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Is Home Ownership a Farce?

 
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afrokock View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote afrokock Quote  Post ReplyReply Direct Link To This Post Posted: Oct 26 2013 at 1:51pm
and whilst people talk about a home losing its value, they conveniently forget to account inflation and currency devaluation

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maysay1 View Drop Down
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Post Options Post Options   Thanks (3) Thanks(3)   Quote maysay1 Quote  Post ReplyReply Direct Link To This Post Posted: Oct 26 2013 at 2:00pm
Originally posted by afrokock afrokock wrote:


i personally havent met anyone (retired) who owned their home that is worse off than someone who never owned a home and rented

but thats just me though


It's possible that it's a very American thing. A combination of not actually owning the home, our obsession with debt and consumerism, and the lack of a family support structure means there are a lot of retired Americans who are way worse off due to "owning" their home.


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Post Options Post Options   Thanks (2) Thanks(2)   Quote rickysrose Quote  Post ReplyReply Direct Link To This Post Posted: Oct 26 2013 at 2:10pm

housing costs are a bit different than other investments

you need to live somewhere, you don't need a stock or a mutual fund

nothing's guaranteed but it makes reasonable sense to risk investing the money you'd lose in rent, into a house
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Post Options Post Options   Thanks (1) Thanks(1)   Quote Tbaby Quote  Post ReplyReply Direct Link To This Post Posted: Oct 26 2013 at 2:12pm
We own our home outright.  Hunkered down and did it a few years ago.  There are rare times I regret it, and think I'd rather have put the money into our retirement funds, but as a whole I like the fact that I'm not writing out a mortgage check monthly.  I like the fact that I can paint my walls any color I choose, or rip up the carpet to put down hard wood floors.  I don't have to ask permission from anyone.

Our home lost some value when the real estate market dropped back in 2009.  Its recovering slowly.  We will be buying a bigger house one day and plan to keep this one as a rental.--Alternate streams of income is the plan.  Or if the kids need a home later in life it will be there for them.

Renting is throwing your money in a black hole IMO.   It's fine if you really don't want the responsibility of homeownership, because being a home owner isn't easy at times.  If you want something fixed you got to do it yourself.  But that's really not that great a problem if you aren't afraid of working for yourself, investing in your own home.  Best feeling in the world.

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Post Options Post Options   Thanks (1) Thanks(1)   Quote nitabug Quote  Post ReplyReply Direct Link To This Post Posted: Oct 26 2013 at 2:47pm
I still don't see how renting is bad if you pay less than someone with costs of upkeep, taxes and utilities.

Cash is an asset and you can make money off of it too. If you have 125k house and spend 7-10k or more a year on the house, but I pay 5k a year and we make the same amount a year...how is your investment better?

Given I am saving that amount.
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Post Options Post Options   Thanks (3) Thanks(3)   Quote melikey Quote  Post ReplyReply Direct Link To This Post Posted: Oct 26 2013 at 3:24pm
people have to do what's best for their situation. i think it is dishonest to say that homeownership is for everyone. i think people on fixed incomes or unreliable employment are better off renting, because it's much easier to scale up or down. also renting is better for those who are not settled in where they want to live in the long run. 
owning a home is better for people with stable employment, who plan to live in the same place for a while. 

finally the type of home matters too, condos have more monthly fees but they are also easier to rent than a house most places. which may be attractive to those who can't see living in the same place for more than a few years. selling a home is expensive, it's better to buy and hold than "flip" in most cases. 

i think owning a home is NOT a one size fits all type of thing. people need to do what's best in their particular situation.


Edited by melikey - Oct 26 2013 at 3:25pm
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Post Options Post Options   Thanks (1) Thanks(1)   Quote uppitynegroid Quote  Post ReplyReply Direct Link To This Post Posted: Oct 26 2013 at 4:33pm
Originally posted by nitabug nitabug wrote:

I still don't see how renting is bad if you pay less than someone with costs of upkeep, taxes and utilities.

Cash is an asset and you can make money off of it too. If you have 125k house and spend 7-10k or more a year on the house, but I pay 5k a year and we make the same amount a year...how is your investment better?

Given I am saving that amount.
 
This is really the thing.  If you put sentiments aside, and you're looking at the house purely as a financial investment, well then, there are lots of other ways to invest your money.  In the example you gave, you could put that $5,000 you are saving into the stock market or something else and get a significant higher return than the person with the home. 
 
I think that's what I need to figure out, because I'm not about the sentiment of saying something is "mine" or being able to paint it what color I want.  I just want to know I'm making a sound investment, and if I decide home ownership isn't for me, then I need to figure out what other kind of investment is for me.
 
Oh and your situation is a perfect example of how renting sometimes is way more cheaper than buying.  That's why I questioned RickyRose's post.  I've seen situations where people pay $700 in rent and utilities combined per month.  I don't know any homeowner who pays that much per month when you combine mortgage, interest rate, taxes, house maintenance, and utilities, but like another poster said, a lot of this varies regionally. 
 
Also, the bold part of your post is what scares me about home ownership.  The people I know who have nothing to show for it remind me that if they had rented and just put the money they saved in a savings account they would be way better off than they are after their short sale, foreclosure, etc.  Now take it one step further and say they put that money into their 401K then they would have been even better off.  Its just scary to work so hard and end up putting your money down the drain. 


Edited by uppitynegroid - Oct 26 2013 at 4:35pm
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Post Options Post Options   Thanks (0) Thanks(0)   Quote uppitynegroid Quote  Post ReplyReply Direct Link To This Post Posted: Oct 26 2013 at 4:38pm
Originally posted by AmiliaCabral AmiliaCabral wrote:

People have to do whats right for their lives instead of getting caught up in the "American dream"
 
But I will say this though, two many black people get pushed out of "our"  neighborhoods and are replaced because we don't own anything and have no leverage to either fight or influence change in these communities. In Brooklyn I see it too much. Renters get mad but youll always be at someone else's mercy when you rent. Buildings that used to charge tenants $1100 charge $2100 now but what can you do but move?
 
Mortgage is a really cultural thing too. I was watching some money show and they said that mortgaging a home in Canada is way less common than in the US. But it seems like the US is addicted to debt so a lot of people don't even bother trying to pay off their homes but get comfortable paying less than a renter would. Its totally possible to own a home and get out of the mortgage life but you have to have a different mentality, be more aggressive in paying the mortgage off early or buy it outright cash to start with.
 
My friend lived in Canada for sometime and he said one of the reasons why so few people own homes in Canada is because the government strictly regulates the banking industry and if you want to buy a house there you have to put down a minimum of 20%.  A lot of people put down up to half.  Home ownership there is strictly for the stable and financially secure.  It kind of makes sense though.
 
Oh and you are right about it being cultural.  In most parts of the world people own homes outright or have paid off a very large chunk of the home's value, unlike here where people can buy a house with nothing down or 5% down.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote carolina cutie Quote  Post ReplyReply Direct Link To This Post Posted: Oct 26 2013 at 4:43pm
I saw myself buying as soon as I got settled with my career but not so sure these days.
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Post Options Post Options   Thanks (4) Thanks(4)   Quote nitabug Quote  Post ReplyReply Direct Link To This Post Posted: Oct 26 2013 at 4:44pm
Exactly. You have to know your situation and so what is best.

Home ownership shouldn't be everyone's dream, just like college.

Edited by nitabug - Oct 26 2013 at 4:44pm
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