permabull said:

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I agree with Ramit Sethi when he says "home ownership in America is a religion". I see lots of people do anything and everything to get into a home because they have been brainwashed to think that is the ONLY way to build wealth. While for a lot of people, buying a home makes sense, but there is nothing wrong with running the numbers and making sure it makes sense for you. I have seen people buy homes over an hour away from work or get into really bad properties (i.e. manufactured homes) not because it was a good fit for them, but because they just want to check off the home ownership part of the American dream.

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While I generally agree, the brainwashing regarding college degrees from the best universities is probably at least as prevalent.

I should have emphasized that I was saying people think its the ONLY way to get ahead. I think for some people home ownership is the obvious choice, but for some people it simply isn't once you run the numbers.

Husky Boy Jr. said:

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I have heard a lot of anti home ownership stuff lately and it has to be generational. I have owned and lived in 3 homes and each has been an enriching experience for my family very little related to finances.

I do feel greatly for first time home buyers - very unaffordable in my area and so many (cough - boomers - cough) seem to ignore this.

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The problem with the pro home buying advice, is that buying a home isnt the right advice/move for every single person every single time, and people like to make it out to be like that. Just because you can technically afford to buy one, doesnt mean its the right financial or lifestyle move for that specific person.

For many people, theyre better off renting and continuing to save/invest in the stock market. Or they're better off renting because of the flexibility and the lifestyle it provides (young, single, good job prospects out of state, mobile, no kids, being close to social activities, etc). I wouldn't advise a young person right out of college to buy a house in Katy, TX, when they could rent inside the loop in Houston and be close to friends and social activities.

As always, thats why its called personal finance, because its personal.

Petrino1 said:

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Husky Boy Jr. said:

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I have heard a lot of anti home ownership stuff lately and it has to be generational. I have owned and lived in 3 homes and each has been an enriching experience for my family very little related to finances.

I do feel greatly for first time home buyers - very unaffordable in my area and so many (cough - boomers - cough) seem to ignore this.

---

The problem with the pro home buying advice, is that buying a home isnt the right advice/move for every single person every single time, and people like to make it out to be like that. Just because you can technically afford to buy one, doesnt mean its the right financial or lifestyle move for that specific person.

For many people, theyre better off renting and continuing to save/invest in the stock market. Or they're better off renting because of the flexibility and the lifestyle it provides (young, single, good job prospects out of state, mobile, no kids, being close to social activities, etc). I wouldn't advise a young person right out of college to buy a house in Katy, TX, when they could rent inside the loop in Houston and be close to friends and social activities.

As always, thats why its called personal finance, because its personal.

---

Again this.

Some people make buying a house out as the one must when it comes to saving and building wealth but you do give up 2 things that for me personally have been significantly life changing when you buy: easy mobility and liquidity.

Owning a home is framed by most who own one as a need rather than a want. I think people should form the question as a want though to truly understand whether it is worthwhile to them or not.

ATM9000 said:

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Petrino1 said:

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Husky Boy Jr. said:

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I have heard a lot of anti home ownership stuff lately and it has to be generational. I have owned and lived in 3 homes and each has been an enriching experience for my family very little related to finances.

I do feel greatly for first time home buyers - very unaffordable in my area and so many (cough - boomers - cough) seem to ignore this.

---

The problem with the pro home buying advice, is that buying a home isnt the right advice/move for every single person every single time, and people like to make it out to be like that. Just because you can technically afford to buy one, doesnt mean its the right financial or lifestyle move for that specific person.

For many people, theyre better off renting and continuing to save/invest in the stock market. Or they're better off renting because of the flexibility and the lifestyle it provides (young, single, good job prospects out of state, mobile, no kids, being close to social activities, etc). I wouldn't advise a young person right out of college to buy a house in Katy, TX, when they could rent inside the loop in Houston and be close to friends and social activities.

As always, thats why its called personal finance, because its personal.

---

Again this.

Some people make buying a house out as the one must when it comes to saving and building wealth but you do give up 2 things that for me personally have been significantly life changing when you buy: easy mobility and liquidity.

Owning a home is framed by most who own one as a need rather than a want. I think people should form the question as a want though to truly understand whether it is worthwhile to them or not.

