I keep seeing people say that owning a home is this unnecessary “American dream”, and that it’s a bad idea, since most people don’t want to stay living in the same spot for the rest of their life.
My question would then be, “If buying a house is not smart, what is the smart decision?”. Is it just renting a house/apartment for the rest of your life? I did some math based on national averages in the U.S., and it looks like buying a home is a bigger investment of cash up front, but renting for your entire life would cost more in the long run. So what exactly is the answer here? I’m becoming more and more worried about how i’ll ever be able to find affordable housing.
I’d like to see it normalized that buying a house is the answer *for some people, at certain times.*
If you’re not planning to stay in the area for five years or longer, it might not make sense. If you’ve just moved to a city and want to take your time and find the neighborhood you like best, it might make more sense to rent for a time. If you’re just starting out in life, and don’t have enough for a downpayment, it might not make sense. If all you can afford is a run-down shack in a bad neighborhood or a nicer house with a two-hour commute to your job, that might not be a trade-off you’re willing to make.
Do we need more affordable housing? HELL YES. Are there some very scary trends out there? OF COURSE.
But at the end of the day, you are an individual and there is no “final grade” on life. You have to make the best choices for you, your lifestyle and your needs, at the time. I didn’t become a homebuyer until late in life (and even then, it was a condo, not a single-family home because I’m old and really don’t need a yard to maintain) but I can look down the line and see my choices and my circumstances are the reasons why that was the case. If I’d stayed in VeryTinyTown and not gotten divorced? I’d have bought a house years ago – but I’d also have been locked into a bad marriage, stagnant wages and a location I wasn’t fond of. Moved to GiganticCity and married a better person, got a fabulous job… and ended up with a condo. Oh well.
There are pros and cons to renting, pros and cons to being a homeowner. You – and only you – can determine what makes the most sense for YOU. You do not want to be the person lying awake at 3 a.m. staring at the ceiling in a place you cannot afford that you bought just because “everyone says so.”
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
Tbh I own a home and we’re dealing with a lot of issues right now. We had a major storm come through and we need a new fence, new siding and new roof. Fighting with contractors, insurance and the city has been so stressful. Our dishwasher shit out on us, our AC unit is having issues now. It’s constant upkeep. Our taxes keep increasing. Yes we have a lot of equity in our home but sometimes it seems not worth it. I’ve contemplated selling to move into a condo/townhouse where the HOA would do the mowing/snow blowing & be responsible for the roof and exterior. There’s always other options. Hell, I even wouldn’t mind buying a plot of land and a nice double wide trailer and living in that just so I didn’t spend half my check on mortgage each month. š¤·āāļø
I am a New Yorker; the New York answer is to get a rent-stabilized apartment in an iffy section of town and stay forever.
https://www.google.com/search?q=rent+vs+buy+calculator
Whether or not to buy a house depends on a lot of factors. Thereās no single right answer for everyone.
Also, if you’re not at all handy and have no interest/skill in fixing things, owning a home may not be for you either.
I haven’t seen anyone claim that buying a house is unnecessary. But it’s not realistic for a lot of people who live in HCOL areas. I will never own a house, and I will die as a renter. Am I extremely pleased with this? No. But that is my reality, and so I stay in my little apartment that has become my home.
I bought my first house 10 years ago this coming July. It has cost me a fortune to maintain and I’ve had so many regrets in the past decade. That said, it’s my house (eh, it’s Wells Fargos house technically). This year my mortgage payment went down a lot because I have enough equity now that I no longer need mortgage insurance. I also just a couple months ago paid off the loan I took (from my retirement savings) for the down payment. Finally, I feel like I have some freedom financially to improve the place or do something else. If I was renting all this time I would not be in this same position. In fact, my mortgage now is less than my rent was for the similarly sized place I was renting before this, and now I have a nearly half acre yard.
All that to say, I wouldn’t buy unless I felt confident that I wasn’t going to move and the purchase was going to be long term…unless I could afford to buy and sell with the market and buy my way up to a nicer place. My boss is in a very similar situation to me (dogs, single) and lives nearby renting a house about the same size and pays 500 beans more than my mortgage. Cost-wise, I think it’s a wash now. I’m absolutely spending 5k a year maintaining the place. BUT, if my dogs ruin something, I don’t have to answer to a landlord. If I want to cut down a tree I can. If I miss a couple weeks of yard care, that’s my own problem/shame. BUT, when a pipe bursts, that’s also my problem. If the furnace craps out, also my problem. If I was hoping to go on vacation when my furnace died, plans might have to change or I take out a loan to fix the HVAC. (these are actual examples lol)
TL;DR I’m not sure there really is an answer. If I could find the perfect place to rent that was in a great location with a huge fenced yard I might consider it just because I have been stung so many times by home repairs. On the other hand, my house is 50 years old this year so I truly bought into all of this kind of risk and knew it at the time. To rent my same place would cost 30% more than my mortgage.
