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I've lived in apartments all my life and it's worked out for me. I've moved around a bit because of work, either changing jobs or, frankly, losing them. And so I've always held off of buying a house. Obviously, I know the most basic "pro" of renting is that you have freedom of movement with no repercussions. So I told myself "wait until you're at the point in your life when you're in a secure job and then buy a house." Makes sense. But as the years have gone on, I've realized that's basically never. Sure, there are lots of people (most?) who just stay at their job for decades, but there's also the possibility of always losing your job even tomorrow for at least a large majority of people. So I chucked that out the window recently and decided I was going to buy a house. Good idea or bad idea? Here is my thinking.
Apartment living in and of itself doesn't bother me. I don't mind renting space. But I'm at the point in my life where I get aggravated hearing other people on the other side of a wall. Or hearing people walking around on my ceiling/their floor. I don't like having to smell people smoking. There's an area for recycling/trash and it aggravates me when people throw their garbage in the recycling bin -- not because I'm an eco-warrior, but because it's right next to the dumpster, which means they literally don't care what they're doing. I don't like having to find parking or having to share parking with people who will squeeze right up next to your car.
OK, so that sounds like I'm fed up. But is "fed up" a good enough reason to buy a house? My biggest "makes sense" reason is that I'd rather sink money into a monthly mortgage than into a monthly rent.
Most people I know were fairly positive about the idea of buying a house. But then I talked to a friend and he said don't do it. He made it seem like buying a house was the worst decision in the world, with huge upkeep and hidden costs, as well as property taxes. Essentially, he said there was almost no reason ever to buy a house (which is sort of drastic, but I guess is technically true, since anyone can rent always). So ...is buying a house crazy? Or crazy for me to do? Or makes sense?
Owning a home vs renting is always going to be highly personal. It's a mix of financial (in my town I've owned 2 homes with mortgage/insurance/taxes that were a couple hundred dollars Cheaper per month than the cheapest/most disgusting rentals available), and emotional (I take PRIDE in owning, it's something by which I use to measure my own self, my house is something which I use as part of my identity, exactly like others use a car, a watch, clothes, etc..)
I've owned 4 homes, 2 1970's era "starter" homes, a 1950's mid-scale and my current is a 1930's upscale. The 1970's homes threw no surprises, everything the inspector found in a pre-purchase inspection was ALL there was to find. Actually, that was true of the 1950's house too but it was a one-owner property. There was nearly zero upkeep and zero "hidden" costs. While I had to replace both a roof and AC system in the second 1970's house, I knew that going in and paid a price that reflected those needs. The only real "surprises" I've had across the 4 homes was a water heater in the first house and a water Pump for the heat (hydronic/baseboard heat) in that same house. The water heater was the most expensive to resolve and it was under $500.
If you aren't in a place financially where you have 6~12 months of emergency fund, then maybe buying a house isn't right. If you just Buy something and don't have a pre-purchase inspection done, then you're probably going to come across "surprises". You should completely understand all of your costs, how insurance and taxes play into it (you're already paying those as a renter by the way, it's just wrapped up into rent) not to mention your TOTAL cost with different loan options.
Actually, loans are a big thing to learn about. We were idiots at first and just went with the "normal" 30 year mortgage, you pay a TON of interest up front and build nearly no equity for a number of years. Our current house is a 10/1 ARM (meaning the interest is fixed for 10 years then can increase at a maximum of 3% for the next 5) with a 15 year "pay off"... the payments were the EXACT SAME as a 30 year traditional. So, $350/month for 15 years or 30, which would be better? Given that most people move at least every 5~7 years, a loan that has a fixed rate for that time and then either a balloon or adjustable rate, makes a lot of sense. No reason you can't refinance before that change if you plan on staying (and I highly doubt that interest rates are going up anytime soon). Get educated on these things though.
Buying a house has done a Lot of things for my wife and I. On our first we "made" enough to pay off her school loans (just a touch over $100k when she graduated, paid off when we sold the house 6 years later) and still have a 20% down payment on our next, more expensive, house. The 2nd house was a mistake and we lost some money ~ still net ahead, but that was also a house bought pre-bubble and sold post-bubble. 3rd house we made a profit, and I'm in the 4th house (but starting to think about selling, looking like we will again turn a profit). Overall, we have made money by owning our own homes. Nevemind the mental well being that comes from pride of ownership, being able to make Any changes you desire without prior approval, not having neighbors inches away (though you can have that if you rent a SFH, and not have that if you own a townhome), etc...
