General Question

tinyfaery's avatar

Why is it such a big deal to own a home?

Asked by tinyfaery (40478points) April 29th, 2009 from iPhone

I have never had any desire to own a home. I see no purpose. I can’t take it with me when I die, having a landlord to fix stuff is great, no property tax, no massive debt, and I am not tied to a place by virtue of “owning” a piece Iand (that’s the most important one.

Most people I meet seem to think home ownership is so important. Why? Is it important to you? Is it all just a part of the fantasy of the American dream?

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49 Answers

knitfroggy's avatar

I’m totally with you on this! I’ve never thought it would be so great to own a home. There is always something going wrong, taxes and insurance to pay…it sounds horrible to me! I like calling my land lady if something goes wrong and she gets it fixed right away-no skin off my back. We have a really great land lady-I’ve had shitty ones before!

I know that owning a home is part of the “American Dream” but not to me. My best friend told me she knew that she and her husband had “made it” when they purchased their house last year. She wasn’t so tickled though when the Kansas wind blew a bunch of her shingles off and the insurance had to total her roof. They played hell coming up with the $1350 deductible!

The_Compassionate_Heretic's avatar

It’s the age old American dream:
Get over your head in debt.
Pay unnecessary dues.
Let your home completely dominate your future dreams.

Who wouldn’t want that?
(me)

BBSDTfamily's avatar

If for no other reason, owning a home is great because 1. You can do whatever you want in/to your home with no landlord laying down the law for you, and 2. You aren’t throwing money away into a rental. When you move out of a rental, the money paid is gone. When you move out of a home (by selling), you get to take some of your money back, thus it is a much wiser choice. If you buy smart, you can even make money.

BBSDTfamily's avatar

Owning a home is only smart for those who are financially secure. From the answers above, it sounds like you are not sure about your finances and so yes, for you it is best to rent. But for someone with secure finances it is a very wise investment if they play their cards correctly.

knitfroggy's avatar

@BBSDTfamily I’ve never looked at it as throwing money away. It’s no different than paying utility bills in my opinion. I gave money and had a roof over my head. I have nothing to show for paying my utility bills each month other than receipt-same as with my rent.

BBSDTfamily's avatar

@knitfroggy Using a utility bill as a comparison doesn’t work here…. you also throw money away on utility bills in a house. All other things are equal besides when you rent, you are giving money to someone. When you buy a home, you are making an investment.

BBSDTfamily's avatar

@knitfroggy Also, if you always rent, you will always be making a payment to live under a roof. If you own, you won’t because eventually you’ll pay the loan off. You are paying much more money over your lifetime to rent.

knitfroggy's avatar

@BBSDTfamily Guess it’s all in how you look at it. I have no interest in owning a home at this point in my life. There is nothing wrong with that! If you want to own a home, I’m happy for you. For me, I’m not interested, especially with the way the housing market is in the town I live in. We will be moving in a couple years and don’t want to have to worry about unloading a house.

BBSDTfamily's avatar

@knitfroggy I agree nothing is wrong with that. It’s not for everyone at every stage in their life at all. It sounds like you’ve done what works best for your family. I was just giving examples of why owning a home can be beneficial because nobody had yet and that’s what the question was.

tinyfaery's avatar

You talk about money as if it had some objective value. I value my freedom and liquidity.

BBSDTfamily's avatar

@tinyfaery I value those things too, but I don’t like to throw my money away either.

knitfroggy's avatar

@BBSDTfamily I agree it is good for a lot of people. It is not for my family. We’ve been in a position before to buy a home and didn’t, and I’m glad. My husband was laid off from his job and went back to school. In the field he is studying we will have to move to a larger town when he’s done with school, so it’s all good. :)

YARNLADY's avatar

We prefer to own our own home. It has been a very good investment for us, with our equity building in spite of the economic downturn. We lived in rentals for many years, and were always at a disadvantage, but even since we bought our own house, we have felt very comfortable with the ability to have more freedom in our own house than we would have in a rental. However, there are also a lot more hassles, so I suggest that anyone who has no interest in owning a home should not own one.

