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My husband and I have disagreed on this subject for a long time. He thinks buying a home is more of a burden than a good thing. We rent a nice house, and if something breaks we call property management to fix. ...no money out of pocket. Also, we do not have to pay property taxes. Can you give me some pros to owning a home, besides the usual "feel a sense of pride" and stability. I know we will eventually own it and might be considered an investment, but that would be 15-30 years in the future. Nobody really owns a home until they pay their last mortgage payment.

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    See many past questions here about home ownership. Financial advantage is debatable depending on exact prices, mortgage rate, investments. Investment value is questionable; any gains get eaten by the next place, plus paying interest and losing investment income. Buy when you will be in one place for an extended time (one rule of thumb is 5 years), you can afford it, and you want the advantages of being able to adapt the place to your own needs and/or the sense of stability enough to offset the additional obligations. (You are paying tax and maintenance costs now, btw, as part of your rent.) – keshlam Jun 25 '16 at 14:31
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    (Buying a fixer-upper may be an exception to not-an-investment, though many home improvements cost more than their sales value; do them because they make your life that much better.) – keshlam Jun 25 '16 at 14:36
  • I strongly suggest you look at the right column, "related" questions, and see if you can edit to narrow the scope of your question. As written, it's too open ended, too vague to get good answers. – JTP - Apologise to Monica Jun 25 '16 at 15:32
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    "Also, we do not have to pay property taxes" right, you just pay someone who pays property taxes; similarly, you pay someone who pays for repairs. Just because those costs aren't itemized doesn't mean you aren't bearing them. That's not to say renting isn't cost effective, context matters significantly in the decision to buy vs rent. – zzzzBov Jun 28 '16 at 19:54
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    "Nobody really owns a home until they pay their last mortgage payment." - sorry, that is incorrect. You do own the home. The mortgage company has loaned you money using your home as collateral. – Joe Strazzere Jun 29 '16 at 11:44
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IF the price of the property (1) increases A LOT,

you will just break even, on the huge expenses of home owning.

IF the price of the property (2) increases A HUGE AMOUNT,

you will make lots of money, due to the leverage.

IF the price of the property (3) stays even, you will LOSE a tremendous amount of money. It's much like owning a car - constant expenses.

That's all there is to it.


It's well worth bearing in mind that property prices for your area / your property need to be constantly increasing for you to merely break even.


Note that over long periods of time prices tend to go up (most anywhere - but not everywhere). Many people basically base their thinking on that. It will be OK "in the long run". Which is fair enough.

I believe one huge factor is that it is enforced saving. That is the number one advantage for most.

Note too that in most/all jurisdictions, there are tremendous tax advantages, even if it turns out to be situation (1) (i.e. a waste of time, you only break-even).

Note finally that there are, indeed, tremendous social/financial advantages to having the equity: it gets incredibly easy to get other loans (for business or the like) once you own a house; this is undeniably an advantage (perhaps press your husband on that one).

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    I think you're failing to compare your #3 scenario with the cost of renting. Rent isn't free and is very likely to be an even worse scenario than #3. Home values don't need to constantly increase, they only need to increase between when you buy it, and when you sell it... which is likely if you wait out bubbles and avoid declining communities. There's also Robert Allen's philosophy: never sell. Turn it into rental property. – Harper - Reinstate Monica Jun 26 '16 at 6:33
  • hi @Harper! Re: saving a few dollars on rent: Well, I disagree based on personal experiences. Note too that if you have a house, and you're not renting it out (because you're living in it), you are losing a huge amount of money. It would be rather like owning a taxi, but using it as a personal car and not actually making the money from it. – Fattie Jun 26 '16 at 12:51
  • And I,m with you, personally... I've run the numbers, which say renting is better here, for me, in my under-market unit. But "personal anecdote" is not the format here. I've run the numbers in other locales, and they tell a dramatically different story. Being handy is also a factor. I can add an electrical circuit for about $30 and paint a house for under $200. – Harper - Reinstate Monica Jun 26 '16 at 21:08
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    "I've run the numbers in other locales, and they tell a dramatically different story" Wrong! they make sense in retrospect. They only make sense in the future if you assume you know which way property process will head. Quite simply, you're betting on prices going up-a-lot. – Fattie Jun 27 '16 at 20:26
  • Actually, no. I am of the "never sell" school, so resale value is irrelevant (ie zero). For your reasons and more: resale value is too fickle. It encourages bad thinking (fearing bubbles; thinking your house is an ATM machine; worrying about historic dollar value). And estates should pay capital gains, not living beings - botch an exchange and you have an inhuman tax bill on no cash to pay it. – Harper - Reinstate Monica Jun 27 '16 at 21:47
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Once you paid it off, you don't pay rent anymore. That is the major advantage.

Also, you can do any change you want to it.

