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The best reason I can think of to buy a house is that eventually you have no more payments. That's where I am now. My house is paid for and unless I decide to buy another house, I will never ever have a house or rent payment again in my life. That's a pretty good feeling. Yes, I have property taxes, but that is a drop in the bucket compared to rent or house payments. If I did buy another house, I'd probably keep this one, rent it out, and the rent would help pay my new mortgage.
I watched my parents buy/own/sell property through the years and they made a profit every time. Sometimes they would price their property high thinking it would give them time to find another place and prepare to move, and then they could lower the price when they had found another place. And then the house sold on the first day at the high price they listed it at.
After their second house, they never had a mortgage. They made enough profit that they were able to buy another house - and 80 acres - with cash. Sold that and bought another house and 80 acres with cash. Sold that and bought two houses - one for them and one a rental property - and they owned those when they died.
Owning is not always better than renting, housing is completely LOCAL. I wish someone had given me this message when I bought my first house in 2002, it was the largest financial mistake of my life as it just sold a week ago at a 50k loss. My wife also took an 80k loss on her home that she purchased in 2007 and had to sell in 2011 when her job moved her across the country.
Even when you pay off your house like I did, you still have property taxes, maintenance, and possibly HOA dues, those costs never go away. Buying versus renting is just a preference for how you want to pay for your housing needs. The realtors of the world have really put a lot of marketing into "renting is just throwing your money away", it absolutely is not.
For me I will be renting for quite some time, I have no desire to lock myself into a home that can crash in value again. I love being able to call the landlord when something breaks, I no longer have to deal with it myself. I have been very successful in my career and with total market investing but will stay away from one of the least diversified "investments" you can make, buying your own home.
If you're renting you're paying for the landlords expenses in your rent. You're paying his ppty taxes, maintenance, yard work, etal. When you move out you get no investment benefit back. Owning you get tax benefits, appreciation benefits, possible higher credit rating, pride of ownership, many advantages.
But to play devil's advocate here - you CAN move when your lease is up, you don't have to sell your house first. If the neighborhood starts depreciating you have lost nothing. Ditto if your job requires a transfer. You have more freedom in some ways but the trade-off is having to hear your neighbors, dealing with the idiots who don't pick up after their dogs, etc.
The advantages to buying a house are having more privacy than an apartment, more security because nobody has a key except you, having your own parking area, not being impacted by others' poor housekeeping skills, and being able to make repairs in a timely manner instead of having to wait for the landlord to get around to it.
The disadvantages are that you can't just move when you want to, you're responsible for upkeep, repairs, and yard work. Also if you have horrible neighbors you're stuck with them a lot longer than you would be in an apartment.
Owning is not always better than renting, housing is completely LOCAL. I wish someone had given me this message when I bought my first house in 2002, it was the largest financial mistake of my life as it just sold a week ago at a 50k loss. My wife also took an 80k loss on her home that she purchased in 2007 and had to sell in 2011 when her job moved her across the country.
Even when you pay off your house like I did, you still have property taxes, maintenance, and possibly HOA dues, those costs never go away. Buying versus renting is just a preference for how you want to pay for your housing needs. The realtors of the world have really put a lot of marketing into "renting is just throwing your money away", it absolutely is not.
For me I will be renting for quite some time, I have no desire to lock myself into a home that can crash in value again. I love being able to call the landlord when something breaks, I no longer have to deal with it myself. I have been very successful in my career and with total market investing but will stay away from one of the least diversified "investments" you can make, buying your own home.
While owning may not ALWAYS be better than renting in some unique situations, overall it typically is.
Even if you take a hit when you sell, you still get SOME of your money back. You get NONE of your money back when renting/leasing. Every penny you spend is gone forever.
It all boils down on the decisions you make when buying. If you do your research and find out that homes are selling at the top of the market in the area it may be wise to wait a while and let the market cool down before buying. Otherwise you have the situation you mentioned above.
Property taxes and maintenance are a drop in the bucket if you have no mortgage in comparison to rent. Unless your home fell in because you didn't fix things as they broke and needs to be rebuilt maintenance should be a fraction of the cost of rent.
I've never taken a large hit on a home and I've owned three to date. In my worst situation I broke even and that was after spending over $16k one year to replace the HVAC, roof, appliances, etc.... I didn't make a profit on that house, but we didn't lose anything either.