I have to ask the same question about owning a boat. To me it seems like the biggest waste of money I can imagine, but some people love them.

BBSDTfamily's avatar

Here is a random example of why owning a home is best financially….

Buying a $150,000 home, financed 30 years, at 6.5% will make a $948.10 mortgage payment each month. At the end of your loan, you will have paid $191,316.73 (assuming you pay as scheduled). If you buy this home at the age of 26, by 56 you have a free and clear home with no payments due ever again in your life.

Let’s say you decide instead to rent all your life, and we’ll even make the rent payment far less…. $800 a month. If you rent that apartment/condo/home from the age of 26–56, you will have paid $288,000 (far more money) and you now have to keep on paying to rent somewhere….

Make sense?

On top of that, if at age 56 you decide you want to retire and move off someplace else… you can sell your home if you bought it and use the cash to buy your retirement home (still no more payments!). If you are 56 and have rented all those years, you paid for the person’s vacation home that you rented from, because you have paid off their mortgage and they are vacationing in a free house while you are still shelling out cash every month!

So who is your money going to work for? You? Or your landlords? Your decision.

BBSDTfamily's avatar

@YARNLADY You are correct. A boat is a depreciating asset much like a car. They are toys, not investments. So yes they could be viewed as a waste of money unless you’re the person who loves boating and has money to spend on one.

jrpowell's avatar

@BBSDTfamily :: In those thirty years you have to assume the water heater will fail a bunch of times, and the roof will need to be replaced at least once. Fuck that.. I would rather rent.

Look at what has happened to housing. People that thought renting was throwing money down the drain are now living in their car.

BBSDTfamily's avatar

@johnpowell Why do you have to assume the water heater will fail a bunch of times? You can buy a brand new house for the price I listed, and even if the water heater does fail multiple times you will still come out much better financially by owning a home, no question. And the people you are referring to bought a house over their price range and without a secure job. I already said it is not for everyone.

augustlan's avatar

Clearly, home ownership isn’t for everyone. However, for the vast majority of people it’s the best investment you will ever make in your lifetime. Market downturns notwithstanding, real estate has always appreciated in value over the long run.

A few examples from my own life:

1) I bought a townhouse when I was 21 years old, hoping to make a big profit after 3 to 5 years. Sadly, I bought at the top of the market and it went downhill from there. We ended up staying in it for 11 years, but when we sold it, we got every penny back out of it that we’d put into it, plus a little more.

2) We were then able to buy a very nice single family home for the bargain price of $211,000. Real estate shot through the roof, and after 5 years it was worth over $500,000. Even with the market downturns, it’s still worth about $400,000.

3) After I got divorced, I was able to use my settlement to buy a duplex outright in another area. I live in one side, payment free and rent out the other side. So this property is an income producing property for me.

4) When my second husband got laid off, we were able to survive on a greatly reduced income for 4 months… only because we had no mortgage payment, no rent payment, and still had income coming in from the rental property. If that hadn’t been the case, we may have ended up homeless!

BBSDTfamily's avatar

@augustlan Good for you! I am glad it worked out so well! My husband and I bought our first house in our early 20’s as well. We are now in our mid 20’s and in our second home and have about $150k in equity.

YARNLADY's avatar

@BBSDTfamily Our story is pretty much along those lines, also. In fact, we have done so well with building our equity, we were able to buy our son a home last year. The stories about people who have lost their homes are nearly always because they were not financially educated enough to know what they were getting into, and I would never advise anyone to become a homeowner if they don’t really know what they are doing.

Here is our area, a lot of renters have also found themselves kicked out of their homes because the owners found themselves in foreclosure as well.

When we bought our first home, our agent tried to talk us into buying a house that we couldn’t afford on the low adjustable rate, with re- finance in three years, and we refused.

