There's a huge opportunity cost to owning too. Owning can make it much harder to move on and move up in your career. I've seen it. My friend was about to get laid off ("downsizing") and had a good lead on a job in a distant town. He's in a house, underwater, and can't sell the thing to save his life. It's dead weight. Options, sell at a huge loss, walk away, try to rent it in a market flooded with similar rentals....no good options. These are tough times now. Owning in lousy markets is incredibly risky unless you bought at the bottom.

Decent list, though it feels like a couple of items were stretched to make the total 10, versus 7 or 8.

owsning a house????no problem, the big problem is empty the other house where you have leaving for 28 years, that is the BIG problem we are facing today. Some one teachme something, long ego, "NEVER KEEP ITEMS OVER SIX MONTH IF YOU ARE NOT NEED OF THEM,"

Tamacundo "El Vengador Errante"

Another thing to consider; Most "Costs" associated with ownership are also part on the overall Investment opportunity that exists for Home owners. Thus, also contributing to the possible future financial Gain upon resale or refinance. As well as the benefit of present and future Tax write off opportunities...

Where as, All the "Costs" involved with Renting (unless associated with a "Rent to own" or "Lease purchase") simply all go out the window! Never an investment opportunity or a vested interest...

Also; thankfully in many areas HOA's are the exception and Not the Rule!

We brought our home last year. knowing the income we made.. we will never ever get a chance to buy a home in 10 years or so. Thanks to the housing market (sad for others). we can afford to buy a home within 2-3 years of good saving. We love our home, my wife cook everyday in the kitchen, our son love to spend his time in playroom and yard. it is perfect. We hope to build enough equity to upgrade the water heater, landscape etc. In the meantime, we don't need to worry live in someone else property (apartment) and paid rent for my landlord 's mortgage.

Today to rent a place is more money then the mortgage payment,because when people can't sell their homes they are trying to rent them for what they owe on the mortage,It is so sad,I have a friend who paid $150,000 for her house and she would never get her mortgage payment in rent,Not in this area.

While the lists are helpful, it points out one very important fact: Maintenance is not free. Whether you buy and push the lawnmower or pay your HOA dues or hire the landscaper, maintenance costs either time, money or both.

The problem here is that folks are playing a turnover game and the probablilty of paying anything off is nil because folks keep moving around trying to get that home right on upwardly mobile avenue. What folks need to do is to stay put and develope a strongly appealing neighborhood that will attract intelligent, smart folks that make you feel comfortable and safe. A neighborhood teachers want to teach and police services can keep a handle on protecting the neighborhood. Empty houses mean squatters, drug houses, landscape eyesores, vermin and places for perverted activities to occur. In this uncertain future you need to own a home free and clear to ensure you will with certainty have a place to live.

Good article but I would have added one more item: PROPERTY TAXES! Yes, I know that one seems like a 'No Brainer', but for those who live in areas like California (where housing prices have been historically high) considering being 'wooed' by a state such as Texas (where they tout their 'low' purchase prices of homes), you could be in for some serious 'STICKER SHOCK' if 'Due Diligence' is not performed. While you're drooling over that luxury home for 'only' 250k, you need to know AHEAD OF TIME that you'll also be facing an annual Property Tax Bill in the neighborhood of $7500! (3% of anually assed value). That's OVER & ABOVE everything previously mentioned in this article. In researching Texas properties, I've noted a 'tendency' for the 'Propety Discriptions' to include everything EXCEPT the taxes and probably for good cause. (You'll have to do your own homework as to whether or not the lack of a state income tax there will make the move financially sound. Also, if you're setting up 'shop' there you MUST know about their 'Franchise Taxes'!) This is where a GOOD Real Estate agent becomes a 'must have'. Sadly, many will never know that they didn't have a good agent until after the fact!

Rent in an area before you buy to see if you even like it. I bought my main + only home in 2004 in FL for cash and am stuck with property I would have to give away now and I hate the area. I am stuck, miserable and broke-30K worth of "special" condo assements in the first 2 yrs.. Most of the owners hate each other. It's the condo from hell.

