I just can’t convince myself to buy a house.

jaxbusa

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I think it’s a huge 20-30 year liability for a terrible return and I can’t stomach the thought of it. Am I over thinking it?

The average decent single family home that isn’t 150 years old and on top of the neighbors house where we are is 500k and another 8-10k in taxes a year. We can pay the mortgage but I don’t want to. My wife and friends think I’m crazy.


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You are not over thinking it. There are some great comments on here. Something not mentioned about purchasing a home is that you are locked in to that agreed price and interest rate for 30 years. As inflation continues you’re still paying that same payment. You will get raises at work and have higher income that’ll ease the burden of the mortgage. With that said, the interest on the mortgage does suck. Look at the mortgage amortization schedule and study it. A mortgage doesn’t make sense if you’re going to move in a few years.

Mortgage Calculator | Amortization Calc

https://www.amortization-calc.com/mortgage-calculator/


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03cobra#694

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I bought my long term home last year. I should have it paid off in ~15 years right before I retire. I don't care if there's a downturn soon because I won't be selling it then anyways.
This probably the best answer here. So much bad information. I’ve owned a few homes going way back. Never lost money because it was mine/ours. Paying rent is asinine. You’ll never have anything, but what do I know.
 

nxhappy

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I think it’s a huge 20-30 year liability for a terrible return and I can’t stomach the thought of it. Am I over thinking it?

The average decent single family home that isn’t 150 years old and on top of the neighbors house where we are is 500k and another 8-10k in taxes a year. We can pay the mortgage but I don’t want to. My wife and friends think I’m crazy.


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you need to understand, real estate is next to number #1 for making money. Once the land is gone, it's gone. Basically all the rich people I know own land and real estate. When you rent out you are pissing money away. Your home WILL increase in value. You may not see it quickly but you WILL make a profit. My first house, doubled my money in 7 years. My current house, Almost doubled in 3 years. If you can't afford your area, you need to move to a more affordable spot. You may even have to move states. The longer you wait, the more expensive it will be. Several of my friends got ****ed, they waited too long, and now they can't afford a house.
 

nxhappy

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Yes, but in the end you have nothing. It's like throwing money out the window. While $500k is expensive for just a decent house, it will be yours, and you will be building equity as you pay down the mortgage and the house appreciates. Your other option is to buy a multi-unit property and live rent free as tenants pay your mortgage, but it doesn't seem like you'd be willing to do the upkeep or maintenance.

100% true, listen to this man
 

Blown 89

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Wait for it to come crashing down soon. It could be around the corner. It could be next month. It could be a year from now. The problem is, every Tom, Dick, and Harry is predicting it's going to crash ASAP. Once again, time in the market is the best thing, not trying to time it.

Google, reddit, news, whatever outlet you want, they've been preaching the 'end is near' bubble forever.

2013:
The Next Housing Bubble Is About To Pop All Over You - Gawkergawker.com/the-next-housing-bubble-is-about-to-pop-all-over-you-510108728

2014:
Here's proof the housing bubble is about to burst | 2014-04-15 ...https://www.housingwire.com/.../29669-heres-proof-the-housing-bubble-is-about-to-b...

2015:
Get Ready for Another Real Estate Bubble | The Fiscal Timeshttps://www.thefiscaltimes.com/2015/03/03/Get-Ready-Another-Real-Estate-Bubble

2016:
4 Signs The Global Housing Bubble Is Already Bursting--Here's What ...https://www.forbes.com/.../4-signs-the-global-housing-bubble-is-already-bursting-her...

2017:
This veteran investor nailed the last housing bubble and now expects ...https://www.marketwatch.com › ... › Stocks › Howard Gold's No-Nonsense Investing

2018:
We're probably at peak housing. Here's what that means. - MarketWatchhttps://www.marketwatch.com › Economy & Politics

The fact is, while everyone's been holding out on buying in at the next crash, all the people who have a few years in have built up enough equity to pad the next dip. Here's California, Nevada and Arizona.