We bought a brand new house, the last one in the complex, with a builder’s buy-down on the interest rate, and lived there for four years with zero upkeep problems. We then sold for a huge profit, which we rolled over into a much nicer, bigger house, and so on over two more purchases.

jrpowell's avatar

@BBSDTfamily :: You can’t buy a house for a 150K here. I live in the poor part of town and the house down the street is 400K. We pay 1200 per month to rent a block away.

YARNLADY's avatar

@johnpowell You have touched on a good point. I once rented a very nice, big house temporarily while looking for one to buy, and had to “settle” for a smaller, not quite as nice one that we could afford.

BBSDTfamily's avatar

@johnpowell For the third time, owning a home is not for everyone.

cookieman's avatar

When we purchased our house in 1996, my monthly mortgage worked out to $1200/mo. The average rent for a similarly-sized flat was $1000/mo. Seemed like a no-brainer.

Since then, we’ve refinanced twice and added a second floor, more than doubling its size. At last appraisel, even with this dismal economy, I’m sitting on $100,000 worth of equity.

And it’s mine. I can do whatever I want to it without checking with anyone.

But I understand some people like the freedom of mobility that renting provides. If I were inclined to move about, I would agree.

casheroo's avatar

I have no issue with being a chronic renter, I know that is what will happen for many years…doesn’t bother me. I want to own my own home one day though, for my family to have a place where we can live for many many years, without any fears…like eviction.

mcbealer's avatar

I like the idea of owning a home, and agree with most of the attributes of home ownership listed here.

My problem is I haven’t really quite decided where I want to live permanently. And I don’t want the headache of trying to sell a home.

It also scares me that at this point of my life, a 30 yr mortgage might outlast my lifespan, and I don’t want to leave a bunch of debt when I die.

cwilbur's avatar

For me, it’s also a no-brainer. I’ve looked at the numbers, and in this area the monthly cost of ownership of a condo is about 20% less than monthly rent. If I’m willing to move to one of the areas where there are overbuilt condos (parts of Dorchester and South Boston), that discrepancy goes up.

Sure, if I’m renting, I can pack up and leave at any time. But $350 a month in extra rent is a big price to pay for that privilege. And if I own, when I pack up and leave, I have equity in the house, and I get a chunk of my money back.

ubersiren's avatar

Only those who can truly afford a home can reap its benefits. If you’re able to afford it, it’s best in the long run. Eventually, when your home is paid off, you are no longer obligated to pay for shelter. If you can’t afford it, you’re going to be in debt for the rest of your life.

dynamicduo's avatar

Do you have enough money to keep paying rent when you are retired? That’s why buying a house is handy, you pay it off throughout your career when you have strength to work, then you have a secured place to live for the rest of your life.

For those who value freedom and the ability to get up and go somewhere else to live, buying a house makes no sense, as it takes a lot of time and effort to sell a house, not to mention there’s no guarantee when it will happen nor how much money you will get.

I’m at the point in my life where I am deciding what to do about my living situation. I don’t like the idea of pissing my money away via renting, although at the current time I do enjoy the perks (the pool and workout rooms, the lack of caring about maintenance or repairs, not having to buy appliances). I have also been using these months to think about what attributes I want in a house. My requirements make it such that it’ll be a crap shoot whether I find a house in this area or not. Plus, giving the market another year to calm down is always a good idea.

theartfuldodger's avatar

Home ownership is not for everyone. My husband and I got it easy, our clan [family extended] has owned several homes that they have rented out for decades; all of the homes are owned outright. My husband inherited one of them.

Life is great when you own a home and have nothing but home owner’s insurance, property taxes and house repairs/remodeling to pay. I say this to say, when the house is finally paid off, it really is an asset, and it can be passed on when you die. You can remodel it and do whatever you want! It’s your space, your place on this earth and no one else’s.

That’s what makes home ownership great.