---

I prefer to think of it as kind of a continuum, where some minimum conditions should be met before "investing" in a house. For some people, it's a no-brainer to buy, either for financial or family-specific reasons. Some of the ideal minimum conditions, in my opinion:

- You have saved up 20% for the downpayment (avoid PMI)
- The house payments plus other ongoing expenses (HOA fees, utilities, maintenance, etc.) are a manageable portion of take home pay.
- You are still able to max out retirement savings at work
- You intend to stay in the house for at least 5-7ish years, or your company has sufficient assistance to make a relocation manageable if you have to move in that time period
- You can handle doing a significant amount of the repair and maintenance work yourselves (otherwise, it's better to have a landlord that handles that risk)
- Your credit is sufficient to get at least a national average type interest rate - if not, work on improving credit before buying

The following are additional opinions:
- If you are single (and don't intend to stay that way longer term), it's probably best to avoid buying a house, and rent in an area that meets your social needs and provides flexibility. An exception would be something like buying a duplex and living in one of the units.
- Home ownership has been widely encouraged due to the perception that society benefits when people have made a commitment to a family and a home, and tend to seriously take ownership in their community when they have more at stake. It also is an ongoing stimulant for the economy, which people of all stripes appreciate. Not saying this is bad or good, just pointing it out.

Illustrious Potentate said:

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So a guy that owns a bunch of real estate suggests renting to those he meets.

That's a smart business plan, if I've ever heard one!

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he made a few million developing residential and commercial real estate projects in DC. but he only kept one of the condos that he owns.

he is a CEO of a Private Jet company in Manassas now.

his point is just like two of the other posters here-

if you are single and young(ish) and want to live in different parts of the country and the world- it makes more sense to invest in equity markets than the burden of owning a primary residence

especially in Florida where I will live with the very high hurricane insurance and HOA fees

I bleed maroon said:

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ATM9000 said:

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Petrino1 said:

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Husky Boy Jr. said:

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I have heard a lot of anti home ownership stuff lately and it has to be generational. I have owned and lived in 3 homes and each has been an enriching experience for my family very little related to finances.

I do feel greatly for first time home buyers - very unaffordable in my area and so many (cough - boomers - cough) seem to ignore this.

---

The problem with the pro home buying advice, is that buying a home isnt the right advice/move for every single person every single time, and people like to make it out to be like that. Just because you can technically afford to buy one, doesnt mean its the right financial or lifestyle move for that specific person.

For many people, theyre better off renting and continuing to save/invest in the stock market. Or they're better off renting because of the flexibility and the lifestyle it provides (young, single, good job prospects out of state, mobile, no kids, being close to social activities, etc). I wouldn't advise a young person right out of college to buy a house in Katy, TX, when they could rent inside the loop in Houston and be close to friends and social activities.

As always, thats why its called personal finance, because its personal.

---

Again this.

Some people make buying a house out as the one must when it comes to saving and building wealth but you do give up 2 things that for me personally have been significantly life changing when you buy: easy mobility and liquidity.

Owning a home is framed by most who own one as a need rather than a want. I think people should form the question as a want though to truly understand whether it is worthwhile to them or not.

---

I prefer to think of it as kind of a continuum, where some minimum conditions should be met before "investing" in a house. For some people, it's a no-brainer to buy, either for financial or family-specific reasons. Some of the ideal minimum conditions, in my opinion:

- You have saved up 20% for the downpayment (avoid PMI)
- The house payments plus other ongoing expenses (HOA fees, utilities, maintenance, etc.) are a manageable portion of take home pay.
- You are still able to max out retirement savings at work
- You intend to stay in the house for at least 5-7ish years, or your company has sufficient assistance to make a relocation manageable if you have to move in that time period
- You can handle doing a significant amount of the repair and maintenance work yourselves (otherwise, it's better to have a landlord that handles that risk)
- Your credit is sufficient to get at least a national average type interest rate - if not, work on improving credit before buying

The following are additional opinions:
- If you are single (and don't intend to stay that way longer term), it's probably best to avoid buying a house, and rent in an area that meets your social needs and provides flexibility. An exception would be something like buying a duplex and living in one of the units.
- Home ownership has been widely encouraged due to the perception that society benefits when people have made a commitment to a family and a home, and tend to seriously take ownership in their community when they have more at stake. It also is an ongoing stimulant for the economy, which people of all stripes appreciate. Not saying this is bad or good, just pointing it out.

