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I really don't understand the obsession with owning a home. So many people I know expend their entire savings on buying a town home or a condo or some other pla

I really don't understand the obsession with owning a home. So many people I know expend their entire savings on buying a town home or a condo or some other place where you might as well rent an apartment. But the dream of "being a homeowner" is somehow worth it. It's always struck me as something of a con. Any tax benefits you might see are offset by the much higher monthly mortgage payment. * note my experience is based on living primarily in SF and LA, so if you are willing to put up with Middle America I'm sure you can find much better value

Mwyborn 14y ago
My reasoning behind wanting to own my own home is that i am tired of renting and having to do exit cleans and paranoid about any damage that may occur. Its also a sense of security for me, to know that i own this piece of earth and this is my base. Although i don't own a home yet but would love to. Another reason is that i could pass on the property as an asset to future generations. But i suppose everyone wants different things in life :)
tsotha 14y ago
You have to run the numbers. Right now because a lot of people with bad credit got forced out of homes and into the rental market, historic low interest rates, and a large volume of homes for sale, here in the east bay you'll pay less if you buy than if you rent. Five years ago the opposite was true (in spades). Mostly it depends on your circumstances. If you're single and you change jobs relatively often, it doesn't make sense to buy a house. If you have children it's cheaper to buy a house in a good school district than to send your kids to private schools.
redschell 14y ago
Can someone more worldly than I speak to any possible cultural factor here? By that I mean, is the desire to own property as deeply-rooted elsewhere in the world as it is, or at least seems to be, in America? Are people in Japan breaking their backs to own a home? How about Europe? Brazil? I'm genuinely fascinated by this, because it really does seem like American society frowns upon people who don't own a home by a certain age, especially when children are involved, almost as if a backyard is absolutely fundamental to the child-rearing process.
- sateesh 14y ago
  A datapoint, the desire to own a property is quite deep rooted in India as well.
- EwanToo 14y ago
  In the UK owning your own home is definitely "the dream", but in France, owning your own home is much less of a desirable thing, though it is increasing. I don't know about the USA, but with current interest rates and the end of the housing boom a couple of years ago, in the UK it's often cheaper to buy than to rent, assuming you can get the deposit together.
rayiner 14y ago
Say you take out a $400,000 loan for a $500,000 place (this will buy you a 3BR high-rise condo in downtown Chicago). At today's rates, your mortgage payment will be ~$2,000/month. Your first payment on that house will be $600 principal and $1,400 interest. In a condo, your HOA fee will be maybe $800-1000/month. Depending on your tax bracket, your tax savings will be ~$400/month, which will cancel out your property taxes. So your total cost is $1,400 + $1,000 = $2,400. Market rent for the same 3BR high-rise condo is probably $2,500 to $3,000. Moreover, while your rent will go up 2-5% each year, the interest component of your mortgage payment will actually go down (2-3%/year over the first decade). Finally, when house values appreciate, you'll capture that increase rather than your landlord.
- hessenwolf 14y ago
  just a caveat; when = if. Houses may be overvalued.
- greghinch 14y ago
  I see how you're doing the math, but I think you're presenting it misleadingly to say your monthly cost is $1400+$1000. First of all you left off the $600 principal; you may recoup that in a sale but you still gotta pony it up every month. Second, your $2000 a month mortgage payment seems low on a $500k home. Talking to realtors and friends that have bought, the rule I've been told to go by is plan $700-$800 per $100k for mortgage and property taxes (not including any HOA). So that means a cost of $3500-4000 PLUS HOA dues every month. Even if you are offsetting $1000 of that with tax benefits, renting for $3k still looks attractive, especially if you factor in the cost of maintenance of a period of 10 years or more. Between two homes I've rented I've not had my rent increased once by a landlord in the past 6 years.
  - rayiner 14y ago
    It's not misleading, it's accurate. Your principal payment is money you'll get back on sale (or can borrow from if you need liquidity). It's qualitatively different than interest or a rent payment that you'll never get back. My number is roughly in line with the $700/100k figure. I'm assuming 20% down, so the loan is for $400k. If your credit is excellent, and you don't live in one of the high-tax areas, $2000 loan payment + $500 taxes is doable. As for rent increases, I've never not had a rent increase in 8 years of renting in Chicago and Atlanta. It's standard practice in the city.
johnpattiyson 14y ago
Why do I own a home? My girlfriend and I bought a house together a year after we finished university. We're now married. We found a beautiful 100-year old brick house in a village in the UK an hour from my work, 30 minutes from hers. It's just big enough for the family that we want in the future so we're not planning on moving. We bought it because we wanted to have our own space to live and raise a family in. Every penny that we pay off is ours in equity. The interest base rate is so insanely low (0.5% in the UK) that we hardly pay any interest on the mortgage. We've worked hard to pay off as much of the mortgage as possible, forgoing holidays for a couple of years, so it's now more ours than the banks. In a decade or two it will be ours entirely. If we rented (and some of the houses in the village can be rented) we would pay twice as much each month and having nothing to show for it after decades. We're close to two major UK cities, so we are not out in the sticks. We're both young academics, so we are certainly not rich. As a couple we have a lot of fun decorating, remodelling and maintaining it. The previous owners had windows that weren't in keeping with the style so together we replaced them with hand crafted sash windows. Every summer we spend a glorious weekend having fun painting all the woodwork together. When we die we will be able to pass on our house and its value to our children. It will be the house they grew up in, in the village they grew up in. They will either be able to sell it to get our life savings, meaning they or their children can buy their dream home, or perhaps they'll build a family in it as well. Having your own house is about having your own space - your own castle.
ibisum 14y ago
Renting an apartment means giving someone else money to let you live in their space. Buying a home means, paying a bank to live in what will eventually, hopefully, be 'yours' to do as you wish. Such as, rent it out to someone.

