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I don't have specific Pittsburgh numbers for you but I purchased a home this year and will share some random thoughts.
Do you have any savings for a down payment on a house? Closing costs + down payment alone cost several thousands $ and you would want the reserve fund left over to cover the unexpected repairs and emergencies.
If you purchase you should plan to live in the home for at least 5 years. After this time period you will have hopefully knocked a bit off of the principal on the loan. (This is where you beat renting) . Because when you sell you pay your selling real estate agent usually 6% of the purchase price. If you were to turn around and try to quickly sell the house after, say 2 years, you may have been worse off than renting. When/if you do decide to sell hopefully the property will have appreciated and/or you will be selling in a "seller's market" (a market where there are more buyers than sellers).
Consider purchasing a duplex and then you can rent the other half.
Be careful about purchasing a home that has an HOA. They have rental restrictions and if you are offered your dream job across the country you can't rent out your place, you have to stay in Pitt and forget about the job, or make the move but have housing costs in two places.
Take your yearly income and multiply that number by 2.5. Try to purchase a home less than that amount.
So far buying a place has turned out to be a good decision for me. When I was a renter I had no control ovr how long I could stay in one place, as the landlord could decide not to renew the lease at any time. As an owner I stay here as long as I stay on good terms with the bank. Also the bank can't increase my housing payment each and every year, like the apartments like to do when it's time to renew the lease. I paint, I don't need permission to have pets, I take pride in cleaning and landscaping my yard (I just picked up 7 bags of leaves on Christmas), I pull into MY driveway after work every day.
The cost of renting is simple for me. It is about $7,000 a year utilities and all included.
You'll be hard pressed to beat that price if you buy once all is said and done. Closing costs will be several thousand right off the bat, then you'll probably hit $7,000 a year at least no matter what once you factor in utilities, maintenance, repairs/renovations, taxes, and insurance.
Just to give you a ball park figure, I pay ~$325 a month for my mortgage, insurance, and taxes on a $50K home. Utilities add another ~$175 a month. That's already $6,000 a year, at half the budget you stated in your OP, and assuming $0 in maintenance and renovations.
I'm a proponent of buying, but if you're happy with your current rental situation, I don't see any financial reason for you to buy. Are there other reasons you want to buy?
Renting is throwing your money away. You can easily find a house that you can own, maintain, insure, and pay taxes on for $7k a year. It may not be a fancy place, but you're not going to get a fancy apartment for that amount, either.
The only catch is it will take a significant down payment or cash investment to purchase a house.
I live in Pittsburgh and work downtown so I prefer to live somewhere close to downtown (within 10 miles).
I have been renting for years now for about $500-600 a month and since I live by myself, I do not need a lot of space.
$500-$600 is pretty darn cheap and as you state includes utilities. You can't buy a home that cheap when you start adding up real costs. Sure the mortgage can be cheaper, but that is just the beginning of home ownership. Taxes and upkeep as well as the time it takes for that upkeep. I think the two questions you need to ask yourself are: 1. Will owning a home improve my life? 2. Do I want to build equity over the years to come? So you buy a home for $70K or whatever and you do some paint, landscape, fix up the kitchen and such over several years and you start building some equity. Is that worth it? Owning a home is a never-ending job in a way. There is ALWAYS some work to be done and some days you aren't going to want to do any of it.
Home ownership is great. Until the furnace dies, the roof needs replaced, the grass needs cut, you need a tree removed, the septic tank backs up,the siding falls off, the water heater goes, the basement floods.....and so on and so forth.
Houses are a pain in the rear.
Personally. I would rather spend a little more in rent and let the landlord deal with all of that.
Of course if you have the time and inclination to do all of the maintenance deal with the contractors and the finances to handle unexpected big bills. Go for it. I do know people who enjoy the homes they own. But it isn't for everyone.
This thread makes an interesting read if you are considering buying.
I moved to Pittsburgh about a year ago after renting for two years in a big well managed complex. Prior to that I had owned a home for about 20 years. I must admit it was nice to call someone else to come fix things whenever there was a problem. I missed being able to make changes to my home. Pros and cons to both. Just be sure to be realistic about the actual costs of home ownership.