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How many home owners in the US do you think meet this criteria? Im going to guess not many. For most Americans, its going to be hard to pay their mortgage and extra home costs, and save significantly for retirement.

permabull said:

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beerad12man said:

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hedge said:

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Id feel more comfortable purchasing if I had 200k, 150k down and another 50k for emergencies

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If you are able to save up another 100k ANY time in the next 5-10 years, you are more than comfortable enough to buy a house.

The amount of people who can save up 150k for a down payment and still have 50k for emergencies is probably less than 2-3% of Americans.

I'm not going to tell you to go out of your comfort zone. You do you. But it's not necessary by any means and in fact, extremely rare.

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With stock gains alone 100k should easily turn into 200k in 7-10 years. Factor in investing money saved by not paying property taxes, maintenance, increased utilities and insurance and you can easily get there 3-4 years sooner. I think people should buy a house because its where they want to live, not because people think its a good investment and you have to buy now or you will never ever be able to afford one.

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My post had nothing to do with financial maximization, though. There's more to it than this anyways, but it was more about if he'd be comfortable or not. He's plenty fine in terms of comfortability with regards to buying a house if he's anticipating being able to save another 100k for a down payment any time in the near future.

If he'd rather maximize his dollars in investing instead, that's another conversation than having 50k for emergency funds. The OP started off clearly making it seem like he wanted a house, but was waiting to time it.

permabull said:

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I should have emphasized that I was saying people think its the ONLY way to get ahead. I think for some people home ownership is the obvious choice, but for some people it simply isn't once you run the numbers.

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Yup.

For some folks, it makes sense, for others, it doesn't. Paying rent doesn't always mean "throwing money away." But that said, renting has to be a part of an overall financial strategy.

(Akin to people always saying how much their house appreciated, they are also the first people to ask whether you rent or buy a place. Like...what difference does that make? I don't ask how much their monthly contributions are in the market).

Yeah I can't help but notice that people say buying a house is the best and most obvious financial decision, then when you run the numbers for them they get defensive and talk a lot the emotional and fulfillment side of things.

There is nothing wrong with spending your money on things that you are passionate about, but don't lie to yourself and say it's the obvious and best financial decision.

I see the same thing when people talk about paying off your low interest mortgage vs saving the extra cash in a money market paying a higher interest rate. They say "debt is evil and bad" and "there is just something to be said about being debt free". Those are fine reasons if that is what you value, but please don't argue it's optimal because the math doesn't work out.

Tex117 said:

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LMCane said:

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permabull said:

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beerad12man said:

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hedge said:

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Id feel more comfortable purchasing if I had 200k, 150k down and another 50k for emergencies

---

If you are able to save up another 100k ANY time in the next 5-10 years, you are more than comfortable enough to buy a house.

The amount of people who can save up 150k for a down payment and still have 50k for emergencies is probably less than 2-3% of Americans.

I'm not going to tell you to go out of your comfort zone. You do you. But it's not necessary by any means and in fact, extremely rare.

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With stock gains alone 100k should easily turn into 200k in 7-10 years. Factor in investing money saved by not paying property taxes, maintenance, increased utilities and insurance and you can easily get there 3-4 years sooner. I think people should buy a house because its where they want to live, not because people think its a good investment and you have to buy now or you will never ever be able to afford one.

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Huge FOMO when everyone talks about how much their homes have appreciated

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Because for whatever reason, people have no problem saying how much they think their house has appreciated versus saying how much your investment account has gone up.

Owning a home can be a decent financial move under the right circumstances, but renting as part of an overall strategy can also be a decent to outright better financial move depending on the individual circumstances.

You don't have to keep up with the Joneses. Ultimately, they will be keeping up with you.

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Tex- you are a man of decided wisdom.

and in reality I don't chase the Jones's. I rent a nice condo after selling my townhouse a year ago. I have net worth in top 11% of the USA. for me it's not about "look at my nice house!" it's more

"man I wish I had bought property 20 years ago and now I sell it for the investment"

for me, everything comes down to how to build real wealth, not how to APPEAR to have real wealth like everyone on Instagram.

so if I can make more money buying gold, or Bitcoin or the SP 500 index (I do all three) than I don't care about owning property.