Snoopy's avatar

I think if you know you are unlikely to be living in the same place 5 years from now, then you should probably rent (e.g. in school, temporary job relocation, etc.). Also, if you want or must live in a particular area (e.g. parts of CA) where it is personally cost prohibitive for you to own, then renting may be your only option.

My husband purchased a home when he was very young that doubled in value upon resale less than 10 years later. Even after paying off the remaining mortgage he profited $40K.

We own our current home outright – no mortgage, no rent. We own our cars outright too – no car payments. (On that note, I don’t understand why people lease vehicles either….it is a perpetual car payment….) That is a whole lot of money that other people pay each month that we don’t have to….that gives us a lot more financial security in case there is a major unforseen financial problem in our family.

I rented apartments for 10 years while I was in school. It made financial sense at the time. In my current situation, owning is a better idea…..

Darwin's avatar

Financially, owning a house can be useful in several ways.

1) Income tax: If you can itemize, then mortgage interest (especially on a relatively new loan) and property taxes are deductible.

2) The ability to decorate, repaint and landscape as you wish without answering to a landlord. Also, to decide for yourself whether to upgrade, downgrade, or keep things the same when you do a repair.

3) Once the house is paid off (as mine is) your monthly out-go drops precipitously. With a child going to college in a year that is a good thing. Our vehicles are also paid in full.

4) At least in Texas, if you own your own home and fall on temporary financial hard times you can choose not to pay property taxes, leaving them to be paid by your estate.

5) Also in Texas, if your house is not collateral for a loan (such as a mortgage) if you file bankruptcy it cannot be taken away and sold out from under you. The law officially leaves you your primary dwelling and one horse (interpreted these days as your house and one car).

6) Although we have lived in our house now for 16 years and don’t plan to move for several decades, my parents moved frequently but still bought a house every place they lived. As property values increased even slightly they got more for each house than they paid for it. This allowed them to move up the housing scale each time the sold and then bought another house. In the end they had a very nice house that sold for enough to fully cover moving into a senior living facility where they can get any help they need.

I lived in rental property for some years at the start of my career and discovered that if the building is sold the rules not specified precisely in your lease can change, sometimes detrimentally. Also, each time you renew your lease the rent can go up (sometimes precipitately). In addition, you can be evicted when the building is turned into condo units, someone buys your apartment as an investment, and then doesn’t pay the mortgage.

All of these happened to me during the 8 years I rented.

mamabeverley's avatar

@BBSDTfamily I think you need to check your math. @ $948.10 a month you will have paid $341,316. Your figure of $191,316 is intrest on the loan. If this does not include taxes and insurance, you need to add that in also. In reality, you are paying more than twice the value of the home.

Kazz's avatar

I bought a 3 bedroom/2 bath/den/2 car garage house in 1970 for 23K, payment $225 monthly. Approx. ten years later you could not find a one bedroom apt in this area. for that amount, but my payments more or less stayed the same for many years. This house is now payed for. It’s now worth about 110K. I can take that money and feed it into a better house and keep my monthly payments low, or I can rent it out and get about $950 a month. When you rent you are still paying utilities, upkeep for the property, the management company if they have one, the property owner’s loan to buy the apartments, the property taxes he has to pay, the insurance, and money in his pocket so that he can make profit. When you move out, you get nothing. I can improve my home knowing that more or less, I’ll get that money back when I sell or rent it. The joy of growing a garden with fresh vegetables in my backyard! My house has been payed off for many years.

theartfuldodger's avatar

That’s the other thing – my husband and I do not plan to stay here in this home, especially when we start having children. I’m not a native of this state, but my husband is. I refuse to raise my kids here because the educational system is a joke [compared to Michigan and other places.]

