Renters Only: Compared to the monthly cost of buying a similar home, my rent is...
- ...a lot cheaper. (47%, 95 Votes)
- ...a little cheaper. (21%, 43 Votes)
- ...about the same. (13%, 27 Votes)
- ...a little more expensive. (6%, 13 Votes)
- ...a lot more expensive. (13%, 23 Votes)
Total Voters: 202
This poll was active 04.01.2012 through 04.07.2012
Rate this post:
00
About the same if you consider PITI and mortgage insurance (I couldn’t put 20% down on my home if I bought it today). Cheaper if you only count P & I.
Rate this comment:
0 
0
We are renting a house in a very nice Seattle neighborhood. The house has never been a rental and is nicely updated. The owner was trying to sell, but abandoned that plan. If we would have bought the house for the last asking price, paid 20% down and gotten the lowest available interest rate on a 30 year mortgage then our rent would have almost covered the monthly interest and principal payment. With taxes, insurance and upkeep I figure we are saving close to 10K/year.
Rate this comment:
0 
0
A lot cheaper, but only because we would not buy a home in this school district. If we bought here it probably would be a wash. Our kids aren’t in school yet, but they will be in 3-4 years, so we are currently renting close to my husband’s work in a lower cost area. When we buy we will buy in a better school district where the homes are all more expensive (taking into account all the added expenses of owning vs. renting, of course).
Rate this comment:
0 
0
$1200/mo. + bills ~ $1450/mo.
Ravenna. Nice dog yard. Old drafty house.
Been here nine years, saving money for 20% down the whole way.
Almost there.
Rate this comment:
0 
0
After owning two houses for 15 years total, we’re acutely aware of the real costs associated with ownership.
So on that basis we see our rental as only a little less than owning. There are other benefits to us leasing though, lots of them.
Our decision to lease versus buy is not associated with a bottom or with the cost difference between the two options.
For instance, with two small children we think we may actually need at least two types of houses as they grow. Possibly another if they choose to live at home or go to college. Upsize downsize, mobility, no maintenance burden (though it looks like plenty of owners don’t take on this burden either) just to name a few.
Rate this comment:
0 
0
This poll also depends heavily on your location. In my case in Kent my 3 bedroom rent & Expenses is way more expensive than a comparable condo in the same neighborhood. Including all the PMI, HOA dues, insurance and taxes I would save $200 to $300 a month!
Here is the trick though – it’s kind of a catch-22. Many banks will not fund on condos if there are high assessments waiting in the wings, of if they do it will be a FHA loan. Then the trick is the whole complex has to meet the FHA guidelines, So that depends on many factors and how hard the HOA is trying to stay FHA compliant. Those assessments can be a real deal killer.
Rate this comment:
0 
0
Many people underestimate the costs associated with home ownership. Besides the mortgage and taxes, maintenance and repair can easily be 5% of value per year over time and is financed out of cash flow. Dishwashers break, water heaters leak, windows break, and roofs need replacement. Throw in the occasional climate event and it gets even more expensive. Even in a rising housing market the increasing value of a house does not translate into increased income or cash flow unless you refi and pull some cash out.
Oh, wait, that didn’t work did it?
Right now for us the major advantages of renting are some predictability of expenses and the lower cost overall allows me to finance other endeavors, like college tuition and maybe retirement sometime.
Rate this comment:
0 
0
My rent is a lot more expensive if we’re comparing it to a similar size and style of condo in my neighborhood.
But my rent is way cheaper than buying a single-family detached-home in my neighborhood, but my apartment is also a third the size and without the benefits of a yard, garage, no shared walls, etc.
Rate this comment:
0 
0
By ricklind @ 6:
I thought the 8% per year appreciation WAS SUPPOSED TO BE the retirement savings. That didn’t work out too well either. What they didn’t tell us was they meant retirement for the agents, mortgage brokers and various other housing parasites.
Now we all realize we have to downsize our housing expectations to allow for significant savings… if we ever want to retire, or save up for the kids college. We have realized that, haven’t we?
Rate this comment:
0 
0
When considering the monthly ‘expense’ comparison, many people are including the Principal repayment as an ‘expense’. This is incorrect in my opinion. Homeowners are infact paying themselves that money which comes back (hopefully!) in the form of equity. Obviously, if you bought in 2007, that principal payment won’t be coming your way for a while, but if you get a house at a reasonable price I would do the comparison versus renting removing the Principal.