Now is an incredible time to buy if you can afford it. Interest rates are low, just off historical lows of 2008/2009. If you are sitting on the fence about buying and can afford to, don't sit for much longer as the pendulum is shifting. With HAMP and courses in its application finally reaching RE agents, there will be a keen interest from RE agents that hertofore had not participated in selling "short" since they did not understand the process because there essentially WAS no process, at least no standardized process. This will clear out inventory, prevent additional foreclosures and just before lection time the economy will be in swing again. NOW is the time to buy if you can afford it!

As a renter for 5 horrible years, I am more than aware of the supposed "benefits" of renting. However, purchasing a home far outweighs these risks. As long as one creates a budget and sticks to it, there is no reason why no one can't purchase a home and live comfortably... i.e. staying within your means financially. I've already begun my search for my first home and intend to purchase a home with a mortgage that is equivalent to my current rent. I truly look forward to mowing my lawn and shoveling my snow... all for the sake of equity building and mental peace and sanity!!!!

Im In my 4th home now in 23 years my first home cost $17,000, 6 years later I bought my 2nd home for $54,000 and kept the first one as a rental, after owning the 1st home 18 years I sold it for $49,000, then after living in my second home for 14 yrs I sold it for $128,500, at the same time purchased a fixer upper for $54,000 spent $20,000 and sold it 2 years later for $95,000, I now live in a beautiful home with lots of equity. In order for this to work you do have to take care of your home keep it updated especially when time to sell. Time is on your side, start small stay within your means and alway's have a emergency fund (even if your renting) and you will be fine

A mortgage including insurance and real estate taxes on $100K is approx $650.00 a month...You can buy a 3 bedroom condominium in Duluth MN in a nice neighborhood. Rent on a one bedroom apartment in a not great neighborhood is $745/mo plus utilities. You save $105/mo plus your would build credit and equity.

don't forget that property tax deductions are not allowed if you pay AMT. In the area where i live, the average annual property tax is over 25k!! It makes renting even more appealing.

Live within your means, owning a home to hope to build the equity so you can update your furnace, well I just don't think so. So what do you do take out equity loans to take care of your property. Soon enough you will be in the same trouble so many other people are in, you owe more on your home than it is worth. Try to sell..OMG! This is just a merry go round. I just sold my house, got a good price for it, now I am buying a house within my price range and paying it off. Forget about me having to have a morgage to write off at tax time. I bet by the time you write it off and get your refund I wouldn't make anymore than just paying it off and no tax break and no morgage at all.
The insurances alone will kill you, house insurance, flood insurance, water line ins,. sewer line ins., you get insured out! Then FEMA at anytime can change the maps....all of a sudden not being iin a flood zone 0$ and it now is a flood zone and its $2,100 this year and goes up every year! I could go on and on corruption of counties, where does your $ go, paying school taxes and not having any kids while your neighbor has 4 kids.

If you want to have a nice life just live within your means...very easy.

@ Joanne Karmel.....you are soooo right. Having to pay elevated school taxes and not have any kids like my husband and I who have an empty nest now, and the neighbor has 4 kids. There should be a different tax assessment for families who are retired and don't have kids living in the house. We would not be interested in living in a good school district. You can't fight City Hall, right? We have to just live within our means like you say. I agree with you 100%

Homeowners have lost over $13 Trillion in equity during this recession. Many new restrictions and laws imposed on the housing industry by ignorant government officials are slowing and even preventing a normal recovery. Homeowners' costs are huge if you are looking at the equity losses since 2006. Our government officials need to review the impact on some ill-advised laws, change them, and allow the housing market to recover. If the housing market is allowed to bounce back, the economy in general will bounce back too.

You composed a very compelling list concerning the cost for either renting or ownership. Typically the decision to buy or rent is made after carefully considering your position in life. The cost associated with renting will typically increase without control. The cost associated with ownership can be better managed. It’s easier to argue the disadvantages of home ownership in a down market. You should consider the real estate market moves in cycles. The market value of many properties has dropped however they will increase again. Here is something to think about! It doesn’t matter if you own or rent you are stilling buying a home. The questions is would you prefer to purchase a home for yourself or your landlord. I have been a successful REALTOR for 12 years with few regrets. Most of my clients are very secure in their homes. In addition to providing shelter the homes equity will fund college tuition and help fund retirement. Can you do this by renting?

