patrick.net

corntrollio says

. That's because the cost of rental should be the costs for your landlord plus some extra (or else why have an investment property).

missing factor: inflation + Prop 13 protection.

The places I've rented were built in 1925, 1974, 1960ish, 1975ish, 1984, 1993, and finally 1987, and all were rented out by the original owner or the following owner (the 1925 place WAS the original owner -- she'd been there 60 years already, LOL)

RE investors are generally happy getting a good return thanks to inflation and don't have to pummel every last cent out of their renters.

The market overall takes care of that.

corntrollio says

The cost of rental should always be more than the cost of ownership, by the way. When it's not, there's usually some sort of market distortion in place. That's because the cost of rental should be the costs for your landlord plus some extra (or else why have an investment property).

You'd be surprised at how many "house investors" are out there losing money on rental houses as we speak, particularly in the Bay Area.

tatupu70 says

tjjenkins says

a homeowner might be more likely to turn down a fantastic job with a competitor in Chicago, LA, New York or [fill in far away city that require sale of home here] that a renter would jump at? Over time, will the increased career flexibility of renting have its own financial rewards?

That's why jobs that require cross country moves come with relocation packages.

That does not fully address the issue for several reasons:

1. No "relocation package" includes a benefit that would allow a houseowner that is underwater, as most of them are, to sell and walk away clean. A bank would need to approve a short sale, which can take months or the buyer would need to walk away and have his or her credit destroyed. A renter, on the other hand, can get out quick and clean.

2. Many employers, including tech start-ups, smaller companies and law firms do not pay relocation expenses.

3. Relocation packages, some of which do indeed cover broker fees and commissions, give employers a strong economic incentive to prefer renters or local applicants. Depending on the value of the home being sold, this could be substantial (5-6% of the home value). I would not want to be on the wrong side of that incentive in the future, although I am not sure this has been much of a factor historically.

The bottom line here is that selling a home involves paying a 5-6% commission, plus a host of other fees and expenses. I know, having sold a home in San Francisco earlier this year, that these fees and expenses can be substantial. (I had to pay $13,000 in transaction taxes to the city and $20,000 for staging on top a broker's commission!!!).

Selling a home involves substantial transaction costs. Renting does not. Somebody has to absord that cost. I would not want to count on employers continuing to foot that bill in an era of increasing corporate tightening. I am a renter for the moment and like the freedom it offers after being a homeowner for the past 11 years.

edvard2 says

You'd be surprised at how many "house investors" are out there losing money on rental houses as we speak, particularly in the Bay Area.

No, the point is that I'm not surprised by it. But the fact of the matter is that renting should always cost more to account for being more liquid, to account for transaction costs of buying, and to account for flexibility/convenience. Certainly in some markets, the buying prices make no sense relative to renting, I've always said that. Of course, with interest rates so ridiculously low, that is changing slightly in some cases.

Bellingham Bill says

missing factor: inflation + Prop 13 protection.

Yeah, that matters too. That counts as a market distortion.

When you factor in:

Mortgage
Taxes
Insurance
Maintenance and Upkeep
Heat
Electric
Water
Sewer
Landscaping
Etc, et

Need one more factor I feel. Labor how much is all of this going to take a chunk out of someones ass labor wise. Calculate numbers. Whats not added to is the trouble gone to. I don't bother with numbers.

I went to understand how much of my fucking life this is going to take up. Buy at 23 for a pile of wood stuck together with water and light inside. I might have to labor as bonded for 24/7 possibly. 23 years of my life. Shit. Not to mention more than likely due to some kind of dicky ordinace. I can't even grow food in my yard. Which there really is not enough of to grow food. So I am screwed there to. Nevermind the cattle, sheep, road chickens, lamas and every other kind of STOCK that I can actually trade and live well with without having to shine some other lackeys shoes everyday. Truthfully I don't get it. I guess just sit around and get taken by the swindlers and con's usury people if thats all one knows. They may never learn to have their own life.

tjjenkins says

No "relocation package" includes a benefit that would allow a houseowner that is underwater, as most of them are, to sell and walk away clean

Most homeowners are NOT underwater. The last estimate I saw was 25% of owners WITH mortgages. And there are packages that include the company buying the house from the new employee at either market price or what they employee paid for it (whichever is higher). I don't think they are prevelant, but they definitely exist.

tjjenkins says

Many employers, including tech start-ups, smaller companies and law firms do not pay relocation expenses.

