I own a home (and I have invested in real estate), currently with the interest rates that we have, renting and investing your money in the S&P 500 would provide a better return and be less of a stress on finances.
A home becomes an investment only if you sell it, otherwise it is merely a lifestyle choice. When I bought my home, my cost of living practically doubled. I pay for utilities, lawn care, had to buy a good snow blower, a good lawn mower and I am responsible for all of the upkeep.
Buying would have made financial sense for me in 2018-2019 when interests rates were much lower. I only bought because I needed more space for my kids.
If one really wants to invest, renting and buying a separate rental property (or if you are single house hacking) makes more sense but this notion that just buying a home is an automatic win is a myth.
A home is simply where you live and its value appreciation only matters if you sell it. And you won't even truly own the home until after you paid it off in 20-30 years.
With these interest rates, if one is strapped for cash, renting makes way more sense. Home ownership at best is merely forced savings and that is it.
I hear you and we are aligned on a few of your points.
To be clear, I’m not a proponent that one’s primary residence is an “investment” because in most cases it is not. (Sidebar - However, home equity can be tapped into prior to selling with a HELOC that can be used to buy other revenue generating assets, like a rental property or to buy a business).
What I advocate for is that we shouldn’t be life long renters because we don’t want to “cut the grass”, “fix a toilet” or because of interest rates that can be refinanced down the line.
With a mortgage, you get the following:
- Locking in your monthly housing expense for 30 years
- Equity
- And most importantly, ownership
Wealth is built through ownership and that’s what our people should be aspiring to so we are not beholden to cacs continuing to have their way with our dwelling, community and livelihoods.
Of course owning isn’t the answer in every case and nuisance of course factors in but a lot of the boogey man arguments and misinformation (e.g. you need 20% down to buy a home) in favor of renting are laughable the more informed you become.
As long as the plumbing, foundation, electrical are good. Everything else is patience.
