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View Poll Results: Importance of home ownership to FI?
Extremely important or essential 31 23.66%
Very important 39 29.77%
Somewhat important 29 22.14%
Not important at all 32 24.43%
Voters: 131. You may not vote on this poll

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Old 08-25-2014, 03:57 PM   #21
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Couldn't vote cuz needed another option: "it depends". Personally, bought 18 years ago and home value is over 4x what I paid so it was amazingly profitable. ...
Does that 4x figure also include non-deductible mortgage interest (which most people do not take), insurance, taxes, maintenance and personal man hours spent on the place over those 18 years?
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Old 08-25-2014, 04:03 PM   #22
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...Also, having now ER'ed, I can relax in the knowledge that, having prepaid my housing costs, I know that for the rest of my life, my housing expense can only increase modestly. I am not at the mercy of a landlord.
Until you find out that you need a new roof at $x, or the sewer line immediately repaired for $6,000--which recently happened to my former landlord. And many "homeowners" are at the mercy of a landlord--who just goes by another name (such as "homeowners association").
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Old 08-25-2014, 04:23 PM   #23
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Not important for most, I think.
In fact, kind of irrelevant. But still a lot of satisfaction for many, including me.

Currently living in the last house I will ever own. Next move will be to either a lock & leave condo or a CCRC.

Meanwhile, we are enjoying our last house to the max. Replaced the HVAC when we bought it ten years ago, and will probably replace the roof in a year or two. Otherwise, everything is in good shape and we love the location so much we want to stay here as long as we can.
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Old 08-25-2014, 04:26 PM   #24
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Until you find out that you need a new roof at $x, or the sewer line immediately repaired for $6,000--which recently happened to my former landlord. And many "homeowners" are at the mercy of a landlord--who just goes by another name (such as "homeowners association").
Yes, home ownership may include such unexpected costs such as a new sewer line, new roof, etc. The trick there of course is to buy smart in the first place (I have never been interested in condos).
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Old 08-25-2014, 04:51 PM   #25
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While paying off a house over time can be a useful form of forced savings, there can be downsides too. For example, many folks spend much more than they should on "living space" due to owning a good sized home when they'd do fine in a rented one bedroom apartment.

If houses are going to go back to appreciating significantly and consistently, they are a hard financial proposal to beat if the purchase is made in moderation. You're living in an appreciating investment. But if appreciation is nil, or close to nil, folks who stretch their finances in order to live in a big home with nice amenities might do better financially by renting a modest apartment and investing the difference in TSM every month.

We're still in the very modest home we bought 36 years ago. We view our success at getting to FIRE at 55/58 as augmented not by owning the home but more by owning a small, easily affordable home. We invested several thousand annually for decades that would have been consumed by the property taxes, higher maintenance, higher utilities, etc., that a large home would have entailed.
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Old 08-25-2014, 04:52 PM   #26
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Does that 4x figure also include non-deductible mortgage interest (which most people do not take), insurance, taxes, maintenance and personal man hours spent on the place over those 18 years?
Paid cash so no mortgage. Insurance was negligible at around $650 annual. Low prop taxes (RE was in a slump at the time so prop taxes correspondingly low) capped by prop 13 in CA. Yes, I pay an HOA fee, but as I despise doing household maintenance of any kind so I gladly pay this laziness fee to steer clear of using "personal man hours" (until recently I even paid to have the place cleaned!).

Profit comes from living in a shiny happy trendy area (just outside Beverly Hills) filled with shiny happy trendy people who will eagerly pay me outrageously high shiny happy trendy dollars when I vacate and move to a place not populated by mannequins.
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Old 08-25-2014, 05:00 PM   #27
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One family in our neighborhood sold their house after a year for $100K gain. Another sold after ten years for less than they paid for it after deductions for realtor fees. Some of it is luck and some of it is the difference between buying at the top and bottom of a bubble.
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Old 08-25-2014, 05:05 PM   #28
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One family in our neighborhood sold their house after a year for $100K gain. Another sold after ten years for less than they paid for it after deductions for realtor fees. Some of it is luck and some of it is the difference between buying at the top and bottom of a bubble.
So houses act like other investments in that supply and demand vary over time and investment outcomes aren't guaranteed to be positive?

Gee, who knew?

