Will we be renters forever? And is that a bad thing? ??
Will we be renters forever? And is that a bad thing? ?? Ah, the age old debate. To rent, or to own your home.?
There have been arguments for both sides, and people are passionate about their opinions on the topic.? After all, owning a home has historically been cultural to a central milestone in American ?? life.? While it’s served as a the penultimate “adulting” signifier since the GI’s returned from World War II, the aspiration has been under fire recently from American’s millennial and Gen-z populations. I’ll try my best to wave the white flag ?? (and stop with these corny metaphors) to bring some objectivity to the debate.
You’ll hate my answer because it is...
it depends.
We’ve oversold the dream of ?? homeownership for years, but now it seems like we’re taking it to the other extreme. So how did we go from years of believing homeownership is a smart financial move, to now believing it’s one of the worst financial moves you can make?
To address the question, it helps to see both sides of the argument.
Strong arguments in favor of buying are usually:
1) When you pay off your home, it’s yours. You eliminate the expense of housing once you’ve paid it off.
2) If the home appreciates more than you’ve paid in mortgage, interest, taxes, and maintenance over time, you’ve earned a return, or you break even.
And the equally solid arguments in favor of renting:
1) Owners don’t even own the house, the bank does.? Miss a few payments and they will take it.
2) While you may own the home one day, you’ll owe property taxes forever because you don’t own the land beneath it.
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3) Renting isn’t throwing money away—you get a place to live.
4) Housing returns 2-4% a year, versus stocks returning 8-12% a year.? Housing ownership returns, when inflation, interest, taxes and maintenance are calculated lose 4% a year.
5) Renters don’t have to pay for repairs, maintenance, or similar issues.??
Here's how you fix this:
1) House hacking - Live in a portion of the house, rent the other.For comfort's sake you can do this by purchasing a 2-family house, or having clear separation in the floors.? Single?? Buy a house and rent the 2 extra bedrooms and basement old college buddies.? Have their payments cover mortgage.
2) Accessory Dwelling Units (ADUs) - Simply put, they are tiny houses you can build for 20k and put in your backyard.? These can be rented out, or put on Airbnb.
3) Buy a serious fixer-upper or buy at auction - With buying a fixer-upper, you will typically get a deep discount on price.? If you are good with your hands, or know an affordable contractor, you can extract significant value with a home makeover, putting yourself ahead in the long run.There are numerous inputs to make in this decision that are driven by your unique wants and financial situation.?
A decade ago The New York times built this nifty calculator.? Try inputting your data and see what it says below, then lmk!https://lnkd.in/d2Fbc3Va
do you own, or do you rent? let me know
email me: [email protected]