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If single and move about some than renting is good idea. If you ever get settled in one place than maybe consider purchasing a home. Just be smart and purchase something that fits you at a reasonable cost. As an example, a single person can easily get by in 900sq ft and anything over 1500sq ft might be a waste of space.
I own my home (no mortgage) plus I down sized (to 1450sq ft) when I bought, my association takes care of all outside landscaping/maintenance, and I have no intention of ever moving again thus renting would make no sense for me.
My mom rented (after divorcing) for nearly 15 years. Every year her rent would go up. She finally decided to buy a condo which stabilized her monthly payments. 15 years later the condo is paid in full and she can retire without worrying about paying rent. Also, in some area's of the country after the housing crash in 2008, rent went up substantially do to the number of people renting. This is something else to consider.
My mom rented (after divorcing) for nearly 15 years. Every year her rent would go up. She finally decided to buy a condo which stabilized her monthly payments. 15 years later the condo is paid in full and she can retire without worrying about paying rent. Also, in some area's of the country after the housing crash in 2008, rent went up substantially do to the number of people renting. This is something else to consider.
This is another very good point. As we get older to the point of retirement, there may come a time where we can't work and have to live on a fixed income. Living in a home that is paid for is much easier (sans the yearly property tax and random repair) than trying to make a rent payment each month.
Buying a house is not for everyone. With a house all work and maintenance and expenses are your problem. If you want to someday sell, you may not be able to do it due to a poor selling market. With a house you may have an investment into that house and the neighbors from hell may move in next door, and you can't sell your place to get away from them. If you change jobs often or transfer often, again you may not be able to sell. Or you may live happily in 1 place for years and now the area is going to seed or a toxic waste dump is being built. Can you move? Can you sell? Can you even get the money you spent, back?
Doing let other talk you into buying if you are not sure.
BTW- I own a house, and owned others from a previous marriage and relationship. I had to walk away from 2 houses and got nothing from them. Another house took a year to sell (we no longer lived in the house) and took a loss (by approx. 200K) just to "get rid of it". And we are currently having a problem selling our current house (it's too big for us now as we reach retirement). I'm hoping to break even with this one.
I don't know if I would want to buy anymore.
You can also try renting a home, or apartment in a home. That way you don't have to put up with ppl walking over you, noise, and parking in the "nose bleed" section of a parking lot.
Buying means you lock in your housing costs at current levels. Renting means you are at the mercy of housing inflation. Buying also means you will eventually pay for the house and your housing costs will drop. My mortgage on a 15 year note was $1600/month, but my housing costs in retirement are only $300/month taxes and insurance, with another $125 for heat, lights and water.
Maintenance is not that big a deal if you know how to budget. I just put a new 30 year roof on the house for $6,000. That's $200/year, a trivial expense. Yes, over the last 22 years I have put about $70,000 into the place, but that was almost all upgrades that improved the comfort, appearance and market value of the house, for a total of less than $3500/year, about 2 months rent in the current market. The nice thing about upgrades is that you only do them when you have the money.
Look at your history. Did you have to move because you couldn't pay the rent? If not, you could have made the mortgage payment just the same. It's not like your bills stop because you rent. There are money saving options to owning a home too. A complete energy upgrade means my utility bills today are the same as they were in 1994, despite years of rate increases.
I disagree with this advice. The "idiots" (like me) who went with a fixed 30 year mortgage are the ones who still own their homes after 2009. The brilliant geniuses who went with an ARM got foreclosed, and can't buy a house again for 7 years because their credit is shot.
The best approach has always been, and continues to be, a 30 (or 15 if you can afford it) year fixed mortgage with the best possible rate you can lock in. Rates are rising, so if you get an ARM, thinking "no problem, I can always refinance to a fixed later) you will definitely pay more regardless whether your ARM resets or you get a fixed 4-5 years from now.
I do agree that getting a fixed rate mortgage is less risky that getting an ARM. And interest rates are still low, so I'd do that before they go up again.
But, to play devil's advocate here is what happened to us: we thought we'd move right after we retired, so in 1998 or 99, we refinanced with an ARM. Strategy was to sell before the interest rate would float after several years. We used the money to improve our kitchen which was sadly out of date and worn out. We had our kitchen remodeled, and a few years later we retired, and then put our house up for sale. We had a pending sale when the market tanked in 2008. Our sale did not go through, and we did not list again for several years. In the mean time, our interest rate--went down. It decreased every year for several years, which means that our mortgage payment decreased every year until we finally were able to sell in 2012.
So, there are a lot of unknowable things about home ownership. I'd advise the OP to ask a lot of people whom they would recommend as a realtor, and interview several experienced realtors. Pick their brains about moving, and what sort of homes are on the market. Find out if you are in a buyers' or sellers' market. Decide if you want a one level home. Decide if you can tolerate a subdivision where homes are cheek to jowl. Are you interested in new or used? What part of town do you want to live in.
Visit some open houses this spring. Talk to realtors. Decide what you down payment would be. Do the budgetary math. Then start looking if you have decided to do so.
Sorry if this has been addressed already but going back to the opening post the comment from a friend that there are no good reasons to own a home is frankly idiotic. There are plenty of good reasons to own a home, equity and appreciating for starters.
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.
This scenario doesn't make any sense, if you don't own the home outright wouldn't you still have the money in some kind of account or are we assuming everyone would have blown it at a casino?
It is great that you have not lost any money, but a lot of people have, I don't see what is wrong sharing the other side of the coin with the original poster, buying a home is not a guarantee of any kind of return.
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