Part of the American dream has always been home ownership. It's just a fact. From the time most Americans are in their 20's, they are already thinking about saving money to purchase their first property. It is considered a "great investment" and a huge part of the successful life. And yet, things have changed.
Between the mortgage crisis and foreclosures and falling home prices, owning a home is just not what it used to be. So why are people still so obsessed with it? Just the other day, I was talking to a friend who is pregnant and she and her boyfriend were stressing because they still rent at 36 and have a second baby on the way. I get their concern. But honestly? Lucky them.
A conversation on Cafe Mom is also brewing about this same topic. Some agree with me. Some agree with them. But the reality is: no matter what your opinion, home ownership is just not what it used to be.
My husband and I bought our first home (a condo) when we were 27. We bought at the height of the market in a city where real estate is already very expensive. For about $100,000 more than our Ohio friends spent on their 3,000 square foot homes, we bought our 1,000 square foot condo in the heart of a very cool, up and coming neighborhood where we could walk to everything. We did not care about schools at the time. Or safety. Or any of the things parents of young kids have to care about.
We were childless and thrilled, furnishing our home with all the furniture we had recently purchased during a trip to Morocco. And then we got pregnant. And then the market tanked. Had we been renting, we would have probably bought a home in a good neighborhood at that point. But we were stuck.
Last fall, after seven years in a condo we had only planned to be in for five, we were finally able to get out. We were very lucky that we found a buyer who bought out home for what we bought it for. We walked out with just enough to put down on our new house, which is a suburb of NYC where real estate is even MORE expensive. We love our new house, but our property taxes combined with our mortgage mean we pay twice what we used to pay. Sure, we get better schools and the opportunity to do whatever we want with our house now, but we also get happy little surprises like broken pipes that cost $10,000 to repair. We have to foot that bill. There is no landlord.
That's the thing about home ownership. It is not just the down payment. It is every little bit of maintenance and all the savings you need for that. Plus decorating and everything else. And then there is STILL no guarantee you will get return on your investment.
We chose to buy because my husband still really likes the idea and we had enough to put down. But with less than 30 percent or so down, it seems absolutely silly to buy. Renting is not what it used to be and it can mean the difference between being stuck in a place and being able to get the hell out. If I had it to do over again, this home would be first we owned.
Sure, it all worked out, but we were very, very lucky. It could have gone either way and for us, it was just not a wise investment. If you don't have a large chunk of your own cash to put down (not borrowed) or the money to cover sudden large expenses, then keep on renting. Trust me. It's smarter.
Are you really into owning a home?