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Thread: Buying a House vs Alternatives

  1. #21
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    I'm under the impression that a nursing degree is a ticket to financial security. You may not be able to get the exact assignment you want, but it's unlikely you'll lose your house because you lost your job and couldn't find another that paid in the same ballpark.

  2. #22
    TJ TeresaJ's Avatar
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    Right now I'm gathering information, and I hope the discussion is useful for others as well.

    Thus is the first time in my life I'll be financially secure and also in a phase of trying to be financially responsible. I'm trying to climb out of debt and I want to be smart with my money.

  3. #23
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    My other piece of wisdom is this: buying a house is waaaaayyyyyyyy easier than selling a house, unless you're in a super hot market where any pile of garbage will go for above asking (unfortunately you can't know what kind of market you'll be selling in when you buy). Which is why I don't recommend buying if you're already thinking about selling it down the road. Nobody tells you this when you're buying your first house. Buy a house you'd be happy living in until you die. IMO, spending more is better in the long run than buying something conservative now with the intention of upgrading later.

  4. #24
    Now we know... Asteroids Champion ACow's Avatar
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    Quote Originally Posted by scarydoor View Post
    Hmm. Interesting. This made me think a little. There are a bunch of articles speculating house prices here are about to crash, maybe 80 percent (after banks crashing, etc). Fairly fanciful speculation, but who knows. Also, I am slightly alarmed at how many new apartments are being built in my city, despite already having quite high unemployment.

    I have generally considered renting to be throwing money away. But... I would say prices here can only crash dramatically, or rise a tiny bit, so renting for a year or two, seeing what happens, is probably a good option (blink twice if correct).
    Again, I can't really comment on specifics or speculate, but i feel its fine to talk about general economics.

    First: practically never make a decision on FOMO. Fear is not a basis on which to make decisions, and the real estate market is never a case where you're being chased by a bear and deciding whether to trip your friend. If one isn't trying to model/speculate, at least make decisions based on real evidence and what each situation gets you now.

    Generally, comparing the less thought about points of the two options, i feel i need to bias a bit because i think australian culture is 100% in the buy camp.

    Renting pros:

    - flexibility and small commitment
    - research/experience (traffic noises, neighbours, cooking facilities, spaces, heating/cooling - we learnt to never get a western facing apartment in the afternoon here due to the australian summer sun, design)
    - don't pay body corporate
    - don't pay council rates
    - some states you might get some utilities included + appliances (you don't tend to get dryers included here in VIC for some reason, but you do in NSW/ACT)
    - comparatively small transaction costs
    - access to something otherwise difficult to obtain (nicer house, shorter commute, higher paying job, education/community access)
    - save/invest the difference between that and a mortgage payment

    The point is to rent because you're using the advantages of renting for some strategic benefit. Otherwise it probably is dead money.

    In terms of buying, the most overlooked points include:

    - stamp duty
    - maintenance/body corp fees + politics + sinking funds (do not underestimate any of those)
    - neighbours (be careful/do research, can't just look for another property)
    - council rates (do not underestimate these)
    - taxes and special levees (in my place for instance, there's a possible local tax for renting your car space and for maintaining the inner city parks added on to our water bill)
    - exposed to equity gains/losses
    - exposed to interest rate risks
    - exposed to income risks

    Unlike the US, we tend to have variable interest rates on most of our loans. Unlike the US, we don't have as much crime/poverty/racial issues, so there's not as much discrepancies between who can get loans and why and where. Unlike the US, there's no tax deductions generally available for home owners. We do have CGT/negative gearing, but I would not advise listing those as pros/cons unless you've already done the math: never assume they're applicable to you or good/bad.

    Home price rises are generally not worth that much if you've only got one house, because a rising tide lifts all boats. The gains go to those most highly leveraged with multiple properties.

    Home price falls are of most concern to those highly leveraged or who immediately buy just before the fall.