Be careful about purchasing a home that has an HOA. They have rental restrictions and if you are offered your dream job across the country you can't rent out your place, you have to stay in Pitt and forget about the job, or make the move but have housing costs in two
Lots of good thought in your post, but I disagree with your comment on HOAs. I've lived in several HOAs and never had a problem renting my house out, or in having a renter move in. In fact, I have a renter in my house right now. Having said that, HOAs are not for everyone, and they are all different. They have some advantages, though, so if you're interested in a house in an HOA neighborhood, read the rules and see if they're rules you like. Some HOAs are very restrictive, others are very relaxed and have just joined together to handle maintenance for common grounds. Note: if you don't like the rules, don't buy a house there assuming you can just ignore them. Sometimes you can, but sometimes you just end up regretting moving there. Better to just choose a place with rules you like.
I've been so anxious/excited over the prospect of buying my first home that I have difficulty sleeping sometimes and have to whip out my iPad to look for new listings on Trulia or Zillow!
Here's how I personally figure things out financially:
RENT: $700/month x 12 months = $8,400/yr. I currently have a roommate (my partner), so that is halved to me paying $350/month x 12 months for $4,200/yr.
BUY: I'm looking at homes in the $40,000-$60,000 range where my monthly obligations for the mortgage, taxes, and insurance/PMI will likely be in the ballpark of $350/month x 12 months = $4,200/yr. My roommate/partner will be coming with me, and I'll charge him half this obligation in rent, which will result in me only paying $175/month x 12 months for $2,100/yr.
INSTANT SAVINGS: $2,100/yr. (to be applied towards the next topic)
Now comes the "maintenance/renovations" aspect. It seems like everyone on here lives in a piece of garbage house because they say they spend "thousands every year on repairs" as they tell me I'm not ready to be a homeowner. In my example I'm going to presume I'll start by spending ~$10,000/yr. on renovations/repairs/maintenance, but as the more critical and expensive replacements and repairs are finished that number SHOULD decrease over time---not stay constant. A new roof on a small house may run a few thousand dollars. Ka-ching. No big deal, though, because a new roof SHOULD last for 30 years (or longer). I used to work at Lowe's, and I know it doesn't cost "thousands" for a new hot water heater, especially if you install it yourself. That should run well under $1,000 for the item itself and accessories/parts. A new furnace (and installation) will be a few thousand dollars, also, but, just like the roof, a new furnace should last at least 20 years---if not longer. So even if I buy a $50,000 home needing work let's presume the first year I replace the roof. Then the next year the water heater and furnace simultaneously go. Then the next year I find out I have foundation issues and need to water-seal the basement. After that I decide to replace the sidewalks and driveway (if applicable). The following year I put in newer energy-efficient windows. Yes, it DOES cost thousands of dollars to repair/renovate/maintain a home, but once you do any of these things you shouldn't have to do them again for a VERY long time unless you're incompetent and screw up the installation and void warranties in the process.
Utilities? I'm not budgeting for them to increase drastically at all. In the case of our P.W.S.A. bill it should DECREASE because we currently pay the P.W.S.A. bill for our upstairs neighbor because our landlady makes us. Our apartment is very poorly-insulated, and we have higher winter gas heating bills as a result to offset the heat loss. If we weatherseal, replace windows, etc. in our first home, our gas heating bill should go down. Our electric bill is never really that large, so it's of no concern. Overall when it comes to renting vs. owning your utility differential should be mostly negligible, especially if the square footage change is comparable. It's not like it would cost much more to heat an inefficiently-insulated 800-square-foot apartment vs. an efficiently-insulated 1,200-square-foot home.
Another thing you have to consider is that your rent will ALWAYS be on the increase. Ours has increased 33% since moving in due to the "Great East End Housing Crisis", and it will continue to rise. That $350/month payment estimate for a HOUSE will stay fixed, even if prevailing property values continue to soar here. Also, in thirty years (or likely much less if I were to make double-payments) I will no longer have to pay for a mortgage---although the property taxes (probably $100/month-$150/month) will remain, along with the insurance (no PMI, though). I can't even tell you how liberating it would feel if I woke up and no longer had to pay a mortgage, let alone ever-increasing rent. That money could then be freed to further improve the property, invest, travel, etc.
It's overall cheaper to buy than rent here in most cases. Don't be deterred by these fear-mongerers who proclaim your house will always be falling apart and will need an infinite supply of money to maintain.
I've been so anxious/excited over the prospect of buying my first home that I have difficulty sleeping sometimes and have to whip out my iPad to look for new listings on Trulia or Zillow!
