Having both owned a home around Dallas/Ft. Worth, plus having extended family members who currently own a 3000+ sq. ft. home in the in the suburbs north of Dallas, and also currently renting a small apartment ( due to a personal divorce situation, not permanent decision ), I feel I can add a few comments to the discussion.
First, let me preface this by saying that it is definitely NOT an apples to apples situation. By this, I mean it is generally not very smart to buy a very small home, and it is also not very smart to rent a very large apartment or home either instead of buying. Given the choice, most of us (myself included) would PREFER to own our own home, than rent. But this is usually for LIFESTYLE considerations, not necessarily always FINANCIAL considerations. I have also noticed over time a large percentage of the public seems to believe that it is ALWAYS right to buy a home at any price and ALWAYS stupid to rent an apartment ever. Personally, I think this is wrong for several reasons.
These are some of the overlooked points I have noticed:
1. Housing maintenance - Foundation problems
Homes around D/FW tend to have major foundation issues at least 30-50% of the time, many times requiring significant foundation repair work, which can easily cost $10K or more to fix. This is of course a REGIONAL factor and would not apply in all markets. Some of this can be prevented by "watering the foundation" and such, but not in all cases. I have seen some previously flat streets that look like an earthquake occurred (roads really humpy all over, new small hills that were flat before, etc. ) after about 5-10 years just from normal aging. The clay around the D/FW area is really nasty for movement over time.
2. Housing maintenance - Fences
Many of the newer developments in the Dallas suburbs have wood fences in the back yards and along streets, or some brick fences. Due to the foundation problems mentioned above, these fences are usually not good for more than about 5-7 years before needing to be replaced. Many times they will rot, bleach out, blow over in storms, or get moved around to where they look dumpy ( yes, even the brick ones - ground movement again here ) after a few short years.
3. Housing maintenance - Neighborhood fees.
Some of the subdivisions actually charge yearly fees to maintain the subdivision. In some cases, these fees can get to be $100-$200 a month or so.
4. Housing maintenance - Appliances, lawn care tools
Most homeowners will end up repairing or replacing appliances (oven, refrigerators, dish washers, washing machines, etc.) unless you have just moved into a relatively new home. Also, it can get expensive buying lawn mowers, fertilizers, garden implements, trimming trees, and paying for lawn services. Also, around D/FW you tend to have to replace and/or reseed grass a lot due to the heat. Watering isn't cheap, and sometimes you are prevented from doing so if there are drought conditions, so when that occurs your lawn needs major work afterwards.
5. Housing maintenance - Hail-induced roof damage
A lot of homes around D/FW are vulnerable to hail damage from storms. Sometimes you are MANDATED to replace a nearly good roof, just because of seemingly MINOR hail damage. My relative has had to do this TWICE over only a 10 year period. Sometimes insurance covers this, but usually at the price of a large deductible, and major increases in rates.
6. Homeowner's insurance - EXPENSIVE as hell
The homeowner's insurance these days around D/FW is EXPENSIVE, EXPENSIVE, EXPENSIVE... Not to mention they no longer cover mold damage, and sometimes it can be hard to even get any coverage at all if the home has previously had any water-related damage claims.
7. Neighborhoods change quickly in D/FW
What were premier, new subdivisions about 10-12 years ago around Flower Mound (north of D/FW airport), are now considered also-ran, overpriced, dated and dumpy looking. This also affects resale, since there are tons of new or almost new homes on the market, you lose a lot in resale if you overstay the neighborhood. Optimal seems to be moving about every 3-5 years, but then you factor in resale costs (realtor fees, preparing the home for sale, competing with new builder specials), and you see the issues. If you stay put, you get to pay increasing property taxes based on inflated appraisals which you cannot realize in the marketplace. And you have to sell your existing home against a plentiful supply of BRAND NEW homes which do not suffer from issues 1 and 2 yet.
Some other points to consider. In about 3 years of renting currently (rent $900/month for 2 bedroom), I have had 0% rent increases for 2 years, and only about 3% over the past year. In addition, I can get my carpets steam cleaned for free every year, pay NOTHING for any maintenance, insure my belongings for less than $40/month, pay less than $100/month for electricity, less than $20/month for water, free usage of a well-maintained pool, free usage of a well-maintained fitness center, and have maximum flexibility regarding when I want to move, or how often I can move. In addition, I live in a really good neighborhood where the average houses are $250-$300K so my kids can go to quality schools. The current monthly payment (PITI) of most of the homeowner's in the area is north of $2000/month. I am paying less than half of that. And the housing appreciation has slowed way down in this area, to less than 5% a year with a big risk of flat prices for some time.
Regarding the supposed "tax advantages" of the house. Well, guess what - for married people making 6 figures or more, you have to clear about $11K in itemized deductions before you get a single PENNY of benefit from tax deductions. Also, what you win there, you will lose back a lot of times from AMT if you sell ISO options, or have both spouses working. All in all, it is MINOR benefit at best, not a major benefit like it was about 10-15 years ago.
Is it better to own a house - sure for lifestyle reasons. But be aware that you are many times "flushing money" down the toilet for home repairs and property insurance just as much as the renter is supposed "flushing money" down the drain on rent every month. And it's really not that lucrative an investment except in a hot market with low interest rates. One recession and/or 10% mortgage rates will expose the problems with buying homes at current price levels as an "investment".
