On Sunday, I went to a local apartment complex for an outdoor fitness class. SMS took a pass since he’s still nurturing his shoulder back to full health. I had heard about the class the day before when we were touring the complex.
For the past several months, SMS and I have been debating the rent vs. buy conundrum. I know. So original. But this past year has been pretty mind-blowing with mortgage rates and if you don’t know this: 1. congratulations on already owning your house and 2. I hate you. Haha, I kid. I don’t. Wait, I do!
On top of popping interest rates, house prices in the Bay Area are exorbitant. This is not new, but with both the price and the interest being high, we were doing a lot of mental contortions to try to make sense of it all. And it was stressful. And super-circular in our discussions, which became really draining from a mental energy perspective.
One thing that really helped me figure out what to do is to identify the “wasted money” in each situation. In renting, people talk about “throwing your money” away since you are not spending your rent on a personally owned asset. You are buying the roof over your head for the month, so that’s pretty tangible but still, it’s not something owned by the renter. I’ve definitely known about this concept since I’ve rented my entire adult life.
But there is also wasted money in owning due to interest payments. That is money I’ll never see again and adds significantly to the total cost of the house over the mortgage term. Conceptually, I had realized that but when I looked at SMS’ financial spreadsheets, I was amazed at how much money that was each month. It is a lot money, much more than rent at this current time. I mean, I had known about the idea of rent to buy calculators to help a person make the decision, but seeing real numbers in terms of house prices we were considering was illuminating.
Also, I’ve been a little hesitant in taking on that much debt since one of the big reasons I went into the military was to avoid taking on ~$250k of medical school debt. So, to take on a debt burden that is a lot greater gives me significant pause.
All this to say, we feel pretty certain that renting is still the best option for us. The complex we’re considering is quite nice and I think it will be a fun place to live. I’m hoping for a bit of the social experience we had when we lived in another nice complex at the start of our Northern CA time in 2015. We lived in Mountain View at that time and had really interesting neighbors that were pretty easy to meet.
So, where’s the hike? Getting to it! After a morning of a workout followed by a ridiculously-sized smoothie that was delicious and free(!), I did a few hours of computer work. Then, SMS and I decided we needed some sunshine so we hiked the Arastradero loop in a nearby foothills preserve. It is really beautiful with a lot of golden dried grass that looks great in the late afternoon sun.