Even startups and smaller companies offer relo packages if they are recruiting nationwide. May not include a specialized relo company to handle everthing for them, but they will give $x bonus for relocation.

tjjenkins says

Relocation packages, some of which do indeed cover broker fees and commissions, give employers a strong economic incentive to prefer renters or local applicants. Depending on the value of the home being sold, this could be substantial (5-6% of the home value). I would not want to be on the wrong side of that incentive in the future, although I am not sure this has been much of a factor historically.

I have found the exact opposite to be true. Companies want you to settle down and put up roots. Then you won't leave. The cost of paying your realtor is MUCH less than paying a headhunter to find your replacement, interviewing, then paying another relo package

tjjenkins says

Selling a home involves substantial transaction costs. Renting does not. Somebody has to absord that cost. I would not want to count on employers continuing to foot that bill in an era of increasing corporate tightening. I am a renter for the moment and like the freedom it offers after being a homeowner for the past 11 years.

I can't argue with that. Buying/renting is a personal choice and there are advantages/disadvantages to each. Sounds like you made the right choice for your situation.

tatupu70 says

Even startups and smaller companies offer relo packages if they are recruiting nationwide. May not include a specialized relo company to handle everthing for them, but they will give $x bonus for relocation.

Not sure if startups do this, but I know some companies will sometimes just give you a signing bonus to deal with this.

One relo package I heard about for a non-CXO (all bets are off if you're C-level -- a variety of things are possible) was an established company being willing to pay up to 7% in transaction costs for selling the home in the other city -- I believe it could have included realtor fees + transfer taxes.

tatupu70 says

Companies want you to settle down and put up roots. Then you won't leave.

The golden handcuffs thing can be important The company wants YOU to spend the money on a house. Then it's harder for you to leave. But you still have to have an important enough job for them to pay for it themselves.

Tatupu70: You make some interesting points, especially about the employer having an interest in employees planting roots so they wont leave.

I agree that buying vs. renting is a personal choice and cannot be reduced to a one-size-fits-all analysis. I am sure I will find myself buying again someday . . .

It pays to buy, if your a RE investor, even more so if you've got certain connections. It's a different story wherever you go. I live in one of those high property tax states so I can rent for about twice the cost of your average annual property tax bill. I could go buy a nice run down shack for 40k right now, but the property taxes are $2500, and I won't pay it.

Relocation packages I believe are a thing of the past. I was out of work for 6 months and I was attempting to get a job outside of Cali. I never asked but every company I interviewed with informed me right up front that no- they would not pay any sort of relocation stuff. Period. Again- I had not even asked.

As far as being offered to relocate wherever- HELL YES, I would do that in a split-second if the company I worked for would let me. I could take a 60% paycut and still be doing a LOT better elsewhere besides here.

edvard2 says

Relocation packages I believe are a thing of the past

It depends on your field I think, but they are definitely still available.

Bellingham Bill says

The baby boom put a lot of money into the market 1980-2010, and they're going to start taking a lot of money OUT of the market.

BINGO! Everyone keeps saying you'd make more investing your money in stocks than housing... I see a lot of Boomers retiring in their homes and just taking money out of the market to live off of in their paid off home... To me that means a stagnant housing market at worst and a falling stock market...

edvard2 says

Relocation packages I believe are a thing of the past.

Relocation packages are alive and well. I have two friends that work for different corporations and they were tranfered for a job promotion within the company within the past two months. One went to NY from CA and the other to the Bay Area. The lady going to NY was underwater on her home by about 90K and the company had a relo company take it over and they listed it with the local RE company. She said that she didn't care what happened to it or how much it sold for because she would be made whole for up to 100K........nice perk, and they she's buying a place in West Chester County so they are putting her up there until the new place closes escrow. The other person had the relo company take their home over as well and they were paid for relocating their belongings, corporate housing for him and his family, etc.

That's not a relocation package, that's a golden parachute.

tjjenkins says

The bottom line here is that selling a home involves paying a 5-6% commission, plus a host of other fees and expenses.

I think it's cheaper if you sell on redfin... so it's more like 4.5% commission.