We plan to move, and buy a home where we land. We will rent out our current home. Who says you can’t be mobile? There will come a point when we want to move out of the country, and my husband has said we will use one of those agencies that rent and manage your properties.

hungryhungryhortence's avatar

It’s potentially the best piece of credit, security and investment most people have access to. Ideally your home appreciates in value to where you can borrow against it instead of using other lines of credit and the interest rates for that credit are less than other loans. The security is a roof over your head where the payment remains more constant than the climb of rents in the same area and if you do borrow against your home, you’re less likely to let the loan lapse or not make timely payments because you’d be jeopardizing your roof. The investment aspect for most people is to cash out one day and either buy larger for growing family or lifestyle or buy smaller to simplify and use the equity for other things.

SeventhSense's avatar

#1 reason-Equity
I don’t own a home either but the thought that I’ve paid hundreds of thousands of dollars in rent and own nothing is not nearly as nice as owning something I could sell for hundreds of thousands of dollars. Real Estate in most of the major metropolitan areas of the country is the single greatest investment you can own. You don’t have this with any other investment. You buy a new car and drive it off the lot and it loses value before you make it to the end of the block. Right now there’s a correction in the market because of the bad loans and the glut of homes being built, but like the stock market, it will rise again in the next few years. In NYC they say every year that the prices have got to fall, yet they just go up and up. I’m bullish on Real estate in the major metropolitan areas..Geez, I sound like Jim Kramer :)

preggers's avatar

I think the difference is between flexibility/living in the moment and stability/putting down roots.

Before starting a family, I would have preferred to rent. The freedom to pick up and move anywhere was more appealing than a financial investment.

Now my priorities have shifted a bit. I’d still like to travel with my family. But it’s important to me to have a home base to return to…its the difference between travelling and wandering.

It doesn’t feel quite like home when you live with the possibility of having to move because the landlord has raised the rent or decided to sell. When you’re younger, it’s not such a big deal. You just pick up and move. My family also did that when I was a kid. It’s not what I want for mine though.

wundayatta's avatar

Hmmm. Pay $1200 a month for a mortgage, and own the value of the property. Pay $1200 a month for enough space for a family, and never see that money again? Gee. I think I’ll piss away the money.

Oh, and I’ll also wait for months while the landlord dicks around, trying to get out of repairing the pipe burst in the bathroom. I really do so enjoy going to my friend’s to take a shower. I also really like that strange flora growing in what is supposed to be the lawn that noone ever mows. But what’s best is the smell of garbage wafting in the window from the plastic garbage can the squirrels ate through. I love picking up dirty diapers my neighbor threw in the trash, after the squirrels have eaten their fill. Oh, and I really enjoy the baby upstairs crying through the night. I needed to be up, working on that project.

Yup. Apartment hell it is!

Why, if I had a house, I could repair things instantly, and choose a good contractor to make the repairs. I wouldn’t be at the mercy of the landlord’s whims. Who wants that? Who wants control over their life? Not me! That’s for sure!

wundayatta's avatar

Oh yeah. In four days we own our home free and clear! Partaaaaaaay!

Nimis's avatar

@daloon Congrats! :)

SeventhSense's avatar

Sigh…some day before I die I’ll own a home :(

YARNLADY's avatar

@daloon And you think neighbors don’t do all that? When your fence blows down in the worst storm of the century, who pays? The neighbors, no, they all rent. Don’t get me wrong, I’m a home owner and love it, I’m just saying…........

Randy's avatar

They aren’t making land like they used to. It’s one of the best investments you can get and after you do purchase land, why not put something on it to increase value?

^^^That’s just something I’ve always been told. I don’t own land or a house because I’m poor.

Strauss's avatar

Most Americans make two large investments in their life: A house, and the mortgage to purchase that house.

philosopher's avatar

I have owned my own home since I was Twenty Three. The big deal is the money you pay makes the home belong to you.

john65pennington's avatar

One day, somewhere down the road, a piece of paper will come in the mail that states Mortgage Paid In Full. this is not only a grand day to celebrate for yourself, but it also gives you something to leave your children.

Need i say more?

Skaggfacemutt's avatar

My house is paid for. Now I can retire. Need I say more?

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