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More thoughts on Home Costs…

After the deluge that hit Houston yesterday, I’ve been thinking about how much home ownership is loaded with risk. First off, we’re fine, and our house is fine, although there are thousands of people that are not in that situation today. A quick recap on what happened here yesterday, according to news reports, there were over 1,200 high water rescues, and the equivalent to ~240 BILLION gallons of water fell in a matter of hours. Effectively, almost 17” of rain between 3 am and noon. Whoa… We had a lot of rain around Memorial Day last year, but it wasn’t a quick episode like this one. Even though we didn’t plan to end up in our neighborhood, more and more we appreciate where we are and how little we have to worry about flooding.

We dropped our flood insurance last year because well, we just didn’t see the need. Even after this most recent event, we still aren’t worried about our house flooding. The street didn’t even hold water this time, unlike Memorial Day, when there was almost 3 feet of water in the roads around our house. Once they turned on the pumps or opened drains, or whatever it is that they did, we went from 3 feet of water to nothing in less than 10 minutes. That wasn’t the case for the other areas that we had been so keen on moving to when we first got to Houston though. Those places seem to continually get flooded to some degree. Sure, we consulted all of the flood maps to make sure we wouldn’t be in a “bad” flood zone, but the flood zones change after each flood event. The reason the maps continually change is because with more and more asphalt and infrastructure going in, water has fewer and fewer places to go which change runoff and drainage patterns. Those patterns aren’t recognized until – you guessed it, a flood event. What a Catch 22 type situation.

There are multiple apartment complexes that had their whole first floor flooded out with water that was waist deep or higher. Some houses that were just getting their repairs finished from the Memorial Day floods last year had a foot of water in their house yesterday. One homeowner mentioned that the city of Houston told them if they flooded again they wouldn’t be able to get permitted to rebuild. Whoa… Think about that. You buy a house and live in it for 5 years or so and then you get flooded. You get it covered by insurance and the city lets you repair it, with the caveat that this was your free pass, and one more and you’re on your own. Then another flood hits less than a year later and now you’ve got a house that is destroyed – again. You still owe money on the mortgage I’m assuming, and you can’t repair it. That sounds like a nightmare of a situation.

We narrowly avoided a similar situation when we moved to Covington, LA, that involved Chinese drywall. After Hurricanes Katrina and Rita hammered LA and MS in 2005, there was a huge increase of new construction on the Northshore of Lake Pontchartrain. Alongside that, there were 9 hurricanes that had hit Florida during 2004 and 2005. Between Florida’s rebuilding efforts, and the other Gulf States getting a double punch with 2 hurricanes, drywall was in high demand and short on supply so it was imported from a Chinese manufacturer. They had a high amount of sulfurous materials in their mix, which is not good. This led to the drywall giving off toxic fumes that would turn copper black and corrode it, and wreak havoc on electrical appliances, not to mention your own body, lungs, etc… Our neighborhood ended up having about 30% of the homes in it constructed with this drywall, and fortunately we lucked out and had none in our house. For the people that weren’t so lucky they were only left with a few options. Either replace the drywall out of pocket themselves, which was around $80k or higher, or wait for the lawsuit to get resolved and get your insurance to cover it. In the meantime, they were constantly replacing electrical appliances, and dealing with breathing issues and nosebleeds. One of our neighbors just paid for it to get replaced out of pocket because in 3 years, he had replaced 3 televisions, 2 dishwashers, 2 ac units, 3 microwaves, 3 computers, and his wife had been dealing with headaches and nosebleeds since they moved in. Other people just waited it out, but couldn’t sell their home in the meantime, because it was such a liability and no one wanted to inherit that problem.

Think about that cost to replace all of those electronics. Not just that, but who has an extra $80k lying around to get the drywall replaced? Even then, there were concerns about the effect on the wiring, so there were suggestions to replace that as well which would add another $20k, and the wood used to frame the house had to get replaced or treated to neutralize any gases it had soaked up from the drywall so that it wouldn’t continue releasing gases and destroying things… You basically have to rebuild your house from the inside out. Ugh…

It’s just mind boggling the amount of things that can go wrong with buying a house, and then you’re stuck paying and paying just to maintain your abode. We’ve had friends buy a house and in less than 2 months the water pipes connecting their house to the water system collapsed and they had to pay almost $20k to have them dug up and replaced because you need water right? That’s what’s been on my mind recently, just ruminating on homes and their associated risks. Riveting stuff isn’t it?

