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Well, we bought our home for $440k in 2010 and it's now valued around $750k. We're planning to sell soon. That's $300k in appreciation we would not have made if we were renting. Sure, there are hassles involved in owning a home, but we have enjoyed the freedom to have pets, paint or renovate however we want, and not having to worry about being forced to move at the whim of a landlord.
In our case , instead of buying another home , we rented in 2003 and bought a real estate investment package of assorted things for 500k ....we sold it off through the years while renting and got many millions back from it .
We can subtract out all the rent and taxes and buy quite a few homes like we had .
So there are two aspects to a home ...there is the housing costs themselves which may be more or less renting since we tend to rent less house then we buy .
Then there is the investment portion ...other investments may blow that home appreciation away ....
So it is the combination of the two that need to be compared
I got a mortgage about 3 years ago in a semi-rural area of King County WA. While it's a fairly nice, modest size house (750 sq') I'm already looking forward to eventually selling it. I miss the simplicity, flexibility, and low-maintenance of an apartment.
It's sort of weird because most people in my area either seem really into having a house or want one. Many of my neighbors are retired, and I'm baffled why someone would want all the expense and upkeep of a house at that stage of life. For me it was never that important, but rentals in my area are very limited so I reluctantly got a house largely at the behest of my mom. I'm not desperate to sell or anything, but definitely will when or right before I retire.
I'm curious if anyone else has similar attitudes. It's puzzling to me why home ownership is so highly regarded. To me after the novelty wears off it becomes just another thing you have to deal with.
I'm very late to the thread. Most retirees have a paid for house that only costs property taxes, utilities and the usual upkeep. Much cheaper then renting an apartment.
I personally will never live in an apartment, condo or town house. Will downsize to a small house that's hopefully off the grid.
I'm very late to the thread. Most retirees have a paid for house that only costs property taxes, utilities and the usual upkeep. Much cheaper then renting an apartment.
I personally will never live in an apartment, condo or town house. Will downsize to a small house that's hopefully off the grid.
It really depends where you live ... don’t forget time makes a big difference in the effect of a paid off mortgage relative to other costs ....
A home here in many areas may have cost 30-35k back when we bought our first homes back in the 1970s in Long Island ..today the taxes are 12-15k a year ....that paid off mortgage which was a lot of money 30 years ago won’t even cover the utility bill today ......
So when all costs are considered a retiree with no more kids living with them can rent a small apartment in queens for less than maintaining that whole house with all its costs in Long Island despite being paid off .
We may be buying a 2 bedroom condo in westchester, but it certainly will cost us far more than our renting in queens when all is considered even with no mortgage.
Taxes , hoa fees , insurance and maintenance fees can be pretty high depending where you buy and what you buy.
Like I say we generally don’t rent what we would buy in most cities or high cost of living areas...high rise living costs can be a fraction of single family home costs because of the economy of scale..
Most renters in nyc and the boroughs are in multiple family dwellings over 5 family ....so renting can be way cheaper then buying a home.
I would think most major cities are the same with apartment houses holding the majority of renters
Last edited by mathjak107; 09-28-2020 at 05:25 AM..
So far more than 26 million seniors have mortgages and that is growing as more and more take them at these low rates...
Mortgages in themselves are neutral ....having the cash in hand that could be trapped in the house can be just as good ....liquidity can be just as comforting and profitable as having all that cash tied up in the home and not liquid.
Folks get to caught up in this not having a mortgage thing ....in order to have a choice it means you needed the dough to not have a mortgage in the first place .....that means lots of liquidity outside the house.
Many people actually would have done better pre retirement not making extra payments to accelerate paying things off and channeling that extra dough in to other investments....
Once you have the dough you can pay off the mortgage or not ..but once the money is trapped in the house only loans can get it out .
Many helocs were closed in 2008 just at the time people needed the money ...today you need the same qualifications for a heloc as a mortgage so no guarantee you can get any money back out if need be.
You can’t pay for things at the supermarket with a closet
Last edited by mathjak107; 09-28-2020 at 06:33 AM..
It really boils down to your individual situation and likes and dislikes.
Since you must have always been a long time apt dweller, you prefer the no maintenance and no commitments life style.
This house is 3,700 sq. ft. sitting on 5 acres for quiet and privacy.
I am 89 and my wife is 90
I am many decades younger than you, and the thought of living in a 3700 sq ft massive McMansion is mentally exhausting.
I can't imagine how much of that mega house actually gets used at age 90.
But, I understand inertia is powerful and there is no incentive to downsize for you.
Downsizing is real work, both mentally and physically, so I understand when people ride it out.