Many people consider it an investment - if you ever sell it, it could be worth more than what you paid (although this is not for sure)

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    It really isn't an investment even if it appreciates, because it doesn't generally appreciate much relative to the market. That is, after you sell you still need to buy another house and they have gone up in price too. – JohnFx Jun 26 '16 at 15:26
  • You do still pay taxes, insurance, and potentially HOA, though. Between all of those, that's like a third of our total ownership cost. Still going to be amazing having our home-ownership costs drop by like 2/3s in 10ish years though. – neminem Jun 27 '16 at 15:44
  • @JohnFx oh, that too. – Harper - Reinstate Monica Jun 29 '16 at 17:59
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Buying a house may save you money compared with renting, depending on the area and specifics of the transaction (including the purchase price, interest rates, comparable rent, etc.). In addition, buying a house may provide you with intangibles that fit your lifestyle goals (permanence in a community, ability to renovate, pride of ownership, etc.). These factors have been discussed in other answers here and in other questions. However there is one other way I think potential home buyers should consider the financial impact of home ownership:

Buying a house provides you with a natural 'hedge' against possible future changes in your cost of living. Assume the following:

(1) You want to live in a particular community for an extended period of time; and
(2) Accommodations represent a significant part of your living expenses.

If these two items are true, then buying a home allows you to guarantee today that your monthly living expenses will be mostly* fixed, as long as you live in that community. In 2 years, if there is an explosion of new residents in your community and housing costs skyrocket - doesn't affect you, your mortgage payment [or if you paid cash, the lack of mortgage payment] is fixed. In 3 years, if there are 20 new apartment buildings built beside you and housing costs plummet - doesn't affect you, your mortgage payment is fixed. If you know that you want to live in a particular place 20 years from now, then buying a house in that area today may be a way of ensuring that you can afford to live there in the future.

*Remember that while your mortgage payment will be fixed, other costs of home ownership will be variable. See below.

You may or may not save money compared with rent over the period you live in your house, but by putting your money into a house, you have protected yourself against catastrophic rent increases.

What is the cost of hedging yourself against this risk?

(A) The known costs of ownership [closing costs on purchase, mortgage interest, property tax, condo fees, home insurance, etc.];

(B) The unknown costs of ownership [annual and periodic maintenance, closing costs on a future sale, etc.];

(C) The potential earnings lost on your down payment / mortgage principal payments [whether it is low-risk interest or higher risk equity];

(D) You may have reduced savings for a long period of time which would limit your ability to cover emergencies (such as medical costs, unexpected unemployment, etc.)

(E) You may have a reduced ability to look for a better job based on being locked into a particular location (though I have assumed above that you want to live in a particular community for an extended period of time, that desire may change); and

(F) You can't reap the benefits of a rental market that decreases in real dollars, if that happens in your market over time.

In short, purchasing a home should be a lifestyle-motivated decision. It financially reduces some the fluctuation in your long-term living costs, with the trade-off of committed principal dollars and additional ownership risks including limited mobility.

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The New York Times offer a remarkably detailed Buy vs Rent calculator.

You enter -

  • home price
  • time you plan to stay in home
  • all mortgage details
  • future projection for home price growth, inflation, rent inflation
  • taxes, etc

From all of this, it advises the break-even rent, when monetarily, it's equal.

I'd suggest you keep a few things in mind when using such a tool. Logic, common sense, and a Nobel prize winner named Robert Shiller all indicate that housing will follow inflation over the long term. Short term, even 20 years, the graphs will hint at something else, but the real long term, the cost of housing can't exceed inflation.

The other major point I'd add is that I see you wrote "We rent a nice house." Most often, people are looking to buy what they feel they can't easily rent. Whether it's the yard, room number or sizes, etc. This also leads to the purchase of too big a house. You can find that you can afford the extra bedroom, family room in addition to living room, etc, and then buy a house 50% bigger than what you need or planned on. In my opinion, getting the smallest house you can imagine living in, no bigger than what you live in now, and plan to get on a faster than 30 year repayment. Even with transaction costs, in 10 years, you'll have saved enough to make the bump up to a larger house if you wish.

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A home actually IS a terrible investment. It has all the traits of something you would NEVER want to plunge your hard-earned money into.

  • It does not generate any income or cash flow
  • Buying/Selling them takes large amounts of money, time, and stress
  • The commissions on a house are insanely high
  • When you do want to sell, you can only sell it to one tiny group of people (they want that type of house, in that location, for that price)
  • It requires constant input of more cash to keep its value from going down
  • The land is what appreciates in value in most cases, not the house itself (see previous bullet point)

The only way that buying a house makes good money sense is if you pay cash for it and get a really good deal. It should also be a house you can see yourself keeping for decades or until you're older and want something easier to take care of. Of course, nothing can replace "sense of ownership" or "sense of pride" other than owning a house. And your local realtor is banking (really, laughing all the way to the bank) on your emotions overcoming your smart money savvy.

