House = money pits

[Nebulous]

For many people, their biggest investment is their house or apartment.

Why do people put so much money into this investment?

[Animedragon]

Here in the UK many people aspire to own their own home, and sadly many don't realise their dream of home ownership. I think that buying your own house or apartment comes from a desire to have somewhere that is "your place",  it's difficult to actually put into words but it's somewhere to come home to that is yours and yours alone.

And of course it is an investment, once you've paid off the mortgage it's all yours, and house prices continue to rise so as time goes by it becomes more and more valuable, but if you just rent a house it doesn't matter how many years you pay in rent the house is never going to be yours.

[Emotion Flux]

I've thought a lot about this. I think it's a sense of independence, and like @Animedragon said, it's about owning a place to call your own. Imagine coming to your own house to relax after a good day's work, right? I think it'd be pretty sweet to own a home, but I don't really have an optimistic opinion about my future chances since I basically can't work because of my autism. I wish I was high functioning, but the only thing that's helped is the speech therapy I had as a kid since my biological father embarrassingly had a speech impediment but thankfully the therapy remedied that for me. But yeah, owning a home is more of a fantasy for me that I'm not sure I'll ever see happen... oh well, that's life, isn't it? Some people get dealt a royal flush, the rest of us are lucky to get 2 pair as a hand. Poker is one of the best examples of life imo.

[efaardvark]

On 2/20/2023 at 4:59 PM, Nebulous said:

For many people, their biggest investment is their house or apartment.

Why do people put so much money into this investment?

One has to live somewhere so you'll be paying for housing one way or the other.  Supply and demand being what it is, sharing the planet with 8 billion other people who also need a place to sleep will likely be expensive no matter how you go about it.

If the question is "to buy or to rent?" then I too think it is mostly to have something that is yours, to do with as you like.

From a purely financial angle renting is perceived as ultimately a lot more expensive.  The theory is that renting goes on forever while buying & owning at least gives one a chance to ultimately "escape slavery to the system" or "reward yourself for good behavior" or some such.  Historically speaking the equity one has in ownership actually is a good method of storing value without actually "investing" in a specific currency, at least as long as one does not buy a house that winds up being on an earthquake fault or in a war zone.   Of course entropy and politics being what they are maintenance and other expenses as landowner are often just as bad as renting so the idea of finally paying off a mortgage to live big usually doesn't work out quite as well as hoped.  (Take it from one who is responsible for maintenance on an older house in a high-cost area.  It is paid for in the sense that the bank signed the deed over long ago, but taxes and maintenance costs are a non-trivial and never-ending budget item.)

There's a component of cultural traditions too.  Especially in places that are relatively new to and skeptical of the whole idea of banking and credit physical things like real estate, gold, artwork, etc. are often still a culturally preferred method of storing wealth.  Owning a house containing a lot of bling is pretty much the definition of social success there and a house being the most expensive investment most people ever make renting puts one on a lower social level than owning in the minds of many. 

Finally there's the George Carlin angle.  Consumption and consumerism requires buying stuff.  Owning a lot of stuff means you need a place to store your stuff.  The more stuff you have the bigger and more expensive your place to store your stuff needs to be.   

[Nebulous]

On 2/20/2023 at 4:59 PM, Nebulous said:

Why do people put so much money into this investment?

Because I spend more time here than anywhere else. Duh

[Key Visual]

Having a home offers convenience and in the long run can save you a lot of money over renting. There is a ton of stuff that I have to spend money on that I could do at a home for a lot less. Working on my car being one of them. The apartment complex I reside in doesn't allow major repairs other than changing oil and such since there really isn't room for that to be done. Also I have to use a laundromat to do my clothes and units that allow washers and dryers are out of my price range. Also having a house with land would allow me to grow more food than I can on my apartment patio. When I was living at home easily grew 100+ plants that we canned and saved for the winter. When veg prices went up over the winter we had them ready to go frozen or canned to use at a much cheaper cost. With food prices as high as they are it saved us a ton of money.