I'm not saying that buying is better than renting long term, or vice versa. We all can crunch our own numbers for our respective situations.

I'm just surprised at how much more of my monthly income will be devoted to "living" expenses one I do finaly buy. The payment shock makes it difficult to make the leap from renter to buyer.

i think its situation. if housing prices are ballooned it's not a good idea to buy an expensive liability.

otherwise i'd just try to minimize how much it costs to have a roof. If you can't pay cash I wouldn't recommend to buy it, wouldn't want to waste life in debt to a bank.

I've seen a lot of dumps out here in CA for sale, with the realtor/owner whomever jacking up the price like it's made of gold. Now cost of that is not worth buying.

dodgerfanjohn says

The correct answer is that it all depends on what the cost to purchase is vs what the cost to rent is.

True! That's what my calculator is all about:

http://patrick.net/housing/calculator.php

Patrick - in normal times that may be true (I'd need to think about it a bit more before - not sure if I fully agree). but these are not normal times. There is a sizable segment who knowing they are underwater or in a home they cannot afford, try to rent it out to cover their costs. Ergo, rents trend higher than they would if simply economic metrics would dictate (supply vs. demand, income vs. price, etc.)

Comparing purchase price to rental cost oversimplfies the scope of the problem. My metric has always been price to income. (Loose lending aside) you can's spend what you don't have.

That said I've hijacked my own thread. My point is that when you account for the "big picture" cost of ownership - it can easily eat up 50% of one's monthly expenditures. Certainly this cannot be sustainable in the long term - but I can't quite discern what impact, if any that has on housing prices, since few seem to look at the total cost.

EastCoastBubbleBoy says

since few seem to look at the total cost

What makes you think this?

Okay, normally I would agree with you, but I hate to listen to coughing, talking and arguing from the morons who live next door. There is only a thin piece of drywall between apartments and stucco boxes and it feels like living in a rats nest.

Here is my solution:

Mortgage 25% down 75% loan over ten years
Taxes Buy a fixer at LOWEST price (less than cost to build) NO politicians to pay off for over priced "building permits" ....keeps the taxes low.

Insurance. Go cheap except always add a large umbrella policy from a CREDIT UNION to pick up all of those items never really covered in a typical policy.

Maintenance and Upkeep I do it myself. Tools from a swap meet or garage sale are as cheap as you want to pay. Some are even free.

Heat. I use blankets and a solar powered water heater

Electric. Two large solar arrays with 50% cash back from Uncle Sam.

Water. I have my own well with two bladder storage tanks. PV Solar runs the pump.

Sewer. I have a leach field off of a properly designed septic tank.

BUILD IT YOURSELF....Go to the country...plenty of room out there.

Landscaping. I do it myself....the grass is cut by my two goats.
My plants are all eatable from our garden .. goats, laying hens

Security System. Two Doberman Pinschers.

Etc,

BUY CHEAP....BELOW the cost of building. Let nature provide your energy and food. You must expend work...to do the rest.

You can exist off the grid. NO TV NO CABLE TV.....

I use "borrowed wifi"

As compared to

Rent
Electric

Of course, everyone is able to pluck raw diamonds from piles of crap and buy $150,000 recently sold homes in foreclosure for $39,000 after/while renting for $1500 and OF COURSE its a MUCH NICER house. Of course.

Lurking... don't know where you live, but this comment:

I require all of my SFH tenants to have all the utilities such as water, cable, gas and electric in their name.....

...Made me think of one of my friends, who's been SFH-shoppingfor about a year now, and said that many of the houses she's seen obviously have a grow room set up. If I was the landlady, around here I think I'd always want water in my name, just one way to keep an eye on things.

It truly matters where the house is located; I'm currently paying about $500 less than I'd pay if I rented the exact same place. The renters around here pay the same out of pocket costs as do "owners," when it comes to water ($30/mo), trash pickup ($20/mo), electric/heat (house specific). We're all septic 'round here and we pay $300/yr HOA fees, which basically covers the firehouse.

My situation isn't typical for a house in Calif or the East Coast, but it is for the rural West. The $39,000 house isn't typical for here... Real estate is local with national issues factored in, I guess.

EastCoastBubbleBoy says

The difference is startling. Rent and utilities are about 25% of my monthly expenditures right now. Factoring in for all of the additional costs of maintaining a home, hosing (and its peripherals) would take up just over 50%!

