Reflections on Homeownership: 3 Years In

It was three years ago this month that I bought my condo. I was pretty staunchly single then and life has definitely changed quite a bit, but the two bedroom condo that I bought has been able to evolve with my life, which is really great. We’re still working on the furniture tetris game from my boyfriend moving in. We at last know exactly what we’re doing with all the furniture, even if it hasn’t happened yet, and we’re planning on re-painting a room and have mostly picked a color. By the end of 2015, it should definitely feel like a shared living space rather than just my place. We both feel like we’ve finally found the right way to balance sharing living costs! I pay for all of the costs related to the condo, we both have separate insurance policies, and he covers a similar dollar amount in other costs, which right now works out to the internet and electricity bills, groceries, music services, small appliances and furniture, and eating out together.

I’ve stopped comparing whether renting vs buying is better because as of February, assuming I could sell my condo for the exact same amount I bought it for 3 years ago, buying was cheaper by $1,500. A realtor from the brokerage I used to buy my place contacted me in February and he mentioned that he would list my place at about 25% more than what I paid for it. Based on the emails I get about similar units near me, I think it’s up about 30% from purchase price now, but I’m going to leave it at 25% up in my net worth calculations. I am so, so glad I bought when I did! It has been such a slam dunk in terms of being cheaper than renting and the market is so much crazier than when I bought.

In 2015, I expect this condo to cost a total of $13,700 in housing expenses (mortgage interest, HOA dues, property taxes, condo insurance, electricity, repairs, interest lost from having the equity locked up, and tax savings. If we wanted to rent a similar place, we would be paying about $36,000 to $40,000 per year in rent between the two of us, so somehow I have a feeling we would have moved to a cheaper part of town if I hadn’t bought this condo.

In the last year, the mortgage hasn’t moved nearly as much as it was in the past. Last June, it sat at $152,167.66. Now? It’s at $138,600.73. Meaning I’ve paid it down by $13,566.93 in the last 12 months, about 2/3 of which came from the regular payments. I have 13.25 years left on the mortgage and have paid off 51.5% of it. Why has the mortgage paydown slowed down so much? I’ve been prioritizing other things like changing jobs, taking a couple months off unpaid, setting aside money for tuition, textbooks, and a larger emergency fund in planning for grad school, and contributing even more money to retirement accounts. It’s still on my radar, but I doubt I’ll make any substantial progress on it until 2016.

I don’t care that much about how much my condo has appreciated (that’s just icing on the cake) because our housing costs are pretty much dirt cheap for how much money we make. My housing costs are approximately 9% of my expected gross income this year, which ignores the fact that my boyfriend also makes a decent income and he also has pretty minimal fixed expenses, which means that we have pretty decent savings power between the two of us.

As much as I like to run the numbers on buying vs renting, homeownership is also a lifestyle choice and I’m so glad I chose it. It is a really good fit for my personality and my boyfriend’s and I could see us staying in this condo for many more years. Neither of us are big on moving and keeping fixed expenses low is pretty sweet for being able to spend more money in other areas of your life, like travel and/or putting more into savings and investments.

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13 thoughts on “Reflections on Homeownership: 3 Years In

  1. This rocks — love that you’re keeping your housing costs so low. That’s been key for us being able to save a ton is keeping our housing costs way below what banks say we can “afford.” We’ve picked the price ranges for our condo and later our house based on what we could very comfortably cover along with all of our other costs and savings goals on only one income. And we’ve never regretted not buying more house.

    • Yup, we were trying to figure out recently how we live off so much less of our income than some friends do who live in a similarly nice place – I own this place, so our fixed expenses are way lower. My housing costs were closer to 20% of my base salary when I bought the place, but my income has gone up and I’m paying way less mortgage interest.

      I’m glad you guys did something similar! It’s so wonderful having housing so inexpensive compared to income.

  2. This is similar to the estimate we were trying to make – we have to live somewhere, does it make sense to buy?

    Of course, our overall housing costs are quite a bit higher than yours. Renting would be cheaper for now (but because we’d still be in an apartment, not because renting is actually cheaper on a per month basis). Rents keep going up though, and we at least know how much our bill will be, and we know we can afford it. It will be too bad if the market crashes and we discover we bought at the “wrong time”, but it would also be too bad if we waited and then wanted to move into a a house later and discovered that even renting a house was v. expensive. It was a risk either way, and we mostly picked for the lifestyle reason.

    • You guys did buy a house and me a condo, though I think we would buy a bit cheaper of a house than your price range if we did buy one?

