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Well the fact that time ain’t your friend sometimes has left many in the tri state area with paid off homes they can’t retire to .
A 30-35k home like we all bought in the 1970s has those mortgages long gone ..but 12-15k a year in taxes and renovations that are needed decades later that cost 3x as much as the house did have made these homes unaffordable over time to keep .
So many are forced to relocate now because those dollars no longer spent because of paid off mortgages won’t even cover utilities today. Those houses they raised their families in now do them no good in retirement.
That is the sad truth about homeownership over the long term in many areas..
Yeah, not so sure about all that?
If someone paid $30-$35K for a house in the 1970’s and it now has a property tax bill of $12-$15K means they have hundreds of thousands in equity. A reverse mortgage would solve any financial issues. Plus like I pointed out earlier with California where all property tax can be deferred as a lien, I know other states have similar programs, or ones where it greatly reduced for those meeting a certain income threshold. And there’s no way rent would be cheaper for something comparable?
As for renovations I’m assuming you mean maintenance? No need to update a functioning kitchen/bath if you’re strapped for cash? As for maintenance, see above about a reverse and giving you the funds. Also there’s hundreds of local, state, and federal programs for seniors and home improvement. Some are free, some need to be paid back, and some become liens upon sale. My grandparents in Michigan had a new roof, windows, and furnace all done for zero out of pocket at the time.
Now if someone can’t keep up the house they raised their kids in because it’s too big, and/or has too many stories, or they want to leave a nest egg for their heirs and not use their equity that’s another story? But to say someone can’t afford to stay in their paid off house of 40-50+ years with hundreds of thousand of equity because of property tax or utilities (which also have reduced rates for qualifying seniors) is a bit disingenuous.
As a former home owner (owned for decades), currently sitting on the sidelines, I've been going back and forth about buying ever again. I still don't know what's right for me, but this author makes some really good points:
We're willing to put up with heavy restriction of property usage, the virtual elimination of economic use, the imposition of high and growing taxes, and the potential for legal attachment in exchange for tax incentives and the ability to sell the property at a higher price in the future.
Good deal perhaps, but it seems more like renting with the option to sell at a profit at a later date. Owning a home today is more like owning a stock: you hold title, but you have no impact on how the business is run, and your primary advantage is the ability to sell at a higher price. That means a house has morphed into something more like a tradable commodity than the traditional family homestead that could nurture a family for generations.
The dirty little secret in the housing sector is that over the past few decades price appreciation?has become?everything when it comes to homeownership.
You describe the typical urban/suburban home ownership experience, under the thumb of HOA and other "supervisors". Out in the rural Washington area I live in, I have 12 acres of pasture I am free to lease to whoever offers the most money, and within broad limits I can do whatever I want with my property.
My place is worth at least 3X what I paid for it 30 years ago. I like it here and don't want to sell.
Property tax is about 2K per year.
No kids so when I kick the bucket it's available for the next person.
If someone paid $30-$35K for a house in the 1970’s and it now has a property tax bill of $12-$15K means they have hundreds of thousands in equity. A reverse mortgage would solve any financial issues. Plus like I pointed out earlier with California where all property tax can be deferred as a lien, I know other states have similar programs, or ones where it greatly reduced for those meeting a certain income threshold. And there’s no way rent would be cheaper for something comparable?
As for renovations I’m assuming you mean maintenance? No need to update a functioning kitchen/bath if you’re strapped for cash? As for maintenance, see above about a reverse and giving you the funds. Also there’s hundreds of local, state, and federal programs for seniors and home improvement. Some are free, some need to be paid back, and some become liens upon sale. My grandparents in Michigan had a new roof, windows, and furnace all done for zero out of pocket at the time.
Now if someone can’t keep up the house they raised their kids in because it’s too big, and/or has too many stories, or they want to leave a nest egg for their heirs and not use their equity that’s another story? But to say someone can’t afford to stay in their paid off house of 40-50+ years with hundreds of thousand of equity because of property tax or utilities (which also have reduced rates for qualifying seniors) is a bit disingenuous.
Not true all the time about a reverse mortgage .people who resort to reverse mortgages generally are cash strapped ..what few realize is the lender can order you to make huge repairs
Thousands for a roof or furnace , concrete or foundation work etc …..it is in every reverse mortgage agreement….
There are caps on the loans too as well as they only loan up to half the cap in many areas depending on age .
So they are not always the answer ..they also eat equity extremely fast so most prefer to sell , take the equity and relocate.
Which is why the tristate area has already lost millions of retirees
some figures are missing when I read the Following:
Bought home at 35k sold it at 105k.
To the average joe they'd say wow! a 70K profit.
The problem I foresee are some figures missing.
The interest rate being the chunk that takes up that supposed profit.
The Daily upkeep- Yard work. Taxes, Maintenance . Utilities, Insurance , Replacements of walls, floors, appliances, Roof. All factor in to home ownership. Least we forget when you are imposed with new water sewer lines being put in, or the Walk way being accessed as needing repaired to meet code.
In the barebones sense , yes when the mortgage is paid off, the deed is cleared and the person or entity is the owner outright.
Welcome to owning, brick, concrete, dirt,metal, wood,water way, and maybe bragging rights for location.
A typical mortgage ran 2-3x the cost of the house in interest alone before rates got this low over a 30 year period .many end up needing renovations to update things along the way which can run 2x or more what was paid for the house decades later .
Most homeowners are very poor at keeping records of actual costs every time they spend a dollar on the house.
I was a homeowner for a few decades off and on …I much prefer renting and investing that money in assets that are paying all our living costs while still growing now that we are retired….