My experience is different - I'm paying about 15% to buy & maintaint my place - renting would be closer to 28%.

Everything is relative. My 5 year ARM went to 2.75% 8 months ago. my payment is now $720/month (principle and interest...and a decent part of that is principle). Add taxes, insurance, HOA dues, and maintenance and i'm still WELL below $1,000/month. Throw out the utilities argument because i don't know any house renters in my are that don't pay their own utilities (all of them). I live in a cookie cutter HOA so the entire neighborhood is comparable. Houses rent for $1100-1300. I'll take home "ownership" over renting in my situation. For the record, you can buy in my hood for about $130,000. Also, my house is my family's home and we have no intention of leaving it (i know anything can happen in the future). If we do stay put, in 25 years i won't have to choose between a lease or a mortgage. I'll simply have a house that only has taxes ($900/year) tied to it.

underwaterman says

They can't stay low forever

underwaterman says

The odds are against keeping low mortgage interest rates.

NOPE

http://research.stlouisfed.org/fred2/graph/?g=3dP

back when total leverage (the red line -- total credit owed / GDP) was under 2 they had the power to monkey with rates to kill the economy.

But in the mid-80s something broke and we are in a different regime now.

external federal debt is $10.2T right now, looking at all gov't debt divided by wages:

http://research.stlouisfed.org/fred2/graph/?g=3dQ

you can see it rising from 0.8 in the 1970s to over 1.8 today.

This means an eg. 5% treasury rate has the anti-stimulative power of 11.25% rates of the past.

Rates shot up in 1980 to stomp wage inflation that was coming from all kinds of conditions that do not obtain today, eg. in 1980 the baby boom was aged 19 to 34, now it's aged 50 to 65.

Speaking of which, my chart above does not include the $4T in debt notionally owned by the various trust funds that also need to be repaid.

The higher the debt goes, the lower interest rates are driven.

Los Angeles Owner says

Everyone keeps saying you'd make more investing your money in stocks than housing... I see a lot of Boomers retiring in their homes and just taking money out of the market to live off of in their paid off home... To me that means a stagnant housing market at worst and a falling stock market...

This was actually discussed in the Economist recently where there was a study done on these things:

http://www.economist.com/node/21530077

In his paper Mr Takats seeks to quantify this effect. He prefers to look at an international sample rather than data on single countries, because that enables more robust identification of the impact of ageing. He also focuses on house prices rather than financial assets, because they are less likely to be influenced by cross-border capital flows. Mr Takats applies two aspects of demography to BIS house-price data from 22 advanced economies: first, total population; second, the ratio of old people to the working-age population, or the old-age dependency ratio. Between 1970 and 2009, he finds that a 1% rise in GDP per person and a 1% rise in the total population each corresponded to about a 1% rise in real house prices. But a 1% increase in the old-age dependency ratio was associated with a 0.66% drop in real house prices.
...
Prices of financial assets do not necessarily shadow those of property: people tend to buy and sell stocks and bonds later in life than they buy and sell homes. But they are also affected by ageing as the old sell them to realise cash. A model developed at the Federal Reserve Bank of San Francisco finds that since 1954 there has been a high correlation between the ratio of Americans aged 40-49 to those aged 60-69, and the price/earnings ratio of the stockmarket. The implication of this relationship for share prices in the future is bearish, it says. Based on standard demographic and earnings assumptions, the San Francisco Fed’s model suggests share prices will fall by 13% between 2010-21. The good news for America is that the relative proportion of middle-aged people should rebound in 2025, implying a strong recovery.

Such estimates should be treated with caution. Ageing, at least in the short term, is fairly predictable, so markets may have already discounted its impact on asset prices. Mr Takats draws attention to the fact that elderly people may end up working longer, which would reduce the pressure to sell their assets.

tatupu70 says

What makes you think this?

I agree with EastCoastBubbleBoy on this one. It is common for many people to look at mortgage cost and perhaps to consider (and overestimate) the mortgage interest deduction, but not consider several other costs, such as maintenance.