Clearly, you need to be able to handle the cash flow requirements and be able to stay in one place for more than a 5 years, but I would argue that the better comparison to renting would be to take the taxes, insurance, interest and upkeep costs minus the value of the interest expense tax shield and compare that to the cost of renting. Principal should not be included.
People need to learn the difference between an expense and an investment. Things may be difficult to handle from a cashflow perspective, but that doesn’t mean they are ‘expensive’ if overtime it pays you back.
Rate this comment:
0 
0
I heard some RE pundit say you need to save 1% or 2% of your income each year for repairs that you may need.
Rate this comment:
0 
0
By pfft @ 11:
So if you have a $200,000 home and make $60,000 a year you need to save 6-12k, but if you have that same house and make $120,000 a year you need to save 12-24k? That makes a lot of sense. More savings for contingencies for someone making more money! /sarc
Rate this comment:
0 
0
By Kary L. Krismer @ 12:
1% or 2% of your income.
Rate this comment:
0 
0
RE: pfft @ 13 – Yes, my point was that makes no sense. Someone making less money would probably need more of a cushion to pay for repairs than someone making more money. They should save more than the person making more.
Also, how much it costs to properly maintain a house has almost nothing to do with how much you make.
Rate this comment:
0 
0
Currently ‘about the same’, going to go up to ‘a bit more expensive’ in another month (12.5% rent increase). I happen to be in the process of buying a house that is comparable, and my PITI plus the expected additional utility costs will be almost the same as my rent is currently.
Rate this comment:
0 
0
By T. Y. Lee @ 8:
This one made me laugh. I spent about 7 hours breaking my back in the yard today to, yet again this year, try (in almost certain futility) to replace my moss with grass. I plan to do a lot of surfing tonight, given that I probably can’t get out of my chair…..some benefit.
Home ownership is over-rated….
Rate this comment:
0 
0
@ Chuck C
No only is home ownership overrated, grass is even more over exalted.
Learn to love moss. It’s green, never needs to be mowed, won’t invade your flower beds, and requires no care to thrive. How great is that?
Rate this comment:
0 
0
The answer of course depends on how you define “Monthly Cost” of owning, Doesn’t it?
Does the monthly cost include:
1. …the lost earnings on the downpayment?
2. ….time and money spent maintaining the home, yard, etc…
3. …repairs and maintenance of the furnace, plumbing, gutters, appliances, roof?
4. …future losses as the value of the home drops in price or value increases at a rate less than inflation?
5. …future losses in value as interest rates increase?
6. …lost potential income due to the inability to move to a better job in another state?
7. …Taxes?
8. …Transaction costs when you purchase and sell?
I didn’t think so…
Only used car salesmen and real estate agents focus on the monthly payment without considering the impact of taking on so much debt. Potential buyers should take a good, hard look at the debt they are going to be paying off for the next 30 years.
Multiply your annual rent by 15X and that is the maximum value of your property.
Rate this comment:
0 
0
I don’t own a house, so I’m not biased in favor of buying… but your points all seem to me to be biased to make renting look better (as well as the fact that you double count a few overlapping items). Here’s some of my perspective on your points…
“1. …the lost earnings on the downpayment?”
Which, in a safe investment, is about 2 or 3 percent annually. And, with low down payments that can still be had if you have decent credit that’s not adding up to a ton right now.
“2. ….time and money spent maintaining the home, yard, etc…”
I’ve been kicked out of places (single family homes that were owned by people who seemed to have an emotional attachement to them) that I rented for not taking good enough care of the lawn, so although most of the big ticket home maintenance items (new roof, gutters, etc.) would be the responsibility of the owner, renters aren’t free of responsibility… unless yard maintenance is built into the rent (at additional cost). I guess if you’re talking apartment or townhouse living, this isn’t a factor… but then you have the whole shared wall thing.
“3. …repairs and maintenance of the furnace, plumbing, gutters, appliances, roof?”
Yes, this should be factored in.
“4. …future losses as the value of the home drops in price or value increases at a rate less than inflation?”
Or gains if the place appreciates. Not likely in the next couple of years, but I’d guess housing will be above todays pricing in less than 5 years.
“5. …future losses in value as interest rates increase?”
