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Friday, January 08, 2010

The Joys of Home Ownership

The NY Times has an article today about, basically, how much home ownership sucks.  I think the key is that owning a home (like everything else in life?)  is much easier if you don't have to worry about money.  It's WICKED expensive, and that's why the current housing situation is all the more precarious - homeowners with little or no money down are massively leveraged.  Some of them are intentionally leveraged to provide maximum return, but I'd guess that most are leveraged because they simply couldn't afford to put more money down.  If you spend your last dollars on a 3% down payment, you're going to be hosed when you need minor repairs.  The Times article mentions a family whose swimming season was ended when "$500 worth of pool pump filters died."  They show a picture of the homeowner sitting beside his algae ridden pool. I have no idea how much this home owner makes, if he has savings, or what his mortgage looks like, but if $500 is going to be an impossible expense for you, then maybe you should reconsider buying a home with a pool.

I am learning on the fly just how expensive owning a home is, because I just bought one.  Never mind the expense of furnishing the home - things add up quickly:  property taxes (mine are nearly 3% of my home's value!), oil (in the winter we'll probably spend $600/month on oil for heat, even though I've adopted my Father's "put a sweater on!" technique and tried to keep the temperature below 68 degrees), minor repairs ($400 to have the angle of the granite block leading into my barn changed so that our Honda Civic could enter without bottoming out on the threshold).  Of course there's also insurance, snow plowing, landscaping, and now this morning: mice!  My wife declared war on mice while we lived in NYC, and spent many hours devising a bait which they couldn't deftly pluck from the traps.  She settled on dog food kibble super glued to the trap, after the mice proved adept at licking peanut butter clean.  We'll see if the NH country mice are as savvy as the NYC urban mice.  Early indications hint that the country mice are a bit sneaky - they actually opened the top of my cereal box rather than gnawing through the bottom - but they were a bit sloppy and left some clusters of cereal and mouse poop behind, betraying their theft.

The article also quotes a homeowner with an interesting philosophical take on do-it-yourself home repairs:

"“Why would I have any interest in fixing the bathroom sink?” he said. “I’m in my 30s. If fixing something made me happy, I would have learned how to do it.”"

I'm the opposite - I have spent my life so far generally bereft of practical real world skills which I would now like to acquire.  Since we've moved in, my wife and I (she's the brains of the operation) have changed 3 electronic thermostats, and yesterday we replaced an outdoor light.  I enjoyed wiring the new light myself, mostly because we didn't get electrocuted, we didn't have to pay anyone, and it was easy:  we didn't have to install the box that the light goes in - our new light fit on the old box that was there.  In the coming days we'll change two more side mounted lights, and three more challenging hanging pendant lights - but we definitely like the sense of accomplishment that comes with these repairs.   I blogged several weeks ago about how I managed to jump start my lawn tractor.  It probably seems stupid to some, but for a city boy, it was an accomplishment!

After our bathroom toilet became clogged (not with doo doo - the bowl was clear, it just wouldn't flush so much as a piece of toilet paper) my wife shut off the water,  removed the entire toilet from the base, drained the water from the tank, and, at the advice of her father,  snaked the "s" curve with a piece of co-axial cable (my idea!) with a sock knotted around the end of it.   I later heard her whispering to her dad about something, and I busted into the bathroom to find her holding the obstruction:  a sponge that she'd left in the toilet while cleaning!  She was scheming with her dad about how to blame me for this one - since she assumed it was one of my massive dumps that had done the deed in the first place.  She settled on blaming me for "shitting on the sponge,"  but the point is that her ingenuity resulted in an educational learning experience in home plumbing with a simple solution caused by a simple problem - rather than a $300 call to a plumber. 

We are dealing with one total clusterfuck right now - getting a chimney lined.  Our house is an antique home with original chimneys, and every mason who comes to the house to look at it tells me something different. Unfortunately, this is not the kind of thing one can do himself, so I'm stuck continuing to evaluate different proposals and decide who I can trust with this major job.