We bought our first home (foreclosure) for $75k and sold it two years later for $125k when we realized the property values were up but were going to go down quickly as the neighborhood was beginning to attract people who weren't concerned with upkeep. After paying commission we pocketed $42,500 on that house. The only maintenance to that house was carpet replacement, but we negotiated to have that paid for by the bank when we bought it, and it didn't cost us a dime.
We bought our current home right below current market value, but we also know the market took a dip in our area about the time we bought (also the reason we didn't make a profit on the last house). We also knew about all of the upcoming development that will make the area more desirable and that it was worth us taking a risk at buying so close to current market since research shows it should go back up.
I know a couple of people who have lost big money on homes, but again they bought at the top of the bubble in an area that wasn't developing and when the bubble burst they were left holding the bag. We have a friend that paid $115k for a home that I warned them needed structural repairs and was in an area in decline. They ignored this, waived a home inspection, and bought the house. They have tried to sell it numerous times for $70k but can't because any time they make it to inspection the buyers back out.
It's all about the decisions you make.
Look at this scenario........ (other investments aside, as not everyone has market investments) what if you get into dire straits and need a large amount of cash and you own your home outright? With owning a home you can take out a HELOC or you can outright sell it (if you need desperately need cash quick you can short sale it for a loss but still generate cash), you can re-finance it, or even take out a reverse mortgage if you just had to. What happens if you are renting? You can't call upon any of the money you have spent to get you through a tough time. You have no asset to pull from.
I've always been a renter, husband always a home-owner. We bought our house, 1900 sq ft a year ago, it has gone up in value 15%, because of our age and the homestead exemption, our payment is now under 1k a month.
You cannot rent a ONE bedroom apartment for less than $1200 here in the Fort Worth area (a decent one anyway).
Where else can you get 15% on your investment and have a roof over your head?
But to play devil's advocate here - you CAN move when your lease is up, you don't have to sell your house first. If the neighborhood starts depreciating you have lost nothing. Ditto if your job requires a transfer. You have more freedom in some ways but the trade-off is having to hear your neighbors, dealing with the idiots who don't pick up after their dogs, etc.
All of this is completely true. If you like to move around a lot, buying may not be a wise decision. If you intend to stay planted in an area permanently (or for 10-15 years) buying is a better investment. There is some upfront research to do first.
Property value research - We look up the trends in the area we are considering. We look for peaks and valleys, the old sales prices, comps within a 3 mile radius, etc... then we research if there are any developments coming through that may increase the value. We also research news articles to find out if there have been any crimes reported in the neighborhood.
Meet the neighbors - We always do this prior to signing a contract. Whether we see them out while looking at the house, stop and introduce ourselves during a few trips through the neighborhood (more on this below), figure out if we know anyone who knows someone that lives in the neighborhood, etc.... Eventually we end up meeting most all the neighbors. If we are under contract, we take the opportunity to talk to them again during the home inspection.
Make multiple trips through the neighborhood - We call these scouting trips. We will drive through the neighborhood at random times to get an idea of what life is like there. Are the yards unkempt? Is there junk in the driveway or the yard? Are the homes unkempt? Are any of the neighbors night owls who play loud music late at night, have frequent parties, etc? If we can answer yes to any of these questions, we mark it off the list. This is also a prime opportunity to meet the potential new neighbors and get a first impression of them.
Inspect the house WITH the home inspector - This isn't something everyone can do, but if you can it is extremely wise to stay on their heels. Our last home inspector missed a few things that I caught and vice versa. They're human after all and that nice little clause at the bottom of the inspection releases them from any liability if they miss something. You need to understand the real condition of the house and make sure there aren't any potential problems with the house that may cost you a lot of money up front.
These can all be indicators of the possibility of neighborhood/home depreciation. If they are present, we don't take the risk. There is still some risk involved, but we minimize it however we can.
But to play devil's advocate here - you CAN move when your lease is up, you don't have to sell your house first. If the neighborhood starts depreciating you have lost nothing. Ditto if your job requires a transfer. You have more freedom in some ways but the trade-off is having to hear your neighbors, dealing with the idiots who don't pick up after their dogs, etc.
I'm a homeowner and I still have to deal with this crap.
I have a townhouse so I think it's more the type of housing versus rent/buy that determines such things. OP, whether you decide to buy or continue to rent, I think a SFH will somewhat improve your quality of life.
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