Real cost of owning a home
I purchased my home in 2020 and am selling it now. The gain I'm about to pocket sounds AMAZING, but I wanted to break down the numbers on what the actual cost was over my years of ownership, to determine the true "gain" (if it was even still net positive). I hope this is helpful for anyone considering buying a house. I always say, you have to want to be a homeowner. It comes with a lot of work, a lot of out of pocket costs, and if you don't love it, then renting is probably more beneficial for you.
I'll sum up the numbers up front, and then add a little more detail later on.
Purchase price : $150,000
Sold for: $360,000
$210,000 profit sounds amazing - but what have I paid during my years of ownership? (I'll be rounding to the whole $1000 to make it easy)
Closing costs: $14,000
Sale cost: $25,000
Total paid principle mortgage: $45,000
Total paid interest (2.6% 😭😭): $16,000
Total paid Escrow (PMI, insurance, taxes): $30,000
Sum: $130,000
Renovation costs over the years (I'll break this down later): $65,000
Total paid: $195,000
Remaining on mortgage: $97,000
Sum: $292,000
$360,000 sale - $292,000 = $68,000 gain
This $68k gain does not include any utility costs spent.
Overall, I'm very happy with this number, but I do want to add some more details.
The $65,000 renovation costs is probably closer to $100k if you include labor. I did a lot of the labor myself, which helps a lot. Renovations included roof, added bathroom, mini splits, windows, water heater, appliances, landscaping/hardscaping, and redone kitchen. This does not include a few thousands worth of paint. I did one major project each of the 6 years living here, meaning I had to come up with anywhere from $10k - $25k worth of cash each year.
Inflation has also helped. A higher interest rate, lower inflation, and labor costs would most likely overcome my $68k gain.
I repeat, own a home for the love of the game, not some amazing financial investment.
What I am gaining now is going towards a down payment of our next home. The next home is in much better condition than the first one I purchased (when I bought it) and the interest rates now suck. Because of this, I wonder if I will get nearly the amount of gain out of this next house. But we do plan to stay much longer. Only time will tell!
Good luck to you all, and I hope this helps!