I think owning a home is overrated. Why I may never own a home again.
Not too long ago, I closed on the sale of my home. I had been ambivalent about buying in the first place (although, overall, I felt good about the house), but the whole closing process, and the realities I faced as a homeowner, have pretty much turned me off of buying in the future.
After looking at the situation, I think that I could be happy renting for the rest of my life.
Why I Feel the Need to Never Own a Home
I?ve never viewed residential homeownership as an investment. When we were looking, I cringed inwardly every time the real estate agent referred to whatever home we decided on as an ?investment.? I just didn?t see it that way. I?m not a huge fan of Robert Kiyosaki, but I do agree with him when he points out that paying a mortgage on the home you live in is in no way an investment.
But I figured that, even if we didn?t come out ahead, that we could probably do ok. And besides, we had just moved five times in as many years, and the last move was prompted by the fact that our landlord didn?t want to renew the lease because she wanted the house for her grandson and his family. We figured that at least we could landscape the way we wanted, and we wouldn?t have to be worried about getting kicked out on the whims of a landlord.
After having the home for seven years, though, I changed my tune a bit. Some of the issues that we ran into include:
- We got tired of taking care of the yard, so we had to hire someone else to do it.
- Property taxes, mortgage interest, homeowners insurance, and other costs ? even with tax breaks ? still cost more than we expected.
- The market finally started tanking in our area, and our home lost value.
- We had to replace the flooring after five years.
- As we entered the seventh year, it became apparent that we would need to start making some repairs, and replacing some of the original fixtures (like the cheap builder-installed toilets) in the home.
- The thought of having to eventually do things like replace the roofing and make other, more substantial repairs, began to haunt us.
- It?s difficult to just up and move when you own a home. My husband?s new job, and our move across the country, came suddenly, and we were tied down.
- We?re not the landlord type, so renting out the house didn?t appeal. (Plus, see number five; we?d still be responsible for all of that.)
The whole real estate process is also a big pain. Sure, it was a bit of a hassle to apply for the apartment we now live in. But that process was nothing to the real estate transaction process. The stack of paperwork involved when we bought the home, and then when we refinanced the home, and then when we sold the home was huge. The paperwork alone is almost reason enough to never own a home again.
Everything about the process is stressful. Plus, it didn?t help that the home had depreciated enough in value that we had to come up with several thousand dollars to make this all happen.
So Far, I?ve Enjoyed Being a Renter Again
Right now, I enjoy renting. Part of that likely has to do with the fact that we are now in a position to afford nicer apartments than we were able to get when we first married. Our current apartment is only 250 square feet smaller than the house we were living in. We?ve got on-site storage available to replace our under-the-house storage, and we can also garage our cars. We downsized to the essentials, and I like that aspect, too. Plus, since we have limited space to grow, we are spending less money overall.
I also like that we don?t have to pay when things break, and we don?t have to take care of maintenance. As a homeowner, I had to make appointments for heater service and air conditioner tuneups. Then, I had to pay for these services. Now, I don?t have to worry about it. The property management company takes care of that stuff. I don?t have to worry about taking care of the yard, and I don?t even have to pay for the alarm system in the apartment.
What?s also nice is that we were able to snag an end unit on the top floor. We only share one wall with our neighbors, and we never hear them anyway. It?s nice and quiet, and even going up the steps isn?t that big of a problem for us. We just modified our shopping habits a bit. Not only that, but there is a fitness room on site, and a nice resort-style pool. I can ?go to the gym? and we can play in the pool without the need to go across town or pay for admittance. It?s a nice setup.
While I might prefer a town home to an apartment in the future, or we might decide to rent a house again, so far this experience has been awesome enough that my husband and I are in agreement that we could never own a home again and be perfectly happy.
When you look at overall appreciation, once you take out what you pay in mortgage interest and other costs, even with a tax break, you?re hard pressed to see an annualized return of better than two or three percent ? especially if you live in areas that aren?t likely to see huge gains in the market. I can do better with my other investments. Plus, we aren?t tied down. Even if we had to pay a fee for getting out of the lease early, it would still be less than what we just forked over to sell our house.
Owning can work out if you are able to sell at the top of the market, or if life?s unexpected circumstances don?t prompt you to sell quickly, and for terms you aren?t particularly happy with. It can even work out if you decide to go the rental income route and become a landlord. But that?s just not my style.
