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.
We rented for years and, honestly – I miss it. There was something so nice about knowing exactly what the monthly expenditures were going to be. If something broke, it was NOT MY PROBLEM (not just the fixing part, but also the paying).
I don’t regret buying a house in terms of having more space (we were in a very small apartment with two kids and my husband and I worked from home, so it was not ideal) – but it has been exhausting and expensive. That said, we bought 5 years ago and are feeling so, so blessed to have been able to both 1) find a house in our price point (housing prices have always been high in the town where we live – we literally bought the cheapest house available at the time – but they skyrocketed during COVID) and 2) have aggressively paid down our mortgage so when we just had to renegotiate our new term, even with the much higher interest rates on offer, it doesn’t have a huge impact. Our financial planner discouraged us from paying down the mortgage vs. investing, but for my own peace of mind at the time – and for the huge increase in rates that happened – I am SO glad we took this route.
That said, if I could have found something similar to what we own for an affordable rental price, I’d probably prefer that option. In my mind, home ownership is overrated…
The bee home is so cute! I have never seen anything like that before!
My husband and I own our house (after years of renting), and there are benefits and disadvantages to both, including the ones you mentioned. I love the freedom of having our own place and the more secure/permanent feel of having a house… but sheesh the upkeep is a pain in the rear. So much money sunk into things that are important but don’t improve the home value, or things you must do but can’t see (new water heater! new driveway! etc!). Plus when anything breaks, it’s up to us to fix it or hire someone to do it. Ugh. There are definite plusses to having a landlord! If renting is what works for you now, that’s great! To me, there’s no “wasted” money — it’s just the cost of renting/buying.
Renting definitely has its advantages. Owning a house is a lot of work and if something breaks it’s on you (depending on the landlord it’s on you, too though). I am aware of how lucky we got when we bought the house. In our area finding a house to rent that is big enough, in the right area to stay in the schools, that is in a shape that compares well to the rent that is asked is no easy feat either. We were kicked out once when the landlord wanted to move his son in (1 month after our daughter was born). Maybe that is easier if you are looking for apartments?
Renting v. buying is such a landmine. I’m glad you reached a decision that works for your situation without too much wailing and gnashing of teeth!
Good times lol. There’s no “right” answer on owning or renting. Where I live mortgage payments are about the same or lower than rent, so buying is an easier decision.
We owned a home for three years and are now back to renting (I have a whole post brewing about that)… both options have become ridiculously expensive here in the capital (I don’t even want to know how it is where you are), but it’s definitely not just about “not paying rent”… a house has so many hidden expenses that quickly add up to much more than what you’d pay in rent.
We bought our house 20 years ago. If we were trying to buy now, we definitely couldn’t afford it, and we probably couldn’t afford rent in our area. It’s totally crazy. I agree there are pros and cons to both renting or buying- the upkeep on a house is really expensive. I think buying is a good option IF someone in the family is good at handyman-type repairs… we aren’t, sigh.