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This is probably a dumb, pointless thread, but I have to ask if anyone has ever been in this situation. I'm also going to post this in the real estate subforum as well.
I've recently turned 26, and I'm starting to notice that ever since, my circle of friends and family members have started putting a lot of pressure on me to purchase a home.
I would like to think that I'm pretty accomplished in my career, so far anyway. I am fortunate enough to make a good living for my age and in this economic climate. I guess other people see that and think that I need to make the "next step" in my life and purchase a home. I am really not ready to for a myriad of reason, but the so called advice I'm getting from others has reached such a fevered pitch lately that I'm really starting to question my own maturity level.
Currently, I am renting what is IMO a fantastic apartment. Its $925/month, which is actually pretty steep for my part of the world. But its a great place. Completely renovated historic building, top of the line appliances, wood floors, great city view, semi private rooftop balcony, elevator access, basically what any bachelor in his mid 20's can want. Yet even when I tell friends and even some family members this, I get this "does not compute" look. They always say, "yeah it may be nice, but for $925/month you can go to [insert random suburb in my area] and get a really nice house. Plus you're building equity and get a fat tax write off!"
I've done my research on my possible tax benefits. At the price level I'm comfortable buying at without giving up my lifestyle (and I'll admit I've got some expensive habits) it is simply not going to give me much of a tax break. In fact, I probably won't even clear the standard deduction limit after being in the house after 2 or 3 years.
I would love to buy a version of what I'm renting, but condos in my part of town are going form a minimum of 250K, which is about 75K more than I'm comfortable with. I've looked at some houses near me but they are so not my style and more than I want to pay as well. I could always go to the burbs for something cheaper but I'm a city guy at heart and would die of boredom living out there.
I guess to make a long story short, I am very content in my living situation and lifestyle, but all this pressure I'm getting from others is getting to me. Usually I would say I could care less what you think about me, but I'm starting to think I'm falling behind and not doing what's appropriate for my age. I live in a part of the country where people tend to settle down young, and everyone my age is buying houses. And indeed where I live homes are very reasonable. Yet here I am just chugging along being a lowly renter. Am I being immature about this, putting present lifestyle satisfaction over future financial benefits? Should I shove my expensive habits, man up, and buy a home? Or am I just being my usual neurotic self and should just plug my ears?
Im only a couple years older then you, make a decent buck, and am closing on a place in a few days. However I live in Chicago where rents are more expensive, and a very nice 'bachelor pad' would rent for closer to 2k. Personally, I am buying because interest rates wont go much lower, ever, house prices are reasonable compared to rents, and most of all because I see myself staying in the area for the foreseeable future. That being said, owning will still be more expensive for me vs renting the same place, but I hope that I will enjoy the lifestye more. Through all the years I have rented I have never bought very nice furniture, or my big TV because I never knew if it would fit in my next rental, couldnt paint, ect.
In 10 years I might be able to walk away from this place with 100k in equity, but I will have spent more money on repairs, assesments, taxes, ect then I would have if I rented.
Entire point is that owning a place is a lifestyle choice, not an investment. Whats the point in spending more money on housing and less on nightlife if you dont care what kind of place you live in?
If you really want to shut them up, tell them that a well balanced investment portfolio will out perform any rise in housing costs. And most important you will be LIQUID!
From a financial standpoint you're making the correct decision to stay a renter. I'm in a similar situation, without the pressure of friends, considering whether to buy a place. My current rent is about $100/mo more expensive than yours, but condo/ home prices are considerably cheaper. Homeownership has several other components that must be added to the cost of the mortgage. In your case, condo fees and taxes would add several hundred extra to the mortgage cost. You're all in monthly cost would be in the neighborhood of $2k.
Before making your decision, sit down and model everything out in a spreadsheet. There's hugely influencial interest groups in the U.S. pushing people to buy homes to make a buck for themselves. We all hear about "don't throw your money away on rent", the benefits of the interest rate deduction, and formerly "housing prices never go down". Most will never benefit much the interest rate deduction as you've already found out. Also, is there any difference between paying interest to the bank or paying rent to a landlord?
