Pittsburgh Housing: Cheaper to Own than Rent (Media, California: to rent, buying a home)

[Hopes]

Originally Posted by user_id

I'm sure they do, but the "return" a home gives is part of the financial consideration. Homes in Pittsburgh pay be cheaper than many other areas, but the "return" one gets on them is terrible partly due to the property taxes.

And that's okay. After the crash of the housing market in CA, you of all people should appreciate that Pittsburgh's property doesn't go DOWN in value. People all over the country have houses they paid hundreds of thousands more than what their houses are worth now. Talk about not having a return---that's worse than a terrible return. It's a nonexistent return, it's an in-the-red return, and/or it's a foreclosed return. LOL I'd take a small return anyday!

[user_id]

Originally Posted by Hopes

And that's okay. After the crash of the housing market in CA, you of all people should appreciate that Pittsburgh's property doesn't go DOWN in value.

Except that property values in Pittsburgh do go down in value.... Do you believe that all those empty homes across the Pittsburgh metro area were always empty and worthless? What of all the homes that have been razed over the years?

The housing market in CA crashed because there was a huge real estate bubble, the prices are merely returning to historic norms.

Originally Posted by Hopes

People all over the country have houses they paid hundreds of thousands more than what their houses are worth now.

Yes and these are people that largely failed to make prudent financial assessments of what they were doing. During the peak of the California housing bubble renting was dramatically cheaper than buying, those that brought were gambling. But you're also ignoring the long-term picture, that is real estate in California, Florida, etc will appreciate over time.

Regardless, one can evaluate the Pittsburgh property market without talking about other areas. When looking at the Pittsburgh housing market I don't see value, I see largely overpriced homes with high carrying costs.

[MeinGlanzendMotorrad]

My house was $30k and I pay ~$1200 a year in taxes total on it...

[BrianTH]

Originally Posted by user_id

I'm sure they do, but the "return" a home gives is part of the financial consideration.

Why should you expect a return in addition to the value of living in the home?

It is reasonable to expect a return when you invest in something that is economically productive. The only economic benefit that a home produces is that it is a place to live. So once you have already accounted for that benefit, you really have no basis to expect a return on top of that. In other words, it isn't reasonable to expect the universe to pay you merely for living somewhere.

So people should expect their homes to be a cost, not an investment, and the goal should be to get the sort of home you want to live in at a reasonable cost.

[greg42]

Originally Posted by BrianTH

Why should you expect a return in addition to the value of living in the home?

It is reasonable to expect a return when you invest in something that is economically productive. The only economic benefit that a home produces is that it is a place to live. So once you have already accounted for that benefit, you really have no basis to expect a return on top of that. In other words, it isn't reasonable to expect the universe to pay you merely for living somewhere.

So people should expect their homes to be a cost, not an investment, and the goal should be to get the sort of home you want to live in at a reasonable cost.

That seems like a good way of summing it up. I was going to post that I figure I'm doing okay as long as I didn't overall pay more than I would have renting, for all the features that I want and enjoy. This financial total would have to take into account mortgage and taxes, upkeep that wouldn't be necessary on a rental, and then any gain when sold. So far I think I'm doing okay, but it could be close. I'm not particularly concerned though.

[Copanut]

Debate all you want, my first home was a duplex in Dormont, while I lived there the rent paid for more that 70% of the mortgage. When I moved out I had a monthly profit. When I sold it I doubled what I paid for it.

Works for me.

[BrianTH]

Note you have to account for the opportunity costs of your capital as well.

But, of course, some people will do better than average, and others will do worse. And the latter may be somewhat less likely to broadcast their anecdotes on the Internet.

[user_id]

Originally Posted by BrianTH

Why should you expect a return in addition to the value of living in the home?

Who cares? My comments aren't about expectations, they are about economic realities. The fact of the matter is that homes in many areas of the country do indeed provide a return in addition to the value of living in the home and these are typically the areas that have more expensive housing. The return partially offsets the higher purchase price.... Whether you find these returns "unreasonable" or not is immaterial....they do indeed exist in many real estate markets.

A home is a depreciating asset, but the land underneath it is not. Land appreciates (or depreciates) based on the same sort of economic considerations other assets do. Not sure why you are trying to pretend as if land is not an asset......

[Hopes]

Why have you been thinking of moving back to Pittsburgh for the past two years when you like California's real estate market better?

[Copanut]

Originally Posted by BrianTH

Note you have to account for the opportunity costs of your capital as well.

But, of course, some people will do better than average, and others will do worse. And the latter may be somewhat less likely to broadcast their anecdotes on the Internet.

You are the Denver Boot of this forum at times.