I didn’t expect this to go so long, and for those still reading, you did it! Woohoo! Have you come across any WTF situations with your home? Have you ever thought about all the risks associated with home ownership, or even renting for that matter? Is anyone even still reading…..


38 thoughts on “More thoughts on Home Costs…

  1. Maggie @ Northern Expenditure

    We had a pipe burst last week and flood our newly insulated crawlspace. Stuff happens with homes. I’m grateful ours have all been small manageable crap that can be dealt with in a day with no major lasting damage. I’m glad you guys were safe from the deluge.

    1. Mr. SSC

      We haven’t had any major issues, with our houses yet, except for some pipes I’ve broken on my own… That was an exciting evening, let me tell you. :)

  2. Fervent Finance

    I rent and don’t plan to own for quite some time. I do plan to have a home base some day but I’ll make sure it’s not in tornado alley or a flood zone. I grew up on a hill, so luckily never experienced anything like these issues. Worst that would happen to us would some tree limbs would fall in our yard from high winds or we’d lose power. I sometimes wonder why people live in these areas that mother nature tends to beat up very often, but I guess work and family tend to keep people planted in an area.

    1. Mr. SSC

      Growing up in KY, I remembered every spring and summer we would get some crazy storms and tornado’s were always a possibility. Fortunately we never dealt with that, but flooding and tornado’s are a definite deal breaker with our next place to relocate.
      Oh yeah, and ice storms, KY gets a lot of ice storms and those wreak havoc on everything.
      I really don’t understand either why people decide to live in places that they know will flood, especially when they grew up in the area. LA had a lot of those examples and the people just accept it as – Yeah, I’ll flood, but you just replace things and rebuild. No biggie.

  3. Steve @ Think Save Retire

    Amen to this. Buying homes is an idea that I am definitely, without a shadow of a doubt, over. Like, big time over. It may be the right choice for some, but definitely not for me and for precisely the same concerns that you’ve written about. It’s just really, really costly.

    1. Mr. SSC

      I am sure we will own another home, but just be aware of the extra costs associated with it. I don’t think last year was necessarily a one-off in terms of home maintenance stuff either. At least the next home we own will most likely be our “long-term” living area, as in at least 10 years. :) I don’t know that we’ll ever plant roots and stay somewhere for good, but who knows.

  4. Lois Wingerson

    This is all the more reason to be prudent when planning FI. That “rainy day” fund is crucially important, because by definition you can’t anticipate disasters or accidents.

    We take it for granted that we will have to pay for the privilege of owning a home, beyond just the mortgage and routine maintenance. With that privilege comes a certain degree of certainty: We don’t have the risk of having to move unexpectedly, which also entails costs. And we don’t have to wait for a landlord to fix a problem that arises.

    This is another great argument for downsizing, isn’t it? The less you have, the less you have to lose.

    1. Mr SSC Post author

      Those are great points. Beyond waiting for a landlord to fix a problem, you also get to choose what level to fix the problem. If the dishwasher dies, do you want a quieter one, or just replace it with a cheaper one that isn’t so quiet but still does the job?
      Definitely a great argument for downsizing. :)

    1. Mr. SSC

      I definitely agree. I remember one tropical storm event in our LA home, the water was rising in our backyard, and it got close to the door and then I noticed there was “fresh cut” grass covering our french drain. I ran out swiped it off o f the tops of the 3 drains and in a minute our backyard was water free. But had we not been home or not paying attention – flood ville. Actually, that neighborhood flooded pretty badly with some storms a couple months ago, and our house didn’t flood, but the new ones they ahd built in the front of the neighborhood were all in feet of water.

