My condo is a security blanket for me. This is my default living quarter beyond working years. Mortgage will be paid off before retirement. I would rather have this done over extra $$$ in retirement fund value. During my new home ownership, This is my way of balancing my finance.
There are no right or wrong to all posts. Any approach that make sense to each, it is a choice.
I do share my value with those city dwellers and world travelers, and also with those who love “nesting” with pleasure of simple pleasures at home. We all should listen to your inner voice, rather than “American dream” slogans.

“Owning a home” is something of a misnomer, since most of us are in the process of “buying a home,” which is essentially renting from the bank or mortgage company.

So, when those of us who are paying mortgages look at our statements… we have to admit that the vast majority of the cost, the interest, is really the equivalent of making a rent payment to our landlord, the bank. The small amount that goes to principal is the only equity we are building up. And even that amount needs to be balanced against the cost of upkeep and maintenance paid by us, not the landlord.

To sum up:
In my opinion, financially, there is not a lot of difference between renting and paying a mortgage.
Psychologically, that is a different story. And, as Trent points out with the 6 examples, there are lots of good reasons to decide either way.

I’m a 30 yo single woman and own my own home. I love it. I love being able to garden. I love having room for my two dogs. I love the whole painting/decorating/fixing/rehabbing part–even refinishing the floors is a kick. I crave my own space, and I love and need privacy. I live in a market where my monthly rent and monthly mortgage are similar. It’s a small town near my family with a climate I love. Buying was worth every penny for me.

My best friend is a 30 yo single woman who rents. She lives in a big city with prohibitive housing prices. She dislikes the isolation of living by herself, and would rather have roommates. She has absolutely no interest in home decoration or furnishing, and the idea of a DIY project is enough to kill her off. I don’t think she owns a table, or feels any lack of it. Her preferred pet is a goldfish. She loves living in the center of a vibrant music community, since much of her spare time is spent composing music and playing various instruments.

I will never convince my friend to buy a house. My brother is trying to persuade me to sell and come live in Boston in an apartment. He’s never going to convince me. Essentially, we’ve each paid our money and taken our choice, and each of us has chosen what is absolutely in the best interest of our happiness. There’s nothing wrong with either of our decisions.

People who talk about the money they make selling a house never, NEVER, consider the maintenance (at least 1%/year), taxes (3%/year in many areas), or any upgrades (paint, floors, wallpaper, kitchen, etc.) in their calculations.

And no, you never recoup the cost of upgrades.

They’ll only tell you purchase and resale price, even leaving out transaction costs like that hefty Realtor commission.

But if you have a $500k, paid for house, but little savings (because all your money went in to the house) or you have $500k in liquid assets and a $1500 rent. Which is the better position to be in when you retire?

I’d rather have the liquid assets and a rent.

Again, I’m not against owning a home, I’m just not going to do it at the expense of my retirement savings. And where I live, it would be. I’d need about $100k down and pay $3k+ a month for mortgage.

Best time to buy a house when rents and mortgages are about level.

Currently in Madrid rent for a 2 bedroom apartment 950€ or less, mortgage for same (if you can get one) 2000€ +

People who say “I sold and made X thousands of dollars” forget that a house is a liability not an asset. It costs you money to maintain every month. An asset earns you money.

Lastly I know tons of people who are, after a big run up in house prices, asset rich, cash flow poor.

Best way to own a house is when it’s paid for and you have loads of cash flow free, unfortunatly not many people do that.

My husband is a professor, and I am a teacher. We pay 1900 hundred rent in a neighborhood where the houses average 750K. (We make les than 100K combined) The towns around us have houses averaging 2 mill. I am sure we pay the least of anyone on our block to get our kids this fine education.