Anyway - I've learned one thing quickly in the few months in our new home - if you're buying a home for an investment, good luck to you.  I happen to have very little doubt that I overpaid for my home, and that I wouldn't be able to sell it for my purchase price any time in the near future - but that doesn't matter, because we bought it to live in - not to make money off of.  Hopefully, we'll be here for a long time, and in the end the cost benefit analysis of buying and selling a home with its embedded costs of ownership will be favorable to the costs of renting.  If not, we'll have incurred some sort of net cost over the long run, in exchange for owning our own home that we can make decisions about - rather than living under a landlord's roof and being subjected to his whims.  In any case, we're not counting on making money our home - that would be gravy if we did.

-KD

18 comments:

Anonymous said...

FWIW, Home Depot has a very handy "Do-it-yourself" book for most common household maintenance & repairs...got one for Christmas a couple of years ago...it's well worth the $20

KrazyBangs said...

I totally agree.. home ownership has beena burden, but I have saved much more being out of a condo where they would take inappropriate bids on projects that were really need over major projects that were (ie painting numbers on parking spaces when at half occupancy instead of repairing trash compactor)

The money I save doing my own lawn care, pressure washing, pool cleaning and my own insurance certainly beats writing special assessment checks.

pfweeks said...

Take a look at Thermocrete for your chimney. We live in a 1928 Boston Condo, 50 units, 46 of them with working fireplaces. After much due diligence we opted to have all of them lined with the Thermocrete Ceramic Flu Sealant last summer and the massive project went very, very well. It cost each of us owners about $7K, but the end result is superb, should last for another 90 years.

But What do I Know? said...

Good luck with the money pit, KD, that fireplace is just a brick-lined hole in the wall that you shovel money into.

I've never figured out how the math worked on home ownership without some kind of price appreciation. I spend about $5k per year on maintenance (oil burner goes bad, air conditioning unit burns out, washer/dryer blow up, etc.--I'm not even talking about lawn care and mulch which I do myself) and insurance and $10K on property taxes, so that's $15K per annum right there (which is the equivalent of about $25K in taxable income) just to stay even--and I haven't even paid my mortgage yet. The median household income in my area is about $70K (upper middle-class), so I (and my neighbors) are spending a third of the MHI on taxes and maintenance!!!

Without some kind of nominal (let's forget about real)wage inflation, this is unsustainable.
Is there anyone I can sell my house to and rent it back on a long-term lease? Oh yeah, they have that--it's called a 3% down FHA mortgage.

I'm a damn fool for paying down my mortgage.

Kid Dynamite said...

the math absolutely does NOT work without price appreciation... and why should we expect never ending price appreciation? shouldn't that be self correcting in a free markets sense which results in everyone rushing to buy to take advantage of the phenomenon, thus eliminating it ? ah yes - in fact, that happened!

Taylor said...

You summed it up best - you bought a house to live in and not make money off of. If more people could understand that's why you buy houses (to live in), we'd all be in a lot better shape. As far as how the math works out, I guess it all depends on what needs your house has. I live in the southeast, so luckily I am unfamiliar with the heating oil problem, but it can still work out.

getyourselfconnected said...

KD,
great post and you bring up many aspects that most newer buyers (2002-2007) just refuse to admit. Even with appreciation homes are a poor investment and there is just no denying it. Add in crazy appreciation especially over a few month time frame (that has worked out well!) and maybe homes are a good play.

The wife and I started to look for homes in 2002, but the prices here in Massachusetts were outrageous. We are both in the Biotech field and make good money and even a crappy home in a so-so neighborhood was out of our range. I kept tabs as the bubble built and things got crazy here. A friend of mine bought a house with his girlfriend and I know for a fact trhe wife and I make double what they did (2005) because I helped him with his taxes. An interest only loan got them in the home and they had lawn furniture inside because they had no other money. They defaulted last year of course.