I am a home owner, and my husband and I bought our home 26 yrs. ago. We bought a small house knowing we were not having children and no pets. This sets a stage for not having to worry about schools and later not having to downsize. We were given wonderful info from a Realtor that I have not heard from any since, she asked our salaries and or any other income she pointed out all the new types of bills monthly as well as yearly we would then be responsible for most of them already listed on the other comments above.
Then she said add of the expenses up and if one of you loose your job can the other still pay them.
If you cannot you do not buy the house. The inflated prices of homes that were purchased during 2003 and 2007 were way out there. You paid way to much money, you probably didn't qualify on all the expenses associated with home ownership, not just the mortgage and those property taxes and school taxes that only keep going up. The other element not mentioned is why are you buying a home and staying only 3 to 7 yrs. and selling to buy another. When my generation grew up you bought a home and stayed there. Then you paid it off and retired (which is for alot of people a thing of the past). I do understand that sometimes events in your life change and you need to reevaluate but you can loose alot as some people have from the statements above.
Just don't ever rush into buying your first home until you do your homework on all those expenses, that you have no bad debt, and remember if you are married can you afford it all if your spouse looses their job or any ailment happens even if they pass on.

Don't forget PMI is now a tax write-off for many home buyers. So the cost is not as much of an impact to owning as it used to be in past years.

Thank you for your fine list, Tara. After college I rented apartments for 3 years and then bought my first home when mortgage interest rates were 9%. I am thankful that I am a homeowner today and I hope that my children and grandchildren can be homeowners in the future. In spite of problems and difficulties, there is a certain feeling of independence and satisfaction in homeownership which I never had while renting. I have a few tips to share with future home buyers. I hope you are able to take advantage of relatively low interest rates and home prices.

Home repairs in the Northeast are sometimes required by weather related damage such as trees falling onto homes after being blown over by the wind, roof damage, pipes freezing, etc. Homeowner's insurance policies should cover some of the costs of wind damage. However, insurance companies argued that wind was not the chief cause of damage to homes along the Mississippi Gulf Coast during Hurricane Katrina but surging waves of water. Relatively few homes have been rebuilt near the Mississippi beaches. Insurance companies may have avoided paying Katrina claims because flood insurance is sold separately from regular homeowner's insurance policies.

Furnaces, humidifiers, and air conditioners require maintenance and possibly replacement in the future. Home buyers should include the cost of homeowner's insurance (and flood insurance in areas prone to flooding) and a savings fund for future repairs and upgrades in their housing budgets.

For the record, and I assume we all can comprehend, I am completely flabbergasted at the complete and utter ignorance displayed on these posts regarding the merits of owning as opposed to speculating in the real estate market. People, these are stark differences.

First, let us completely disregard those unfortunates who, for one reason or another, whether caught by error or by ignorance, find themselves in the mess of owning property that has its value in a steep decline.

Next, lets focus on those renters or buyers, as they find themselves, and their decision to do either one or the other.

It is factual that buying is an obligation placed upon those who venture in that regard, and should not be taken lightly, as the end result could be your ultimate financial undoing should you be forced to default. My suggestion is do not take this undertaking lightly, as it completely separates those with financial discipline with those who only dream they have it.

Do the math people and make the commitment if your figures are correct. A lender will assist, but I would strongly suggest that the beginning be with you and your convictions and strong desire to complete this deal.

If you lack any of the above, do not do it. That is the facts, or suffer the consequences. Remember, the one about "The Man in the Glass"? If not, look it up.

