

So you think it's not "bad" for a device to be so dangerous that it is implicated in fifty thousand deaths per year? What is your threshold of "bad"?

Let me clarify my position, Mike. I'm admitting cars are dangerous, but they are only so because of the fallibility and, sadly, large numbers of people who are bad drivers. A vehicle can be a very safe and reliable means of moving from point A to B with a competent, careful and skilled driver behind the wheel. The problem isn't with the cars themselves, it's the dangerous drivers and mentality of people thinking driving is a 'right'.

Fuck, I'll freely admit stairs are dangerous, but this doesn't mean I think stairs are 'bad'. Absolutely anything can be argued as potentially dangerous.

I don't have statistical figures on hand, therefore I can't really hazard a guess. I'll risk it and say you're probably much more likely to be killed in a car crash than lose your house and still have to pay for it.

Ah, so you ridiculed the concern for such people based on a completely unjustified assumption of the rarity of this scenario, which you simply pulled out of your ass. Got it.

So my impression that people are much more likely to be killed in a car crash than lose their home and still pay for it is incorrect? Statistically speaking buying a home isn't a good idea compared to renting?

Ok, I'm quite happy to be corrected; can you give me sources (or steer me in the direction of) from which to verify this new understanding?

[Darth Wong]

Oh, that's rich. You make a completely unjustified claim which you admit that you pulled out of your ass, and then you demand that I provide fully referenced evidence to disprove your claim. What the fuck is your brain damage?

[Themightytom]

If some passing mod could kindly fix my quotes screwup above, I'm going to bed now & hope I don't accidentley kill someone out of absentmindedness tomorrow.

In your dangerous car?

[Broomstick]

How rare are disasters?

Well, in my town 20 homes were completely destroyed in one night by a tornado. Several dozen others were so severely damaged that their owners have to make major repairs before they can live in them again and thus must pay for alternate housing while rebuilding their homes AND continuing to pay their mortgages.

I have mentioned the recent flooding in my area - this affected areas that have never flooded before since records have been kept, far beyond the borders of what are normally considered "flood plains'. At least a half dozen homes have been completely destroyed due to fires from either damaged gas lines or catching fire when a house near them blew up, which the fire department could not reach because they drive trucks, not boats. Many other homes will probably be condemned due to flood damage, some of it from backed-up sewers which... well, think of your basement literally turning into a septic tank. Others have simply been soaking in water for two weeks. Even where the home is not effectively destroyed it may be uninhabitable until major repairs and disinfection are done, which means, yes, they're paying for alternate housing while ALSO paying that mortgage! And most home insurance does not cover flood damage.

In the Chicago area the recent flood affected thousands of buildings. Keep in mind this level of flooding was unforeseen and unpredictable, far exceeding even "once in a century level" or historical patterns of flooding.

Are such disasters "common"? I suppose that depends on how you define the term. They do happen to people every single year.

Renters in that situation... well, they might lose their possessions in a flood, but they aren't on the hook for a mortgage. In fact, in many areas, if the building isn't inhabitable the renter is off the hook, even with a lease. A renter will have to find a new place to rent, yes, but will not be simultaneously paying a mortgage, too.