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A lot of the SF Bay Area is like this right now...
Very good friends of mine have a nice 1500 square foot home they completely redid... they liked everything but the local public school.
So they decided to rent a home in the good school district and make their home a rental.
You can just about always rent more house than you can afford to buy in the SF Bay Area...
That goes for the Bay Area, and probably doesn't hold true in most places but the highest cost metros.
I started renting a dated 2 BR/1 BA in a safe area (don't even need to lock my doors) with a good school district in 2014 for $720/month. My rent is now $850/month. It's gone up about $65/month each year, about a 9% increase year over year. Assuming the same increases in rent for three more years, my rent will be around $1100/month. That $380/month increase could cover a reasonably priced new car and a power bill for someone. This is an older apartment complex too, newer and more fashionable complexes will probably increase at a higher rate.
Here in Indiana, property taxes are capped at 1% of the maximum value on residential real estate. Property tax increases here don't even begin to keep pace with the increase in rent.
If a dwelling needs repairs, property taxes increase, etc., the landlord is just going to pass this along to the renter. I'm sure that in some cases the landlord does end up eating the cost, but it's likely rare in decent markets.
You also can't put a monetary value, IMO, in not having to abide by someone else's rules. If I want to repaint, I have to get clearance from the landlord to do so, and either repaint to what they want or pay them to have it done when I move out. If I want to upgrade appliances (like this old stove I have), I have no say in what I get, and am at the mercy of the landlord if I get anything at all. I have complained about my air conditioning for two years, and nothing has been done. The unit runs nearly continuously in the summer, raising my power bill on my ~900 sq ft place to nearly $200/month. I can't call my own contractor to inspect the unit. If I get in late and want to vacuum at 10-11PM, a neighbor is going to complain. If I want to have the occasional party and people have too much to drink or play music loud, there will be a complaint.
Maybe I value my own freedom more than others. Even though I am not really fond of Indiana, the cheap real estate and reasonable cost of living may make me stay. This home is nice and only $115k. While nothing fancy, it's leaps and bounds better than my rental apartment, and it probably couldn't be rented for $1300-$1400.
Homeowners don't know (or admit) how good they have it.
Most people don't really understand the value of owning a home. It affords tax-free income in the amount of the fair market rental.
Stay with me...
When you own a home & live in it (living in it is the key!), you "pay yourself rent" in the amount of the fair market rental rate. This is, of course, not reported as income on an IRS form 1040, so that income is tax-free.
Stay with me...
Imagine you and I own otherwise identical houses right next to each other, have the same jobs that pay the same salary. Under normal circumstances, we each live in the house we own.
Now, let's do a thought experiment. Imagine that you rent your house to me, and I rent my house to you. As a tenant, you pay me rent. As a tenant, I pay you rent. Because they are otherwise identical the dollar amount of those rent payments is identical. They cancel each other out, right?
But not when it comes to income tax time. When calculating our respective tax obligations, each of us has jobs with income, and maybe some interest and dividends and maybe some cap gains, and under this thought experiment, each of us must also report rental income.
Let's say for the sake of argument that the fair market rent is $2000/month. So, each of us pays the other $24,000/year, and each of us receives $24,000/year. At tax time, each of us reports that extra $24,000 in extra income. We also have some expenses associated with that income such as depreciation expense, and various other landlord expenses for repairs and the like.
At the end of the day, though, we pay our marginal tax rates on that extra $24,000 in income.
So, coming back to reality... when we own a home & live in it, we "pay ourselves rent" and that rent is tax-free income. If the fair market rental rate is $2,000 per month, we have tax free income in the amount of $24K/year. Not too bad.
That, boys and girls, is the true financial benefit of owning a home and living in it.
Here, here. We bought a house built in 1950 a few years ago. The kitchen had new floor and countertops, but the cupboards were original. We debated for 4 years on what to do to update the kitchen, because the cupboards are SO well built but very dated. We were hesitant to tear them out, because anything we replaced them with would be lesser quality. So we decided to refinish the bases and replace the doors. The new cupboards we put in our laundry room are sooooo cheap compared to the ones in the kitchen.
Everything else is pretty much original - floors, windows, doors. And all are solid as a rock.
A lot of folks associate an older item with a quality item. While it's true some older things may be better built than newer ones, a lot of older stuff is just junk. Older cars are generally far less reliable than newer ones. Each item has to be judged on its own merits.
Dependent on the two salaries. It's not always easy for both partners to find optimal work. My wife and I struggle with this problem - one of us has always been able to get a decent job, but not two of us at the same time.
Because the 2 of you cannot reliably generate enough income, consider adding a 3rd partner.