What do you think? Do you prefer owning a home or renting? Would you consider a lifestyle that allows you to never own a home again?
We are in the very beginning stages or prepping our home for sale. I am definitely not looking forward to this because this is a side of home ownership that we have not experienced yet. We have to do some repairs, replacements, and maintenance. It will be all very costly!
That being said, we do still plan on buying our next home, and it will probably be our forever home or our “long-time” home.
I did not enjoy the closing process, although we were able to sell the home quickly — without even listing it. But the thought of having to maintain a yard, and pay for repairs and maintenance, just makes me cringe. I know that, technically, I pay for those things as part of my rent, but it’s all rolled in there, and it doesn’t come up as an extra cost. Plus, I’ve got a nice gym and a pool as part of the apartment community. Beats having to lose 40 to 60 minutes of the day driving to and from the gym.
Stability. That is the biggest plus about owning our home. We love the home (my 3 kids have known no other), we love our neighbors, we love the school district. I love the fact that as long as we pay the mortgage no one will ever kick us out. As a father, that is very important and the main reason we will never be renters again.
I can see how the stability would be nice. The good news for us is that we are likely to remain stable in this apartment community. We weighed the options, and you are likely to have long-term stability in a community like this, even with renting. But, even with a home, you might not have stability. My aunt and uncle moved for a job (bringing their teen son with them) and then two years later my uncle was laid off and they had to move again for another job, bringing their son to a different school for his senior year. So, even though they bought, it didn’t change the stability factor with other areas of their lives. And their two forced moves in three years meant they also lost money. Of course, if he had his own business and worked from home, then that wouldn’t have been an issue. …
Owning vs renting and which works best for someone really depends upon what they want to get out of their place of residence, as well as their individual lifestyle. For me, owning makes a lot of sense, and is much preferable over renting. Going back over your points:
1.) I love mowing the lawn and doing landscaping projects. Being able to do it the way I want as a home owner is a plus for me.
2.) Yeah, property taxes and interest is all part of owning a home….but you should have renter’s insurance too.
3.) We built our home 10 years ago, and the market tanked shortly after we built it. it’s still not evaluated at the price we paid for it….but I couldn’t care less. It’s my home, and if you don’t think of it as an investment, then it doesn’t matter what the market is doing. Plus, the devaluation of my home makes my property taxes go down as well. 🙂
4,5 and 6.) yes, repairs and maintenance are certainly a part of owning a home – and can cost a lot of money. But as a home owner I get to pick the stuff out – a landlord would probably just install another set of cheap builder grade toilets. I get to decide what goes in my home, what it looks like, and how much I’m going to spend on it – AND I don’t have to keep hounding my landlord to upgrade or fix something that is at end of life.
7.) I’ve worked for the exact same employer in the same location since I graduated from college – 18.5 years and running. Yes, things happen…but if I have my way, I’ll never move. My roots are deep.
8.) I’m not the landlord type either. But since moving isn’t in my plan – nor is it the nature of the business I’m in – I won’t likely have to worry about needing to sell or rent my current home.
Just a different perspective, which is mine alone. If renting makes your life more stress free, then that’s what you should do. Life is about options, and not everyone is comfortable with the same choices.
Oh, I agree that you should do what works for your situation. I know lots of people, like you, who are happy with it. Home ownership just isn’t our thing, especially since who knows when my husband will get a truly long-term job. But all the things that come along with owning are things that I don’t enjoy. You do what works for you, and renting works for me 🙂
When my parents sold their house they said they’d never own again either. The upkeep mixed with massively depreciated value of the house due to changes in the neighborhood were huge financial burdens. And both places I’ve lived recently (CA and NY) are way too expensive to even consider buying a home. Happy renter here!
I think that’s a good point, too! In some places buying a home is just unaffordable.
We don’t have to worry about this, since our folks bought the apartments we have, so they did the work before. I do like the idea of owning a home maybe just for the support we’ll give our daughter, she’ll inherit 2 apartments and most likely a house we plan on building in few years somewhere near the city.