LMCane said:

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Tex117 said:

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LMCane said:

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permabull said:

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beerad12man said:

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hedge said:

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Id feel more comfortable purchasing if I had 200k, 150k down and another 50k for emergencies

---

If you are able to save up another 100k ANY time in the next 5-10 years, you are more than comfortable enough to buy a house.

The amount of people who can save up 150k for a down payment and still have 50k for emergencies is probably less than 2-3% of Americans.

I'm not going to tell you to go out of your comfort zone. You do you. But it's not necessary by any means and in fact, extremely rare.

---

With stock gains alone 100k should easily turn into 200k in 7-10 years. Factor in investing money saved by not paying property taxes, maintenance, increased utilities and insurance and you can easily get there 3-4 years sooner. I think people should buy a house because its where they want to live, not because people think its a good investment and you have to buy now or you will never ever be able to afford one.

---

Huge FOMO when everyone talks about how much their homes have appreciated

---

Because for whatever reason, people have no problem saying how much they think their house has appreciated versus saying how much your investment account has gone up.

Owning a home can be a decent financial move under the right circumstances, but renting as part of an overall strategy can also be a decent to outright better financial move depending on the individual circumstances.

You don't have to keep up with the Joneses. Ultimately, they will be keeping up with you.

---

Tex- you are a man of decided wisdom.

and in reality I don't chase the Jones's. I rent a nice condo after selling my townhouse a year ago. I have net worth in top 11% of the USA. for me it's not about "look at my nice house!" it's more

"man I wish I had bought property 20 years ago and now I sell it for the investment"

for me, everything comes down to how to build real wealth, not how to APPEAR to have real wealth like everyone on Instagram.

so if I can make more money buying gold, or Bitcoin or the SP 500 index (I do all three) than I don't care about owning property.

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No, Im decidedly not.

But absolutely on the rest and right on! Good for you!

If it makes sense to buy a home financially (or even if it kinda doesn't, but location, kids, school, family), then go for it. Personal circumstances (and market circumstances) will dictate this.

But, as all of us have discussed multiple times, take a closer look at the numbers. They may not be as favorable over the long term as one may think.

LMCane said:

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Illustrious Potentate said:

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So a guy that owns a bunch of real estate suggests renting to those he meets.

That's a smart business plan, if I've ever heard one!

---

he made a few million developing residential and commercial real estate projects in DC. but he only kept one of the condos that he owns.

he is a CEO of a Private Jet company in Manassas now.

his point is just like two of the other posters here-

if you are single and young(ish) and want to live in different parts of the country and the world- it makes more sense to invest in equity markets than the burden of owning a primary residence

especially in Florida where I will live with the very high hurricane insurance and HOA fees

---

You don't think renters pay the insurance or the community fees?

I bleed maroon said:

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ATM9000 said:

---

Petrino1 said:

---

Husky Boy Jr. said:

---

I have heard a lot of anti home ownership stuff lately and it has to be generational. I have owned and lived in 3 homes and each has been an enriching experience for my family very little related to finances.

I do feel greatly for first time home buyers - very unaffordable in my area and so many (cough - boomers - cough) seem to ignore this.

---

The problem with the pro home buying advice, is that buying a home isnt the right advice/move for every single person every single time, and people like to make it out to be like that. Just because you can technically afford to buy one, doesnt mean its the right financial or lifestyle move for that specific person.

For many people, theyre better off renting and continuing to save/invest in the stock market. Or they're better off renting because of the flexibility and the lifestyle it provides (young, single, good job prospects out of state, mobile, no kids, being close to social activities, etc). I wouldn't advise a young person right out of college to buy a house in Katy, TX, when they could rent inside the loop in Houston and be close to friends and social activities.

As always, thats why its called personal finance, because its personal.

---

Again this.

Some people make buying a house out as the one must when it comes to saving and building wealth but you do give up 2 things that for me personally have been significantly life changing when you buy: easy mobility and liquidity.

Owning a home is framed by most who own one as a need rather than a want. I think people should form the question as a want though to truly understand whether it is worthwhile to them or not.