      You’re right on it mostly being a lifestyle decision. My boyfriend remarked that going forward, I/we will probably mostly own now that I already own. I’m not sure I want to go back to renting unless it is far cheaper than buying or we don’t plan on staying in the city/type of housing we would be in.

      If you guys stay in your house for quite a while, it doesn’t matter so much if the market goes down if you can still afford your outgoing costs and you could absorb the price drop. That’s the way I look at it at least.

      • I’m selling mine as soon as my tenants lease is up later this week. I’d much rather have access to the capital personally. My rent is basically the same as my mortgage+HOA, but it’s a much nicer property and more amenities. The HOA has been going up every year, but with rent, I always have hte opportunity to move somewhere cheaper, take on more roommates, etc.

        I’ve been renting for almost the past 2 years now and I like it so much more than owning. I never rented before I owned, it was straight from parents to owning, so maybe that was part of the problem.

        I like that If something breaks, then I just call the leasing office and they deal with it. When I was living in my condo, I would debate if I would make do with a minor inconvenience or have to call in a professional and pay them. I had to replace 2 or 3 appliances in there too.

        I am certainly glad that I had the opportunity to own – it financially enabled me to spend a couple years living by the beach and it would seem that it has been financially beneficial vs investing in index funds, but I find that i don’t seem to like living in the same place for a long period of time….I tend to get bored.

        Mine has actually appreciated over 50% of the purchase price just over 5 years ago, but I guess that is California for you

        • I’m not really big into moving and really enjoy making this place my own. Honestly, unless we leave the state we’re in, I don’t foresee us moving. I also don’t foresee myself ever wanting to live with roommates again.

          To each their own – I’m glad you got to try owning and that you’re realizing that you like renting better! 50% price appreciation in 5 years is pretty lucky! So many people (you and me I think included) are strongly encouraged by their parents that owning is better, but in reality it isn’t always.

      • Yeah, it doesn’t matter to us directly. It would be a little sad to know that we could be in a more optimal position had we waited 5 years (or whatever that turns out to be), but you can’t make a decision completely on that.

      • Also, my plan was to buy something cheaper than we bought – but it simply wasn’t a a realistic option. The choices were to continue to rent and hope the market eventually cooled down, to buy something we’d likely outgrow, or buy at the price point we bought at. I would have continued to rent rather than buying something that I wasn’t confident we could live in for a long time (neighborhood w/out good schools or too-small for family). I don’t think renting would have been a bad decision over the next few years. I think the real regret wouldn’t have came until we wanted to live in a house (rented or owned). House rentals are crazy here, but apartment rentals are… well, they are crazy, but doable.

        • Hah! Yeah my original price range was about $250k for a 2 bedroom / 2 bathroom place. I’m so glad I upped my price range because to look in the same neighborhoods now, similar places are in the high $400k range, rather than the low to mid $300k range that it was when I was looking. My place was at the top of what I thought I could afford then, but now it’s super affordable with the salary increases since then…

          The real comparison should always be renting vs buying of a similar type of unit, but you’re right that people tend to buy a house that will last them longer whereas if they kept renting, they would keep renting an apartment. I think you guys did it fine, but a lot of people will rush into buying a house because the rent prices on houses are so crazy high, even when they’re not really ready to buy a house yet.

  3. Buying is great if you stay in one place. I have a house and have been here 20+ years.

    A renter can maximize the rental experience by renting only the size needed at the time of need. And living closer to work, saving commute costs and time. Use the time to get promoted at work, or work a side gig. You also accumulate less stuff when renting – generally. If the renter moves to a different job, they can follow it with a new rental. That’s anywhere on the world. If a renter does that, renting is cheaper.

    For a homeowner to move every few years, it’s a major expense.

    • Yup, my parents and my boyfriend’s parents’ have been in their respective houses for multiple decades now. Neither of us are big movers and are happy with our city, so perhaps we will also be in this place for decades.

      I lived ridiculously close to work the first few years, when I was renting, and it was definitely pretty convenient. That area is incredibly expensive now though – rent has almost doubled since I moved to this city 5.5 years ago.

  4. Sounds like homeownership has worked out for you! Congrats!

    I’m afraid that I’ve bought at the top of the market, so much less of a financially prudent movement than your buy. But at the same time, one never really knows where the market is headed, eh?

    • It has! I’ve been really happy with it. I was quite worried about how it would go.

      I don’t think you can really know how homeownership is going to go for you until a few years in. It’s a long-term thing, not short-term, which was hard to predict when I was buying at 23. You could be buying at the top of the market or it could just keep going up. You don’t really know. The market is also really different than when I bought and you could be buying with a different financial calculation than I did, which is totally fair too!

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