      Small and cheap is even great for less cleaning too. :)

  5. Our Next Life

    I’m glad you guys weren’t heavily impacted by the flooding — sounds horrible! This is similar but different: last week I called USAA, our insurer, to add umbrella insurance. And just because I hadn’t talked to them for a while, I asked a question I’d been wondering about: If our house burns down, do we have to rebuild in the same place, or can we take the money and buy elsewhere? (We live in wildfire country — this is not a far-fetched question.) The answer: We’d have to rebuild in place. Which is CRAZY to me. Because a place that burns once will probably burn again, albeit not for a while because the fuel will be diminished. But yeah, that would potentially be a massive and lengthy headache because it could take years to get all the houses rebuilt that burn down. This is the downside of mountain living…

    1. Mr. SSC

      Thanks, yeah, nothing in our area but some high winds. I still need to also add umbrella insurance – d’oh! Calendar reminder set! :)
      That’s interesting about the rebuild, because we looked at a house in LA that had burned (regular house fire) and their insurance wouldn’t let them rebuild on the same slab, so they raised it 2′ and built on the same footprint… We didn’t buy that house. :)
      Fire danger is something we’d like to avoid in our next locale, but if it’s in the mountains, then not a lot to do about that. I saw the effects from a LOT of wildfires during my 9 years in Denver, and even had some co-workers go through that ordeal. Rebuilding sounds pretty rough, but it’s the loss of everything you didn’t grab during evacuation that seems to be the most shocking part of that situation.

  6. Mr. PIE

    Glad you had no issues.

    Beyond the financial pain in these cases is the emotional burden. You get a home just right and how you want it and then carnage hits. There is no price you can out on that stuff.

    Owning a home,whatever form of shelter it takes, will always carry risk. Like investing it all depends what level of risk is comfortable for you and what you want from it.

    Luckily we have been spared any major issues although hurricane Sandy caused a large tree to come down from our property onto a neighbor swimming pool. We split the costs of repair and tidy up which were thankfully minimal. And we were grateful to have an understanding and reasonable neighbor.

    1. Mr. SSC

      You’re right, it’s a lot more emotional weight than financial, especially if you ahve proper insurance. People say it’s just stuff, but I’d ahte losing that banjo I got with my dad, our picture albums of the kids, and all the more sentimental stuff that money can’t replace.

      In LA, we went through a hurricane the weekend after we closed on the house, and then Ike came through two weeks later… We saw about 4 more storms, but no damage for our house fortunately. It sounds like you got off pretty easy respectively with your tree. I’ve got a tree that I think would most likely take out the corner of our house if high enough winds hit. It ahs made it through all the hurricanes and tropical storms to date though, so maybe I’m just a worrier, lol.

  7. ThePersonalEconomist

    Glad you weren’t impacted. BTW the photo is beautiful.
    I do worry about this kind of thing, although more about bush fires as we live 200m from a national park. And we had pipes burst only 2 weeks after moving into our house which wasn’t covered by insurance (tree roots). I guess it is a gamble.

    1. Mr. SSC

      Thanks, I took that from an offshore platform one summer. Those sunsets in the Gulf can be beautiful!
      During the 9 years I lived in Denver, I saw the effects from a LOT of wildfires, even the largest one in the states history. Those things scare me more than hurricanes, or other weather events because they’re so – final. They take everything if you get hit with a fire.
      Our friends were in the same boat with no insurance coverage because of similar circumstances. Fortunately, we haven’t dealt with those sorts of issues to date, except for when I broke a waterpipe and flooded our main floor 2 weeks after moving in. In this case, it was just me being clumsy with some cheaply installed pipes, and I broke the pipe right behind the shut off valve. Whoops, Hahahaha, sigh….

  8. Apathy Ends

    Our first house was 60 years old, furnace went out the first year (2k to replace) and it was so inefficient with heating/cooling that we would spend $300 some months on our energy bills.

    We got out of that house after 2.5 years because I was always worried about “what’s next”

    1. Mr SSC Post author

      I lived in a place like that, just rented, but man, the heating bills in the winter cost more than the rent, by almost double! I was only there for the one lease term.
      It also had things that were continually breaking and while I wasn’t paying to get them fixed I still had to deal with repair people, and the waiting to get them fixed.

  9. amber tree

    Good to hear that you are ok.
    It looks like we have a WTF coming up now. 4K is not that that much, but still, it will eat well into the “life happens” fund.

