A few years ago, we sold our “forever” home to help make our dream of slow traveling the world a reality. We moved into a rental. And we’ve never looked back.
I have no desire to buy a home again. While I’ll never say never, it will be a long – llooonnnnggggg time in the future if I ever do so again.
People have all kinds of reasons they are still purchasing a home today.
- They say it’s a great investment.
- They think it’s a way of establishing roots in a community.
- They say you throw money away if you rent.
Um, no. That’s the media doing a very good job of getting you to believe that about the real estate industry.
Let’s talk about all three.
It’s a great investment
Looking back over the last century, it’s hard to argue with this statement. My parents purchased a house in the 1970s, and less than two decades later, it was worth more than 10 times what they paid for it.
Baby boomers did make A LOT of money playing the buy/sell game and moving up to bigger and better properties.
As a Gen Xer, we had our opportunities.
We also lost a lot too. Hello, 2008.
For most home buyers, they save a bundle to have a down payment. Then they move to cash-poor mode as they dump their savings into a property. They borrow hundreds of thousands of dollars to make up the difference.
They pay primarily interest payment for years.
They spend even more money fixing the place up and taking care of basic maintenance items. Need a new roof? There goes several thousand. Want to remodel? There goes tens of thousands. Landscaping. Water heaters. Furnaces. New carpet. New hardwood floors.
Can you recoup? Odds aren’t in your favor.
Now let’s talk about property taxes. You’ll pay these the rest of your life, for as long as you own the home.
Mortgage deduction? Not any more. For most middle-class homeowners, under current policy, that deduction is gone.
This isn’t an investment. If you bought a stock that delivered in this manner, you would have sold a long time ago.
People who buy are more stable. They belong to the community. They have more desire to get out and meet their neighbors, and to take pride in everything around them.
That’s what most people believe. But it’s simply not true.
Have you ever had a neighbor who lived near you for years? Yet outside of seeing them drive by, you have no idea who they are? Or what they do?
Of course. It’s called living in suburbia.
I lived in a community for seven years. And outside of saying hi to the people right around me, waving as we mowed the lawn, we never socialized in any capacity. We all led busy lives. We worked different shifts. Our kids went to different schools, and were different ages.
How is that establishing roots in a community?
Instead, my community was based on my common interests. I volunteered at my daughter’s school. I joined a local workout club. I took part in a women’s group, and sat on the board of directors.
That was my community. My roots were flexible based on where I wanted to give my time.
And I didn’t need to own my house to do that.
I don’t own a house today. I’ve rented for the last several years and intend to do so for many years to come. (At this point I’m saying I’ll never buy again, but I’ve also learned never to say never.)
And by selectively choosing where I’m renting, I have an incredible community around me. I have neighbors we dine with on a regular basis. I have a group I walk with every morning.
I found all of this by saying hello. And being a friend.
That’s easy to do, whether you live in a rental or buy, or stay for a month or ten years.
That is about choice. Not whether you rent or buy.
Throwing money away
I rent. Every month, I pay a fee and expect a certain level of service. If something goes wrong with my plumbing, I call for maintenance. If a pipe breaks, it’s my landlord’s problem. If there’s a leak, they fix it. I simply pay a fee every month, and they take care of the rest.
Try living without a water heater, a furnace, or restoring your house after mold sets in. When you “own” it, it’s all on you.
I don’t have to save thousands in a rainy day fund for a home’s “little” emergencies. Instead, I can invest it anyway I choose.
The future isn’t going to mirror the past
Go ahead and Google the future of real estate. No matter which news source you follow, you’d be hard-pressed NOT to find doom and gloom in the real estate market.
Everything points to a downturn in the market. And not just a little one. A BIG ONE.
The average home price in places like San Francisco is well over a million dollars. How can a millennial crippled with college debt ever afford to jump in at that price?
It also doesn’t take much to realize our concept of housing is changing.
Millennials don’t want the very large house in the suburbs. They want urban living. Trouble is, baby boomers and gen Xers are following in their footsteps. When the kids leave and you’re faced with an empty nest, do you really want 5,000 square feet of space? Or is a well put together condo in an urban area more to your liking?
And traveling – how many articles have you read lately about someone giving it all away and traveling for the rest of their lives? I Googled “selling it all and traveling the world” and 1.2 billion results came up. Yep, there’s a lot of desire.
Some buy a motorhome and hit the road. Others Airbnb around the world. And they’re doing this at all ages: singles, families, empty nesters.
When you no longer believe the American dream includes homeownership, it opens up your world to new opportunities.