Also, fuck landlords š
Buying a house is the smart answer if you plan on remaining in a specific locale for a
Material amount of time.
I think people go way too extreme on the house vs rent equation. I think the difference between the two (all other factors being equal) is not that substantial. There are going to be times and places where home ownership becomes better after just a few years and other times and places where it never really beats out renting.
The real way home owership is better is it essentially forces you to save a lot of money in the form of equity in a generally appreciating asset. Its forced investment. If you are disciplined about your savings and save without having a mortgage and you invest that longterm while renting then its not going to be that big of a difference. Benefit of a house is house values almost never go down and a fully paid house gives you a lot of security in your retirement. But then again having a ton of liquid assets gives you that security too so.
Everyone think they’re gonna move around a lot, but even the minority of which seldom do. Renting was a terrible decision for me. I could’ve had a decent brick 3/2 home paid off by now instead of the 1/1 shack I inherited.
I bought a house in February, the market may crash and I may lose money on it. But my happiness and the happiness of my wife as been at all time highs since becoming homeowners. That alone Is worth
There’s a game here. Houses are more expensive where you make the most money, cheapest where you don’t.
Get your experience as a renter and find places where a built up experience where, even if you took a pay cut, you would have more disposable income after you move.
100k in LA is a renter. 80k in most of the country is a home owner. You have to look at cost of living with your income and ability to move.
Edit grammar
At the end of the day a home is a shelter. It shouldn’t be thought of as an investment and nothing else. If you want to buy a house and you have the means to, then do it. However, don’t try to time the market and don’t overpay for a house that isn’t worth it. Do your homework and find a home that fits your needs that you can afford. I get renting sucks, I currently rent and am over it. No matter how nice the apartment is that you move into, how much you pay, or how good of a neighborhood its in, there are always lazy, loud, and inconsiderate people who live there. Typically with a home, the chances of this are lessened (assuming you move to a decent neighborhood). As for renting a home, I can’t speak on that too much.
Cannot imagine staying in the same home for thirty years then staring at the same walls in retirement just because you have a paid off home. Iām stacking retirement accounts and will hit the road when the time comes. Or split time. RV, camp host, etc. Iād rather wander than be locked down.
Buying a house was a quality of life decision as opposed to long term financial decision. I hate apartments and houses for rent are very expensive. Living in a house makes me happier, so I bought a house.
The majority of people in countries like Germany rent for their entire lives. They even have decade long leases there.
Not so coincidentally, they also have much better housing policy than all their neighbors because there isn’t an army of nimbys fighting every new development.
Buying a house is the answer. Changing home ownership laws is also the answer.
You are not alone. There is a huge housing crisis in the US. It’s a true shame that it’s not being covered on the news every single day because we need to start making progress and having serious national discussions yesterday.
Have you tried not being right about everything and just did what you wanted to do?
You are being manipulated. Those articles are attempting to get you to believe that you donāt want or need a house. Rather than face the reality that you canāt get one with a standard job.
Not that long ago a single earner with a HS education could afford a house and three+ kids..
The current market is over valued, let it cool off. Buying is still a good idea, but not in all markets. Move to a secondary housing market and buy a place there. Start smaller and older home, commute into town.
My god. Do not buy right now, weāre (us) on the verge of a collapse. Save up
I thought the general advice was that the break even point tends to be around 7 years?
Depends on a lot. I bought my first house in the burbs 10 years ago for better access to schools for kiddo. He was in same school gr 4-8 then went to excellent free public high school with AP classes, stem programs, parent involvement, incredible diversity. We have great libraries, green spaces, relative excellent safety and free parking. That in the city (chicago) would have been impossible. I commuted precovid ~45-60 minutes each way (now usually about 40) and hated that part of it. I had a great garage for projects and a workshop, a beautiful yard & garden. Heās now off at school finishing freshman year of college. Iām selling the house almost 10 years to the day and making enough for a down + about 1/3 of a condo in the city and two years of tuition. It worked out both as a place for what I needed and as an investment. Iām now downsizing considerably but the condo Iām buying cost more than this house did 10 years ago. It wonāt be my forever place but again is what I need to be able to be a bike ride from work and take care of college.
