Why Buy a Home?

[W2R]

People sometimes talk about renting vs buying as though it was a purely financial/investment decision, and for them probably it is.


But for me, the purpose of investing is to make money so that I can buy what I want in life. And although I don't want much, I want (and have) a house.

Someone who doesn't feel that way about owning a house probably wouldn't get the satisfaction out of it that I do, and that weights the decision in the direction of renting more than buying for them.

 

[Meadbh]

In Vancouver or 5 months, we rent and put up with the landlord. I relate it to my experience with the corporate bureaucracy. I can make them do it. It just takes time and leverage. Kind of a game I know I can win but would rather not play anymore. Then I look at what I am saving every month and justify it. I think those landlords must be scratching their heads, trying to make money in these times!

Buying property in Vancouver as a rental is ridiculous. Home prices there are so inflated that it would almost inevitably be cash flow negative. The only justification is in accumulation of equity over time. This is fine provided that the bubble doesn't burst..... which it will eventually. When people who would be wealthy anywhere else cannot afford to buy a house, something is wrong. How many more Chinese gazillionaires can there be?

Vancouver Real_Estate Chart ~ Canadian Housing Price Charts and Real Estate Evaluator Blog www.chpc.biz

 

[Zoocat]

People sometimes talk about renting vs buying as though it was a purely financial/investment decision, and for them probably it is.


But for me, the purpose of investing is to make money so that I can buy what I want in life. And although I don't want much, I want (and have) a house.

Someone who doesn't feel that way about owning a house probably wouldn't get the satisfaction out of it that I do, and that weights the decision in the direction of renting more than buying for them.

I agree completely. As I get older, my home has become a place of refuge and comfort. If I own a home again, I can imagine that growing older there will be a real pleasure. Renting as an older person can be scary when the landlord can tell you at any time that he is selling his property and you have to find a new home.

 

[Birdie Num Nums]

I agree completely. As I get older, my home has become a place of refuge and comfort. If I own a home again, I can imagine that growing older there will be a real pleasure. Renting as an older person can be scary when the landlord can tell you at any time that he is selling his property and you have to find a new home.

If you have a lease, then you shouldn't worry that you may have to unexpectedly go find a new home before the lease expires. If you have a month-to-month, then you should figure in the possibility that you'll be notified to leave in a month or two, and not pretend to be so surprised and "scared."

On the other hand, although you may have imagined that being a homeowner or a landlord would be "a real pleasure," you might find instead that your neighbor is from hell, with you feeling that you can't sell your home and move elsewhere without incurring a huge financial loss; or your tenant suddenly leaves you with costly damage/expenses.

It's all relative, being a renter or "home" owner, ain't it?

 

[misty57]

Homes have an investment value and a lifestyle value. We purchased our current home almost (6) years ago with FIRE in mind. It has dramatically dropped in value as far as it being an investment is concerned, but its lifestyle value is priceless. Since we weren't/aren't planning on selling or going anywhere any time soon - it's all good.

 

[clifp]

People sometimes talk about renting vs buying as though it was a purely financial/investment decision, and for them probably it is.


But for me, the purpose of investing is to make money so that I can buy what I want in life. And although I don't want much, I want (and have) a house.
.

Homes have an investment value and a lifestyle value. We purchased our current home almost (6) years ago with FIRE in mind. It has dramatically dropped in value as far as it being an investment is concerned, but its lifestyle value is priceless. Since we weren't/aren't planning on selling or going anywhere any time soon - it's all good.

You are both right. For a large number of American the lifestyle value (control, security, pride of ownership) is worth a lot certainly hundreds and for some thousands a dollars/month. For a smaller number the freedom, and lack of hassles associated with renting is worth a similar amount of money. There is also a large number of us in the middle, since I see pro and cons to both.

I see the value in attempting to quantify the investment value of house. So for instance the person and that is pretty confident that they will be relocated in 5 or 6 years, can say I think buying will cost me $100-$400/month over this time, but it is worth to me or no it isn't and rather the money for something else.

I think my main point is that investment value of house has dropped dramatically over the last few years. In the past a lot of that value was based on fear and greed. Fear in that if I don't buy now it will just be more expensive next year and I'll be stuck being a renter my entire live, and greed I'll buy the house now for $500K and selling for a $1 million in a few years and fund my retirement/life style.

Now days the greed value of home buying is very low, and the fear value is a negative. The guy who is concerned about his job, is very reluctant to put most of his life saving of $40,000 down on a $200,000 house, cause he fears if loses his job and the house goes down he'll lose his life saving or worse.

 

[chinaco]

It is a good idea to weigh your options and think about it.

I am not sure there many universal rules... because there are many variables.

However, there is one consideration that i believe is very important. Do not get caught up in the "I have to have a big impressive house" trap! It is just an ongoing expense. Buy no more than you reasonably think you will need. Obviously one should consider the eventual resale of the house and buy one that will be marketable... But over doing the house is just a money drain!

 

[rescueme]

Do not get caught up in the "I have to have a big impressive house" trap!

I agree. One must recognize if they are buying/building according to their desires, or those of their friends/family/or the general public.

I/DW have nobody to "impress" but ourselves. Over the years (we're on our 4th home, in 40+ years) we bought/built to our desires - not to impress anybody...

As an often quite quote I use (and the title of a book) - "What you think of me is none of my business"...