Housing
Does it make me a bad person to get some sick satisfaction out of reading articles about the impending drop in housing prices? This is (of course) after years of being essentially told (by parents, family, friends, and experts) that:
- “Buying real estate is the obvious “no-brainer” way to “invest” your money,” and
- “Deciding to rent is akin to taking all of your money out of the bank in $1 bills, putting it in a large barrel, dousing it with octane 93 gasoline, and setting it on fire [, you Moron].”
I understand that buying a house is not like buying a car; I’m not an idiot. But it’s also not like putting your money in an ultra high-speed savings account and watching it balloon like a chia pet. I’m tired of people telling me that it is. There’s no such thing.
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Perspective. The individuals that you’re referring to are obviously a) homeowners b) have families and need a place to call their own c) see ownership as a sign of success and therefore a goal to be met. I don’t agree that buying a home is a smart investment; think about it, the down payment for a crib run into the six figures (bay area or SoCal). Taking that same amount of money and investing in an index fund can yield +10% whereas you’re unlikely to see that sort of return in a house in the short term.
In any case, renting IS throwing your money away, but unless you actually own your home outright (i.e. all paid off) most homeowners are just “leasing” their homes from the bank. Oh, and lets not forget other costs besides the mortgage that will never see a return like interest, taxes, insurance, maintenance, etc… (though much of this is tax deductible).
Anyway, buying a house is a big deal. If you don’t meet all of the following criteria, then you’re better off renting:
1) have decent credit
2) willing to stay put for the next 5-7 years
3) can put 10-20% down
4) love fixing things (or have the cash to pay someone to fix it)
5) can ride the ups and downs that the market will bring
6) really really really want to own your home.
Buying a house and thinking you’re gonna be rich from it is just ignorant… but theres a joy in knowing that the landlord won’t raise your rent (unless you have an adjustable loan, then you’re f**ked).
Damnit. I should have bought a new car instead.
“In any case, renting IS throwing your money away…”
Yeah, it’s that particular attitude that I’m talking about. Renting is a cost, just like paying for food or transportation. I haven’t ever heard anyone say that buying groceries from Safeway is “throwing your money away.” If buying and running a farm is within your realm of reasonable decision-making, then by all means go ahead and do it. But I can’t stand people walking around lecturing others that they’re “throwing their money away” by not wanting to plant and raise corn.
To me today, people telling me that I should buy a house is like people telling me I should buy a planet in the Solar System (”Because you won’t be throwing your money away!”). It’s that unreasonable and it would be that irresponsible.
Hm, well my point was that if renting a home is throwing your money away, then there is an argument to be made that buying a home is also throwing your money away in the form of interest, taxes, insurance, etc..
Like you mentioned, living somewhere is going to cost you money whether you buy or rent. Owning a home is a very personal decision that only you can make so don’t let other manipulate the facts.
Sheesh.
I could not agree more with you Jack and I used to work as a Financial Real Estate investor… A vast majority of people do not understand that real estate is just an other investment vehicle. There is no such thing as a better vehicle. If there was, no one would use the others
Look, some of arguments are obviously really valid. Others are just people talking out of their ass. The fact of the matter is that you CANNOT VOTE unless you own propety in this country. Only landed gentry are allowed to cast a vote.