---

I prefer to think of it as kind of a continuum, where some minimum conditions should be met before "investing" in a house. For some people, it's a no-brainer to buy, either for financial or family-specific reasons. Some of the ideal minimum conditions, in my opinion:

- You have saved up 20% for the downpayment (avoid PMI)
- The house payments plus other ongoing expenses (HOA fees, utilities, maintenance, etc.) are a manageable portion of take home pay.
- You are still able to max out retirement savings at work
- You intend to stay in the house for at least 5-7ish years, or your company has sufficient assistance to make a relocation manageable if you have to move in that time period
- You can handle doing a significant amount of the repair and maintenance work yourselves (otherwise, it's better to have a landlord that handles that risk)
- Your credit is sufficient to get at least a national average type interest rate - if not, work on improving credit before buying

The following are additional opinions:
- If you are single (and don't intend to stay that way longer term), it's probably best to avoid buying a house, and rent in an area that meets your social needs and provides flexibility. An exception would be something like buying a duplex and living in one of the units.
- Home ownership has been widely encouraged due to the perception that society benefits when people have made a commitment to a family and a home, and tend to seriously take ownership in their community when they have more at stake. It also is an ongoing stimulant for the economy, which people of all stripes appreciate. Not saying this is bad or good, just pointing it out.

---

I'm about to own a home again, but this continuum preference you've laid out is precisely why the dogmatic thinking of home ownership worries me in the US: a home is the biggest hard asset people will ever own and the largest single thing most will buy in their lifetimes and most of your bullets are to answer the question of can you afford it vs. is it worth it.

Affordability is what most people focus on when they are throwing huge loads of liquidity into something and signing 15 or 30 year commitments to pay for something moreso than how much it is actually worth to them. This is the psychological trick long term financing plays on people.

chris1515 said:

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If anyone brags about how much their house has appreciated, keep in mind they are paying property taxes, HOA fees, insurance, higher utilities than from renting, probably a couple grand in mortgage fees when they bought, commissions and closing costs when they sell, lawn care, pest control, and repairs and upgrades. Most of those folks doing the bragging never talk about those costs. Nor do they compare the rate of return on house vs market returns.

Don't get too caught up in that FOMO stuff when it comes to missing out on the jackpot that is homeownership!

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Preach brother!

I think it's just society: look how many shows there are on television about realtors and buying extravagant homes, and how many shows on buying and flipping, and how many shows about repairing homes, and just the entire ethos of America is "home ownership"

while to me it is strictly a financial decision- will I make more wealth investing over the next 25 years or more money buying a home now and keeping it for 20 years?

smart money says investing is more lucrative unless you live near the property and can do a lot of the upgrades maintenance yourself and manage the renting to others.

LMCane said:

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strictly a financial decision

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Not at all true. Despite my cautionary notes to at least consider the financial aspects of home ownership, I will be the first to say that buying a home is NOT strictly a financial decision.

Quality of life considerations, proximity to schools or work, scarce availability of comparable rental alternatives, family needs, and many others are at times as important as the pure financials.

Bottom line - be aware of the financial impact, and factor it into the overall decision.

I bleed maroon said:

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LMCane said:

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strictly a financial decision

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Not at all true. Despite my cautionary notes to at least consider the financial aspects of home ownership, I will be the first to say that buying a home is NOT strictly a financial decision.

Quality of life considerations, proximity to schools or work, scarce availability of comparable rental alternatives, family needs, and many others are at times as important as the pure financials.

Bottom line - be aware of the financial impact, and factor it into the overall decision.

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Yeah, where you live is not strictly a financial decision. Its why the whole residential real estate market is irritating to deal with. So much emotion, ego, Jonses, and irrational thought permeate that market.

In the end, with a family and kids schools and a "life with the white picket fence" owning a home may make sense. (Even though you can potentially make more money elsewhere depending on circumstances).

hedge said:

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Sitting on 100k in money market. Plan was to use for down payment on house but interest rates aren't coming down nor are prices. Time to start DCA in VOO or lump sum it any other thoughts?

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I'm working with a Houston based real estate firm that allows passive investing. They are paying a monthly dividend of 10-12% annualized depending on initial investment.

Hines?

Not Hines. Happy to share more info via PM.

H-town ag said:

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hedge said:

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Sitting on 100k in money market. Plan was to use for down payment on house but interest rates aren't coming down nor are prices. Time to start DCA in VOO or lump sum it any other thoughts?

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I'm working with a Houston based real estate firm that allows passive investing. They are paying a monthly dividend of 10-12% annualized depending on initial investment.

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Stanford Financial?