Comments on: I might never buy a house again

By: Christine

Christine — Fri, 19 Mar 2010 18:13:13 +0000

Your parents can really rent for less than property tax and maintenance costs on a house? It seems hard to believe.

By: Stew

Stew — Tue, 16 Mar 2010 04:34:07 +0000

I think that renting will allow us to eventually save for retirement.

BTW, my parents have little retirement, but an almost paid off house, however they are probably going to sell it and rent because they can’t afford maintenance costs and property insurance.

By: Courtney

Courtney — Tue, 16 Mar 2010 03:24:47 +0000

You didn’t answer the question, Stew :-) Will you plan to own a (however modest) home by the time you retire, will you save enough over the next X years to continue renting through retirement, will you hope to inherit property, will you…?

A home is only a good “investment” when it’s paid off. For most people who don’t otherwise have a lot of retirement savings, cutting out (estimating) 60-80% of their biggest expense allows them to stretch their retirement dollars a lot further. Mortgages eventually get paid off but rents only go up. So, my question was how will you take that into account in the future, not what would you change if you could go back in time to eight years ago.

By: The Rat

The Rat — Tue, 16 Mar 2010 03:10:23 +0000

I think there are pros and cons to both owning and renting, and you’re right – there’s a boatload of indirect/hidden costs that come with buying a home.

Another factor that really comes into play in terms of being able to offload a house if need be is the real estate market conditions in one’s area where they reside. We all know what happened in the U.S. and the housing crisis, but some areas have fared better than others to say the least.

Nice post.

By: Stew

Stew — Tue, 16 Mar 2010 02:05:30 +0000

Courtney, on the whole, I think that owning a home has done more to damage our retirement savings than anything else. In the 8 years that we owned the home, I think we put close to $26K into it – not counting mortgage payments and property taxes . . . yikes! I hadn’t even considered that until this moment.

By: J

Mon, 15 Mar 2010 20:43:06 +0000

This is the debate of the millennium. It is covered well in the Wealthy Barber by Chilton.

I feel like I am house poor myself. Tons of bills. My advice to prospective home buyers- which is worth nothing – is to have a large down payment, an extra 10k for closing expenses and if the house is 10 years old or more have an additional 5-10k in hand for repairs/upgrades.

By: Craig Ford

Craig Ford — Mon, 15 Mar 2010 20:28:06 +0000

Stew,
There are some tremendous advantages to both renting and buying depending on ones situation. I’m thankful that you recognize that for some renting is a good idea. I’ve always been turned off by the kind of thinking that says home ownership is for EVERYONE.

By: The Biz of Life

The Biz of Life — Mon, 15 Mar 2010 19:37:37 +0000

I can see renting in retirement instead of owning just because of the PITA factor of fixing all those little things that go wrong and replacing whatever breaks. I’m under the illusion that until that time comes I’m better off owning to get the asset appreciation, which if history holds should at least match inflation.

By: Courtney

Courtney — Mon, 15 Mar 2010 18:35:39 +0000

How will this affect your retirement? Most people have lower expenses in retirement because their homes are paid off by then (or at least expenses at the same dollar level, as health care expenses tend to go up as housing expenses down). I believe you’ve said in other posts that you are not saving very much for retirement right now; how do you plan to compensate for this additional expense down the road?

By: Stew

Stew — Mon, 15 Mar 2010 16:44:32 +0000

Gina, we did the same thing, but we did not plan for all the hidden costs . . . and we kept rolling those costs into more and more debt . . . until we could not handle the burden anymore.

I was advise to buy a house by almost everyone, especially people who were really good at handling money. I just think the paradigm has changed.