I am a numbers guy, always have been. Just seem to really like to revel in them and extract some minor meaning from them. Sometimes it is to save money, sometimes to see what I lost.
In that vein, I was looking at our house. I know that a house, like your 401K, is supposed to be a LONG term investment. However, I am looking at the real numbers we really spent here and what we will likely spend at our new urban digs. Apples to apples.......or as close as we can get.
Once we sell this house we will have lived here for almost exactly 1 full year (2 and a 1/2 weeks shy of it). We put down 3% towards the home (and fees associated with such) and have dutifully paid our mortgage, gaining about $350 each month towards equity. We will have therefore earned about $4K over the year. However, with estimates ranging to nearly 8% depreciation over the last year (our neighbors property has depreciated about 20% in the four years since these were built), even being conservative, you couldn't argue that we have truly earned anything. You could only argue over exactly how small or great a sum was lost. So, one could easily argue that you aren't so much building equity at this point as you are bailing out water without fixing the leak.
We also pay a small monthly fee for external upkeep. All told, we feel fortunate to walk out of this house with somewhere around $1500 (inclusive of the additional equity built up over the next 2 payments). Some things are just not good investments and this was assuredly not. We bought low enough that it is possible that eventually it would have proven worthwhile (though I dare say it would never be the case for our neighbors), but it would have been awhile. But, I digress. Ultimately, we will walk away having paid approximately $2700/mo to live here (inclusive of our up front costs). That is a rough estimate and is probably a little on the conservative side. Gives me the shakes just thinking about it. Had we pushed out another year (even with the downward trend slowing and our equity slightly increasing as the principle of the loan slightly dwindles), we still would be looking at nearly $2300 a month at our current sell price, a number we would likely not be able to get at that point in time.
So, as we move to a fairly pricey apartment in a desirable locale, we will still save a princely sum. When you take into account that NONE of our money will need to be put down (the deposit was $99) and that the non-refundable start up fees include only the $84 application.........while objectively you can look at the two numbers and it would appear we are saving only a few hundred a month, it is actually much much more. Including utilities, we will save about $900/mo over what we spent this past year. Had we moved to the same apartment one year ago instead of here it would have saved us nearly $11K. From a strictly month to month cost, we will save about $4K. Probably nearly another $1K in gas (although that will likely we eaten up literally........via happy hours and coffee shops).
But, ultimately, it is all a sunk cost. If you stare too hard at your investments (bad or good) in the past, you will never be able to move forward. It is best to just let go and move on. Home ownership has its perks to be sure, but presently those perks are not fiscally sound ones unless you are willing to think longer term than I dare. In the meantime, I am just looking forward to being a renter again with the landlord on speed dial should anything go awry :)
That isn't to say that I do not understand that houses, by and large, are emotionally purchases. There is more (for most people) about their house than its monetary worth. It is a place of family and friends and memories. It is, for some, the ultimate goal and part of the American dream. As Tia says, some people wouldn't move out no matter how much they are upside down because their house means that much to them. A house isn't always an investment of money, but is sometimes more an investment of hope and a fulfillment of dreams. Its just not how I see it.
No comments:
Post a Comment