Why I Am Never Going to Own a Home... (Houston: Valentine's day, real estate)

[emirate25]

Do you agree or disagree?

why i am never going to own a home again: Tech Ticker, Yahoo! Finance

[diablo234]

Well homeownership is not for everybody, even though it has it's own benefits as well. It just depends on personal circumstances.

[Lost_In_Translation]

Guy is very one sided. Each person's situation is different so whether or not it makes sense for him to buy doesn't apply to everyone. True, alot of people that should have rented bought in to the notion that homes are an investment. I believe a house is a deprciating asset like anything else you use. The land is where your appreciation comes in. And that is never a sure thing. I bought because I wanted to. Not because I thought I was throwing away my money renting, but because I wanted my own space and no landlord telling me what I could or could not do (my HOA is an altogether different matter). I also wanted to store multiple vehicles and I can't do that at an apartment complex or townhouse. And the rental market for houses where I live in Houston is poor at best and much more expensive than a mortgage. So I bought. Worked for me and I am very happy. Sure I may not see my downpayment or much of my taxes, but I've got more room and a roof over my head and cars' heads so I'm pleased with the decision.

[Liljo22]

Originally Posted by emirate25

Do you agree or disagree?

why i am never going to own a home again: Tech Ticker, Yahoo! Finance

Don't agree at all. Even if you rent, you are paying maintanance and taxes. They are just factored into your rent number but you get zero tax advantage. And I don't see owning a home as an investment. Its a nessescity that you can build equity in rather than just pay to live there. I know there is a risk that it may go down but I am thinking long term.

I bet the writer will also tell you that you should never lease a car over buying. I don't see the difference. You need to fork over about the same % of down payment to usually get the payments manageable. There are a ton of closing costs. You pay maintanance and taxes on it. The difference is that a car is going to depreciate while that is not certain on a home.

[SL Hawkeye]

My advice for follow-up articles from this author:
1. Why it's cost-effective for me to live in my mother's basement.
2. Why I don't need to spend money for a college to give me a piece of paper saying I'm smart.
3. Why I'll never get married (see also - Refusing society's pressures to buy gifts on Valentine's Day).
4. Why it's just too expensive to have kids.

I'll agree that home-ownership isn't for everyone at all stages of their lives. Just don't try to tell me I'm wasting my money.

[Ellen Pitts]

I think the writers reasoning answers the questions of why overspending on a home is bad financial decision, not that simply buying a home is a poor financial decision.

A - Downpayment lost - I think there are still low down payment options out there. My husband is a vet so we never pay any down payment. However, we're planning a move to Houston and we will put a down payment on the house we buy because it will change my monthly payments significantly. What we don't pay in mortgage can go into other investments.

B- Closing costs - 2% of 200k is only $4000. If I rent, I have to put down a security deposit, which for us is about 2k (large family, large house). AND if I stay in the rental the payment will increase annually. So it'll catch up eventually.

C - Maintenance - At least if I am responsible for fixing it I KNOW it will be fixed! Landlords make decisions based on profit and loss not the renters comfort (not to mention energy efficiency) Right now I am in a rental. It is a beautiful home but the windows gush air, the fridge is at least 20 years old and on it's last legs. LL often replaces broken things with used junk. :-/

E- You're trapped - You're only trapped if you owe more than the house is worth. Buy no more than twice your annual income and take out no longer than 15 year mortgage and you'll never be trapped in a house. In Houston, of all places, where there is so much reasonably priced real estate there is no excuse for being trapped in a house.

Besides, after a mortgage is paid off in 10-15 years I'll be slamming a ton of cash away into my investments. That guy will still be a slave to his landlord. He also has less control over his life. What if the LL sells and he gets kicked out?

I think the lesson is more that the 30 year mortgage was a bad idea. Once the housing bubble gets back on track, shorter term mortgages will be more accessible to more people.

[chris_ut]

"The following blog post was written by James Altucher, managing director of Formula Capital". This guy is supposed to be some kind of investment executive and didn't do any research up front before apparently getting wiped out in real estate, then cries about it on his blog? Let me hurry up and invest my money with his company.

[Houston_2010]

I was telling my hubby I wish I had some king of "super" here at the house. I can't afford it of course, but wish "someone" else can deal with the maintenance of the house like you do when you're renting and landlord takes care of things. LOL.
I do love owning my home (well, technically the bank does, I'm paying them :-)) and not having to answer to anyone about what I do, how I do it. Best of all, no HOA!

[TDAlmighty]

Author strikes me as jaded and probably should not be giving out advice on items that he clearly knows nothing of (taxes, real estate price history, financial theory).

My perspective is like this: Last year the average American savings rate was higher than in any time in recent history -- 5% of income. If by making a mortgage payment it forces people that would not normally save to put their money in something that can somewhat holds it value, I am all for it.

To specifically address the author's concern, you place a 40k downpayment on a 200k home. Due to a dip in the prices/realtors fees, after five years you net 20k at closing. You are no worse off financially than if you had bought a boat or car with that 40k and watch it depreciate to 20k. In addition, at least there was a small chance that your home COULD appreciate.

The large caveat in my stance is my belief that nobody should buy a home that does not think there is a good possibility they are going to stay in that location for five years or more (and their income is relatively stable). Not enough time to recover if there is a dip in home prices and to cover realtor/closing fees.

[kreeyax]

Originally Posted by pegotty

I think the lesson is more that the 30 year mortgage was a bad idea. Once the housing bubble gets back on track, shorter term mortgages will be more accessible to more people.

I think that's the key. Do a 15 year mortgage, or don't do one at all. You just pay way too much interest on a 30 year mortgage, so you don't build any equity if you are like the average person who moves every 5-10 years.

Personally though I'll probably never buy a house again. When you factor in all the closing costs, realtor fees, interest, property taxes, maintenance and repairs, etc... it's just not worth it for me.