This is difficult to explain. I can’t figure out a rule of thumb for spending, the prices of things fluctuate so quickly it’s confusing. Here are some examples
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A house, prices are out of control, inventory is low, sellers are greedy. I’m feeling not only unable to afford it but finding lack of value in inflated prices
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Computer parts. Relatively cheap compared to pandemic but more expensive than before but also much cheaper than 90s/00s, but still could be cheaper
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TWS earbuds, completely different ball game from regular earbuds, disposable electronics.
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Food. Nights out with drinks now sometimes cost me more than 2 & 3, but seem like just keeping up with inflation
The prices range from 100,000s to 100s, but some are fleeting, some semi permanent, some last a long time. I also spend hours researching prices of parts and waiting for sales, but spending the same amount on social events in an instant
No doubt there is no value to buying a home in a lot of areas rn.
I rent a 2 br townhouse for 1800/mo. I have a detached garage. I have a basement with washer and dryer. I have about about 1200 sqft plus the basement which is unfinished. Utilities combined is 200/mo. Heat is included.
A similar unit would be about $300k. I’d get probably 8% interest with a 750 credit score. I’d have basically the same mortgage as I have for rent. Plus I’d be responsible for stuff I’m not right now, like heat, water, sewer, trash, recycling, lawn care, and literally any maintenance.
It’s a way, way better deal to be renting right now I many areas.
With rent you’re just paying to live there. With a mortgage every payment means you own more of the place (equity). If you have payed off the mortgage or didn’t need one then you have equity that you can use for last-ditch funding.
Yes, but managing that equity comes at a cost itself.
If a hurricane comes and floods my basement, it is 100% $0 to me, not my problem.
And, more importantly, I will have more capital available to me to be a first time home buyers by being patient, which will allow me to build equity faster in the long run.
Good point on the basement but the overall concern seems to be that the cost of real estate (including renting) is getting so it’s not feasible for most people to move along from just renting (if they choose to).
Yeah, but that will create a supply issue
Either prices or interest rates will fall. Or the oublics buying power will Increase.
That’s what a lot of people fail to understand. It isn’t just the price of the house. It’s everything else included (maintenance, replacement,taxes ). If over the very long term it’s cheaper to rent then probably just rent.
I implore anyone to look into this historical fact:
The Bush’s sold GW’s childhood home a few months ahead of an economic recession. They rented across town for a few years while they assembled a ‘historical society’ to rebuy the home after the housing crisis. It is now a museum in Milton, MA.
This happened in the mid-late 80s.
Even the ultra wealthy rent, when it makes sense economically to do so.
Owning is great and equity is important. But you don’t need to set owning a home in a pedestal.