Living In $paces
The first apartment I got myself remains one of my favorite places to have lived. The hunt ran only a few hours end-to-end; I did a search, called the owner, was standing in it within an hour, had made a deposit on the spot, and was renting by the afternoon. It was in a 1900s-era house that had been divided into four units. The division between my main room and that of the next apartment over was a pair of sliding double-doors permanently fixed shut. It had hardwood floors, interior columns, a fireplace facade, and half a porch. It was $500/mnth when I moved out.
The most expensive apartment I've lived in was $1,900/mnth + $50/mnth "pet rent", but hey, I'd just started at The Employer and that was a reasonable rate for the area. Besides all the closets being giant sliding mirrors, that apartment was pretty meh. It was carpeted in beige except the kitchen and bath, though it had a loud red "accent wall" and did get points for having sliding glass doors out to an enclosed concrete slab, and for having a small gym and large pool. And I experienced what may possibly be my only in-person earthquake there, minor though it was. Also, I was able to bike to work.
Summing to present, I have spent ~$175,000 on rent over 12 years.
By contrast, even if I take the agreed 15 years to repay the mortgage, the cost of financing is only ~$100,000 (loan is 3.66% fixed). Purchasing the house incurred ~$8,000 in closing costs, there may reasonably be something like $7,500/yr maintenance, and there is property tax to consider, which presently runs ~$5,000/yr. This sums to ~$300,000 over 15 years, or the equivalent of, say, $1,700/mnth rent*/**. If the property is sold to move elsewhere during that time, as is fairly likely, then it is reasonable to expect ~$15,000 in transaction costs per home hop, and adjustments to above commensurate with new loan terms, should a loan be involved.
And for this sum, my wife and I get a fairly large house in rather descent condition with a treed yard and lots of privacy; a brick fireplace; a kitchen with a weird double-oven; an office room, space for oh-so-many books, a guest room, a music room, and an art room; a basement big and open enough for roller-skating, and a sun-room with sliding glass doors for walls looking out over an acre of woods with trees much older than I am and a small stream. I want to get flagstones delivered and wend old-fashioned stone walls through the forest. Owning trees is strange.
I'm now much further from some friends and much closer to others. I sure won't be able to bike to work, being also now much further from The Employer, but there's a straight-shot paved bike trail to the station, and commuting via train seems splendid for working having left the office early, playing games and reading++.
We're going to add a slide from the sun-room to the back yard.
And a zip-line to a fort amidst the trees.
* This fails to account for savings being tied up in a large frozen asset during upcoming economic recovery/turmoil, though it is believed that inflation will be up for awhile, at the same time that real growth is respectable-but-meager. In this context inflation will eat some portion of outstanding loan's value and the frozen nature will protect real value vis-a-vis sitting in savings (though probably not as well as being more diversely invested). Otoh, with the end of QE2 and the staggering recovery, it is plausible that the value of properties will slide a further 10-20%:
...but this has to be counter-weighed by the influence of established interests in seeing housing rise, for which it's hard to do better than handy-wavy speculation. I am also unsure how to factor in value of Maslow-esque stability vs. diminishment of housing flexibility, fluctuations in government policies & tax rates, possibility of job loss/transition, actuarials for myself and family, growth/decline of town/region, insurrection, comets, war, floods, zombies, or other chance events in any meaningful way.
** This figure is likely rather inflated in practice because US tax code allows for a substantial deduction based on mortgage interest paid. Though I find it a little odd we have such a market nudge towards owning property (England has no such deduction and has nearly the same rate of property ownership), it dates to the inception of the US Income Tax in 1913 (though most non-home interest deductions were nixed in 1986), so it's not going away without a fight.
The most expensive apartment I've lived in was $1,900/mnth + $50/mnth "pet rent", but hey, I'd just started at The Employer and that was a reasonable rate for the area. Besides all the closets being giant sliding mirrors, that apartment was pretty meh. It was carpeted in beige except the kitchen and bath, though it had a loud red "accent wall" and did get points for having sliding glass doors out to an enclosed concrete slab, and for having a small gym and large pool. And I experienced what may possibly be my only in-person earthquake there, minor though it was. Also, I was able to bike to work.
Summing to present, I have spent ~$175,000 on rent over 12 years.
By contrast, even if I take the agreed 15 years to repay the mortgage, the cost of financing is only ~$100,000 (loan is 3.66% fixed). Purchasing the house incurred ~$8,000 in closing costs, there may reasonably be something like $7,500/yr maintenance, and there is property tax to consider, which presently runs ~$5,000/yr. This sums to ~$300,000 over 15 years, or the equivalent of, say, $1,700/mnth rent*/**. If the property is sold to move elsewhere during that time, as is fairly likely, then it is reasonable to expect ~$15,000 in transaction costs per home hop, and adjustments to above commensurate with new loan terms, should a loan be involved.
And for this sum, my wife and I get a fairly large house in rather descent condition with a treed yard and lots of privacy; a brick fireplace; a kitchen with a weird double-oven; an office room, space for oh-so-many books, a guest room, a music room, and an art room; a basement big and open enough for roller-skating, and a sun-room with sliding glass doors for walls looking out over an acre of woods with trees much older than I am and a small stream. I want to get flagstones delivered and wend old-fashioned stone walls through the forest. Owning trees is strange.
I'm now much further from some friends and much closer to others. I sure won't be able to bike to work, being also now much further from The Employer, but there's a straight-shot paved bike trail to the station, and commuting via train seems splendid for working having left the office early, playing games and reading++.
We're going to add a slide from the sun-room to the back yard.
And a zip-line to a fort amidst the trees.
* This fails to account for savings being tied up in a large frozen asset during upcoming economic recovery/turmoil, though it is believed that inflation will be up for awhile, at the same time that real growth is respectable-but-meager. In this context inflation will eat some portion of outstanding loan's value and the frozen nature will protect real value vis-a-vis sitting in savings (though probably not as well as being more diversely invested). Otoh, with the end of QE2 and the staggering recovery, it is plausible that the value of properties will slide a further 10-20%:
...but this has to be counter-weighed by the influence of established interests in seeing housing rise, for which it's hard to do better than handy-wavy speculation. I am also unsure how to factor in value of Maslow-esque stability vs. diminishment of housing flexibility, fluctuations in government policies & tax rates, possibility of job loss/transition, actuarials for myself and family, growth/decline of town/region, insurrection, comets, war, floods, zombies, or other chance events in any meaningful way.
** This figure is likely rather inflated in practice because US tax code allows for a substantial deduction based on mortgage interest paid. Though I find it a little odd we have such a market nudge towards owning property (England has no such deduction and has nearly the same rate of property ownership), it dates to the inception of the US Income Tax in 1913 (though most non-home interest deductions were nixed in 1986), so it's not going away without a fight.