Renting you get nickel and dime'd a ton for little things.  Housing projects usually can be done yourself with enough time and learning how to do them properly. With housing costs as they are now it may be a bit cheaper to rent in some areas but you spend that extra saving on other things. Generally owning a house can be cheaper if you can get a loan with a locked in rate. Never go adjustable or floating rate mortgage if you can help it. The bank just wins in that situation. Their goal is to get you to pay tons of interest or have you default if they can.

The current system we have is trying to keep people from owning property or homes and keep you stuck at that level trying to juice ever ounce of savings you have going though the process myself. Seeing what it would take for me to even qualify for a loan. Tons of fun I tell ya.

But there is programs out there that can help if your a first time buyer and take advantage of them. Will save you a ton of money in the end and the interest rates are lower. Hopefully by next year I can start the process and get a place of my own instead of renting but we will see.

 

Also one thing that a house gives you is collateral for bigger purchases. If you have a big bill that you could make payments on but couldn't afford to pay outright you may be able to wrap it into your mortgage payment.  Now you would have to be careful with this as  your payment could increase but can get you out of a situation depending on the cost. This will take equity away from the hope for reselling but if your going to be in the same house for the rest of your life it may not be a concern unless you plan to use the houses equity as a retirement fund.

I know that this may not be possible for everyone as where I live housing is up but not as bad as a big city and where I live is more rural. In a big city renting is usually the only option it seems. Had a few relatives have to move out of NYC because of rent being so high.

As for the topic of "House = money pits" I don't think so depending on what you want to do. If your traveling a ton and not being in one location yeah I can see that. But if your in a established job and expect not to be moving for a good while a home makes sense. It can seem like a money sink but it offers a leg up for other things that when your renting can cost you extra money. That savings could be put into the house, retirement fund, or paying down outstanding debt.

 

Edited July 3, 2023 by Key Visual

[Animedragon]

Owning you own home gives you security of tenure. One of the things I've noticed here in the UK is that quite a lot of private landlords are in the "buy to let" market, they buy a house with the intention of letting it out, the theory being that the rental income covers the cost of the mortgage and other expenses. But increases in interest rates are making this idea difficult and some landlords are finding that the rental isn't covering their costs. This results in either the landlord putting the rent up or just deciding to cut their losses and sell up.
Personally I can't think of much worse that finding a letter on my doormat one morning that says "Sorry you'll have to move out because I'm selling the house".

[efaardvark]

Owning a house isn't a cure-all expense-wise.  Entropy is a thing.  Maintenance and repairs will need to be done by someone.  Money for repairs, taxes, and all the other etc. will be coming out of the pockets of the one who lives in the house, one way or another.

And just to get this on the table.. news flash, landlords have expenses too.  As a renter you may not be paying the property taxes or a mortgage directly but I can almost guarantee that the landlord is paying most of your rent check to the tax man and the bank, just as you would be if you owned the property yourself.  Sure they take a cut for themselves, but it isn't like they're getting it all for themselves, or even most of it.  If the renter doesn't pay the rent, the bank will foreclose on the landlord for not paying the mortgage just as quickly as they would for any other homeowner.  This will almost certainly result in the renter having to find another place to live as well.  TANSTAAFL.  Owning does give you a discount on the monthly payment(s) by cutting out the landlord as a middleman but it often isn't nearly as much as a naive renter imagines.

For me what owning mainly does is give you a bit more direct control over the situation.  Repairs and maintenance do still need to get done, but they get done on your schedule and to your satisfaction, not some distant landlord's.  If you want to make changes - even major ones - you don't have to ask permission of a third party, you just decide things for yourself.  That sort of thing.

Also, if you're the type who likes to do-it-yourself then that process can be a source of satisfaction and reward in itself.  And of course save quite a bit of money, assuming you have the time, money, and ability to do it right.  (But even then you have to consider what the value of your time is.  I've given up many a weekend or holiday to maintenance and repairs when I'd rather have been goofing off playing games or reading a book.  That's definitely a cost, though not accounted for in the monthly dollars-and-cents reckoning.)

Full disclosure... I own and pay for an older house that is constantly in need of repairs.