Are you thinking of buying a home? Are you currently renting your living space and wondering whether it would be more beneficial to own the space you’re in? Are you wondering when Space Force will be accepting applications so you can figure out what your housing allowance will be on Mars?
If you ever asked yourself any of those three questions, you’ve probably had to start asking yourself the next obvious question: is it better to rent or buy? And chances are, you’ve realized that you’re not the only one asking this question. Between the pressures of the American Dream and the ever-increasing housing prices, it’s hard to avoid thinking about it. I know my wife and I talk about it at least once a month. But it can be a hard question to answer in just one sitting.
On one hand, Jim Bob (the kid you knew from High School that flunked out of pre-algebra), posted on Facebook that he just sold his house for a net profit of $500,000 because he timed the market perfectly when he bought his starter home. On the other hand, you may have witnessed your parents lose 80% of their home’s value seemingly overnight during the last housing crash. Neither are unique stories for those who are or those who know homeowners.
Even with the risks, however, you can find yourself feeling the tug of the American Dream. Owning a home is an intended destination in the roadway of life for a large amount of the population. Between the pride you get from having your own unique address to the utility a home can bring for hosting parties, it’s easy to see why anyone might want one. But is it the right move for you? Today, we’ll discuss the pros and cons of buying a home so that you can make the most educated decision when you’re hovering your pen laden hand over that mortgage contract.
Reasons to Buy a Home
#1: Tax Advantages
This can’t be ignored. By owning a home, you can acquire a series of tax write-offs when the tax man comes knocking. Between mortgage interest and property taxes, the deductions can really start to add up to some serious cash (more than that time you tried to claim your cat as a dependent).
#2: No Shared Walls
I know I’m not the only one that has been three seconds from stomping over to my neighbor’s door and kicking it down at three in the morning when they decided they couldn’t live without their surround sound and bass. When you move into a home, you give up the shared walls (as long as you’re not buying a condo/duplex) and gain a good bit of yard space between you and your closest neighbor.
Let’s go back to that story about your old High School buddy, Jim Bob. If you happen to buy your home when the price is low in the area, and the area then sees an economic boom, you could be on the receiving end of some nice appreciation to the home’s value. And this can add up to some serious cash (maybe even enough to retire on!).
#4: Monthly Payments Pay Off Your Home
It’s impossible not to think about what you would do if you didn’t have to pay rent. When you’re renting, that rent is just going into the pocket of the building owner and it’s not actually paying anything off for you. Instead, if you own the space you use, you’re actively paying off your shelter toward a future with no mortgage payments (as long as you’re not pulling from your home’s equity or doing other things you shouldn’t be doing to delay the payoff).
Remember that not-so-awesome contract you signed when you moved into your apartment that made you agree not to change the space? With your own home, you can renovate to make your space what you want it to be. Don’t like that wall and you own the property? Maybe you can knock it down for an open floor plan. Always wanted a deck but all you have is an ugly concrete slab? Your new deck is one Home Depot trip away. Want to install a slide to get you from your upstairs to downstairs that ends in a pit of Hershey’s chocolate? If you own it, you can change it.
#6: Family Roots
Home is where the heart is but if you don’t own the place you’re living in, you’re just one eviction notice away from your children no longer being able to return to where they grew up. If you own the home, your children can return anytime to experience the nostalgia of that swing you built on the arm of the oak tree that’s now home to an angry raccoon that your four-year-old named Taylor Swift. You can also leave the home to your children when you pass for a nice legacy value.
Reasons Not to Buy a Home
#1: Opportunity Cost
If things aren’t working out with your current location and you find yourself with the need to move somewhere else, you could run into some serious issues. If the market is currently depressed, you could end up having negative equity in your home if you had to immediately sell it. That means, not only are you out a home, but you also owe to pay back the portion of the loan that still needs to be paid after the new buyer pays you less than your existing balance. That leaves you with two options: wait to leave until the housing values get to a point where you’ve gained some equity in your home or sell and take the hit.
Every time something breaks in our apartment, my wife and I look at each other with the look that says “I’m sure glad we can just call maintenance”. In an apartment, if something breaks, you call the office and they send someone up to repair it at no charge (as long as you didn’t maliciously break it). If you’re a homeowner, you either have to fix it yourself or hire someone to do it for you.
I can’t stand the act of mowing a lawn. When I was a kid, I would trade the chore to one of my brothers any chance I got to make sure I didn’t have to do it. And mowing the lawn is just the start when it comes to the upkeep of a home. Between keeping your furnishings current to updating bathrooms or trying to reshingle the old roof, the costs and time it takes to manage these things can add up. And time is money. Try calculating how much money you make at your job per hour and then calculate how many hours you’ll have to spend just on the upkeep of your home and you’ll see just how expensive this is over the long run. Meanwhile, in an apartment, you’re always ten to twenty minutes away from a completely clean space and thirty minutes away from an Ikea where you can buy cheap replacements for whatever personal property you need to fill it.
Whether people want to admit it or not, if you have a mortgage, you have a debt that needs to be repaid. If you’ve ever taken a loan out on a car, you’ll know what I’m talking about. But you need to think even bigger. This isn’t a ten thousand dollar loan. A home loan is typically going to be $100,000+ in almost every area of the USA. And just like other loans, you’re responsible for the entire balance and tied to it until you either pay it off, sell it for the price of your balance or higher, or go to the great beyond.
#5: Attractive Nuisance
Have you ever heard of the term attractive nuisance? When you own an apartment, you have very little space for visitors to get themselves injured in. That changes when you have a house. With a house comes more space. With more space comes the potential to fill that space with items that can attract injuries. We’re talking trampolines, swimming pools, or even that rock climbing wall that you built after watching that sweet documentary on Netflix. And when it’s outside, it’s at the mercy of the neighbor kid who negligently jumps your fence to try it without asking. If he gets injured, that could be on you.
#6: Cost of Space
A big reason that people leave apartment living and move to a home is to get more space. With that space comes greater costs. Heating, cooling, filling it with furniture so it doesn’t look like empty space where your imaginary friend resides. All that extra room doesn’t come for free.
#7: HOA Fees
Apartments provide a handful of amenities that are wrapped up with your rent. Between an onsite gym, swimming pool, and consistently stocked propane grills, we have a lot of free activities at our fingertips. Once you own a home, you ditch those free amenities and trade them for a nice fat HOA fee. And depending on how your HOA decides to use its fees, you could either have a bunch of amenities provided to replace what you lost leaving the apartment or just a council of people whose only job is to tell you that you can’t plant roses in your front yard because it’s against community guidelines.
These were the most important considerations as far as cost/enjoyment were concerned and the ones that seem to come up most consistently from both homeowners and renters in our research. For us personally, we’ve chosen to stay in an apartment for the time being. It’s amazing how much you can fit into a one bedroom plus study, even with our little one booting all of my computer equipment out into the living room and taking over the study. Additionally, our rent is affordable, we have great amenities (without having to pay any HOA fees), we have controlled entry to prevent theft/pesky salespeople, and we don’t have to shovel a driveway at five in the morning to dig our cars out of the snow to get to work in time.
It’s safe to say, at one point in the future, we’ll definitely be homeowners. That goes without question. But for now, we’re happy with what we have.
How about you? Are you currently renting? Did you buy a house recently and find yourself with lots of regrets? Have you owned your home for years and wouldn’t have it any other way? Was your home ransacked by gypsies? I’d love to know in the comment section below.
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