Joe,
Does your "property inflation" include both "land value appreciation" and "structure depreciation"? (Especially as desired home styles change 10 years from now and begin to make yours feel "old".)

I say to buy it, as I'm a firm believer in owning vs. renting - especially in the long term when inflation means you're actually paying less mortgage payment year over year while alternatively you would be paying more rent year over year.

My domestic shorthair and I are about to make an offer on a house ourselves which is going to stretch us pretty thin for a little while, so I'm in a similar boat. Owning a home for most of the last decade has been fairly rewarding, and it's so nice being able to do whatever you like with the house. On the plus side, if my current house sells for what my realtor says it should sell for, then I'll have made 98.2% profit on the house in 7 years using money I borrowed from the bank. Also on the plus side, the home we plan to make an offer on later today is priced relatively "above the bubble", and the actual property value looks to have remained more or less stable over the last several years.

Good luck in your decision, and hopefully you start to enjoy your 'stability'.

So, I couldn't view the spreadsheet well on my phone at the moment but I'm curious if you included the 6% you would have to pay when you get ready to sell the house as well?

The market has done a reasonably good job of delineating the valuation of the land from that of the structure atop it. For a given neighborhood and lot size, the difference in listing price between a newly-rehabbed home and one in tear-down condition is generally around $200,000. I have not thoroughly researched the cost to gut (or demolish) and rebuild a house in this area, but $200k feels about right.



This is why I find it weird that individual investors are strongly cautioned against trading on margin, and yet we encourage people to do the same thing in the real estate market all the time.



Yes.

I've been massaging the spreadsheet. Right now, line 36 is the money-line, but cell B44 is the one that's causing me heartburn. If I adjust that number by just one point, the break-even cell swings by many years.

https://cimg3.ibsrv.net/gimg/www.mia...485c4007e1.png

Principal

Also for the interest deduction, is that the resultant net change to your annual income and not the actual amount deducted?

Also bear in mind that spreadsheets do not always show the personal pleasure benefits. Walking out to your garage to tinker is a huge benefit to having a house. Dat kitchen.

If you were not concerned about making or losing money, would you need this house in the next 5 years? Are you going to start a family? Are you going to garage 3 cars? Do you want to paint the walls bright fuscia? Do you own a large subwoofer?

Also don't forget the Target effect. Every time you move, there is a $500 Target trip. Plus all that other furniture you'll need to fill the house with.

It's the sum of mortgage interest and property tax paid in a given year, multiplied by my effective federal tax rate. So for the purpose of the TCO line, it counts as income at the proportion at which the money is not taxed.

I'm trying to be objective about this.

But yes, this is a consideration.



None of the above.

It'd be nice to not have an upstairs neighbor, and for my bedroom window to not be on a busy street, but aside from that, purely a financial consideration.


Hahaha. I've moved a dozen times in the past 20 years. Got it pretty much down to a science. The only time I incurred significant capital cost as a result of a move was when I had to buy a lawnmower after moving to NC. That purchase has been artificially depreciated.

Other than things which are literally necessary, I'm still hauling around the same ole' sofa / office tables / bathroom towels that I've been using for years.

Haha, last time I bought a lawn mower it was a used walk-behind off of Craigslist. Still running great.

i'm 71 years old. my house is paid for, the only costs are taxes and insurance. i'd sure hate to be paying 1800/mo rent at this stage of my life. sure, it was a little tight for the first 5 years or so, but it got easier as time went on. we had this house built to our specifications on ~4 acres and there is no hoa to boss me around. if you like independence, home ownership is the way to go. i think you could probably "almost" cash that house like a check if you needed to move.

IMHO, viewing one's house primarily as an investment is a mistake. It is, for the average person, the place that one keeps everything, the place that one spends over half of his life, the place he raises his family. It's home. It's highly illiquid both in terms of transaction fees, but also in the giant PITA that is involved in moving. Seconds homes, rental properties, etc are different, but it's hard (and, IMHO, wrong) to view one's personal, family home with the dispassion requires of an investment property.

--Ian

I suspect there are no other neighborhoods that would suit without having to drop $625k?

How much of that price is the extra garage space you have no intention of using? No plans to start a family, does it have to be a house that large? etc.

I kind of regret buying last year now that I know what I do. If I was still renting I could be gearing up in full to move out of OK to TX.

The cost delta isn't very significant for a recently-rebuilt home in this area. 2 car with 2 or 3 br and 1 or 2 ba is maybe $550-$575k. The cost is mostly in the land.


Below that, $500k will get you into condo / townhome territory. At that point, you're paying $200-$400 a month in HOA, plus dealing with upstairs neighbors in a lot of cases. Many such properties around here are actually single-family homes which have been subdivided into 2-3 apartments, by floor. And believe me, those hundred year old wooden floors squeak. Anything under $450k, and you're parking on the street.

On an unrelated note, it turns out that I am a sex-offender in the state of North Carolina. (NC Gen Stat § 14-184 (2016))

Don't they know the sheep is a liar?

Edit- no, I guess that's the other one.

Edit edit - Fontana Resort is in North Carolina

Never been.

But the majority of the transgressions were committed in the Blue Ridge mountains, mostly Asheville and Banner Elk.

I think one or two of them also violated portions of the NC Motor Vehicle Code, but I'm too lazy to look them up.

It's the location of Miatas at the Gap

Understood, just saying I've not been to that specific location, and definitely not in the Miata. Always either took the 'Roo, or flew in and traveled via Uber.

Life goal: violate the Geneva Convention via a consensual act between two adults.

I would like to urinate on the grave of General Santa Ana.

That's pretty extreme, even for me.

Though, given enough time, it's probable that a few molecules of water which passed through your urethra as urine will have returned to the sky in the form of water vapor and subsequently fall onto Mexico City as rain, striking Santa Anna's grave in the process.

About eight years ago, I messed with Texas. Specifically, I spit on the Alamo. Nothing bad has yet happened as a result of it.

From the TMI department:
5 days after my surgery, I finally pooped. You have no idea how happy this made me.