There's more Work involved with owning a home though, you're responsible for your own stuff... that means mowing your lawn (or paying someone else), doing preventative maintenance on your property (or, again, paying someone else... that option gets costly and FAST), repairing those things that were found on the home inspection, making cosmetic or functional changes so the building suits you...
I couldn't go back to renting. I also don't live in an urban area where renting is the norm (nor will I, ever). Is owning for you? Only you can decide. Is owning a Bad thing? No, someone Owns everywhere you have ever lived or will live.
I purchased my first home when is was 23 years old, still single, and only bringing home $60.00 a week. It took a lot of sacrifices to buy a home on my lousy salary, sacrifices such as selling my new car and borrowing money from several sources in order to make the down payment, hitchhiking to work, taking on roommates, working two jobs etc. I did it after watching my father make money buying, renting, and selling homes. While my friends were out partying, I had my nose to the grindstone, doing everything I could do to own property. The second home I purchased, the payments were more than I brought home each month. I got a liar loan and depended on renting out rooms to make the payments. That home was purchased during the Carter administration when mortgage rates were 17%. I welcomed the high interest, it provided more write off. Whatever it takes.!!
I have owned numerous homes over the years, and each time I sold for a profit and moved up to a more expensive home and enjoyed the freedom of ownership while I watched it appreciate. My first home was purchased for $23K. Many years later I sold the home I lived in upon retirement for just under one million.
I was never involved in buying and selling RE for a profit, theses were all homes I lived in and sold after a few years of appreciation, and then moving up to a more expensive home, which appreciates faster. I changed jobs four or five times over the years, but it was never necessary to relocate for the new job.
I never made more than $60K on any job I ever held, yet I retired with several million in assets. I currently own three very nice homes free and clear, one I live in, one my daughter lives in, and one I rent out. Had it not been for owning RE, I would still be living in an apartment surviving on my meager SS check..
If I had it to do over again, the only thing I might change would have been to move even more often that I did, I stayed too long in some homes, ten years in a couple of cases.
I admit I owe a lot of my RE success to living in Southern California where property values have soared over the years. Owning property may not be for everyone, but I certainly have no regrets...
1) have a secure job that pays fairly well
2) plan on living in your area for at least 5 years (preferably 10)
3) live in an area where house prices are reasonable relative to rents
4) live in an area with a diversified economy (i.e. the collapse of a single industry isn't going to turn your area into a ghost town).
5) work reasonable hours (you need time to mow grass, paint, and do other basic maintenance)
6) can easily afford to pay for major essential repairs (new roof, new furnace, etc.)
Don't buy the myth that owning a house is absolutely essential for financial security. Owning a house carries significant financial risks (like RE market crashes, changes in the neighborhood, tax increases, unexpected major repairs, etc.).
Buying a house is a bad idea for you because of this:
Home ownership is not for everyone.
The reasons you are sick of apartment living indicate that you should look into renting a single family home.
I do not know where the OP resides but in my area if you were to look to rent a single family home you might as well have a mortgage......the price point is essentially the same. That is what happened to me. I looked tomrent a house and ended up buying instead.
The upside to buying is that when you get into your "golden" years, your home will be paid for (hopefully). Also, for people who have children, it's an asset they can pass on after death.
I would hate to know I've paid 30 years worth of rent payments and have nothing to show for it.
I do not know where the OP resides but in my area if you were to look to rent a single family home you might as well have a mortgage......the price point is essentially the same. That is what happened to me. I looked tomrent a house and ended up buying instead.
Even a duplex reduces the claustrophobic feeling that can come with apartment living.
Given the OP's stated pattern of losing jobs, however, renting sounds like a smarter option.
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But is "fed up" a good enough reason to buy a house? My biggest "makes sense" reason is that I'd rather sink money into a monthly mortgage than into a monthly rent.
