Hello folks! Hope everyone is doing alright. I’m going in a new direction with today’s post. I haven’t spoken much before about home ownership, but today is the day! I’ve been a homeowner for almost five years now, long enough to have a pretty good view of the pros and the cons. And don’t worry, this isn’t going to turn into a post solely on the financial benefits of being a homeowner versus renting! No sir-e-Bob, this is going to be all encompassing. And it goes to the heart of the matter and includes the lifestyle benefits / drawbacks of owning a home.
So let’s jump in!
I recently had a revelation. And that simply is that I am tired of being a homeowner. So keep in mind where this post / rant is coming from…There has been one too many home repair issues that have cropped up recently that have pushed me over the edge.
Owning, managing and taking care of a home are just too much for me! There are a lot of repairs and maintenance that is required, more than I initially expected. And I’m tired of it! It isn’t the skill required for the repairs and maintenance (youtube helps with that), it isn’t the expense associated with it (although being nickled and dimed does suck), it is the time commitment and added stress!
Admittedly I wasn’t a totally informed home-buyer. I knew there would be repairs and maintenance, but I think they were underplayed because of my experience growing up. I don’t recall my parents doing a whole lot of maintenance on my childhood home. Sure they vacuumed and cleaned, etc, but I simply don’t recall any major repairs. The most complex thing I can think of would have been a clogged toilet…wasn’t me!
And on top of my historical frame of reference, Lucy and I bought a relatively new house. At the time of buying, the home was about 12 years old. It had one prior owner. They did have a dog, but I wasn’t too concerned by that necessarily; it isn’t like they had a dozen cats or a monkey. Also, the prior owner was a commercial contractor. He no doubt knew how to DIY. Who better to buy a home from, right!?
As a matter of fact, the prior owners made a number of upgrades to the house during those 12 years. That list includes: putting in solid Brazilian walnut floors downstairs (an exotic wood, very nice, very expensive!) and cork floors in the kitchen, installing nice carpet upstairs, redoing the kitchen with nice overhead lighting, cabinets and appliances, within the prior year they bought two new A/C units (one for the upstairs and one downstairs), and they added nice tile to the master bath.
There were a few noteworthy items that were older and so we were well prepared for repairs or having to replace them. That list included an older water heater and the original roof. Not too shabby though, right? We didn’t think there would be much for issues to deal with at all.
The Joys of Home Ownership
We’ve all heard of the statement “the joys of home ownership” in a sarcastic tone. Well at first it is funny, second time someone reminds you of it gets a little annoying, and now I am so sick and tired of hearing it I’m ready to cry!
Let me give you some background first. I’ve now been a homeowner for five years come May 2017. At the time we bought the home we were so excited and ready to be homeowners. We were tired of living in apartments where we could hear our neighbors or be woken up by their slamming doors in the middle of the night, tired of hearing the neighbors below us throwing a party when we were going to bed; the list goes on and on. We were ready for privacy and our own place! And Lucy was ready to finally be able to paint a room…
As you could tell from above, we found what we thought was a perfect house. The perfect balance of nice and new with a few potential DIY home improvement projects was right up my ally. But low and behold the joys of home ownership…
In our five years of owning a home, we have had the following material repair and maintenance issues:
- Wood rot that needed to be replaced on our shed. Not a quick and easy project, let me tell ya! This repair involved buying a bunch of new wood and putting a couple coats of primer / paint on it. Then ripping out the old and screwing on the new. And just a few trips to the hardware store…
- Power washing moss/mildew off the siding of our home and dirt off the driveway (paid for this since we have a two story home). Bet safe (literally) than sorry.
- Power washing moss/mildew off the shed and playground – borrowed a power-washer and completed this myself
- Constantly dealing with moss and weeds growing in the yard.
- A sink hole developed in the back yard around the sewer drain. Yes, a sink hole! It may be 4 feet deep in some spots resulting in wash out of soil into the sewer and won’t get too much worse I don’t think. Luckily it is about 20 yards away from the house and won’t impact the structural integrity of the home. And also luckily it is not my liability (contractor error), but there is a wait list for the city to repair these types of issues. It has already been 2 years and the current estimate is an additional 4 more years! Insane. It makes we question whether I want government run healthcare or not…
- There was an issue with the installation of the new Brazilian walnut wood floors. This is a developing issue, but I think the problem is not enough gap around the edges of the floor to allow for natural expansion and contraction of the wood. This has resulted in buckling in a couple spots. The repair work has been quoted for around $2K to $2.5K. But, sadly, it may require a complete replacement which would be closer to $7K.
