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I'm 30 and don't plan on getting married and starting a family anytime soon. However, everyone and their aunt is telling me to buy a home. The reasons I get all the time are: I'm throwing money away on rent, interest rates are at rock bottom and will only go up, and a house is a good investment.
Well, being an accountant I ran the numbers and buying a home really isn't attractive at all from a financial standpoint. Here's the figures (I live in the Houston area btw):
Rent for a 1 bedroom apartment + all utilities + rental insurance costs = $950/month
Assuming I buy a $150,000 home, here are the estimated monthly expenses:
$300 property taxes (high property taxes around here)
$250 average for all utilities (Houston is hot!)
$100 insurance
$250 all maintenance costs, including having the grass cut
So, in housing expenses alone, I will be "throwing away" $900/month, just $50/month less than I am throwing away with my apartment. That's not even counting interest on the mortgage. As far as "a house is an investment" goes, houses historically have only appreciated in value at the rate of inflation. Your money will earn MUCH higher returns over time in quality stock index funds. You have to consider the opportunity cost of putting your down payment into something that will provide a very low return, as well as the commission when you decide to sell the house.
Then there is the flexibility aspect of renting. For a single person, homeownership just isn't that great of a deal unless you really just want a house for emotional reasons rather than financial.
I'm 30 and don't plan on getting married and starting a family anytime soon.
For a single person, homeownership just isn't (always) that great of a deal unless
you really just want a house for (reasons other than) financial.
Do you consider this to be some sort of great insight?
Or did you really do the math to get to the conclusion?
Being an accountant, why didn't you factor in the tax benefits of owning the home, and then calculate the profit of appreciation when you sell in 5-7 years? You didn't fully run the numbers. You ran the numbers to satisfy your own thinking, that you do NOT want to buy. You didn't prove that you shouldn't.
What does 150K get you in Houston? Is it a one bedroom condo? Or is it a 3 bedroom house? Are you comparing apples to apples?
I bought my first home as a single woman when I was 32. I bought a 2BR/2BA condo with the idea that it would be easy to take in a roommate if I wanted or needed to. It never came down to that but eventually, I had a child while living in that condo and appreciated the extra room very much.
It also sold at a tidy profit and provided a down payment for my next home. I sold that one last summer, again at a nice profit, and have now moved into new construction which is pretty much as close as I am realistically going to get to my dream home. Climbing the property ladder was the only way I was going to get here, particularly since I live in a city where a comparable home rents for more than my mortgage, property taxes, HOA and HO insurance combined and that was the case in my previous home as well.
Now that doesn't mean buying a house is right for *you* and it may not be. But even just running the numbers, I think you are not making the right comparisons.
One more reason smaller properties should be available for ownership by singles. Owning a smaller $75K home might make plenty of sense for a single person.
A fixed rate mortgage will peg your monthly Principle and Interest for up to 30 years.
Where can one say the same about a rent payment?
Exactly what I've been saying for years and years. Recently I saw some "10 best/affordable places to retire" website and every place had a median monthly mortgage payment under $500. Heck, I'm paying $500 a month to RENT a freaking ROOM in a drama-filled 8-person house.
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