We bought a home 2 years ago but it was an outlier event; the mom in law needs care and she sold us her huge home for 50% (tax reasons) of the estimate which was already 20% off from the 2005 high so what can you do.

Good luck with your home.

rjs said...

entertaining anecdotes, kid, its nice to put a personality behind your posts...the expectation of price appreciation on houses cant be justified without monetary inflation...absent inflation, houses are a depreciating asset, just like cars, albeit with a longer expected life span...im going on 38 years in an "antique" (lol) farmhouse in a neighborhood where several old house of the same vintage have already been torn down, and im just trying to make this one last longer than i will...im on my second furnace, 2nd garage roof, second barn roof, 2nd refrigerator, stove, etc. and soon will need a second house roof, & even though i paid this thing off years ago, the annual expenses i have now are much more than my monthly payment ever amounted to...anyone who thinks owning is cheaper than renting has a hard lesson to learn...
btw, i had a 40 foot stainless steel liner put in my chimney 20 years ago, and have no complaints...

Daniel said...

There is a Spalding Gray monologue just waiting for you to watch it. "Don't light a fire in there."

Kimberly Aardal said...

Too Funny! The toilet thing sounds like something I would do.

We are in the process of building a home right now so it's interesting to hear other peoples take on home ownership. I'm with you, we're building this house to live in and if it makes money; great, but it not it's our home and we are going to love living in it.

I agree with the guy that you quoted about learning how to fix toilets.

pfweeks said...

When my wife and I bought our home in 2002, all I wanted was a "McDonald's Mortgage" That's a Mortgage I can afford to pay, even if I have to work at McDonald's (which luckily I haven't had to, at least not since 30 years ago). It was scary how big a mortgage we were pre-approved for. We elected to go with a mortgage 1/4 the size of what we could have gotten, put 40% down and we overpay our mortgage every month. Most people might not know this, but the city of Boston knocks $1500 off your tax bill if you owner-occupy. Having lived in NY and NJ up until a dozen years ago, I'm one of the few up here who actually appreciates how relatively affordable New England property taxes are.

getyourselfconnected said...

Missed the exact score of the jets-bengals game by 3 points! That cincy kicker foiled me!

Sailor said...

Great blog - I always enjoy your comments so I'm glad I can contribute in some small way:

Mouse bait - tie on a small piece of bacon either raw or cooked soft. Best of luck. They are tricky beggars.

Sneak Attacker said...

Congrats on the house. my wife and I also live in an antique of a house - a 250 year old stone farmhouse outside Phila. Its been a lot more work and probably less space than an equivalently priced new house, but we wouldn't have it any other way. These places have so much charm and character. I've owned and fixed up rental properties for years, so repairs and renovations are no problem. I couldn't imagine living in one of these places w/o that experience or w/o a massive wallet to pay the local handyman!

Anonymous said...

Hi,

Always enjoy your posts. My wife and I have owned several houses in the Northwest and the Rockies. We always bought them to live in, not as investments, though we had an eye towards keeping value so we could move when we were ready. The wife grew up on a farm and I grew up in a house my dad built (I started helping when I could hold a saw - around three years old.)

The thing I wanted to pass on is the unexpected pleasure of investing yourself and your effort in the place you live. After five years, when you look at a slope you stabilized by yourself, or tile you put in or what have you, there's a very wholesome satisfaction that this is "our" place in a way that money can't buy.

Scot said...

KD- Just cap the chimney off. Fireplaces are way old tech. They were useful before the advent of insulation. Fireplaces lose more heat than they can add. Houses are a very unquantifiable investment- only useful for raising a family which is priceless. Let me know if you've got any house related questions.

rjs said...

one last piece of doin it yrself advice...when working on the valve in the toilet tank, be sure you dont drop the heavy ceramic tank lid behind the toilet and hit the thin pipe back there, especially if the access to that pipe in the basement is blocked by a heavy freezer and washing machine...

Anonymous said...

Fireplaces are fun. And wood stove may be practical depending on the details. But talk to a real chimney sweep about the lining, rather than a general mason.