Apartments and moving

[rowyn]

For four months, two thirds of my apartment has not had a functioning thermostat, which annoys me greatly. I asked Lut to call the building owner (as opposed to the building manager, who has, after all, been blowing us off for four months) and complain to him. I suppose when that doesn't accomplish anything, I'll send letters to the health department and the Better Business Bureau.

But as inconvenient as the issue with the thermostat is, it's not what's really bugging me about the apartment situation. We use the room with a functioning thermostat most of the time, and for most of the summer, we've been able to get comfortable by opening windows, and having them switch the semi-permanent setting around. It's been off for the last couple of weeks, which has been fine. And I know how to turn it back on, if I do risk electrocution in doing so, and if Lut doesn't want me to because he thinks it might give the building manager an exuse to blame the troubles on us.

Anyway, what's bugging me today is that a couple of weeks ago, the office received a package for us and didn't tell us. Normally they leave a note on our mailbox. This time, Lut only found out because he happened to check the site he'd ordered it from, and they said it had arrived. The office had had it for more than 24 hours without notifying us, before Lut picked it up.

We rarely get packages. But it's been eating at me, this morning, that if the office hangs onto my packages, I have no way of finding out short of marching in there and asking them periodically. I don't know if their failure to notify us was malice or incompetence. I don't know if they're going to graduate to outright stealing packages; I don't know what would possess them to do so, but, quite frankly, I have zero faith in them. They've been lying to me for months about the thermostat issue. Why should I assume they wouldn't lie about other things?

The logical thing to do is move and escape these creeps. The thing is ... I don't want to move. I hate moving. I hate spending money and I hate everything else that attends moving. And if I'm going to go to all the trouble of moving, I want to move somewhere I can spend the rest of my life, because I don't want to ever have to move again. And I don't know where I want to spend the rest of my life.

Maybe I should buy a motorhome and live in it. Then if I wanted to move, I could just start the engine and drive there.

Sure would be a lot easier than packing and unpacking.

Comments

[tuftears.livejournal.com]

What about actually buying a house, if you don't foresee moving anytime in the future? You still pay some big amount per month, but at least it's going toward your own equity instead of someone else's.

[rowyn]

To start with, that hinges on "not forseeing moving any time in the future", which is certainly not the case for me. While I'd like to never move again, I don't like the idea of never moving again enough to commit to living in KC for the rest of my life. Or even for the next five years.

Second, home-owning carries a lot of its own risks. If I buy a house, I have to pay real estate taxes, insurance, yard maintence, and repairs -- all of which are variable and could rise at any time. I'd also have to pay for utilities, which I don't in my current building.

Third, the difference between the rent that I pay in Emerald City, and the cost of interest on a home loan, is not necessarily going to be very different. I haven't made much of a study of the housing market in this area. However, new houses, at the low end, go for at least $120,000. At 6% interest, that's $600 a month (not counting the cost of buying equity in the house). Once I add the cost of utilities, real estate taxes, homeowner's insurance, repairs, etc., odd are I won't be saving anything over what I currently pay in rent. It's not really "your rent money could be going to home equity!" It's much closer to "your rent money could be going to servicing a debt!"

Of course, any money above the level of monthly interest that I pay down on the loan will go to home equity. But since that's money above my rent payments, it's money I could be investing elsewhere if I were renting -- in my 401k, for example.

Home equity is subject to market risk, the same as investments in the stock market. Housing is somewhat less risky than stock, but it's also got a smaller upside.

Of course, there are advantages to home ownership (even being responsible for my own repairs has an upside, as the current situation shows.) And a new $120,000 house would be nicer than my current apartment. I could also find a cheaper house -- but that would carry an increase in the likelihood of needing home repairs.

I might be able to make home ownership work and be cheaper than renting, but it's got a lot more variables, and it's hard for me to judge how much risk I'm taking on with it. And as obnoxious as it is to move out of an apartment, it is ten times worse if you've got to sell a house in order to move.

My natural inclination is to want to own a house, but I don't think it makes a whole lot of sense from an economic perspective, especially given that I'm not wedded to the idea of living here forever, or even for the next five years. As Telnar put it in his case, "It's like buying a $30,000 anchor." ;)

[tuftears.livejournal.com]

Agreed, if you're certain that you're not moving, a house makes sense, otherwise, well, you can certainly make efforts to sell the house so you can move, but that's a bit nervewracking in that you don't know if you'll succeed.

In my case, I am pretty sure I'm going to be staying in the San Francisco south bay area for the foreseeable future, so... House is fine by me.

Helps a lot that my mom's a real estate agent and that my parents helped with the loan cost, so it's much smaller than it'd otherwise be, by about 30% or so.

[rowyn]

Yup! Being able to save on the real estate agent's fee alone is substantial. :)

Even the devil needs a lawyer -- nm -- he probably is one

[telnar.livejournal.com]

You already know that I basically agree with you, but since I don't think that you're being particularly fair to the house option, I'm going to step in and play devil's advocate. There are at least 2 significant financial benefits of owning a house which you didn't mention:

1) You get a tax deduction. It's true that if you otherwise wouldn't have itemized, this isn't as big a deal as it sounds. Even adjusting for this, it is worth something. The standard (federal) deduction for a single person in 2003 is $4750. By comparison, the mortgage interest deduction for 6% interest on a $108,000 mortgage (assuming 10% down) is $6,480, or a gain over the standard deduction of $1,730 times your marginal (federal + state) tax rate right there even if you have no other deductions (and you probably have some even if only state taxes and charitable contributions).

2) Comparing rent with interest payments by looking at the first year's payments is deceptive because of the very different ways renting and buying work. Renting means that your payments go down or (mostly) up as the value of the property changes. The longer you stay, the more you'll probably be paying. Buying locks in your payments so that adjusted for inflation you'll be paying less each year. In exchange for the obvious risks (leaving early, property value declines, illiquidity or interest rate declines -- partially mitigated by refinancing), you also get the opportunity to hold a highly leveraged asset which figures to rise in value over the long run. On average, this will lead to significant capital gains over the long run which (if only because of the leverage) represent a rate of return on your downpayment which is competitive with what you could get in the stock market.

A house is an investment which comes with certain risks that get larger the less time you expect to live there (don't forget the leverage when you're deciding how risky housing is -- no one lets you buy stocks on 20% margin even though that's considered an ample down payment). A good rule of thumb is that you will make a profit on average if you stay for 5 years. That is not the same as saying that you need to be able to sign in blood that you're staying for 5 years for it to make sense to buy. If you have the necessary risk tolerance, then, for example, a 20% chance of staying 30+ years, a 20% chance of staying 5ish years, and a 60% chance of staying 3ish years would still yield a sizable expected profit even though you're a 3-2 favorite to be gone in 3 years (since your gains when you stay 30 years are more than triple the size of your losses when you stay 3 years).

Of course, you already know that I didn’t want to go anywhere near that anchor. In my case, it was easy, though, since it seems unlikely that I’ll end up staying here more than 5 years, and quite likely that I’ll be here less. Hmm... downside but no upside ... what shall I do? Your situation is more complicated, and it’s probably still wrong to buy, but it’s clearly more complicated. If you’re interested, I can toss around some numbers with you next time we talk and simulate some of the risks so that we can move from numbers pulled out of the air to assumptions pulled out of the air and their mathematically provable consequences :)