We have been retired for six years and despite pulling out 6 figures a year to live our balance is way higher than ever including the day we retired 6 years ago.
If we do buy again it will be a condo in a high rise in westchester …right now the costs of buying are way way higher then renting here in queens so we are on the fence as cash flow would take a big hit if we buy.
Single family homes start in the seven figures here so we would never consider that an option nor do I want the chores of ownership.
One thing about the city here is you have vastly different housing options ..so renting vs buying is rarely apples to apples since more than half of all rentals are in multifamily stabilized apartments.
Even at market , rents for a two bedroom 2 bath apartment in a high rise is a fraction of the costs of a single family home …so renters are rarely comparing renting that same single family home one would buy .
Last edited by mathjak107; 07-26-2021 at 04:37 AM..
As a former home owner (owned for decades), currently sitting on the sidelines, I've been going back and forth about buying ever again. I still don't know what's right for me, but this author makes some really good points:
We're willing to put up with heavy restriction of property usage, the virtual elimination of economic use, the imposition of high and growing taxes, and the potential for legal attachment in exchange for tax incentives and the ability to sell the property at a higher price in the future.
Good deal perhaps, but it seems more like renting with the option to sell at a profit at a later date. Owning a home today is more like owning a stock: you hold title, but you have no impact on how the business is run, and your primary advantage is the ability to sell at a higher price. That means a house has morphed into something more like a tradable commodity than the traditional family homestead that could nurture a family for generations.
The dirty little secret in the housing sector is that over the past few decades price appreciation?has become?everything when it comes to homeownership.
Interesting but from my experience, I’ve always made good money with each house and condo that I have owned and later sold. Like anything else, you need to buy with caution and use common sense when putting money into the house for improvements or adding amenities that you desire. All of that is your “impact on the business” and you,nt he owner have that control.
The other option is to rent, where you virtually have no say in your living conditions and or chance of having any equity or appreciate since you are not invested, you’re just paying as you go. Real estate has always been one of the best ways to grow your investment as long as you are in there for a certain period of time, rather than jumping in at out which increases the risk similar to day trading.
We all need a place to live and when buying a house, your primary focus need not be appreciation but chances are better than not that you will show some profit when you decide to sell.
Interesting but from my experience, I’ve always made good money with each house and condo that I have owned and later sold. Like anything else, you need to buy with caution and use common sense when putting money into the house for improvements or adding amenities that you desire. All of that is your “impact on the business” and you,nt he owner have that control.
The other option is to rent, where you virtually have no say in your living conditions and or chance of having any equity or appreciate since you are not invested, you’re just paying as you go. Real estate has always been one of the best ways to grow your investment as long as you are in there for a certain period of time, rather than jumping in at out which increases the risk similar to day trading.
We all need a place to live and when buying a house, your primary focus need not be appreciation but chances are better than not that you will show some profit when you decide to sell.
No chance of making money while renting ? That would be another false statement as a general statement . .
Many Tenants here in nyc make money every day …. Since more than half of all rentals are stabilized tenants are paid lots of money regularly to give up those leases .
We paid seven out of nine of our tenants 100k to leave so we can sell the apartments…since they were boomers and not going to be able to afford to retire by Central Park when the pay checks stop they were going to eventually relocate anyway .
Buyouts-to tenants are very common.
It is only because we didn’t buy another house and rented that we were able to deploy that money in to investments in commercial real estate that was actually life changing for us it was so lucrative.
Today all the real estate is gone and the money we made pays not only our rent , but all our living expenses , while still growing itself in our portfolio.
Statements like renting gets you nothing are never true across the board . That may be true of renters with no resources or choices to invest large sums elsewhere .
Retirees who sell homes and businesses have these choices all the time ….. they can sell that big ole house and rent a small apartment in a high rise and deploy that money in far better investments with zero chores .
Last edited by mathjak107; 07-26-2021 at 07:53 AM..
No, but there are far better places to own than others... Property taxes are capped at 1% of assessed value where I live unless additional items are added on locally for particular items.
We had a second home in the poconos where we thought about retiring to .
Taxes and the cost of living were lower then queens .
But as time went on and we thought about living there full time as retirees we soured on the idea .
Hospitals were few . We had Scranton hospital near us …the first thing they did after Gloria Estefan stabilized from her accident in the area is air lift her to a nyc hospital.
Specialists were few
Facilities, rehab and labs were few
Everything was a drive and if one day I couldn’t drive there was no public transportation….
If I wanted to work a bit in retirement there were only mom and pop low paying jobs or Walmart .
Winters were long and cold with nothing to do .
The summers were getting boring and we had to go farther and farther away to find new things to do .
The list went on and on , and eventually we sold it ..everything we wanted was right here where we were.
High demand areas are expensive and there are reasons they are high demand and have high home valuations and high taxes.
We have an extensive public transportation here that can get you anywhere with no car
We have the finest medical facilities in the country .
I work one day a week in retirement and would have to work many days to earn the same thing .
There are endless things to do here
We could eat out every day ,3 meals a day and it would take 22 years and you would still never repeat .
Best of all we are local to all the kids and grand kids
Last edited by mathjak107; 07-26-2021 at 07:43 AM..
Real estate has always been one of the best ways to grow your investment as long as you are in there for a certain period of time
I'd rather be in stocks if we're talking about investing. Liquid, low holding costs, and they don't tie you to one place. Theoretically, renting keeps it clean and instead of replacing roofs and upgrading furnaces, you put your money into index funds. Unfortunately, rents are rising like crazy, so if you need to stay in a specific location, it's probably best to lock in a mortgage.
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