This post really goes to work listing all the reasons why a house is a horrible investment. Should be required reading for everyone about to buy a house. Why your house is a terrible investment - jlcollinsnh.com

TLDR; - You must decide what is more important, the money or the feelings. But you can't have both. If you read the article linked and still want to buy a house...then you probably should.

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    A house is not an investment. A house is housing. It's a cost. The question is whether you can get something you would rather live in for the same cost by renting or by buying, and that depends on local market, your finances, and your desiderata. – keshlam Jun 25 '16 at 15:24
  • Essentially the OP wants us to tell her who is right, her or her husband. Both are correct, depending on their goals (which she has not made clear). If her husband read my link, it would only galvanize him. If she reads it and still wants a house, then that is for them to argue. – swimex Jun 25 '16 at 17:23
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    Suggested tweak: A home can be a good investment. Just not one you intend to live in. – JohnFx Jun 26 '16 at 15:27
  • By those same standards, renting is also a terrible investment, and often, even worse than owning. It is correct to view both as a total loss, sorta like the Comcast bill. So it boils down to the lesser of two evils, unless you decide you're too good to choose evils, and live under a bridge. So my opinion differs (I don't downvote for that). – Harper - Reinstate Monica Jun 29 '16 at 19:58
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It certainly seems like you are focusing on the emotional factors. That's your blind spot, and it's the surest path to a situation where your husband gets to say "I told you so".

I recommend you steer straight into that blind spot, and focus your studies on the business aspects of buying and owning homes. You should be able to do spreadsheets 6 ways from Sunday, be able to recite every tax deduction you'll get as a homeowner, know the resale impacts of 1 bathroom vs 2, tell a dirty house from a broken house, etc. Everybody's got their favorites, mine are a bit dated but I like Robert Irwin and Robert Allen's books.

For instance: a philosophy of Allen's that I really like: never sell. This avoids several problems, like the considerable costs of money, time and nerves of actually selling a house, stress about house prices, mistaking your house's equity for an ATM machine, and byzantine rules for capital gains tax mainly if you rent out the house, which vary dramatically by nation. In fact the whole area of taxes needs careful study.

There's another side to the business of home ownership, and that's renting to others. There's a whole set of economics there - and that is a factor in what you buy. Now AirBNB adds a new wrinkle because there's some real money there. Come to understand that market well enough to gauge whether a duplex or triplex will be a money maker. Many regular folk like you have retired early and live off the rental income from their properties.

JoeTaxpayer has an interesting way of looking at the finances of housing: if a house doesn't make sense as a a rental unit, maybe it doesn't make sense as a live-in either.

So learn how to identify those fundamentals - the numbers. And get in the habit of evaluating houses. Work it regularly until it's second nature. Then, yes, you'll see houses you fall in love with, partly because the numbers work.


It also helps to be handy. It really, really changes the economics if you can do your own quality work, because you don't need to spend any money on labor to convert a dirty house into a clean house. And lots of people do, and there's a whole SE just for that. There is a huge difference between going down to the local building supply and getting the water pipe you need, vs. having to call a plumber. And please deal with local businesses, please don't go to the Big Box stores, their service is abominable, they will cheerfully sell you a gadget salad of junk that doesn't work together, and I can't imagine a colder and less inviting scene to come up as a handy person.

  • "If you never sell a house, you never pay capital gains tax." In many jurisdictions, the gain on the sale of a person's primary residence is not taxable; this advice is geared towards investment in rental properties, which is very different from the decision to buy one's own home, which the OP is asking about. – Grade 'Eh' Bacon Jun 29 '16 at 12:27
  • I know several cases of friends reluctantly closing on a house with some serious problems, simply because they were up against time limits on an exchange. – Harper - Reinstate Monica Jun 29 '16 at 18:05
  • Let us continue this discussion in chat. – Grade 'Eh' Bacon Jun 29 '16 at 19:09
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    Harper - There was a change in the tax code, late 80's if I recall, that did away with the need to roll the gain into the next home. It was replaced by a $250/$500K exclusion. See Topic 701 - Sale of Your Home. Aside from this, I have to disagree with "never sell." When the 3 kids are out of college and scattered all over the country, there's often a house that's twice the size it needs to be. That's the time to downsize, cut the housing cost by 1/3 - 1/2 and bank the profit. – JTP - Apologise to Monica Jun 29 '16 at 20:09
  • I agree with your reasons to disagree, the crux of "never sell" is make it a rental property. Other reasons are to avoid the head-games involved with worrying about resale value, not to mention the not inconsiderable costs and personal energy-suck of selling a home. I have a neighbor who is spending $100k to prep the house for sale (fixing some big defects but not all), took a 2nd for that, and the house still won't move and she is the most tense person I know. Good money after bad. – Harper - Reinstate Monica Jun 29 '16 at 21:22

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