A whole lot of interesting comments here. Firstly, I'd like to point out that up here in the Northeast, at least in Rhode Island, we pay sewer bills separately and in addition to water bills and they are huge - as are property taxes in Providence. The most important consideration is to know yourself, your needs and your responsibilities. I always thought renting was great when it was cheap - and did so for about 22 years - keenly aware I was paying someone elses mortgage and buying them their home. Always hoping to buy a place and build some stability and equity though. After 27 years in Boston, the first 22 of which had stabile rents and communities, I watched the real estate market go up about 500%. I was a self-employed artist and no one would give me a mortgage, so I was shut out of that huge equity opportunity. The last 5 years I lived there, landlords kept selling the houses I lived in and forced me to move 6 times in 5 years - it destroyed my business, people's ability to locate me, and my ability to do my work, as I was constantly looking for a place to relocate that suited both my living and working needs as well as my budget., and then I had to pack and move and unpack, etc... It was devastating. I swore I would never move again until I owned a place that no landlord could make me leave. That's how I ended up buying in Providence at the very peak of the market. I borrowed a down payment, and bought a 3 family house, so I knew that covering the bills was not completely dependent upon my income from my work, and that the people renting from me would help cover the mortgage as I had for my landlords. I have a place that is 3 times the size of any apartment I'd ever had before, I have a yard and live in a great area, and yes, my house is now worth only about half of what I owe, but I can still cover the bills without worrying that I'd ever have to lose my house or move, because I very carefully considered all of the costs, overestimating expenses and underestimating income to be on the safe side. I also want to keep my tenants happy, so I try to choose people that I can relate to - other people in the arts, theatre grad schools, etc... so we have things in common and enjoy being neighbors. The public schools are dreadful where I am, I never had children and do resent having to pay huge taxes to educate kids, when I never placed that burden on society myself. However, I do understand that with everything in life, there are compromises and that is the cost for a civilized society. Even though I may wait another 10-15 years to be able to break even if I had to sell my house - I would make the choice all over again. I have a great place in a great college town, walkable to fabulous restaurants, theatre, parks, etc... and I can afford it. Since my house is a multi-family most all of the costs to pay for and run and maintain it are deductible, so my income tax burden is reduced to miniscule, and even though it may take a very long time to have my house be worth the price I bought it for, the value will come up again, and my mortgage balance goes steadily downwards, so when I decide it's too back-breaking to keep shoveling snow, I'll be able to sell and put enough money in my pocket to go elsewhere. Or I could rent my apartment and get enough additional rent to cover another mortgage payment elsewhere right now, should I choose that option. I could never have that stability, choice nor profit from paying rent - and with tenants helping to cover the costs - my 1/3rd of the mortgage payment is less than any rent I ever paid. If you look carefully and add up all the numbers and make a purchase within your budget, home ownership is the only way to go! If I could show enough income (after all those legitimate expense deductions) I'd buy as many houses as I could. It never ceases to amaze me at how fearful people are about this most enriching opportunity that is so much more accessible to those of us here in the USA then to just about anyone else in the world.

Great information Tara. Definitely fodder for more blogs too! I put the emotional/sanity cost of having neighbors with thin walls as #6. With owning you at least know who's stomping around upstairs, and can usually ground them for it!
Making the move from renting into home ownership isn't always simple, but it's definitely the way to go for many people.

We often think of the hidden costs of owning a home ... great to see those often overlooked costs of renting! Thanks for posting, Tara!

Thanks, Tara!

Good post.

Another hidden cost of homeownership vs. renting in the 2x-5x increased insurance premiums. Renters usually spend around $200/yr while here in N. TX homeoweners' premums start around $800/yr. with higher deductibles. Homeowners are more likely to take better care in upkeep and maintanence in order to help reduce risk of insurance claims whereas renters have no sense of ownership and let things deteriorate far more often.

Renters on a 1 year lease might see the rent rise $200 a month here in Las vegas as the demand for 3+2 rental
homes is red hot. No new building, almost 5000 new residents a month, and people losing their homes are all copeting for well located homes. The anti owning crowd might change their tune when rents spike every year.

David Cooper
Las Vegas Real Estate Foreclosure Houses with Cash Flow for Investors who demand Below Market Deals

Gret post. Too many "investors" don't think all of the possibilities through.