IF you can afford it, just hire all the maintenance, and stay put. Actually a lot easier than moving
I'm very late to the thread. Most retirees have a paid for house that only costs property taxes, utilities and the usual upkeep. Much cheaper then renting an apartment.
In my situation those expenses amount to about $600-700/mo. I could rent a decent apt for about $1100/mo.
So let's do the math. In a few years I'll have about $200K equity in my house. If I sell it and invest that money moderately I'll have a reliable annual average return of about 5% after taxes. [I can invest more aggressively and have a higher average, but it will be more volatile.] So at 5% return that money will conservatively generate about $800/mo income. I also have a Roth, pension, and social security.
If I eventually sell my house my retirement income will conservatively be about $4500/mo. That's enough to cover rent and all other living expenses almost anywhere I'd want to live in retirement. So if I sell my house and invest that money I'll have more liquid income and flexibility, whereas if I keep it I'll have more upkeep and no flexibility.
Does this make sense? Do you understand why selling makes sense?
In my situation those expenses amount to about $600-700/mo. I could rent a decent apt for about $1100/mo.
So let's do the math. In a few years I'll have about $200K equity in my house. If I sell it and invest that money moderately I'll have a reliable annual average return of about 5% after taxes. [I can invest more aggressively and have a higher average, but it will be more volatile.] So at 5% return that money will conservatively generate about $800/mo income. I also have a Roth, pension, and social security.
If I eventually sell my house my retirement income will conservatively be about $4500/mo. That's enough to cover rent and all other living expenses almost anywhere I'd want to live in retirement. So if I sell my house and invest that money I'll have more liquid income and flexibility, whereas if I keep it I'll have more upkeep and no flexibility.
Does this make sense? Do you understand why selling makes sense?
It make sense to YOU. For myself, I value my privacy and the ability to have numerous gardens around my home. i have a service that mows my lawn (a task I loathe) and I also have garden helpers who assist me in establishing new garden beds and putting in larger shrubs and trees. I handle the smaller tasks like weeding and deadheading. I can afford my mortgage and the upkeep too: I have three pensions, an annuity, social security, and an IRA plus savings. You do you. I'm very happy to have my lovely home.
In my situation those expenses amount to about $600-700/mo. I could rent a decent apt for about $1100/mo.
So let's do the math. In a few years I'll have about $200K equity in my house.
I am with you. When I sell I expect to have double that equity. I can put it in a bank account but I think I probably will be able to find something with a better rate of return. Lets say 3%. That is about $800 to supplement my monthly rent.
Then I will be receiving
1. A pension,
2. Social Security
3. A 401K.
I expect in "now numbers" to be getting about a $1,700 per month apartment.
- with an elevator (all modern apartments over 3 floors need them)
- top floor.
- hopefully sprinkler system.
- definitely a gym
- Allows pets.
- has on site maintenance.
- if in a snowy area, has a garage or car port.
- reasonably close to the town or good medical centers.
- no more property taxes
- no more "stormwater" bills
- no more condo fee increases
- no more worrying about my home during a storm.
- no more yearly having to worry about bugs / bats or snakes.
- no more yearly having to worry about the heater or ac.
I look forward to sitting my home all warm and toasty with a blizzard outside and thinking, let it snow let it snow let it snow. Doesn't matter to me. Won't have to dig my car out the next day. Won't have to worry about damage to my house.
In my situation those expenses amount to about $600-700/mo. I could rent a decent apt for about $1100/mo.
So let's do the math. In a few years I'll have about $200K equity in my house. If I sell it and invest that money moderately I'll have a reliable annual average return of about 5% after taxes. [I can invest more aggressively and have a higher average, but it will be more volatile.] So at 5% return that money will conservatively generate about $800/mo income. I also have a Roth, pension, and social security.
If I eventually sell my house my retirement income will conservatively be about $4500/mo. That's enough to cover rent and all other living expenses almost anywhere I'd want to live in retirement. So if I sell my house and invest that money I'll have more liquid income and flexibility, whereas if I keep it I'll have more upkeep and no flexibility.
Does this make sense? Do you understand why selling makes sense?
It makes perfect sense. So does owning a house.
Some folks really enjoy not dealing with maintenance. Some people abhor the idea of sharing floors, ceilings and walls.
Some people like never having to worry about weather (storms, snow removal etc.) Some people like having a garden, yard, etc.
Some people like views and amenities on site, other people like not taking an elevator to their unit.
Some people like the flexibility to up and move risking little more than their security department. Some people like the flexibility to paint whatever color they feel like, own whatever pet they want, or remodel or replace something at their leisure.
There's no wrong answer, most of the time. And most of the time, rent increases at 4% a year in the open market. Personally I saw closer to 7% living in desirable areas.
There's no silver bullet.
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