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Is buying for everyone? Hell no. Can you lose your ass in a downturn. Hell yes.

Is now the time to buy? Depends on a multitude of factors. Just don't sit on your ass and miss building equity waiting for an eventual drop.
I heard the same arguments during the last bubble. It's amazing how many people still have their heads up their asses after not learning anything the last time around. They'll probably blame the banks for their own greed and stupidity this time too. Home prices can't outrun wages forever
 
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RedRocketMike

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I think it’s a huge 20-30 year liability for a terrible return and I can’t stomach the thought of it. Am I over thinking it?

The average decent single family home that isn’t 150 years old and on top of the neighbors house where we are is 500k and another 8-10k in taxes a year. We can pay the mortgage but I don’t want to. My wife and friends think I’m crazy.


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You're not crazy. Everyone thinking homes are great investments is some Matrix level bullshit. I make a living off investments (not property related). I could make a house a profitable investment and I still don't own one. What makes people think like they're good investments is because they are forced to pay a mortgage so they can't waste their money on the stupid shit they would otherwise. It's forced savings. That's not an investment.

Rent can be a waste of money too. So many people pay too much. For me, the rent I pay is equivalent to the money I would WASTE on school, property, local taxes, heating oil, homeowners insurance (and maybe mortgage insurance), trash, water, sewer. I'm not counting the random big expenses you get hit with occasionally owning a house. And man, buy and sell in a short period, all the assholes involved in the buy/sell process get a cut, the percentage points add up and eat that profit margin up IF the home market went the right direction for you.

There are many good reasons to buy a house but they should be more about your life and what you want. If you're going to raise a family or want to put down roots, buy a house. Or maybe you just want the security of owning your own home. But I wouldn't just buy it because everyone is telling you it's a good investment, especially right now, and definitely not if you plan on moving anytime soon.
 
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KilledbyKenne

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Right. The 500k loan I have actually costs me 800k over 30 years on top of let’s say 6k a year in tax. So let’s say nothing ever goes wrong, taxes never increase, I never have to replace or maintain anything and my home doubles its value and is worth 1 million. I paid 800k for the loan. I paid almost 200k in taxes. My house doubled but I broke even, and I had a huge financial burden for the thirty years.


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Huge financial burden? How much more is the monthly payment really going to be than what you pay in rent? If it is so much more that it is a burden it must be because the house you plan to buy is way more than what you currently rent. That's gotta be considered in all these calculations. If you choose this big nice home I would assume it's because that's what you really want. So why settle for renting something not up to your standard just because you could potentially only "break even" after 30 years if you purchase?

Then there's that time AFTER the mortgage is paid off to consider. You are then only paying minimal costs vs still paying rent which tips the scales more in your favor after each passing month. And you're essentially sitting on $1m( considering the numbers from your example) if you are ever forced to sell.

Don't buy because people say it's a good financial investment. Buy because a good portion of that mortgage payment would be going down the drain anyway in rent, it may as well be going towards something you'll eventually own.
 

Blk04L

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Huge financial burden? How much more is the monthly payment really going to be than what you pay in rent? If it is so much more that it is a burden it must be because the house you plan to buy is way more than what you currently rent. That's gotta be considered in all these calculations. If you choose this big nice home I would assume it's because that's what you really want. So why settle for renting something not up to your standard just because you could potentially only "break even" after 30 years if you purchase?

Then there's that time AFTER the mortgage is paid off to consider. You are then only paying minimal costs vs still paying rent which tips the scales more in your favor after each passing month. And you're essentially sitting on $1m( considering the numbers from your example) if you are ever forced to sell.

Don't buy because people say it's a good financial investment. Buy because a good portion of that mortgage payment would be going down the drain anyway in rent, it may as well be going towards something you'll eventually own.