    1. Mr SSC Post author

      Ugh, $4k is still a lot of money when it’s something that just pops up, even if you’re prepared for it and have a “life happens” fund to draw from. Good luck with that! :)

  10. Jacq

    My friend is trying to sell her house & one of the realtors found info on a sealed oil tank (from heating oil) on her property. However laws have changed since they bought so they had no idea, disclosure wasnt required then. Current rules say it has to be excavated and remediated. Of course that’s not cheap, where it may affect their eligibility to sell, and eats into the down payment on the house they want. It’s a very frustrating situation.

    Glad you are ok with the flooding. :)

    1. Mr SSC Post author

      My mother-in-law went through that with her mom’s house. They also ahd to pay for removal and remediation which was not cheap. It was pretty frustrating for them too.

      I’m glad we’re ok too. :)

  11. Dividendsdownunder

    Wow, that is a huge amount of water. I guess that really hammers home why having insurance, and the right insurance, is important for things like this. Even 1 in a 100 year storms do happen sometimes.

    At the moment we rent, so luckily if this happened to us, it would only be our contents (which we have insurance for) which would be in trouble.

    I’m glad you managed to stay unscathed by this.


    1. Mr SSC Post author

      Thanks, we aren’t too worried with flooding, but the high winds could always knock a tree into the house. The weather reports say the next closest weather event like this was back in 2001 when a tropical storm parked itself over Houston and surrounding areas.

      I remember when I got renters insurance back in the day and found out it was so freaking cheap. It’s amazing I’d never done that before, but what sparked me getting it was watching a neighboring apartment complex burn to the ground… 70 units gone in less than 24 hours. Yipe!

  12. Lucky Girl

    Glad you are not suffering any bad affects from the storms. My parents live down there, and are also fine, but its a situation I am watching closely!

    I am astonished by how little I understood the costs associated with home ownership and the financial risks involved before I bought a house. We had some fairly minor issues with the snow storms in the northeast last year, but I learned a lot from co-workers about ice dams and insurance policies. It is great to have so much control over your own living place, and I have a very hard time imagining giving that up right now, but it really is a significant expense, and riskier than I imagined!

    1. Mr SSC Post author

      Thanks, we lucked out with moving to a good area, unbeknownst to us at the time. Glad your parents are okay too! When you own a house, you become intimately aware of all the issues you could be dealing with, lol. I agree having control of your own space is our main reason for owning, and even though we may rent for a few years when we move out West, we will probably buy another house when we settle down, even though we know it will be costly. We’ve ahd less issues than most because our houses have all been under 10 years old, so most stuff (minus the AC – $7k replace cost) has been working fine. But good grief, it seems like when the little things break, it just keeps adding up. We didn’t realize we’d spent almost $1k/month on just home maintenance and repairs until the end of the year when we tallied it up. It didn’t feel like it at the time, but man, that’s a lot of coin just to keep your home “as-is”.

  13. Elephant Eater

    I saw the news and was thinking about you guys. Glad to hear you’re alright.

    I agree with most of your thoughts on home ownership. The one big advantage to home ownership in my mind is that you have a huge inflation hedge, whether carrying a fixed rate mortgage or having a paid off home. While taxes can go up, your main housing cost of rent or mortgage payment is eliminated and not subject to inflation. I think our long term plans will include home ownership, but we definitely are over the big house thing and will choose a small home with low overhead, little responsibility and utilizing a small percentage of our net worth (in the range of 10%).

    Hope you keep staying dry!

    1. Mr SSC Post author

      Thanks, yeah stll nothing here, and the worst has gone.

      I agree our long term plans will be home ownership as well, and we’ll try to minimize costs by getting a smaller home with low overhead. I jsut never realized how much little maintenace things were costing until reviewing the year end budget. Even taking out the AC, which was a big cost, it was still close to $500/mo on just plain old repairs. That is with a house that’s just ~10 years old now. I also like the mental aspect of knowing the house is mine and I can do what I want. I’m not looking forward to renting for a lot of reasons, but if it makes the mountain living possible for a few years, why not?

  14. Kara

    I don’t own a home, but it’s high on my list of dreams. I really want one! But I know it’s an expensive undertaking, and one that has almost an insane amount of risk to it. I just checked into flood insurance for the duplex I rent in Austin because of these rains. We’ve been lucky but looks like we’ve got another week of storms coming our way!