Confounding the housing investment scenario is the situation where the owner is living in much more square footage and absorbing much more expense that really needed for their desires and lifestyle. Yet, because it's "home" they don't look at it as wasted expense. It's "home."
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Old 08-25-2014, 05:13 PM   #29
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I voted somewhat important. Because it varies by situation. For us, it was probably a bit more than that. Home ownership is a way for modest income people to buy a little leverage - as long as you don't overbuy. the cost of the asset goes up (with inflation only in our area) and your costs shrink in relation to inflation. Once you've paid it off you have a modestly priced place to live and that can make it easier to retire.
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Old 08-25-2014, 05:20 PM   #30
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Being up 4x on a cash house purchase is nice, but if you had sunk that money into Gilead you would be up some 30x.

Would have to figure out how much you could have invested in Gilead with the cash while reserving the rest for rent but I imagine you still would be up about 10x to 15x on your original investment.
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Old 08-25-2014, 05:44 PM   #31
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Probably Not Important At All. In theory, all you need is enough money invested (or pension, SS, etc..) to cover your standard of living whether you own a home or rent.

For me personally, very important. I enjoy home ownership vs renting. Low relatively fixed costs and an ace in the whole if I need it.
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Old 08-25-2014, 05:47 PM   #32
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In reality, "rent or buy" is right up there with "pay off debt or invest" in terms of the passion it stirs up in a lot of people who forget that one size does not fit all, and that their situation and temperament is not that of everyone else.
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Old 08-25-2014, 05:48 PM   #33
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........and an ace in the whole if I need it.

How is your house an "ace in the hole" if you need it? That is, if you're in a $200k home, how is that a better "ace in the hole" than if you had a portfolio of $200k TIP bonds? Or some other conservative investment?
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Old 08-25-2014, 06:59 PM   #34
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Not that it's particularly important for people in this forum, but...

I've noticed a few relatives who had modest investments in retirement but also owned their homes outright. This acted as a useful fallback position for them. Typically, living modestly on what they had, then selling their house as they moved into assisted living - and using the house proceeds to pay for this.

Would they have saved a comparable amount of money otherwise? Doubtful.

So certainly if you are trading home equity for a sophisticated asset mix returning more than owning a house you might be fine. But for some folks, homeownership is a kinda of forced savings plan that pays off for them late in life.
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Old 08-25-2014, 07:44 PM   #35
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I think home ownership is one of the foundations of the US economy. It has fueled economic growth and well being for countless millions and generations of families and has been a critical source of employment. This should continue for my children's generation as well.
Maybe that's why renting is seen as being so undesirable. When I tell people that we are renters, they generally assume that we can't afford to buy. And when I say that we rent by choice, then we are just two financially-illiterate people wasting money on rent.
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Old 08-25-2014, 07:55 PM   #36
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Considering how expensive is your neighborhood, I would think that many people might prefer to rent. Laying down $x millions on a house to me would seem to be introducing some unwelcome risk.

But what you mention is certainly common. I read somewhere that I cannot remember a survey which showed that homeowners are more prejudiced against renters than any other group.

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Old 08-25-2014, 08:00 PM   #37
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...
But what you mention is certainly common. I read somewhere that I cannot remember a survey which showed that homeowners are more prejudiced against renters than any other group.

Ha
My Dad certainly felt that way (and wasn't shy about saying it). And even though I've been a long time home-owner, I lean towards thinking renting is the right thing for my kids - they may be moving while following career starts for at least a few years, better to stay flexible.

-ERD50
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Old 08-25-2014, 08:15 PM   #38
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My first thought during the recent earthquake, was sh*t, we should have downsized last year. Then if worst came to worst we'd have a smaller dwelling to repair or replace.
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Old 08-25-2014, 08:19 PM   #39
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My Dad certainly felt that way (and wasn't shy about saying it). And even though I've been a long time home-owner, I lean towards thinking renting is the right thing for my kids - they may be moving while following career starts for at least a few years, better to stay flexible.
As more and more careers require the ability to be mobile and flexible -- and one can no longer plan on being at the same place for 10+ years at a time, even if they want to be -- the tougher it is to be saddled with an owned home. I think it's great to own in an affordable market when you have good long-term prospects for a steady income where you live, but that describes fewer and fewer of us, especially the younger you go.
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Old 08-25-2014, 08:29 PM   #40
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Considering how expensive is your neighborhood, I would think that many people might prefer to rent. Laying down $x millions on a house to me would seem to be introducing some unwelcome risk.

Ha
The pressure to own is pretty strong, even here. Dropping $x millions on a home in this area is often seen as low-risk because of the strong appreciation in recent years.
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