Depends on what you need and what you want and where youāll be in 5-10 years.
So, like everything,
YMMV. Need to figure out what works for you in your life with what you have and where you are.
I live in Delaware, I make 20 bucks an hour in a grocery store and I’m 36. I was living in a camper in my brother’s driveway for almost 3 years with tens of thousands in debt, I paid off debts used credit cards after for everything and paid them off every month, paid off my car, got perfect credit while living in the camper and ended up being able to buy a 2 bedroom stick built house with no HOA in a growing area for 150k with Zero down payment in August of last year and my payments are 864 with insurance and everything all alone and being single. It’s also like less than 500 feet from the water in the bay.
I am 47 and have witnessed some serious changes in the housing market in my lifetime.
When I was a kid, interest rates were near 15% and I believe my parents were only able to afford a home because my mother worked at a bank and got a decent interest rate on a 5 year arm. Luckily interest rates dropped into the late 80’s and they were able to refi.
Since the mid to late 90’s we’ve basically had the longest bull market in bonds in the history of the United States. It was bound to end eventually and it went on for far, far too long. But it is now ending.
There’s good news and bad news. Savers are about to be able to reap higher interest rates on their savings and bonds. House buyers are about to experience more normal 30 year rates.
All this to say, the pendulum has finally swung and we are, imo, entering a bear market for bonds. I expect it to last at least a decade.
TL;DR housing is about to get less expensive over the next five years imo.
A lot of people say not to buy because you can get a better return in the stock market with the down payment or the extra money you will spend on maintenance etc. My opinion on that is most people are not disciplined enough to invest a consistent amount of money over 20-30 years so I think it makes sense to get into a piece of real estate in a high appreciation area so even if you havenāt been the most consistent investor over your lifespan, at least you have a paid for house that you can live in rent free or sell for a nice chunk of cashā¦just my opinion.
There is no one answer. It depends on your location, personal and family needs/circumstances and home prices/interest rates ve rental prices.
bad conditions for a couple years, or even a whole market cycle, is not at all the same as bad conditions “forever”.
We (44 and 39) just closed our first home this week and we were lucky we were able to. We were moving in some stuff and doing some pre-move jobs and we met the neighbors, a lovely elderly couple who said they’ve lived in their house since 1971!. We probably won’t make it that long, but we look forward to not having to move again for at least 25 years.
I canāt speak to everyone, but I certainly canāt imagine locking myself into one building for years and years. Renting will do just fine.
I own a home and despite, like others mentioned, there usually being a need for ongoing maintenance (even just lawn care) especially on a decent sized property I would NEVER not want to own my home.
Equity gains aside (i.e. I bought in 2018 for $220k, could easily list for $450k+ nowā¦ if I stayed renting it might be easier to move less than 5yrs later but would I have an extra $230k in my pocket?), I donāt see how it couldnāt be considered the āAmerican dreamā to own your home.
I feel like planning to rent forever is a dangerous game to play. Your expenses are literally in someone elseās hands, someone who can decide next lease renewal to charge you 20% more, justified or not.
For me, that was the last push I needed to buy a home. The apartment complex wanted to raise my rent from $800 to $1k/month, I had the cash to buy a house, and did so. Maybe I just got lucky with the timing buying right before prices started skyrocketing, but Iād never go back.
Supply demand dictates that if builders can make money off houses then they will build more houses.
Currently houses are very expensive and we are seeing house start applications increasing across many areas.
Renting wonāt be forever
If I may. Buying a home all depends on timing, to be honest. I lucked out and bought a home two years ago, right before the start of the pandemic. Housing market was still competitive at the time but interest rates were at an all time low. I bought my house at $270K; in California. After living in it for two years and dealing with minor fixes and troubles along the way. Once the Capital Gains tax expired at my two year mark, I sold my home at the perfect time; avoiding the double tax and walking away with $135K to pocket.
Owning a home is an investment. And just like the stock market; the housing market is a timing investment. If you happen to buy at the right time, you will see a profitable return. Sometimes, buying a home as the value increases is better than sitting if you feel like you don’t see a market crashing. And with the things Obama put in place since the 08 crash. The market will never drop like that again. So your house will only go up from this point forward.
One thing no one is mentioning…
Even if you don’t want a house but want to own your home…
Condos and townhouses are also great option. IMO better than a house even.
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