On June 15, 2015, I celebrated my ten-year house anniversary. I’m writing this in the following March, which means it took nine months to even realize it had happened. Like an anniversary in a fledgling marriage, the date came and passed without much fanfare.
My relationship with homeownership is tortured. I bought a house too young, for too much money, at the exact wrong time. It came with problems that a wizened thirty-four year old E.A. would now avoid: an old asbestos-cloaked boiler, 1970s wood paneling, and mandatory flood insurance. And it locked me into a single geographic area, one that is not exactly boiling over economically.
But on the other hand, I’ve thrived here. I had the asbestos removed and painted the wood paneling (it’s looking pretty good, I might add). I met my now wife, and we’ve started our family, turning an office and a guest bedroom into nurseries. We like the area, and our jobs are as stable as anyone can hope for. We’ve turned what was, in the early days, a glorified frat house into a warm, comfortable home for our family.
I’ve learned a ton over these almost eleven years, about myself and about home ownership in general. I’ll give you the main points, the ones I wish someone had told me when I was thinking about buying a home at the age of twenty-three:
The tax benefits are overblown.
I hear a lot from friends about the tax benefits of homeownership (I do not have the most interesting friends). Most importantly, that the IRS allows homeowners to deduct their mortgage interest from their federal taxes. What is often lost is that the tax code already allows a “standard deduction” of $12,000 that a family can take from their taxes. You only get an excess benefit if all of your personal deductions, including mortgage interest, are greater than the standard deduction. In practice this means that high-income earners with large mortgages or lots of other deductions are likely to benefit. Many, many homeowners get no benefit out of this provision, and may not even know it if they don’t do their own taxes.
The benefits of 30-year fixed mortgages are NOT overblown
What if you could lock in the price of gas at today’s prices for thirty years? Would you do it? Of course you would, because you have to assume based on history that gas will get more expensive over time. Most stuff does. No one is offering you that deal – except on your mortgage. With a 30-year fixed mortgage, while other goods get more expensive your mortgage payment stays fixed. This means that my parents, who bought their house in the 1970s, were paying a $320 per month mortgage payment into the late 1990s. When they paid off their house, their mortgage was a tiny speck on their monthly budget, visible only with a magnifying glass.
Your primary home probably won’t be an “investment.”
The past twenty or so years have given us the false impression that homeownership is a way to build wealth. But while it’s possible to get lucky in a hot area, historically house values have risen only at the rate of inflation. That’s not bad, but one could do much better by investing their money in stocks than sinking it into a house. Even bonds might be a better deal; they don’t appreciate faster than homes, but they don’t require maintenance, either.
Ask yourself this question: If you were guaranteed to get no monetary benefit out of owning a house over renting, would you still want one? If you don’t answer "yes" to this question, then you should seriously consider renting. Buy a house only because you want to own a home and property, and treat any monetary benefit as an unexpected side-bonus. This New York Times calculator is a good place to run the numbers for your unique situation.
A willingness to learn - and fail - will save you money.
Homeownership is not a spectator sport. Pipes are going to leak and appliances are going to fail. When they do, you’re going to have to choose: do I try to fix this myself, or call someone? Being a curious person, and a cheapskate, I decided early on to roll up my sleeves and try to learn as many skills as I could. In the past ten years, I’ve learned to frame a wall, replace a toilet, tile a backsplash, install a coffered ceiling and wire an electrical outlet. I’ve also failed plenty of times. An attempt to replace my gutters ended in disaster, and I’ve had to call more than one plumber on the weekend. But overall, I’ve won more than I’ve lost.
I’ve found that beyond the money savings, learning new skills and sharing them with others is a lot of fun. So much can be learned with a book, YouTube, and a willingness to fail. And in doing my own repair work, I’ve built up a basement full of tools that have turned me into a superhero. It’s all saved me a truckload of money.
Speaking of that truck: you don’t need one.
I’ve noticed a strange trend among friends and coworkers where the purchase of a home immediately opens a floodgate of additional spending. The most consistent side-purchase is some kind of truck. The reasoning is that the new homeowner needs a big vehicle to haul purchases back from Home Depot. But in my ten years, I’ve needed to buy something that large only about once per year. So much stuff can fit into a small car when you take the time to try it. And stores will often be happy to deliver materials right to your house. On the rare occasion when I do need a truck I rent one for a few hours, which often costs less than $50. That’s a lot less than buying and insuring another vehicle.
No matter what, you’re going to spend a ton of money.
Even if you insource all of your work, you’re going to spend money on your house. Though I’m a numbers person, I’ve never kept track of how much I spent fixing my house because knowing that number would send me spiraling into a deep depression. Some quick research suggests that homeowners will spend 1-2% of their home’s value per year on maintenance. I think that’s way low, especially if you buy an older home.
And that’s just routine maintenance. Once a place is yours to change as you see fit, there’s no end to the improvements you will dream up. My wife just drew up a master plan for our backyard that involves a new deck, an outdoor kitchen, and a hot tub. I have no idea if any of this will happen. But we wouldn’t even be dreaming these expensive dreams in an apartment.
No one likes to mow the grass.
I sometimes hear city-dwellers wistfully tell me that they wished they had a backyard because they would "really like mowing the grass." These people are mistaking childhood memories with the responsibilities of adulthood. Nobody likes to mow the lawn. My lawn is small, and I alternate between doing it myself grudgingly and paying a landscaper-neighbor to do it. Most of my friends, who used to think they wanted to mow their own lawns, either own condos or pay companies to do it. The same goes for cleaning. Of my close group of friends, I’m the only one who doesn’t employ a cleaning service.
So what’s the verdict?
Monetarily, I have not been better off owning my house. It would have been much cheaper to rent these past ten years. But a lot of that has to do with my unique situation: I got in at a bad time with a needy house. But even if I’d done everything right, I think it would be about a wash.
But the landlord-maintained grass is always greener on the other side. It’s not true to say that I would have rather rented for ten years. Like many people, I’ve enjoyed having control of my own property, changing it as my wife and I see fit. When we get older, I think we’ll happily transition to an apartment or condo where someone else can deal with problems. Until then, I’ll embrace suburban-dad status, fixing my house and trying to make good time when I drive places. I just won’t pretend I own my house for any kind of monetary reason. I just like it is all.
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