Mwyborn 14y ago

My reasoning behind wanting to own my own home is that i am tired of renting and having to do exit cleans and paranoid about any damage that may occur. Its also a sense of security for me, to know that i own this piece of earth and this is my base. Although i don't own a home yet but would love to. Another reason is that i could pass on the property as an asset to future generations. But i suppose everyone wants different things in life :)

tsotha 14y ago

You have to run the numbers. Right now because a lot of people with bad credit got forced out of homes and into the rental market, historic low interest rates, and a large volume of homes for sale, here in the east bay you'll pay less if you buy than if you rent. Five years ago the opposite was true (in spades). Mostly it depends on your circumstances. If you're single and you change jobs relatively often, it doesn't make sense to buy a house. If you have children it's cheaper to buy a house in a good school district than to send your kids to private schools.

redschell 14y ago

Can someone more worldly than I speak to any possible cultural factor here? By that I mean, is the desire to own property as deeply-rooted elsewhere in the world as it is, or at least seems to be, in America? Are people in Japan breaking their backs to own a home? How about Europe? Brazil? I'm genuinely fascinated by this, because it really does seem like American society frowns upon people who don't own a home by a certain age, especially when children are involved, almost as if a backyard is absolutely fundamental to the child-rearing process.

sateesh 14y ago
A datapoint, the desire to own a property is quite deep rooted in India as well.
EwanToo 14y ago
In the UK owning your own home is definitely "the dream", but in France, owning your own home is much less of a desirable thing, though it is increasing. I don't know about the USA, but with current interest rates and the end of the housing boom a couple of years ago, in the UK it's often cheaper to buy than to rent, assuming you can get the deposit together.

rayiner 14y ago

Say you take out a $400,000 loan for a $500,000 place (this will buy you a 3BR high-rise condo in downtown Chicago). At today's rates, your mortgage payment will be ~$2,000/month. Your first payment on that house will be $600 principal and $1,400 interest. In a condo, your HOA fee will be maybe $800-1000/month. Depending on your tax bracket, your tax savings will be ~$400/month, which will cancel out your property taxes. So your total cost is $1,400 + $1,000 = $2,400. Market rent for the same 3BR high-rise condo is probably $2,500 to $3,000. Moreover, while your rent will go up 2-5% each year, the interest component of your mortgage payment will actually go down (2-3%/year over the first decade). Finally, when house values appreciate, you'll capture that increase rather than your landlord.

hessenwolf 14y ago
just a caveat; when = if. Houses may be overvalued.
greghinch 14y ago
I see how you're doing the math, but I think you're presenting it misleadingly to say your monthly cost is $1400+$1000. First of all you left off the $600 principal; you may recoup that in a sale but you still gotta pony it up every month. Second, your $2000 a month mortgage payment seems low on a $500k home. Talking to realtors and friends that have bought, the rule I've been told to go by is plan $700-$800 per $100k for mortgage and property taxes (not including any HOA). So that means a cost of $3500-4000 PLUS HOA dues every month. Even if you are offsetting $1000 of that with tax benefits, renting for $3k still looks attractive, especially if you factor in the cost of maintenance of a period of 10 years or more. Between two homes I've rented I've not had my rent increased once by a landlord in the past 6 years.
- rayiner 14y ago
  It's not misleading, it's accurate. Your principal payment is money you'll get back on sale (or can borrow from if you need liquidity). It's qualitatively different than interest or a rent payment that you'll never get back. My number is roughly in line with the $700/100k figure. I'm assuming 20% down, so the loan is for $400k. If your credit is excellent, and you don't live in one of the high-tax areas, $2000 loan payment + $500 taxes is doable. As for rent increases, I've never not had a rent increase in 8 years of renting in Chicago and Atlanta. It's standard practice in the city.

johnpattiyson 14y ago

Why do I own a home? My girlfriend and I bought a house together a year after we finished university. We're now married. We found a beautiful 100-year old brick house in a village in the UK an hour from my work, 30 minutes from hers. It's just big enough for the family that we want in the future so we're not planning on moving. We bought it because we wanted to have our own space to live and raise a family in. Every penny that we pay off is ours in equity. The interest base rate is so insanely low (0.5% in the UK) that we hardly pay any interest on the mortgage. We've worked hard to pay off as much of the mortgage as possible, forgoing holidays for a couple of years, so it's now more ours than the banks. In a decade or two it will be ours entirely. If we rented (and some of the houses in the village can be rented) we would pay twice as much each month and having nothing to show for it after decades. We're close to two major UK cities, so we are not out in the sticks. We're both young academics, so we are certainly not rich. As a couple we have a lot of fun decorating, remodelling and maintaining it. The previous owners had windows that weren't in keeping with the style so together we replaced them with hand crafted sash windows. Every summer we spend a glorious weekend having fun painting all the woodwork together. When we die we will be able to pass on our house and its value to our children. It will be the house they grew up in, in the village they grew up in. They will either be able to sell it to get our life savings, meaning they or their children can buy their dream home, or perhaps they'll build a family in it as well. Having your own house is about having your own space - your own castle.

ibisum 14y ago

Renting an apartment means giving someone else money to let you live in their space. Buying a home means, paying a bank to live in what will eventually, hopefully, be 'yours' to do as you wish. Such as, rent it out to someone.