The message here isn’t “buying is dumb”. The message is “understand the true costs of home ownership”. No matter where you live, buy or rent, it costs you money. The more home you live in the more it will cost you. Don’t be “house poor”. Don’t buy a huge house thinking it’s a great investment. It’s not. It’s a luxury. Everything in this graphic is a conservative estimate of the true costs.
• Closing costs (buying): Inspections, escrow, title insurance, etc.
• Mortgage payments: In 1990 mortgage rates were over 10%. This payment is based on the average over the last 30 years of 6.3%. I didn’t even count the many refinancing costs you would have to pay to lock in the lower rates.
• Homeowner’s insurance: About 0.5% of the value of the home per year.
• Maintenance: About 2% of the value per year. I know this seems high, but roofs, water heaters, paint, driveway, flooding, remodel, etc, etc. It adds up quick.
• Property tax: Varies a lot by state, but 1%/year is pretty typical.
• Realtor fees (Selling): 6% paid by seller on closing. Didn’t count things lik