Home buying questions - economic benefit

[Aceraceae]

Tl: Dr

[MTQ3000]

If you buy, you are locking in your housing cost for the next 15/30 years in today's dollars (to be precise, just the P+I, because the property tax and property insurance will go up). So, your real housing cost 10 years from now would be significantly lower when you take into account of COLA. And hell of a lot less 15, 20, 25 years from now in today's dollars. This is big when you have to think about your kid's education and wedding, as well as saving for retirement, as it allows you to re-allocate more of your net earnings to purposes other than housing.

If you rent, however, your monthly rent will increase over time for sure (and of course, the rent would reflect increases in the house's property tax and property increase).

Mick

[Areapro]

We recently bought a house and our monthly payment is 3 times more, what we used to pay when renting. We also put about 38% down..... I think there is really no big economic benefit on buying except when house is completely paid off, but it probably will be too old at that point

[BabyDoctor77]

Originally Posted by MTQ3000

If you buy, you are locking in your housing cost for the next 15/30 years in today's dollars (to be precise, just the P+I, because the property tax and property insurance will go up). So, your real housing cost 10 years from now would be significantly lower when you take into account of COLA. And hell of a lot less 15, 20, 25 years from now in today's dollars. This is big when you have to think about your kid's education and wedding, as well as saving for retirement, as it allows you to re-allocate more of your net earnings to purposes other than housing.

If you rent, however, your monthly rent will increase over time for sure (and of course, the rent would reflect increases in the house's property tax and property increase).

Mick

Completely agree. Great points made.

[bencronin04]

Originally Posted by Areapro

We recently bought a house and our monthly payment is 3 times more, what we used to pay when renting. We also put about 38% down..... I think there is really no big economic benefit on buying except when house is completely paid off, but it probably will be too old at that point

Where you renting a house? I'd like to see the different between where you were renting and what you bought. A $1000 month apartment is going to be terrible compared to a house with a 3K mortgage payment after 38% down. That's something like a 500K+ house.

[Areapro]

We had 2b/2bath 1,300 sq ft apartment in Plano for ~1,200 with garage. House is 3 times more than that and your price estimate is about right.

Square footage of the house is more than people usually need... Not complaining but could probably stay in apartment for a little longer. Good thing house is brand new, so good energy efficiency, and no maintenance problems.

[Aceraceae]

Originally Posted by bencronin04

Where you renting a house? I'd like to see the different between where you were renting and what you bought. A $1000 month apartment is going to be terrible compared to a house with a 3K mortgage payment after 38% down. That's something like a 500K+ house.

Our mortgage is about 100 dollars more than our rental house was. It's a few hundred square feet larger. We love not having to worry about a lease.

[Wittgenstein's Ghost]

Originally Posted by MTQ3000

If you buy, you are locking in your housing cost for the next 15/30 years in today's dollars (to be precise, just the P+I, because the property tax and property insurance will go up). So, your real housing cost 10 years from now would be significantly lower when you take into account of COLA. And hell of a lot less 15, 20, 25 years from now in today's dollars. This is big when you have to think about your kid's education and wedding, as well as saving for retirement, as it allows you to re-allocate more of your net earnings to purposes other than housing.

If you rent, however, your monthly rent will increase over time for sure (and of course, the rent would reflect increases in the house's property tax and property increase).

Mick

This is a consideration I didn't include in my post but should have. I would guess that rent prices should increase at a rate similar to the housing appreciation rate, which should average around 3.5%. In the scenario I gave, that would give us an increase of about $1.6 million in nominal cost over the thirty year period, knocking the renting advantage down to around $2 nominally.

[EDS_]

Originally Posted by Areapro

We had 2b/2bath 1,300 sq ft apartment in Plano for ~1,200 with garage. House is 3 times more than that and your price estimate is about right.

Square footage of the house is more than people usually need... Not complaining but could probably stay in apartment for a little longer. Good thing house is brand new, so good energy efficiency, and no maintenance problems.

With respect your contrast of costs above it more or less invalid because of this.