- Refrigerator ice maker broke. This is one of the relatively newer appliances the prior owners bought. How does an issue like this pop up out of nowhere? Who the heck knows. But I was able to buy and install a new one for about $75 and 20 minutes of my time.
- Kitchen sink is dripping. This too was fixed by my own accord with a repair kit purchased online for $15 and 20 minutes of work.
- All three of our toilets have had issues at one point in time. Each fix has consisted of $10 or so for new parts and a range of 15 minutes to an hour or more. I’m much quicker now…practice makes perfect I guess!
- Our A/C units required maintenance when we first moved in. It was covered under the initial home warranty, but it was a major pain in having people come out on three or four separate occasions trying to troubleshoot the issue.
- Over the last year or so, our water heater has been dripping from some overflow or pressure release spout. I had someone check it out initially as part of a free check-up offer and they advised it was not a major issue. I placed an ice cream bucket under the spout and have to dump it once or twice a week (most frequently in the winter for some reason). This thing will kick the bucket soon, pun intended.
- As I noted when initially buying the house, the roof was going to need replacement eventually. I elected to do so at the time I installed solar panels so I wouldn’t have to take the panels off later to replace (this would have been extra costly!).
The whole moss in the yard and mildew on the siding etc. must be a southern thing. I don’t remember this at all growing up in the upper Midwest.
Maybe I shouldn’t have been surprised to have to deal with all these issues, but like I said earlier my mindset was my childhood growing up and the fact this was a new and recently upgraded home.
While I am tired of being a homeowner and dealing with all its joyous hassles, I can’t say it has been a bad move financially. I pay approximately $21K annually in principal, interest, tax and insurance for the home.
When looking at the opportunity cost, if instead of buying a home we rented a home for a similar amount of annual payments ($21K), we wouldn’t get the tax savings from interest and property tax deductions nor the benefit of an ever increasing equity from principal payments. As outlined below, this is relatively significant.
Note that 2012 was a partial year (we bought the home in early May). Also, the state of NC changed its tax policy beginning in 2014 to no longer allow itemization and instead resort to a flat $15K standard deduction. So the tax savings dropped as a result of not being able to itemize for the State tax return. Lastly, the tax savings step back up in 2015 as we moved to a higher marginal tax bracket.
The last thing I’ll consider with regards to the financial merits is my down-payment of $27.5K. Had we rented, this sum would have alternatively been invested in equities. Using the S&P 500 as the benchmark for return performance, you can see this would have compounded nicely during this time period. As shown in the chart below, with dividends reinvested, the stock market return of 95% including a strong last 6 months would have resulted in about $53.5K.
Conversely, if you believe Zillow, the house value increased from our purchase price of $275K to almost $320K. As a result, the value of that $27.5K can be looked at as now being about $72.5K, a return of approximately 164%.
As it turns out, the financial decision of buying our home was better than we could have expected. I’d chalk that up to buying at a good time and Charlotte being a good and growing city. Granted we will have more closing costs to pay upon resale. 7% agent fees on $320K amounts to $22.4K in costs. That takes a big chunk out of the benefit of the home appreciation!
Do I regret buying a home…probably not…so long as the pending sink hole issue doesn’t overly complicate a potential resale of the home (assuming we sell before it is fixed) or does eventually get fixed at the city’s expense.
The financial benefits paid off decently well for us. The annual tax and equity growth benefits do help me rationalize and offset the repair and maintenance cost of a few hundred dollars here and there and the time and annoyance too. My wife and I are fairly busy though and would much rather spend any extra time with the kiddo than doing repairs and not have to deal with the extra stress too.
Of course in retirement with more time on our hands, I wouldn’t expect this to be as big of an issue. And, I suppose, it will get a lot easier when the kiddos get of age to help with more of the routine chores like vacuuming, cleaning and mowing.
But honestly, I did underestimate the annoyance and stress related to home repairs. For future first-time homeowners, don’t underestimate this!
Financial considerations aside, I’m guessing we aren’t the exception here with home repair and maintenance. Buying a new home or even a recently remodeled home can still come with surprises and its fair share of maintenance. So buyer beware!
Hopefully this post will be helpful to those considering buying to think through all aspects of home ownership. And for the next buyer of my house…I made this all up! There wasn’t this much in repair and maintenance work…how could that even be conceivable!
Does anyone else have homeowner stories to share? I’d love to hear them.
Thanks for taking a look!
The Green Swan
P.S. Speaking of tax benefits, if you haven’t done your taxes yet it is time to jump on it now.