Does every child need this kind of caviar education? Maybe not. But I am blessed with the awseome responsibility of nurturing two highly gifted kids who IQ test at about 178. Where we last lived, excelling in school made you a social pariah. Here, in the land of wealthy professionals, the same drive gets you noticed and respected at school. Big difference. Can we afford Ivy League? No. But my kids will have a better chance of scholarships, and I have taught them that the bill must be in balance with the expected after-college income. They will likely be able to go free to a tier 2 college, and probably will.

Why don’t we leave NY and buy a house? (I’d really like to.) Well, there is a biological dad in the picture who lives here. Otherwise we’d buy a house in one of the 3 states that on the grounds of regional diversity practically guaranteees an ivy league scholarship to achievers: Montana, Mississipi or Alaska.

So, we rent to get the priveleges of the rich, living just a hair below our means, and stand vigilant against any tendency to keep up with the Joneses.

I have around $20K in my emergency fund which has taken my whole life to build. Being single with no family nearby, I would not feel comfortable dumping it all into a down payment for a home. And by the time I save that much money again, houses worth $100K really will be dumps. How do people manage to save up for the down payment?

I rent and for the time being I am comfortable with that. But if I wanted to buy a home, would it even be feasible? Tambo claims to have been able to afford homes with income under $25K and while I won’t dispute that, I have to wonder how he/she is able to accomplish so much on so little, while I am scraping by with not even a family to support. I am not a spender, I live bare bones in an area with a pretty reasonable cost of living (to me at least) but obviously I’m doing something wrong, right? Maybe home ownership is not for single people? I have noticed that most homeowners with success stories are married.

Thanks for linking to the follow up. Interesting to see how things turn out.

“Fwiw, I find the we‚Äôre too poor to buy a house on $55k a year thing a bit insulting”

If that’s true I believe it’s do to a misunderstanding related to cost of living.

According to bankrate’s cost of living calculator, a $25K salary in Des Moines, IA is equivalent to a $45K salary in San Francisco with an average house costing more than 800K. A $55K salary would be approximately equivalent to 100K in San Francisco.

We don’t know where this couple lived, but if they lived in a major city 55K doesn’t stretch very far at all.

A used condo for two people around 1000 sq. feet starts around 450K in San Francisco, which means a 20% down payment will put you out $90K. Doable, sure, but it will take you a few years to save up.

I however would be concerned about what happens when someone retires and still has to pay rent out of a potentially limited retirement income. If you choose to rent instead of own then this is something you really need to make sure you’re looking ahead towards retirement age.

Note that the article is 7 years old, so those numbers are a bit out of date. They live in Portland Oregon so the home prices have appreciated substantially since then. In 2001 median home price in Portland metro was around $150-175k range and now its up to $260-280k level.

Jim

Trent: “While I find that somewhat disheartening (often, someone unwilling to maintain their living quarters is often unwilling to maintain other parts of their life, too).”

I don’t see how subjecting one’s self to extra work is a character flaw. Why spend time maintaining your home if you don’t have to?

The original essay is not talking about being tidy, changing lightbulbs, or vacuuming, but repair and maintenance, such as putting on a new roof, fixing plumbing, or yardwork. These are a significant time sink and unless you gain satisfaction from it, your time most likely could be more productively spent in your personal or work life.

Your anecdote seems judgmental and the result of a protestant work ethic than anything else.

But what about other ownership costs? Like mortgage interest? Repairs? Higher insurance costs? Property taxes? And in many places and much higher own to rent ratio?

If it costs me $1500/mo to rent and $3500/mo to buy… I don’t see renting as throwing money away.

I’m not saying I’ll never own, but right now, with the current market (in our area) and my current wages, it makes NO sense for me to own. I’m not going to have 50% or more of my take home going to house payments.

My favorite is the article to teens, here. The essay says a lot of things that make sense, although I think it does take a dim view on the world & the future.

Personally, if I’m going to pay rent or mortgage, I’d rather pay mortgage. At least the house is sort of mine, I can improve it and try to sell it for more than I pay into it. Mortgage interest is deductable, whereas rent is not. What I get back in the spring, I try to shove back into my mortgage.