In addition, if anything, the bubble showed that people will overemphasize the importance of current mortgage costs without considering changes (recasts and resets) to their mortgage costs. Everyone assumed either values would continue going up 20-30%/year or that they'd be making substantially more money or even that it'd be easy to refi. It was easy to refi when values were rising...

corntrollio says

It is common for many people to look at mortgage cost and perhaps to consider (and overestimate) the mortgage interest deduction, but not consider several other costs, such as maintenance.

Certainly possible--I haven't found that to be the case in my discussions.... Looking at this post, for example, mortgage interest deduction is not even mentioned. Nor is the principle portion of the payment. Nor is the value of owning free and clear at the end of the loan.

Using the bubble as evidence is not useful, IMO. It was clearly irrational behavior, and as such, doesn't really show that people underestimate housing costs...

underwaterman says

Don't know why you are using the red line; it is not applicable to the argument that interest rates are artificially low historically

LOL. For one, that's not an argument, that's an observation.

IMO we're not going to see 5% rates when the national debt is $20T. The interest alone on that would be $7500 per household.

but goes against sound monetary policy when logic says higher debt equals higher risk and higher interest is what is supposed to be increased to account for higher risk.

ahah ahah ahaha aha hhah hah.

hah.

"sound monetary policy"

Return on principal or return of principal -- Pick one.

underwaterman says

Just look at what is happening in Europe, especially Greece, Portugal, Spain, and Italy

Greece: Can't print the Euro.
Portugal: Can't print the Euro.
Spain: Can't print the Euro.
Italy: Can't print the Euro.

To attract capital towards risk, you have to pay increasing interest.

That's not what's really going on. The earth is a closed system. There is a limited number of options where money can go. It's all just one big circle jerk, really.

Why don't you look at Japan? Japan *can* print the yen, so they are perfectly free to set the rates they want, even with debt to GDP at horrendous levels.

http://www.theatlantic.com/business/archive/2011/05/chart-of-the-day-us-debt-following-japans-trajectory/239387/

Already the Chinese are buying gold like crazy as well as other countries.

LOL. There's a solid investment for three trillion of sovereign wealth. Gold!

As for the $7500 per household, just look at usdebtclock.org to see that it is already far beyond this paltry number and the system is still limping along.

No, I was referencing future interest burden costs.

Debt itself is meaningless, it's just a number. What actually hurts is the cost to service it. Right now our debt service costs are lower now ($230B) than they were in 1991 ($270B).

$230B is $1700 per household by the way. There's simply no way we're going to be able to pay $6000 MORE per household for interest in the 2020s, along with paying for the baby boom's medicare AND also redeeming hundreds of billions of SS trust fund debt.

To think the US can control interest rates indefinitely and keep them artificially low forever is a clearly wrong.

"Clearly" huh? You simply don't understand the game here.

Let's see what happens in 7 years if Ben and buddies can keep the interest rates low or not.

Indeed. I don't have a crystal ball. But you need to incorporate Japan into your theses. Having lived there in the 1990s, I think I've seen this movie before.

As for inflation, I have no idea if that's coming or not. I don't think anybody does, which is why the yield curve is where it is:

http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/

I am not sanguine about the future, but as Keynes said, "markets can remain irrational far longer than you or I can remain solvent."

For inflation to really exist, there must be WAGE inflation. Price inflation without wage inflation will simply result in reallocation -- eg., land prices -- and rents -- will collapse further.

Let's say 400K home, 80K down, 320K loan. No PMI or HOA.

Mortgage - 1584/mo, @4.3% 30yrs. traditional
Taxes - 8000/yr including school tax. =667/mo
Insurance - 100/mo
Maintenance and Upkeep - 200/mo, just saying
Heat - 50/mo (defeding the heating system)
Electric - Approx. 200/mo. (200 in summer, 300 in winter, 100 in the rest)
Water - 50/mo
Sewer - 20/mo
Landscaping - 0 to over 200/mo, depending on who's elbow grease. Let's say 80/mo
Etc, et - For Trash and gas etc, 100/mo.

so, what are we got here? Approx $3000/mo

Not sure your school tax fully deductable or not, but lets say tax return is worth about two month's expense. So, 3000/mo*10/12=$2500/mo

So, is this additional cost sounds reasonable to you for having bigger home, backyard, garage, few more rooms, etc.

For me, it sounded like little pushing. Look for 350K or lower priced home.

Thanks Seaside. Living in the northeast, heat is a big kick in the pants. Plus taxes. Here's the projections I've been using.

