Psychology of Home Owning

Harry_Powell

mitchaa wrote: »

Option 1 - Typical 25yrs of mortgage payments that are always likely to decrease as LTV builds up, not inflation linked.

Option 2 - Assuming FTB at 25, and living until 80....55yrs of rental with payments definitely rising year on year due to inflation.

That's the way I look at it anyway, option 2 is going to cost you a hell of a lot more in the long run, perhaps 4-5x as much as option 1. Option 1 is an asset, whereas option 2 leaves you with nothing at the end of it.

Buying vs renting is a no brainer.

At the risk of dragging this thread into the realms of another 'renting vs buying' discussion, I feel it's only fair to point out that your example is too black and white (as is usual on MSE). You forgot to add in the costs of purchasing a house (solicitors fees, surveys, valuation fees, mortgage arrangement fees, stamp duty, etc), the cost of property maintenance, the cost of buildings insurance, the cost of remortgaging (arrangement fees, valuation fees) as people remortgage every 5 years on average, the cost of sales as people move every 7 years on average (Solicitors fees, Estate agent, etc.)

When you factor all of these costs in over the lifetime of being an OO, I doubt it'd be as big a 'no brainer' as you think, especially if the renter invested the money he's saving by not paying mortgage arrangement fees, estate agent costs, yadah yadah in a good stock market fund. Don't underestimate the costs of home ownership.

the_ash_and_the_oak

well tbf he was comparing an option of buying one house and living in it for 25 years with renting one house and living in it for 25 years, rather than including any other options that people may have

Harry_Powell

the_ash_and_the_oak wrote: »

well tbf he was comparing an option of buying one house and living in it for 25 years with renting one house and living in it for 25 years, rather than including any other options that people may have

Does anyone ever do that, especially these days?

Heck, I haven't even moved into my house yet and I've already got half an eye on my future renovations with regard to whether they will add to the value of the house when I sell.

That's why I think many of the examples people in here provide are totally bogus, I don't know of a single person who has rented the same property for 25 years, I only know of a few people who still live in the same house that they bought 25 years ago and two of them are my parents.

If being a OO is a 'no brainer' then it should be easy to provide examples that cover every scenario, including the on that covers the 'average Joe' who has 4 houses and 6 mortgages in his lifetime (or whatever the averages are, I can't be bothered looking cos I don't think it is a 'no brainer').

the_ash_and_the_oak

Harry_Powell wrote: »

Does anyone ever do that, especially these days?

Heck, I haven't even moved into my house yet and I've already got half an eye on my future renovations with regard to whether they will add to the value of the house when I sell.

That's why I think many of the examples people in here provide are totally bogus, I don't know of a single person who has rented the same property for 25 years, I only know of a few people who still live in the same house that they bought 25 years ago and two of them are my parents.

If being a OO is a 'no brainer' then it should be easy to provide examples that cover every scenario, including the on that covers the 'average Joe' who has 4 houses and 6 mortgages in his lifetime (or whatever the averages are, I can't be bothered looking cos I don't think it is a 'no brainer').

I'm agreeing with you! (see my post immediately below mitchaa's). I also think there are other options besides a) buying one house and staying in it for 25 years and b) renting for 25 years

Harry_Powell

the_ash_and_the_oak wrote: »

I'm agreeing with you! (see my post immediately below mitchaa's). I also think there are other options besides a) buying one house and staying in it for 25 years and b) renting for 25 years

LOL, I'm not having a go at you (despite having quoted you), I'm having a go at mitchaa's example which as I said was a bit too black and white to give a real indication that OO v tenant is a no brainer.

I'd be very interested in seeing some more 'real-world' figures on this because until I started having a mare with my landlords and subsequently got fed up with renting, I would have been quite happy to rent forever (from a purely financial standpoint).

If a renter put away the equivalent costs that a homeowner has to spend (I've listed these already and won't go into them again) and also put away a similar amount that the home owner pays to repay his mortgage into a decent ISA, I doubt one or the other would be much better off financially.

Mr_Matey

Thanks for the replies everyone, they make very interesting reading!

It's good to discuss some of the benefits/pitfalls of home ownership rather than just the usual "is it a good time to buy or rent" arguments. Although this is an economics board I suppose.

So far my experience with renting has been good. I've not yet had a landlord try to rip me off (apart from demanding rent ), turf me out or anything like that. But I've been a good tenant so maybe that's karma. Maybe that's why I'm not so opposed to renting.

It seems that most owners here have had positive experiences of owning too. Some have negative experiences with renting in their younger years which makes owning seem even better. I guess there aren't many FTBers in negative equity or people who've lost it all on this forum. Maybe they're over in "Debt-Free Wannabe" or "Bankruptcy and Living with it"?

Regardless, thanks for your opinions and comments.

Davesnave

bernard_shaw wrote: »

The only thing one can truly possess is one's own experience. Everything else is just ephemera, just 'things'.

That's a bit deep. Are you sure you're on the right board?:p

Oh, wait, I get it.....Shaw wasn't into 'stuff,' like houses. We can see this clearly from the picture of his humble abode, below:



GBS's modest home 'Shaw's Corner.'

lostinrates

Davesnave wrote: »

GBS's modest home 'Shaw's Corner.'

It is actually fairly modest- not for now though. The loo (open for visitors ''use'' there is great. But, apart from his writing shed which was a bit swish it wasn't grandiose.

Davesnave

lostinrates wrote: »

It is actually fairly modest. The loo (open for visitors ''use'' there is great. But, apart from his writing shed which was a bit swish it wasn't grandiose.

You've been viewing too many lovely properties!:p

Terms like 'modest' or 'ostentatious' are all relative, I guess. I just think it is difficult to dismiss the trappings of the good life as mere 'things' when one has plenty of them. It's like John Lennon singing 'Imagine no possessions;' a great sentiment, but something that he could only imagine, by then.

Roald Dahl used to write in less than salubrious surroundings as well, and in pencil!

lostinrates

Davesnave wrote: »

You've been viewing too many lovely properties!:p

Terms like 'modest' or 'ostentatious' are all relative, I guess. I just think it is difficult to dismiss the trappings of the good life as mere 'things' when one has plenty of them. It's like John Lennon singing 'Imagine no possessions;' a great sentiment, but something that he could only imagine, by then.

Roald Dahl used to write in less than salubrious surroundings as well, and in pencil!

yeah, I agree: in fact, didn't John and OKO have a flat below their own in NYC for their stuff? So, perhaps they actually surronded themselves with little to make the imagining easier.

No the terms are relative, and i did mean his was, relatively modest: now of course it would be super dooper.