Another thing to calculate is that over 30 years your rent is not going to stay the same. Whether you deal with a landlord or huge management company. Inflation will bump prices possibly on a year to year basis. Or the landlord passes away, and either the unit is sold via a will or their kid(s) take control of it. They may not be so generous on the next renewal for pricing.

If you go the 15-30 year fixed rate, the only thing that can swing up is the taxes and if you live in a HOA.
So that monthly payment of 1500 a month will be largely unchanged for the term you selected.

And down here, rent has exploded in price.

5 years ago in a "luxury" townhome with a 2 car garage we were paying 1,800 a month, in a desirable location. The next year they were going to bump it to a shade under 2,100. Noped the F out of there.
 

MTBSully

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I bought my house in Weymouth in january 2016, put less than $4k into it (random shit here and there), and sold it in July 2018 for $70k more than I bought it for.
 

PhoenixM3

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Everyone invests in different things, and if you're good at something, you can make money pretty easily. To me real estate is easier to make money, because I'm not stock market savvy. Also, if the market takes a dump, real estate typically isn't affected. That doesn't account for housing bubbles, major changes in industry in the area, natural disasters, etc....
 

T.Man

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This may have already been mentioned multiple times but I think you're looking at it the wrong way simply due to your surrounding area/cost of living.

Different parts of the country will have varying ROI but I firmly believe based on my own anecdotal experience - It's a pretty solid investment. I think you're overthinking things and throwing money down the drain with renting but based on your location, I can understand why you feel the way you do.
 

Grabber

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I’m paying a little more than half in rent of what a comparable home would cost.


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Is that just in your area or are you speaking in general?

What would be a comparable home to what your'e renting?
 

coposrv

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Is that just in your area or are you speaking in general?

What would be a comparable home to what your'e renting?

The average 2 bedroom would be 2-2400 here.

So the 2 family we are in is owned by the daughter of my wife’s old boss. Her and her husband had a terrible experience with their first tenant. She trashed it and couldn’t stay current with rent. They fixed it back up and We moved in, originally planned for a few months. I paid for 3 months in full with a discount for paying in full. Then we decided to “re-up” for a full year paid in full with a discount again. They wanted 2k per month and I got away with a payment in full of 16,000 for the year with the agreement that if we leave early we are reimbursed for the months left minus one. Basically if we moved in June we get 5 months back.

A comparable home would be 400ish. We have a great deal that’s why I’m reluctant. Basically I’m paying now and comfortable but expecting to see a down turn in the next few years. We can for sure afford to buy but I feel like the markets high and the return over all isn’t fantastic.

We were pre-approved for something like an 800k mortgage. We gross together monthly on average 15k. She makes 83k per year and I’m around a 100. we have a few CCs with a combined few grand balance that we use to pay for everything during the month and 1 car payment of 385$

We live frugally.


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Mpoitrast87

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The average 2 bedroom would be 2-2400 here.

So the 2 family we are in is owned by the daughter of my wife’s old boss. Her and her husband had a terrible experience with their first tenant. She trashed it and couldn’t stay current with rent. They fixed it back up and We moved in, originally planned for a few months. I paid for 3 months in full with a discount for paying in full. Then we decided to “re-up” for a full year paid in full with a discount again. They wanted 2k per month and I got away with a payment in full of 16,000 for the year with the agreement that if we leave early we are reimbursed for the months left minus one. Basically if we moved in June we get 5 months back.

A comparable home would be 400ish. We have a great deal that’s why I’m reluctant. Basically I’m paying now and comfortable but expecting to see a down turn in the next few years. We can for sure afford to buy but I feel like the markets high and the return over all isn’t fantastic.

We were pre-approved for something like an 800k mortgage. We gross together monthly on average 15k. She makes 83k per year and I’m around a 100. we have a few CCs with a combined few grand balance that we use to pay for everything during the month and 1 car payment of 385$

We live frugally.


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Id just buy. With raytheon in Marlboro and i believe a TJX building in Marlboro people are moving to those towns at a high rate. Housing will always be high in that area.
 

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