300K home, 60K down, 240K loan. No PMI or HOA.

Mortgage - 1188/mo, @4.3% 30yrs. traditional
Taxes - 12500/yr including school tax. = 1042/mo
Insurance - 125/mo
Maintenance and Upkeep - 250/mo, just saying
Heat - 500/mo (VERY house dependent, highest in winter low in summer)
Electric - Approx. 350/mo.
Water - 75/mo
Sewer - 50/mo
Landscaping - 0 to over 200/mo, depending on who's elbow grease. Let's say 100/mo
Etc, et - For Trash and gas etc, 100/mo.
(Trash is included in taxes, but surely there are other incidentals so 100/month sounds good)

Total is $3780/month.
Haven't looked at tax deductions, but lets say all things being equal total cost after tax savings is $3500 a month.

HH income needs to be better than average to meet that monthly nut.

ECBB, There must be a typo somewhere because the numbers does not match with your total. Maybe typo w/ landscaping? Or, it must be a heck of large yard. Gotta have a riding lawn mower, and few hours in saturday afternoon. Your heating and electric estimate seems to be higher than what I thought it would be. $1042/mo tax for 300K home... this part made me, wow...NJ tax sucks. :)

With my house (~1600sqft 2/2 with a pool and a 2 car garage and a pool on a 8Ksqft lot):
Mortgage, Taxes & Insurance ~$2600
Maintenance and Upkeep $150 avg
Heat & Electric $200 (when it gets colder, gas goes up, electric down)
Water $40
Sewer/Trash $20
Landscaping $50
Total: $3060 With principal & tax savings it's probably closer to $2600

My last apartment (700sqft 1 bedroom):
Rent $1750
Electric $150
Water/Trash $45
Extra parking $100
Total: $2045

So for $500/mo more I get a dedicated office, double the living space, my own pool and a place to work on my hobbies. I also get the upkeep and maintinance to deal with but don't mind getting my hands dirty.

A similar house on my street was renting for $2200 (+utils).

The great thing about having my house is I recently put together my "home theater" (110" projection, nice 7.1 surround sound) and had a movie night with a bunch of friends and did not have to worry that I was bothering my neighbours.

With how bad the housing market is, if I can sell for at least what I owe + realwhore fees in 10-12yrs i'll be happy (because that will mean I am leaving California).

TType85 says

Heat & Electric $200 (when it gets colder, gas goes up, electric down)

This reminds me of that funny winter day back in winter 2003 when I flew to LA. I saw girls wearing thick coat saying it's freezing. It was 55F in the evening and I was like, WTH? do they call this freezing? I took my jumper off and still felt like I can take my shirt off too. The difference was, I was digging my way out in snowly western PA half days ago.

Bit more energy cost if you're living in the east. A friend of mine living in his house in MD once complained about $600 elec bill. How come? It was $350 last month! Well... dude, here's how come. Have your pajama on and turn your thermostat down to 70F instead of 82F. :)

underwaterman says

AZSALUKI says

Everything is relative. My 5 year ARM went to 2.75% 8 months ago. my payment is now $720/month (principle and interest...and a decent part of that is principle). Add taxes, insurance, HOA dues, and maintenance and i'm still WELL below $1,000/month.

These deals sound good on the surface. What happens if you play with negative appreciation accounting for the coming shadow inventory that will eventually have to come to pass (see links like this:
http://www.mcclatchydc.com/2011/10/16/127042/millions-of-homes-lurk-on-bank.html)? How will it feel when the price drops 30-40k more and if the property taxes rise to make up govt shortfalls? What will happen in a few years when the interest rate increases above the unrealistically low of 2.75%? They can't stay low forever. And when the rates go up and your facing negative equity and want to refinance but can't come up with the 20% equity downpayment, your stuck.