    1. Mr SSC Post author

      I really like home ownership for many reasons, even if it does have more costs associated with it that I originally expected. I got renter’s insurance after watching a nearby apartment building burn down, but I didn’t have to worry about adding flood insurance because I was about 150′ above the nearest body of water, and in a 3rd floor unit. Yeah for small wins, lol.

  15. Ditching The Grind

    Glad you guys are okay. I was just watching the news and thought of you. These storms have been crazy. I drove to Austin this morning and the rain throughout most of the drive was insane!

    1. Mr SSC Post author

      Thanks, and those bands of storms are intense as they move through. Hope you guys stay safe and dry too!

  16. Laurie @thefrugalfarmer

    Been thinking about you guys and the whole Houston area as you deal with this, and so glad you guys (and your house) are fine. We had 11 inches in three hours one time. There was flooding everywhere. We lived in the ‘burbs at the time, and luckily, our house was located near the top of a hill so we had no flooding. We freaked out for a minute when the power temporarily went out and the sump pump stopped working. The water rose higher and higher in the well and just about came out to the basement, then suddenly, the city’s generator kicked in and the power went back on. Many, many homes in our neighborhood and surrounding neighborhoods were underwater a good 3-5 feet. Lots of roads flooded out. Not nearly as bad as what happened there, but bad enough to give us an understanding of the serious dangers that can happen with flooding. For that reason, we work to choose carefully the properties we buy. Regular, non-emergency maintenance costs are bad enough without having to deal with this kind of junk.

      1. Mr SSC Post author

        I didn’t read it like that, but I get where you’re coming from. I think the thing is that especially with that map for the meyerland area, most of those people moved from out of state, and even the ones moving within Houston, it isn’t “supposed” to flood like that. I mean seriously, based on the flood maps and historic data, they’re now an outstanding anomaly that will once again revise the flood maps to say, “whoops, we goofed, that area floods like hell!” Why would they not have marked that previously? Well, the technology can only predict so much (almost nothing) and the flood maps are based on – wait for it – areas that flood when it rains! Seriously, there have been 2 “historic floods” since we’ve moved here, last memorial day – when Meyerland first flooded and just now, when they flooded less than a year later. Until then, they hadn’t flooded so what’s the risk? None according to any data available to anyone purchasing a home there before 2015.
        As far as paranoid, the funniest thing I saw this week was news coverage of a rescue crew on an airboat taking inventory of who was sheltering in place, and who wanted to get rescued. They come across a guy in chest deep water, wading around in his garage – he still had power, because they just cut power to the first floor, so he was fine. When asked if he was okay, he was like, “Yeah, this is just river life, sometimes it floods. I mean last year the insurance company didn’t ahve no incentive to buy us out, but (laughing loudly) I think this might do it.” They asked, do you want to leave, and he laughed and was like, Noooo, we’re good. Chest deep in water, just reigning in the “drift aways” from his garage…. It’s all perspective I guess. – And I really hope you check back and read this. :)

    1. Mr SSC Post author

      That would be horrible knowing that the flooding would have been avoided if the sump only worked – thank goodness the power came back on when it did. :) I think for us moving to LA and closing on a house on tuesday and getting a hurricane on saturday and then another 1.5 weeks later was a nice introduction to the other risks of home ownership. We just lucked out we didn’t end up where we wanted to (in houston) and that we are where we are. Like most geologists say, “I’ll take lucky over good any day!” lol

  17. Kalie @ Pretend to Be Poor

    I just wrote last week about the mortgage as the death pledge (the literal meaning of the term). It’s rarely the investment that people might expect it to be. We found out 1.5 years ago that our deck’s design caused the framing of a portion of the house to rot, and then carpenter ants came in ate feasted on it. Luckily my husband and his brother we able to fix the entire thing–framing, siding, deck, and all, but it took a lot of spare time and energy.

    1. Mr SSC Post author

      Death pledge?! Hilarious! That got me smiling just thinking about it. I’ll have to check out that post. :)

      The more I ask people about their houses and if they’ve ever broken even on them I just get the response – nope, never made money much less broken even counting in repairs, maintenance, etc…

      At least your fix was able to be done by you guys and nothing that needed to be contracted out. That adds a LOT of $ to any project.

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