Upon completing my post-graduate education, my family has persistently inquired about my plans to purchase a house. Their concern is centered around the perception that I am frittering away money on rent, rather than investing it in a property that could appreciate in value over time. However, my spouse and I have decided, for a multitude of valid reasons, to hold off on purchasing a home at this stage in our lives.
Owning a home doesn’t always equate to a profitable investment. The current market trends reveal that home ownership can indeed pose significant liabilities. The predicaments many current homeowners face, such as being underwater on their mortgages or fending off foreclosures, are a testament to this. Additionally, numerous homeowners have witnessed a staggering depreciation in their property’s value, ranging from 20 to 40%.
The financial risks associated with home ownership can be daunting. In my firm conviction, people should refrain from buying a house until they’re fully prepared financially, which includes being able to afford a down-payment of at least 20%, having an emergency fund for 8 months or more, and being capable of paying not just the mortgage, but also other ancillary costs like taxes and maintenance. Currently, we are not in that financial position.
Owning a home comes with its fair share of restrictions. We harbor ambitions to relocate closer to our family in the ensuing three years. As renters, our lease end date provides us a clean exit, leaving us unencumbered by obligations. Conversely, if we owned a house, we’d have to either wait for it to sell (which, given the current market, could take a considerable amount of time) or sacrifice a good chunk of our selling price.
Home repairs would be on our shoulders. As owners, we would bear the responsibility of all maintenance and repair costs, a burden we’re currently free from as renters. When facing issues like a damaged tub surround due to a faulty shower tile or a sinkhole in the parking space, it’s the landlord’s liability to shoulder the costs, saving us from out-of-pocket expenses. Landlords typically have their own coverage like Landlord House Insurance from CIA.
Property taxes are a significant consideration. We currently reside in a high tax area, with the property taxes for houses in our price bracket ranging from $8,000 to $14,000. That means the monthly payout could be a staggering $800 to $1,000, which, as a renter, I’m relieved to evade.
Home insurance costs more than renter’s insurance. While we can find ways to save on home insurance, we are presently paying a nominal $100 per year on renter’s insurance. In contrast, homeowner’s insurance could set us back 5 to 8 times that amount annually, and we’d also have to cover any expenses not included in the insurance.
Home maintenance falls squarely on the shoulders of the owners. We are a busy couple; I work from home and juggle childcare, while my spouse is on the brink of his career, requiring him to clock in long hours. The last thing on our minds is tending to the lawn or hiring someone for outdoor upkeep. As tenants, we’re absolved from such responsibilities.
Home utilities can be expensive. Our current rent factors in utilities like heating, water, and trash disposal. If we were to bear these costs separately, they could scale up to $200 to $300 each winter month.
While we do foresee owning a house in the future, now is not the right time. We prefer to delay this decision until we’re in a stronger financial position to manage the additional expenses comfortably.
To those currently renting, don’t let others guilt you about your choice. Renting isn’t a waste of money; it provides a shelter, a necessity, every month. If you are ever accused of wasteful spending, simply retort that you are indeed saving money by refraining from the heavy costs that accompany home ownership.
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