Here's how I personally figure things out financially:
RENT: $700/month x 12 months = $8,400/yr. I currently have a roommate (my partner), so that is halved to me paying $350/month x 12 months for $4,200/yr.
BUY: I'm looking at homes in the $40,000-$60,000 range where my monthly obligations for the mortgage, taxes, and insurance/PMI will likely be in the ballpark of $350/month x 12 months = $4,200/yr. My roommate/partner will be coming with me, and I'll charge him half this obligation in rent, which will result in me only paying $175/month x 12 months for $2,100/yr.
INSTANT SAVINGS: $2,100/yr. (to be applied towards the next topic)
Now comes the "maintenance/renovations" aspect. It seems like everyone on here lives in a piece of garbage house because they say they spend "thousands every year on repairs" as they tell me I'm not ready to be a homeowner. In my example I'm going to presume I'll start by spending ~$10,000/yr. on renovations/repairs/maintenance, but as the more critical and expensive replacements and repairs are finished that number SHOULD decrease over time---not stay constant. A new roof on a small house may run a few thousand dollars. Ka-ching. No big deal, though, because a new roof SHOULD last for 30 years (or longer). I used to work at Lowe's, and I know it doesn't cost "thousands" for a new hot water heater, especially if you install it yourself. That should run well under $1,000 for the item itself and accessories/parts. A new furnace (and installation) will be a few thousand dollars, also, but, just like the roof, a new furnace should last at least 20 years---if not longer. So even if I buy a $50,000 home needing work let's presume the first year I replace the roof. Then the next year the water heater and furnace simultaneously go. Then the next year I find out I have foundation issues and need to water-seal the basement. After that I decide to replace the sidewalks and driveway (if applicable). The following year I put in newer energy-efficient windows. Yes, it DOES cost thousands of dollars to repair/renovate/maintain a home, but once you do any of these things you shouldn't have to do them again for a VERY long time unless you're incompetent and screw up the installation and void warranties in the process.
Utilities? I'm not budgeting for them to increase drastically at all. In the case of our P.W.S.A. bill it should DECREASE because we currently pay the P.W.S.A. bill for our upstairs neighbor because our landlady makes us. Our apartment is very poorly-insulated, and we have higher winter gas heating bills as a result to offset the heat loss. If we weatherseal, replace windows, etc. in our first home, our gas heating bill should go down. Our electric bill is never really that large, so it's of no concern. Overall when it comes to renting vs. owning your utility differential should be mostly negligible, especially if the square footage change is comparable. It's not like it would cost much more to heat an inefficiently-insulated 800-square-foot apartment vs. an efficiently-insulated 1,200-square-foot home.
Another thing you have to consider is that your rent will ALWAYS be on the increase. Ours has increased 33% since moving in due to the "Great East End Housing Crisis", and it will continue to rise. That $350/month payment estimate for a HOUSE will stay fixed, even if prevailing property values continue to soar here. Also, in thirty years (or likely much less if I were to make double-payments) I will no longer have to pay for a mortgage---although the property taxes (probably $100/month-$150/month) will remain, along with the insurance (no PMI, though). I can't even tell you how liberating it would feel if I woke up and no longer had to pay a mortgage, let alone ever-increasing rent. That money could then be freed to further improve the property, invest, travel, etc.
It's overall cheaper to buy than rent here in most cases. Don't be deterred by these fear-mongerers who proclaim your house will always be falling apart and will need an infinite supply of money to maintain.
Good post. The issue with ever-increasing rent, uncertainly about lease renewals and needing permission for pets is what pushed me towards owning.
Another thing I noticed with renting nowadays, is many landlords want the first month's rent, last month's rent, and security deposit all up front. So let's say your rent is $700 per month and the landlord wants the same amount for the security deposit. That's $2100 just to move in. $2100 is also 3% of a house that costs $70,000. After you cover the down payment, you just need to cover the closing costs, and in many cases the seller covers that. My net out of pocket to get into my house was $500 earnest money plus around $2800 at the closing table for a total of $3300. A desperate seller covered the rest.
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After you cover the down payment, you just need to cover the closing costs, and in many cases the seller covers that. My net out of pocket to get into my house was $500 earnest money plus around $2800 at the closing table for a total of $3300. A desperate seller covered the rest.
