Why Renting Might Be Better Than Buying A Home
According to popular belief, buying a home is a sound investment to take you into retirement, and renting is considered a waste of your hard-earned money. Having grown up and lived now in three countries where the landlord is king this belief has always been ingrained in my brain. In countries like the UK it is quite common and considered very sensible to not only own a home at home but abroad too and to keep expanding your property portfolio. I have heard that in many countries, like Germany and the Netherlands, renting for life is far more common and there is little to no societal pressure to be a homeowner.
Millionaire Mommy Next Door has an interesting argument for renting we don’t often hear:
I calculated the total cost of living in our [purchased] home. Due to our sweat equity, our mortgage balance was very low … but once I added property taxes, insurance, maintenance and, especially, lost opportunity costs (home equity not available to earn money), it became very clear that our shelter “need” was costing us too much in life energy.
Her arguments are based on solid calculations and they are guaranteed to astound you. She discovered that your home purchase doesnt even break even after 30 years!
via Lifehacker
Wall Street Journal,
Your Home Isn’t the Nest Egg That You May Think It Is:
“Economic studies have demonstrated over and over that houses (1) cost more than most people make when they sell and (2) rarely match the long-term returns of stocks or other investments.”
“The costs of owning a home — buying it with a long-term mortgage and then paying taxes on it, insuring it, repairing it, renovating it — sap most of what most homeowners think they make in price appreciation.”
shawn
hey .. thank you ! i’ve been looking for some decent points against home ownership.. the people i knew at pitt that owned houses seemed like they committed some sort of social suicide where weekends were always spent fixing the house or some house related chore…
Ms. Wakame
Luckily you seem to have the gift of finding the most laidback landlords who let you live in it like your permanent home where you can even make drastic changes to the property. It makes all the difference. We’re so happy to finally have a landlord who is cool about letting us paint our place the craziest colours imaginable.
Its so comforting to live in a home that is covered in our family markings. There’s something about it that feels primitive, like carving into our own cave and painting our family history.
I wish I was any good at murals…
niq
This is exactly along the lines of my recent thinking. Even though the housing market seems great at the moment, houses here in Portland, esp in decent/livable neighborhoods are just way out of most people’s budget. Add to that not only all the unforeseen things that can need fixing/replacing over the lifetime of ownership but the very real possibility that the value of your neighborhood may someday escalate and bring your taxes to a point way beyond your income (esp for retired folks) it is downright scary. I’m at such a loss, I want so badly to own my home so I can feel comfort in knowing all changes are for me and that I can look forward to enjoying thm for years to come but this article seems to confirm what I already suspected and she seems to have much more good reading to be had.