Friday, August 06, 2010

Why Did We Buy a House?

We do indeed need a new water heater. We may also need a new pipes throughout the house, or maybe the plumber service guy just has a sales quota to meet. Since Chad and I are not licensed plumbers, we will not be attempting to install our own water heater. It's one thing to fix the toilet (only to have a different part of the toilet break months later), but an entirely different thing to deal with gas lines and water lines running into the same thingy-ma-bob that could go kaboom!

In light of the very necessary new water heater and possibly necessary total re-pipe job on the 1952 house, there will be no kitchen remodel. There will be no automatic dishwasher. I hope for the sake of our budget that there won't be any new kitchen appliances anytime soon. There will also likely be no fall vacation.

Prepare yourself for dizzying logic (and lack thereof) as I try to figure out what we were thinking when we bought a house.

Anyone who tells you that owning a home is cheaper than renting is a real estate agent and/or sorely misinformed. When I add the interest we pay on our mortgage, and how much larger our monthly mortgage payment is than any of our previous rent rates (two to three times more, seriously, and in one case for less square footage), and our ever-rising property taxes, and the amount of money and time we spend maintaining the house inside and outside, and the fact that now we pay all our own utility and cable bills (whereas rental properties usually covered some or all of those bills), my head hurts.

Chad feels renting is an unsettled and unsure way to live, because your rent rate can go up at the end of your lease, or the property owner can decide not to renew your lease. I never agreed with him until we were bribed out of our two-year lease at the posh condo after only thirteen months by a new owner. The location of the posh rental condo proved a deal-breaker when we had the opportunity to buy it - nestled on a freakishly steep hillside of one of Austin's most notoriously dangerous and busy roads. We also gained a bit too much insight into the condo mismanagement when the condo's property management company (allegedly) embezzled the entire reserves fund from the condo association and then declared bankruptcy. Phew! Dodged a bullet there!

As mortgage-payers (I can't honestly say homeowners for another twenty-some years), we can decorate, upgrade and paint knowing that we keep the fruits of our labor, for better or worse. (When I say worse, I'm thinking of the radioactive green paint in our kitchen. Its days are numbered.)

We get federal tax breaks which are pretty much wiped out or usurped by the property taxes. Of course, property taxes pay for local services, but most of those local services are also enjoyed by renters. So I guess that logic makes for some moot financials. Especially when I admit that mortgage payments and home maintenance costs are much higher than rent rates.

We can have more fur-children in our own home than if we were renting or living in a condo.

We have more room for parties. We should throw another party soon...

We have a washer and dryer here that only we use. No more trips down to an overcrowded laundry room or to the dodgy laundromat. Although the washer and dryer are in the carport and get dirty out there. Also, I have to put on clothes to go out there. No streaking to the laundry room for a fresh towel right out of the dryer.

We have a big yard that falls into both the pro and con list.

We're paying a premium for a few freedoms and benefits.

If there's any wisdom I can impart here, it's this: don't buy a house or condo until you are ready. Don't let anyone pressure you into buying a home with the argument that it's cheaper in the long run than renting, because it isn't. Have lots and lots more money saved than you think you'll need. And as my dearly departed dad liked to quip, "you can live in a car, but you can't drive a house."


Jenny said...

Here here! I totally agree with you. I tell people now "Don't buy a place unless you actually think you'll live there for 30 years." because otherwise? Money pit. I look at the house rental listings and realize we could be renting a 3 bedroom home in St. Louis for $1100/month and instead we're guests in my parent's home paying a ridiculous mortgage on a condo in another state and no one has even looked at it in one month. It kills me. I know we'll buy again but that will be mainly for school district issues. As for right now, I'm eagerly anticipating renting a house for the next 3 or so years. Whenever the hell our condo sells.

Sorry about your water heater.

KMac said...

I agree that the unexpected maintenance cost (and rising property taxes) are a huge bummer, but what about the fact that by owning a house, you're building equity? I know that despite all of the trials and tribulations with our cute old house, it's been a solid investment after just 7 years.

(As opposed to renting, where you may pay less in the short term, but it's money you'll never see again.)

Caveat: I know that the house = investment has been a bad deal for folks all over the US in the last year. However, we're both incredibly lucky to own houses in Austin, where the real estate market is still relatively strong.

When/if you sell your house, Jenn, you'll get your money back.

Jenn C. said...

Dear K & J,

I totally agree with both of you. My humble opinion is that for short term (less than 5 years) renting makes more sense financially. The maintenance and some utilities are typically paid by the landlord at a rental property. Many times rent rates are much lower than a monthly mortgage payment, and typically renters do not pay property taxes. My personal experience is that we pay a LOT more (2 to 3 times more per month not including upkeep) for our humble house than we paid for nicer, better location rentals.

We'll be in our house at least 10 years (longer than we first thought we would be) which means we will build equity. I hope the equity will equal our maintenance costs here (all new AC, new water heater, annual tree trimming, removal of 4 dead trees, biweekly lawn mowing, new driveway, new deck, etc...)

To further put the property tax issue in perspective, what we now pay annually in property taxes (just taxes; not the mortgage) would buy eight months in our old Windsor Road apartment with all bills paid (including electric, gas, water, cable) for similar style and amenities with 300 less square feet.

Chad & I (and K & A) are very fortunate to live in Austin, and fortunate to be on the property ladder here. I just hope we don't ever need a quick sale. Although the real estate market here has been a safer investment than in other parts of the country, homes here are staying on the market much longer than in previous years.

You take the good, you take the bad, you take 'em all and then you have the facts of life... and the facts of buying a home. And the world don't move to the beat of just one drum, what might be right for me, may not be right for some. :)