They can't stay that low forever, but they will for a while. Even when they do raise, I have a 2% cap, annually on my note, so once the US Treasury rate finally climbs (that's what i'm tied to), then i'll be capped at 2% per year. It will take a while before my mortgage is unreasonable. In the meantime, I am still paying down the principle. And i realize anything can happen, but i do plan on staying here (i'm self employed). The value of my home has gone from $280K at the peak to $130K. This is about what they sold for when they were built in '92. I know they can (and will) continue to drop, but by another $40K? I doubt it. Even still, I'll be fine. Worst case scenario, I can access hard money at 9%. 9% on $120-130K (or whatever i would owe by the time i'd really be screwed) still isn't bad. Negative appreciation simply doesn't affect me. An increase in interest rate will, but i have a ways to go before i'm really screwed. And i don't know about your market, but our property taxes have fallen with values. They are based on the value of the home. And as you can see from my earlier post, they are very low in Phoenix.
The original post claims that renting is significantly cheaper. My point is that I'm 6 years into "ownership" and that is simply not the case.

EastCoastBubbleBoy says

Taxes - 12500/yr including school tax. = 1042/mo
Heat - 500/mo (VERY house dependent, highest in winter low in summer)
Electric - Approx. 350/mo.
Water - 75/mo
Sewer - 50/mo
Landscaping - 0 to over 200/mo, depending on who's elbow grease. Let's say 1000/mo
Etc, et - For Trash and gas etc, 100/mo.
(Trash is included in taxes, but surely there are other incidentals so 100/month sounds good)

Your expenses are a tad high in my opinion. My total utility bills average $300 a month. It's true I have Geothermal which is very efficient, but I have a Huge house. I've heard of horror stories where people have propane heat and have $600 or even $800 bills during the coldest winter months, but these are generally price spikes during the coldest months, they do not have these kind of bills in the late spring/summer/early fall.

Electric bills are also too high. My bills average about $150 a month in October when I'm not using any heat. If your heating with something other than electric, your bills shouldn't be any higher.

My water bills are around $25 a month, for 3 to 4 thousand gallons of use for two people. If you have a large family or water the hell out of your lawn in the summer months i wouldn't think your water bills would be much more than $50 a month.

Don't have sewer anymore but when I did have it, it was something like $300 a year.

For landscaping I think you mean $1,000 a year. I guess if I counted my Riding mower as part of my landscaping expenses, that number would be about right.

Trash is NOT included with my taxes. I pay $95 a quarter for trash pickup.

My taxes currently run about 8k a year, but some of towns in North New Jersey, 12k wouldn't be too far off.

My house (~3500sqft 5/2.5, 3 car garage on a 113Ksqft lot)

ECBB:

Damn, those taxes are huge! Or shall I say humongous?

Mortgage - 680/mo, @4.875% 30yrs. traditional
Taxes - 960/yr including school tax. = 80/mo
Insurance - 25/mo
Maintenance and Upkeep - 150/mo, just saying
All Electric - Approx. 100/mo.
Water - 30/mo
Sewer - none - all septic (included in upkeep)
Landscaping - 25/mo, if that
Trash and 20/mo.
HOA - 300/yr (fire house/truck) = 25

If I figured correctly, I'm paying about $1,150 for a 1700 sq ft 3/2 on an acre. Of course, there are currently no jobs around here and I'm not sure how many other places have "nuclear contamination" listed second on their wikipedia page.

Other than the no jobs thing, and the rampant cancer, it's a good place to live. And cheap.

Yes, those costs are high for most people, particularly the utilities. Here's mine.
Principal & Interest N/A (last payment next month!)
Property tax $350/mo
Insurance $38/mo
Maintenance $350/mo*
Water/Sewer $35/mo
Electric/Gas $200/mo for both
Trash $0 (city service included in property tax)
HOA $0

*Maintenance is a stab-in the dark estimate. Maintenanec costs are highly dependent on the age of home. Ours is 1974. Maintenance cost was modest for many years. Then when everything started wearing out we had to pay for medical bills before we could afford all the repairs that were needed. So a lot built up. Here’s what I can remember: $35K-$40K in the last 7 years to replace windows, appliances, HVAC, carpet, remove trees, repair patio concrete, stripped old bathroom to build accessible bathroom. We spent at least another $5K that I can’t quite account for that I know included some new landscaping and exterior painting. We need exterior brick repair. We will need a roof in about 7 years. Could use a new kitchen, but it’s not going to happen. There seems to be no end. Hubby is disabled, so currently adult son does our yard work for free. When that stops it will cost us over $200/month to mow, remove leaves, plow snow. This does not include fertilizing, bush trimming, and flower planting.
This is why I want to be a renter! Hubby says he is never moving, so I have to wait my turn.