    If you're not able to make educated decisions on rises and falls, i would strongly advise to look at your other strategic or lifestyle goals, and make decisions based on those things, all other things being equal, never kidding yourself about the costs/benefits of either.

    One of the best things about owning is relative security of tenureship (assuming you can make the payments), which we don't have much of in this country otherwise, and the fact that you can make real modifications to your property (assuming you've got the time and money to do so and it actually serves a purpose).

  5. #25
    Cooler than Jesus
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    I've been thinking about this a lot as well. I'm at the point where I'm thinking of buying something within the next 5 years. I'm really fed up with living in apartments and not having space to garden or a garage where I can do projects. At the same time, my SO is very adverse to driving and hates living in the suburbs away from public transportation, which complicates matters. I think a town house would probably make the most sense for us. I just don't like the idea of sharing a wall with other people and not having my own yard.

    Another thing I hate is the idea of a HOA. I can't stand the thought of some committee telling me that the color I want to use to paint my house is the wrong shade, or that I need to maintain a healthy lawn year round, or some other bullshit.

    Another problem is that I'm very transient. Colorado hasn't fully convinced me yet. I tend to go where the best opportunity is and I hate being tied down somewhere, which owning property definitely entails.

  6. #26
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    ^Its hard to stay transient when you have two careers to pull together every time you move. And the further you guys get in your careers, the harder it's going to be to find a comparable job someplace else, let alone two comparable jobs someplace else. And if you have kids, forget about it. I prefer to be transient too, but at some point I had to accept that I was kidding myself about being transient. That whole time from when rhinosaur graduated to when we settled down here was such a PITA. I wouldn't do it again unless I had to.
    An HOA is both a positive and a negative. If you're in a nice enough neighborhood, or one of those neighborhoods where quirky is the norm and every house is different, then it's just a negative because everybody is going to be taking care of their houses anyway. If you're in a middle income, cookie cutter neighborhood then I think they're more necessary to protect your property value. We live in a fairly middle income cookie cutter neighborhood with no HOA and there are some houses that are just fucked up and shitty and dragging the neighborhood down. When all the houses look the same, somebody adding a fugly porch to the front or painting their house some color that completely clashes with the style of the house really sticks out.

  7. #27
    TJ TeresaJ's Avatar
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    I think I would be perfectly happy in a condo or apartment with a community garden. Maintaining a house and yard is not something I particularly look forward to. I don't care what color the outside is as long as the inside looks and feels nice.

  8. #28
    Now we know... Asteroids Champion ACow's Avatar
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    Home owners associations (which are closest to what we call body corporates/strata here in aus, but I think we're far less likely to have the concept outside of apartment blocks as managed/gated communities are comparatively rare here) can be a blessing or a curse.

    Again it's a case of do your homework. If you move into a place where everyone has the same colours and it's not a colour you can stand, and you immediately want to change the style of the home, is it really the hoa that's the problem?

    Maintenance and insurance is a real thing, and people who think they're being ripped off passing into a communal fund are likely short sighted. And if everyone in your community is short sighted, do you really want to knife in there. If it's well managed there's benefits to the efficiencies if scale aavailable to you, but the cost is social/politics. Here in aus, you're supposed to be able to get copies of the meeting minutes and the like before you buy into the place, so you can see the stars of the books, whose attending, and what the pertinent issues of the community are. Here in aus also, the main cultural split is between owner occupiers, investors (most aus property investment are small time individuals) and commercial interests (think businesses/cafes also in your building). You don't want to buy into a place whose interests and perspectives diverge significantly from your own. On the other hand you can have little despots and corruption in such bodies.

    On the plus side though, someone else can do the landscaping, other facilities can be made available to you for no personal labour, and maintenance and insurance can partially be left to other people's hands, as well as contractors and certain repairs. Oh, and legal matters. Though of course it depends on what the conditions and arguments are that you've bought into. Personally, the managed neighborhood s that seem to exist in the US would make me want to fellate a machine gun, but to each their own...

    Edit:forgive minor typos and quirks, on mobile...

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