FREEDOM’S ENEMY 4 – Home Ownership

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In my conception a house is best used not to live in, nor as rental property, but rather as a symbol for the mind. Here, this is what I’m talking about: “When all your trash cans are full, it’s time to take them out to the curb, before they start flowing over into other areas of the house.”

See what I did there? I swapped the word psyche for house. Fun, words can be. House, here, takes on a similar duty as a word like baggage, relating to the human condition and not a physical item.

Symbolism aside, here’s the gist of today’s post:  You could take the remarkably unremarkable route of going out and trying to leverage enough cash for the largest mortgage payment possible – and then spending the next quarter of a century paying it down – or you could keep your mobility and refuse to allow the amount of things you own decide for you how and where you ought to live.

I have a friend who bought a house 2 years ago. Back then I envied her. She impressed me with her ability to make it happen, and I was happy for her for having made what I believed was an all-around solid investment. I’d love to sit down and chat with her more about it but she doesn’t have time. She’s working two jobs to take care of mortgage payments and a running list of repairs and upgrades. She recently got herself a dog and now has to put up a proper fence, over which the trees that shade the neighbour’s yard (horrors!) will legally need trimming. Also vying for her time is her role as landlord to her downstairs tenant when she has an issue.

With no time to make her home “presentable”, she has been too embarassed by it’s condition to receive guests.  What does this say about the standards by which she’s willing to live?

The prevailing argument for home-buying is that it is a sound financial investment and renting, on the other hand, is like throwing money out the window. The truth is that there are many costs and fees for homeowners that never go towards ownership:  start-up fees, closing costs, property taxes, homeowner association dues, strata fees, home repair costs, appliance replacement costs, utility bills, home security, insurance, yard upkeep, Tylenol…

Buying a home is not exactly the “no-brainer” investment that we’ve all been hypnotized to believe it is.  The above laundry list of money-suck  would certainly exceed, say, the monthly rental of a small apartment. And much of that money you will never see again, either.

“But Marty, what about the equity built up through my mortgage payments?”  Well Lou, in answer to your question, here are three unpopular realities to consider:

  1. Home equity is based on fair market value. Your home’s value may barely rise above inflation. Worst case scenario, you could become one of many who end up stuck with a house they can’t sell in a once-picturesque, but now deteriorating, neighbourhood.
  2. The money you could save by not going the home-buying route could instead be better diversified and funnelled into a mutual fund or some other high-interest liquid investment over the 25-30 years it would take to pay down the mortgage.
  3. Even if you’ve paid off your mortgage and you now “own” your house, stop paying the property taxes for a while and discover the hard way who really owns it.

If you are interested in the principles of minimalism or living a simple lifestyle, which I gather you are if you’re reading this, you probably don’t have, or plan on keeping, a tonne of personal belongings.  Once you’ve pared down to the absolutely essential it’s easy to see the squander and exaggeration in buying a house and, conversely, the manifold benefits of being location independent.

By occasionally renting cheap apartments, and keeping your possessions to a minimum, you can achieve the invigorating freedom of being able to pick up and move wherever and whenever you want.

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8 responses to “FREEDOM’S ENEMY 4 – Home Ownership

  1. Well put as always, Marty.

    As we wind down out home in preparation for our (hopefully) open-ended travel adventure, we are amazed by the amount of possessions we collected, particularly during our two stints as homeowners. While renting we lived in better locations and didn’t seem to accumulate as many possessions. But owning your home, that’s different.

    First the couch isn’t quite right, so you replace it. Then the table looks funny with the new couch, so you replace that too. But wait! Then the furniture in the other rooms looks too different. Better get some new pieces so it all blends. And on, and on, and on.

    Unlike renting, home-ownership infects one with the insidious and costly disease of wanting to make the nest “perfect.” Bah! I’m done with it.

    Cheers,
    Renee

    PS: “With no time to make her home “presentable”, she has been too embarrassed by it’s condition to receive guests.” – LOL. Been there, done that.

    • Hey Renee!

      It’s great to hear from someone who’s been there and is still opting out of the owner role. I hadn’t even thought of the exasperation involved in decorating and making sure all the “pieces” work together, etc.

      Thanks for the comment. I’m looking forward to reading all about your adventures soon.

      Marty

  2. “The money you could save by not going the home-buying route could instead be better diversified and funneled into a mutual fund or some other high-interest liquid investment over the 25-30 years it would take to pay down the mortgage.”

    Prior to purchasing our last home, our rent was reasonable enough that I was able to save money pretty successfully. When we sold our last home just prior to the real estate market crash in 2008 we did make a small profit, but not nearly as much as I would have had had we simply continued to rent and save.

    What’s more, though the living environment we enjoyed as homeowners was one of the nicest I’ve experienced, I can’t say I haven’t had better as a renter. And I’m not convinced the price tag was worth it – especially considering the thousands of dollars we dolled out for home maintenance costs that added nothing to the value of our house.

    From my point of view, I’d have to agree with your conclusion that home ownership was an over-rated money-suck.

    • Hi Joyce!

      I’m actually surprised at how many have agreed with my assessment of home ownership, whereas I thought I’d be touching a nerve for the most part.

      Thanks for sharing your experience here. It’s great to have you as a reader.

      Marty

  3. Safe as Houses?
    “The fact remains that housing can decline in value, and for prolonged periods,” Moshe Milevksy, a finance professor at York University’s Schulich School of Business, wrote in his 2009 book Your Money Milestones. “It is definitely not a risk-free investment.”
    http://www.theglobeandmail.com/globe-investor/personal-finance/rob-carrick/safe-as-houses-that-loud-knocking-is-falling-prices/article1998280/

    • Thanks for the link, Kim.

      Interesting article. Funny how the author starts off a little similarly to my post, detailing the endless tab of ownership and a more thorough comparison to the markets. But then awkwardly, in the last 3 sentences, he ends his article IN FAVOUR of owning:

      “…there’s the best reason of all to own a house: freedom. Your family, your rules, your lifestyle. That’s really what you’re investing in when you buy a home today.”

      He even, curiously, attaches the idea of freedom to a situation that involves complete dependence on location. Weird.

  4. Jill and I just bought a house here in Cambridge. Al hamdulillah if it works out. Al hamulillah if it burns down. Either way I’m killing the marionettes, putting out the fire that’s casting the shadows, moonwalking out the mouth of the cave and heading to the next world. Insha’allah.

  5. Hey Mike! It’s great hearing from you. Eshtaqto elaika!

    Congratulations on the house, regardless of my stand on ownership. I’m deeply happy for you and Jill and the tots. I’m likely making my way back east for a visit in the fall before embarking on an indefinite-length trip to Europe, Insha’allah. Araka!

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