Personal Finance

Is Buying a House Worth It?

“Buy a house, cause it’s an ASSET.”

You’ve probably heard this line before, perhaps from a baby who boomed. It sounds good, as rent can be expensive and just tosses money out the door to someone else. Who wants to do THAT?

In reality, home ownership less of a prize than your elderly benefactors (read: mortgage salesmen) will let out. While exceptions exist, a house is often a net financial loss due to misconceptions about what it entails.

To begin, we have entry expenditures. These will include the time investment of looking at potential homes, paying for inspections (home, radon, and chimney are just a few), and closing costs. Together this can run $4-5k, if not more.

Now, if you don’t put down 20 percent on the mortgage, you’ll have to deal with PMI, and should the bank say you don’t have to pay with them, it’s probably just fancy calculus. Your monthly expenses will include the loan principal, usually homeowners insurance, utilities, PMI, and interest.

“Yeah but you can DEDUCT your mortgage interest.”

Hehe, nice try. Due to changes enacted in the Tax Jobs and Cut Ass legislation signed by Trumpy, you have to itemize to receive the deduction, and in many cases the Standard Deduction will be a better deal. Key point here: the deduction is not a dollar-for-dollar benefit, so you can’t assume massive proceeds.

Then we have upkeep and repair. A house I recently looked at came back with so many problems it would have required about $70,000 in improvements to be worth what I initially offered. It was “AS IS,” of course. You either make those changes as a homeowner, or sell for far below what you want years later. Houses are like cars; they don’t usually age well with constant use.

To be fair, it’s possible to use the pass-through rules to save on taxes if you rent out rooms, and there might still be a tax credit for solar panels if that sounds desirable, so it’s not all bad.

But it isn’t the dream they talk about.

Personal Finance

Buying a House is No Fun

Something I have come to realize is that most narratives of Americana are pushed to benefit a particular market segment. You have proposals for Zales, football for beer, and country living for trucks. They all seem so wonderful, the makings of a dream for the working man. Just spend a little money.

I have another to add on the list: buying a home. Despite loads of banking propaganda, the reality is a whole lot less satisfying than it seems. High costs, unit problems, and finding one you actually like.

As I go through the process myself, I am calling into question most claims made by the scruffy promoters. Houses don’t seem to be assets, because they’re either too expensive to pay by yourself, or too small to have appreciation potential.   

Want to rent it out? Better check with the HOA or neighborhood watch. And don’t get me started on municipal laws. It all becomes a heartache.

Stumble upon a dream model? Too bad, it has an antiquated heating system, outdated septic, or some fat foundation crack. But the list price is still high, and you have enough competition to make the bidding tight.

 In the event regular houses are off the table, you face townhomes and condos with astronomical fees, sometimes over $600 monthly, just to live there. Rest assured it is a “starter home,” however.

Maybe I’m just too crotchety for 2019, but holy closing costs. What happened to the American Dream?