Saturday, February 14, 2009

The cost of homeownership

In response to Mr. Andrea Mitchell's reference to the "unquestioned value" of promoting homeownership, Atrios pretty much sums up the way I feel about the issue:

I have nothing against homeownership, but it isn't right for everyone. Obviously it isn't right for people who can't afford their mortgages after the teaser rate expires. It isn't right for people who need more geographic mobility due to the nature of their jobs or other reasons. It isn't right for people who don't want to invest time in being the "super" of their own building; houses require significant upkeep to main a roughly constant level of quality.
Look, I spent the first 18 years of my life in a home that my mother now owns outright. And though she might disagree, I think I spent enough time mowing the yard, watering the lawn and cleaning out the garage to complain about the difficulty in keeping up a house.

And to think: I never even paid insurance, property taxes or community fees. Not to mention the repairs needed for glass windows I broke in our garage door, or to replace the mailbox when our neighbor repeatedly drove over it in his monster pickup, or to fix the roof after another one of Houston's summer tsunamis.

To be frank, the First Lady and I disagree on the importance of owning a home. I don't disagree enough that I won't eventually relent and start pumping a hefty percentage of my paycheck into four or five-bedroom home on an overpriced piece of land someday. I understand that there's some benefit to being the "super" of your own building. But make no mistake: I see home ownership, in many ways, as a great financial boondoggle.

There's just as many drawbacks: it's a hefty anchor for people in professions that value mobility, the upkeep of a home can be extremely costly, and home owners really have limited influence on the value of their property given that neighborhoods can change dramatically within a span of 10 years. My old childhood neighborhood is a perfect example of this.

Eh. I should stop. It is Valentine's Day, after all. But you all know what I'm saying ...

Also, keep in mind: I'm a guy who has lived in five cities in the past eight years. In many ways, I'm a believer in the adage that "roots are for vegetables" and have little interest in the "profound romance in seeing nothing and going nowhere."

Here's a few folks, even smarter than me (believe it or not!), making the case against homeownership here and here and here.


maria said...

i have owned three homes. the main reason to own a home is to take the mortgage interest deduction off your taxes AND when the economy is good, to make a profit when you sell it.

without that deduction, you pretty much end up owing. i have never owned large or expensive homes, but ones i truly loved and found unique.

that said, my current home appreciated in value 100% over the last 6 years. i was able to refinance and pull some money out to pay off debts incurred in my divorce and to put aside college funds. my home has been an economic engine for me.

my previous two homes did not appreciate hardly at all.

on monday, i refinanced for the third time on this home.

i now have a 30 year fixed at 5 1/8. two years ago al i could get was an interest only loan. a year ago i refinanced to a 7/30 arm (fixed for 7) at 5 1/4. with this newest loan i didn't save much in payments, but have the lock for 30 years. (are you keeping up)?

in 10 i bet i am in beach a renter! lol.

it doesn't make sense to own if you don't plan to stay too long. i was in my first house only 3 years, my second, 10 and now 9 with this one.

the other factor is kids--when you have them in a good public school system, you need the house til they're done.

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blackink said...

@Maria: Whew ... I caught up. But it took me a minute. Lol.

But really, your story sort of gets to the heart of what I'm talking about. While it was certainly an economic engine for you the third go-round (third time a charm?), I just don't think homeownership is for everyone. The whims of the real estate market worry me. I just can't imagine moving into a home and counting on it to be anything other than a place to live.

Also, like you say, homeownership isn't for people who don't plan to stick around for an extended amount of time.

I can't imagine living in one place, one home, one neighborhood, for more than 10 years. Maybe that'll come to me. But as of now, I just think I'd like a little more variety than that.

As for kids, I've always hoped that I'd send mine - just one - to private school. Hopefully, my kid will take advantage of that opportunity more than I did.