A general rule of thumb is not to spend more than 100 to 150 times your monthly rent on a home. Interest rates are low and should allow you go closer to 150.
Most will never benefit much the interest rate deduction as you've already found out.
A general rule of thumb is not to spend more than 100 to 150 times your monthly rent on a home. Interest rates are low and should allow you go closer to 150.
Both of these statements dont make much sense, IMO. I dont know any home owner that does not itemize and receive a larger return because of it. I do live in an area with expensive housing though.
So what if you rent is cheap and you want to move into a nicer or larger place? I will be spending over 300 times on the house I am buying compared to my current rent.
This is probably a dumb, pointless thread, but I have to ask if anyone has ever been in this situation. I'm also going to post this in the real estate subforum as well.
I've recently turned 26, and I'm starting to notice that ever since, my circle of friends and family members have started putting a lot of pressure on me to purchase a home.
I would like to think that I'm pretty accomplished in my career, so far anyway. I am fortunate enough to make a good living for my age and in this economic climate. I guess other people see that and think that I need to make the "next step" in my life and purchase a home. I am really not ready to for a myriad of reason, but the so called advice I'm getting from others has reached such a fevered pitch lately that I'm really starting to question my own maturity level.
Currently, I am renting what is IMO a fantastic apartment. Its $925/month, which is actually pretty steep for my part of the world. But its a great place. Completely renovated historic building, top of the line appliances, wood floors, great city view, semi private rooftop balcony, elevator access, basically what any bachelor in his mid 20's can want. Yet even when I tell friends and even some family members this, I get this "does not compute" look. They always say, "yeah it may be nice, but for $925/month you can go to [insert random suburb in my area] and get a really nice house. Plus you're building equity and get a fat tax write off!"
I've done my research on my possible tax benefits. At the price level I'm comfortable buying at without giving up my lifestyle (and I'll admit I've got some expensive habits) it is simply not going to give me much of a tax break. In fact, I probably won't even clear the standard deduction limit after being in the house after 2 or 3 years.
I would love to buy a version of what I'm renting, but condos in my part of town are going form a minimum of 250K, which is about 75K more than I'm comfortable with. I've looked at some houses near me but they are so not my style and more than I want to pay as well. I could always go to the burbs for something cheaper but I'm a city guy at heart and would die of boredom living out there.
I guess to make a long story short, I am very content in my living situation and lifestyle, but all this pressure I'm getting from others is getting to me. Usually I would say I could care less what you think about me, but I'm starting to think I'm falling behind and not doing what's appropriate for my age. I live in a part of the country where people tend to settle down young, and everyone my age is buying houses. And indeed where I live homes are very reasonable. Yet here I am just chugging along being a lowly renter. Am I being immature about this, putting present lifestyle satisfaction over future financial benefits? Should I shove my expensive habits, man up, and buy a home? Or am I just being my usual neurotic self and should just plug my ears?
People are a bit shortsighted. Yes, borrowing rates are probably the best they'll ever be, but in this economy, do you really want to dispose of your liquid assets and shackle yourself to a very illiquid asset? What happens if your job goes south, and your next best opportunity is in another city? Good luck not selling it at a loss.
Also, not sure if you ever see yourself as getting married... but when that happens, that's usually the time where it really makes sense to think about more settled down home ownership.
I'm 32, just enough older than you to have learned from a few experiences. Please do not make financial decisions because you feel pressured. Part of being an adult is being confident in your own decision making. You said it all when you said you're content with your current living situation. It's fine if people want to give advice -- some of it may even be valuable -- but there's no need for you to make a huge life decision because other people think you should. Listen to your gut.
Buy a house when you feel like owning and living in a house. Your current living situation sounds great- why give it up for a box in the burbs? As others have pointed out, there are other areas in life to make financial decisions. Renting a great place/not wanting to buy a house- that's in the category of "how do I want to live" decisions.
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