...I don't know why people are flocking like lemmings to some of these cities. You couldn't pay me enough to live in Boston. The congestion and cost of living would drive me insane. There are so many cheaper alternatives throughout the country, from Phoenix to Detroit to Tampa, that could fit almost any budget or interest.
Surely no serious person would advocate "flocking" or other slavish devotion to trends, be it moving to Portland to be a cavalier hippy, or to LA to become an aspiring actress, or to NYC to become a junk-bond trading apprentice. So much of what's popular is oversold. Its quality, even if intrinsically good, is magnified beyond rigorous bounds, and garners popularity for mere popularity's sake.
The reason to move to NYC isn't to go to Carnegie Hall or the Metropolitan Museum of Art. I can do that several times annually, and I live in rural Ohio. I can go to Europe several times annually, connecting through JFK airport; and unlike New Yorkers, I don't have to park at JFK, for $33/day. No, the reason to move to NYC is to have neighbors who regularly go to Carnegie Hall and who regularly fly to Europe. It's to have conversations with such people, to sip tea with them at their overpriced studio-apartments' makeshift plastic dining-tables. Maybe it's to date them. Where I live, my neighbors think that Michelangelo was a turtle. I'd like to have neighbors who have read the novel by Irving Stone.
Yet another reason to move to NYC is to rejoin one's ethic/linguistic community. Mine has flocked (there's that word again!) to the south side of Brooklyn. I miss that ambiance and those social ties. Neither is available in the rural Midwest.
Surely no serious person would advocate "flocking" or other slavish devotion to trends, be it moving to Portland to be a cavalier hippy, or to LA to become an aspiring actress, or to NYC to become a junk-bond trading apprentice. So much of what's popular is oversold. Its quality, even if intrinsically good, is magnified beyond rigorous bounds, and garners popularity for mere popularity's sake.
The reason to move to NYC isn't to go to Carnegie Hall or the Metropolitan Museum of Art. I can do that several times annually, and I live in rural Ohio. I can go to Europe several times annually, connecting through JFK airport; and unlike New Yorkers, I don't have to park at JFK, for $33/day. No, the reason to move to NYC is to have neighbors who regularly go to Carnegie Hall and who regularly fly to Europe. It's to have conversations with such people, to sip tea with them at their overpriced studio-apartments' makeshift plastic dining-tables. Maybe it's to date them. Where I live, my neighbors think that Michelangelo was a turtle. I'd like to have neighbors who have read the novel by Irving Stone.
Yet another reason to move to NYC is to rejoin one's ethic/linguistic community. Mine has flocked (there's that word again!) to the south side of Brooklyn. I miss that ambiance and those social ties. Neither is available in the rural Midwest.
And did I mention the dating-opportunities?
I completely agree that the hype/prestige of such places fuels further hype and interest, generating more inbound moves, and those people tell their friends and family to come along, etc. I am from east Tennessee and have quite a few peers and classmates who moved to Asheville, NC, largely because of its reputation as a hub of counterculture. Most don't think farther than the end of their noses, and making a living be damned. Many end up taking whatever they can to get by, barely muddling through day by day.
The major cities are certainly going to attract the majority of those that have an interest in high culture, but even among New Yorkers, that's probably a still relatively small percentage of the population, and probably not among the top reasons for inbound movers.
A final thought: I do not know a single person who has actually paid off their home in 30 years. I know people who have paid cash for their house (so they have hundreds of thousands locked up in a house, go figure); but I do not know anyone who actually took out a mortgage and paid it off.
A final thought: I do not know a single person who has actually paid off their home in 30 years. I know people who have paid cash for their house (so they have hundreds of thousands locked up in a house, go figure); but I do not know anyone who actually took out a mortgage and paid it off.
My parents paid theirs off in 30 years.
We've paid two of them off in less than 10 years (the first one) and in about 4.5 years (the second one). Now we live in a 2300 sf home for which we spend about $500/month in taxes and insurance. Taxes are high were we live because we don't have a state income tax and insurance is high because we're coastal. But if we tried to rent the same house it would be $1200 to $1500/month, at least.
We were able to do that by buying substantially less house than we "qualified" for and by making a point of paying off the note. When we sold the first one we rolled the money into the second one.
Sure you can. I sold my houses in CA and moved to another state. My quality of life is much, much better.
To be clear, the reason I disagree with Prop 13 is a) it has had unintended consequences of causing housing prices to go through the roof, and b) it applies to all property, including commercial.
I think it's intention was sound, especially the part nobody talks about - it made raising taxes a very difficult process in CA. But I also think it's stopped a natural "check and balance" of high property taxes that might have made prices in CA a little more affordable for young people. I also think it should never have been applied to commercial property, since the intent was to protect folks that owned their homes from being taxed out of their homes.
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