That will also affect rent prices. As housing gets more expensive to purchase, rents will also go up. If you’re talking about buying for a cheaper price because prices will come down when rates go up, it’s not an automatic relationship. And, the low interest rates now should be more of a deterrent to people with big wads of cash that can pay a large percentage of the house as a down payment. People who are financing most of the cost of a house, if they plan to live in it for the long term, SHOULD consider the monthly payment as a big factor. If someone is buying a house that they plan to live in for 20 years and pay off during that time, the monthly payment is a real tangible factor. “How much of my paycheck will go to housing if the interest rate is 4%? If it’s 5%? If it’s 6%?” If you’re comparing three 20 year mortgages that are going to be paid off over 20 years, then why don’t you feel that the monthly payment is relevant?
“6. …lost potential income due to the inability to move to a better job in another state?”
Buying a house does make it more difficult to move… but that’s also already been factored in to some extent to your item 4 (having to sell at a lower price when you don’t want to for a move) and 8 (transaction costs).
“7. …Taxes?”
Yes, that’s part of the cost and is what people are supposed to be factoring in.
“8. …Transaction costs when you purchase and sell?”
Yes, that is something that should be considered, as well.
Rate this comment:
0 
0
RE: Chuck C @ 16 – Learn to live in harmony with moss!
Rate this comment:
0 
0
RE: Chuck C @ 16 – Iron. Use it frequently throughout the year. Use a lot of it.
Rate this comment:
0 
0
Just Wait Patiently Like Patient
You can’t PCS [employer buys your house from you] and move to an out-of-state job when your mortgage is underwater; the solution [no company/agency is gonna bailout that much cash] rent it out and at least get part of the mortgage payments back.
I can see Seattle home owners unable to sell, but unwilling to default, using this landlord strategy in masses for upward mobility and/or job stability [i.e., your company moves out of Seattle or your are transferred out-of state]. This should likely gradually/systemically increase the rental units in Seattle with time. Ya gotta move with your job, in most cases.
“..Boeing announced in October 2009 that it had chosen North Charleston as the site of its second final assembly plant for the 787, instead of Washington state where the company has built planes for decades….”
http://news.airwise.com/story/view/1307759567.html
.
Rate this comment:
0 
0
RE: Chuck C @ 16 –
I Purposely Don’t Weed and Feed and Water My Lawn
The toxic chemicals “weed and feed” leaches into the underground East King County water supply [it takes 20 years, but it gets there eventually] and waterring your lawn is considerred bad for summer water shortages [costly too BTW]. Being environmental like this means ya get stuck with a lot of dandelions and brown grass….but ya don’t have to mow near as much.
Rate this comment:
0 
0
RE: softwarengineer @ 23 – I never use weed and feed, or that insecticide stuff. A healthy lawn doesn’t have many weeds.
Most the year I use an organic fertilizer. Part of what I like about it is I can use a whole bag at a time, so there’s nothing left over sitting around. In late fall and early spring I use non-organic fertilizer with iron.
Rate this comment:
0 
0
RE: Kary L. Krismer @ 24 –
I Use a Mulching Lawn Mower for Self-fertilization
My lawn gradually rises with more top soil too [good for areas like mine with hard pan], but looks far more healthier than my weed and feed neighbors.
Rate this comment:
0 
0
By softwarengineer @ 25:
I do that too, during the warmer weather. Neither organics or mulching works during the colder months.
Rate this comment:
0 
0
$800 for a MIL in Magnolia, small kitchen,but it has a shop and the back yard is ours. Next door neighbors bought in 2010 for $595K!
I never would have found it without The Tim’s post on RSS feeds and Craigslist – thanks!
Rate this comment:
0 
0
RE: Kary L. Krismer @ 26 –
To Both Kary and SWE:
http://www.richsoil.com/lawn-care.jsp
I am both cheap and lazy.
Rate this comment:
0 
0
Tim, the monthly cost of buying a similar home is too vague. If I paid all cash, my monthly cost is going to be pretty low compared to someone with an FHA loan or a 15 year fixed mortgage. I think a more specific question is, assuming 0% appreciation in home and rent prices over a 5 year period, plug your numbers into the awesome NYTimes buy vs rent calculator and post your result http://www.nytimes.com/interactive/business/buy-rent-calculator.html
Rate this comment:
0 
0
Based on some quick research I did a week or so ago, it’s only a little cheaper to rent vs. own if you’re comparing an apartment to a condo in an inner-city neighborhood close to Downtown.
That’s quite a change from five years ago, when it was a *lot* cheaper to rent. For me, renting is still definitely the best deal, though, because I don’t see Seattle as a place to settle long-term and want the freedom to pull up stakes and move outside the metro area once the opportunity arises.
Rate this comment:
0 
0