It is costing me just $52 more a month to buy my own home in Manteca when all is said and done than if I was still renting a two-bedroom, one-bathroom apartment at Laurel Glen.
The annual Manteca Bulletin rent survey shows Laurel Glenn on Button Avenue is now $965 a month. It is a well-managed complex by any standard. I was paying $840 a month when In moved out in early 2008 and into my own home.
Between interest and principal I pay $961 a month or just $4 more than renting. Add in property taxes and homeowners insurance and deduct what I was paying for renters insurance and the impact the interest deduction has on the income tax and the bottom line is owning a house is costing me $624 more a year than renting.
And while the tax advantage will fade over the years it is nothing compared to how rents go up.
The rent survey shows the apartment floor plan I was renting in 2001 went for $825 a month. So over 13 years, the rent increased $140 a month. Double that and in 25 years when my home is paid off such an apartment could easily cost $1,245 a month. If I stayed as a renter my housing costs would have gone up. Instead I have essentially flat-lined them. And while I will still have property taxes and insurance it won’t cost me $1,245 a month to live in my home after it is paid off.
When I bought in 2008, prices were starting to drop significantly. The median sales price of an existing home had tumbled from $413,000 to $225,000 in Manteca. Prices continued the downward spiral until hitting a median of $178,000 in 2009.
Had I waited perhaps I would have gotten a house cheaper but it isn’t the home I’m in right now. Not only does it fit me to a “T” but I like the neighborhood and location.
This brings me to how some people view buying a home purely as a business transaction. Even though I have stabilized my housing costs and have been able to enjoy a lifestyle that I prefer that wasn’t possible in an apartment, I still have to like where I live.
When prices were dropping there were tons of people who took the stance to see how far they will go before they would consider buying.
As far as I was concerned, once they reached a point where it made sense and was comfortable from a financial standpoint, I started looking.
One of those people, who told me I had jumped the gun, waited until about 14 months ago to try and buy. He and his wife ended up losing homes to cash buyers and even got into a bidding war or two. He’s in a home now but it’s in Stockton and not in Manteca as he couldn’t afford it due to his income and rebounding Manteca prices. They’re not thrilled where they are at. He’s no longer telling me I was stupid to pay as much as I did. I paid $185,000 for a home that once sold for $325,000 at the market peak and at the bottom of the market dropped to $90,000 according to the county assessor.
There is little doubt that you should only buy a home that you can afford and are comfortable with making the payments. There are trade-offs including perhaps giving up some things such as eating out less.
But if you let a desire to get the bottom dollar home take over you may find yourself settling for a home you don’t like because of rebounding prices.
That’s why if you’re serious about buying a home, then it’s the right time to buy assuming you have the financial wherewithal to do so.