The issues you were facing were because of the bad quality of the work done before. We’re gonna build our house carefully, husband is a civil engineer, so no floors to replace for at least 40 years, same with the roof. In my country most houses are built from brick and mortar, which makes them VERY durable and usually the work done on your new house is of excellent quality, even if it does bring up the costs.
This would allow us to have less maintenance costs in the long run.
Anyway .. if you are OK with renting and it suits you well, then it’s the perfect choice 🙂
I like that you point out quality construction. Anymore, when you buy in a new development in suburbia, you are likely to have inferior materials and quality. There’s something to be said for quality construction!
I think this makes sense. I’ve been tempting to do this myself except that John is English and as we’ve all heard for an English person their house is their castle (they get very attached). Also, deciding to rent implies a level of financial security – people who feel insecure, feel compelled to own (at least this is what I believe).
That’s an interesting take. Usually home ownership — at least here in the states — is seen as a sign of financial stability, and “making it.” Maybe that’s the compensation 😉 At any rate, I think the decision to rent vs. own should be made after careful thought about your lifestyle, finances, and what makes you “tick.” You shouldn’t do either just because someone else says you “should.”
I’m with you on this one! I bought my first house 14 months ago, at the age of 35 and the “dream” of home ownership is LIGHT YEARS away from the realities. I think I spent the first 6 months crying myself to sleep because the reality of the sheer responsibility hit me so hard, literally the day we moved in. I was ambivalent throughout the process too, and I should have listened to my gut. But I wanted that “stability” for my kids before they got too much older (they’re both tenagers) and I guess in my mind, it was the “grown up” thing to do.
But never again! I daydream about the day that I can finally sell the house, get rid of all the crap I have had to accumulate here and move into a small apartment. Owning, in my opinion, is nothing but a headache.
I remember Robert Kiyosaki saying in Rich Dad, Poor Dad that houses are a Liability, NOT an investment. Looking at Warren Buffet’s overly modest home, I think he’d tend to agree. Still, there are things you can do with a home you own that you can’t with a rental (tear out all the walls, repaint EVERYTHING, etc.) Also, rent goes up every year, so you are hedging against the inflation of rent. Add to that the 3% appreciation in value you mentioned above, and it’s not bad financial sense over the long haul.
Additionally, you’re leaving out the part that once you pay off the mortgage, you NEVER HAVE TO PAY THE MORTGAGE AGAIN! So, while renting may seem similar when comparing it to a house with a loan attached to it, once the mortgage is paid off, all that’s left to do is pay yourself. Over time, home ownership wins.
I have two dogs, five cats, and twenty plus ducks and geese. Renting is very tough for people with as many pets as I have, even in rural areas like where I live.
That’s a good point! Sometimes your lifestyle choices mean you have to own — just so you can do what you want!
I agree it is a hassle in some ways, but yes, I don’t feel I have a choice but to own as an animal lover.
Home ownership is definitely pricey. Feels like things just keep coming, though nothing major has gone wrong, after demolishing an attached outbuilding, there’s a gap between the fence and the masonry wall. Cost to rip out the fence and extend the wall? Probably $2,000. Plus the $3,000 we spent on energy efficiency…
That said, it’s worth it to us because eventually we won’t have rent (aka a mortgage payment). Of course, we bought near the bottom of the market. Our mortgage payment is low. We actually pay nearly as much in utilities as we do for our mortgage. So our situation was quite different.
I don’t think people should buy a house as an investment. They should buy it if they can afford to live there, with an eye toward not having to pay for a living space soon. Well, not including insurance and taxes.
I think you make a good point about why it’s right for you. Plus, I like the idea of clarifying, in your mind, what you plan to use the home for, and why you are buying it. If you plan to live in it, cool. But don’t think of it as an investment (other than an emotional one) unless you plan to rent it out for income.
The bursting of the housing bubble turned a lot of people off to ownership. Totally agree that it is not a good investment (for some). After maintenance, insurance, taxes and commissions you are probably going to see a return well below what you could get in safe bonds.
The think is that many people are horrible about saving and investing their money. The stock market, even after some serious crashes, has returned about 7% a year but most individual investors only see returns of 4% because of panic selling. And that is if they keep with a regular savings plan. How many people start putting money away regularly only to miss their goals because of irregular deposits?
A home loan forces people on a savings plan and provides a nest egg after 15 or 30 years. Just too bad that many don’t know enough about investing and how to handle debt
Love the blog. Great advice.
Joseph Hogue
I love houses more than I can say and was obsessed for years before I got my first one finally. I can’t conceive of being a renter at this point and think of renting as a very tenuous situation for the longterm since you’re at the mercy of the landlord.
I live in a city where values over the last fifty years have averaged an 8% annual increase. That includes some flat years and a few down years – plus some years where values went up 15 – 20%, perhaps more. I don’t think of my house as an investment but I have no qualms at all about it losing value in any significant way.
No question – there are responsibilities and expenses being a homeowner but for me the pleasures far outweigh the minuses.
A couple points in favor of home ownership.
1. Once a fixed Mortgage is past a certain point in time, the rents in the area should be higher than the Mortgage (if they keep on trend).
2. Once the Mortgage is paid, people on a fixed income (retired) can still live in a neighborhood and style they were used to before retirement.
3. Renting out your “last” primary residence, and moving up to a nicer home (rinse, repeat) is a way to free oneself from the job market. Landlords do have a lot of responsibilities, but if you are marginally handy and can search you-tube, most of the maintenance can be done by yourself.
4. You give your children a leg up in life. With the cost of rent and school loans, they’re going to need it.
I think home ownership is great if it meets your lifestyle needs and you like doing it. I know my grandmother was happy to live in her home until her death, and only had to worry about utilities and taxes for the last 30 years of living in it. But it really is about your own preferences. I like being a long-term renter, and it’s something I’ll keep doing.
I completely agree with you. I’ve been a homeowner for many years—biggest financial mistake of my life, for most of the reasons you list.
It’s also been the biggest stresser of my life. I should add that my house is a well-built house. However, things break and need to be replaced. I’ve replaced appliances 2x, heat pump 2x, roof once, all of the siding, flooring 3x, painted more times than I can count. Let’s not even get into plumbing and electrical issues. The time and money are ridiculous. You really can’t defer maintenance.
If you own with someone who doesn’t like/want to devote time and money to maintenance, it will kill your relationship. Trust me on this.
The lost opportunity costs (in time, money, lost job opportunities) cannot be understated.
Also, rents are set by the market. I know plenty of homeowners who are losing money renting their place out, but can’t afford to sell. So for those who argue that you’re paying someone else’s mortgage, maybe. Maybe not. Who cares?
The flexibility of renting cannot be overstated. My in-laws have rented their entire lives. When they wanted to move for jobs, they did–in 30 days. When their income went down, they rented cheaper places, when it was up, they rented luxury places. When kids were at home, a bigger place. When kids moved out, a smaller place. You just can’t do that as easily when you own a house.
I felt enormous pressure (by husband and family) to buy. I have finally convinced my husband that we should sell and rent for a while. I am currently prepping my house to sell. Yet another home ownership PITA.
FWIW, I have kept all of my home records. I then created a spreadsheet. Then I cried.
I’m just glad that there are still people buying into all of this homeownership crap –I have something I’d like to sell them.
At least you’re part of a couple, and can share the burden and hassle.
I am trying to sell my first–and possibly last–home. So over it.
The main downside of renting–in the US anyway–includes often not being able to keep pets (or the pet you want, like a big dog). And, especially for people with young kids, the stability of homeownership is important.
But OH! To be able to be free of my glassbowl renting neighbor! To be able to pick up and move to the other coast for a job! To be free of fears of a special assessment by the HOA! But mainly, the best case for not buying a home is to never have to deal with RE sales agents every again.
p.s. If Congress ever cuts the HO deductions, *poof* goes the value of many homes.
I agree with every point this author makes! Our first and only home owning experience was a nightmare. We were just coming out of grad school, starting a family, and we thought buying was a good “investment” and what we were “supposed to do.” We bought at the height of the market and lost SO much money in the following years–even now, our modest property still hasn’t gotten back up to the $147K we originally paid for it. I NEVER want to buy or own again–but my husband worries what we’d do after we retire. He said you should have your home paid off so you can live there in your old age instead of paying rent. What do you think about this–how can you keep paying rent for decades even after you’re too old to work full time?
My plan is to build up my nest egg and develop different income streams. That way I can pay rent if I’m not working full-time. Preparation now means I can build a lifestyle that will allow me to continue into the future.