There are several advantages of home ownership that most people do not take advantage of.
A tax free gain for the sale of a primary residence (2 years + ownership) is one in particular. I am on my 2nd 'primary residence' in 3 years.
Why You Should Never Buy a Home Again
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Re: Why You Should Never Buy a Home Again
#22The title on the post itself (and the slug in the URL) is "Why I Am Never Going to Own a Home Again" (emphasis mine). In the article, the author states "there are many reasons to not buy a home," and the reasons are from his perspective, which presumably is what his friends are asking for.
However, the title here on HN makes it sound like the author is suggesting nobody ever buy a home again — probably not his intent. Sure, there are numerous reasons for not buying a home just as there are numerous reasons for buying a home — it depends on your situation.
I can personally relate to some of the author's arguments. Having rented out the house I bought 5 years ago while I'm living abroad, I'm essentially paying a 2nd rent to make up the difference between what I'm getting from my renter and the sum of my mortgage, taxes and homeowner's insurance.
Re: Why You Should Never Buy a Home Again
#23Yeah, that's it. Lease everything, don't own any assets. Let me know how that works out for you.
Surely, you have to own some assets. "Leased food" doesn't sound like fun.
Re: Why You Should Never Buy a Home Again
#24Earlier quoted context omitted.
If you're renting a $100,000 house for $1,500 a month, you are probably overpaying on rent, no?
In the UK at least, rent is higher than the equivalent mortgage payments at the moment. I pay around 2/3rd the cost of what friends pay for their rented property and this is common across the country. This has been caused by the decline in mortgage lending.
These inefficient market conditions are exactly what I would look for when purchasing or investing in a home. The worst case scenario is + cashflow.
Re: Why You Should Never Buy a Home Again
#25I could easily refute all the points in that article if I had the time. I'll suffice to give this example: "A" buys a $100,000 house, "B" rents a $100,000 house. Both pay about $1,500 per month. At the end of 15 years, "A" owns an asset worth $100,000, "B" owns nothing. You decide.
If someone is getting $1500 /month rent for their $100,000 house, then reason #1 to own a house is "Rent it out, and get 18% p.a. returns on it"
My wife and I didn't sell our first house when we moved, we're prepping it to rent out. It was a serious fixer-upper, so we renovated the bejeezus out of it while living there (learned a lot and bought a bunch of tools). Average rent for a property that size is easily double our mortgage payment - which is why we bought instead of renting in the first place.
Even factoring in taxes and maintenance costs, renting out that first house, even at the low end of what we could get for it, we'll handily subsidize our current residence as well as pay off the old house. Even if we were to sell it, the quality of work we put into it more than pays for the time and money we put into renovations.
To each their own I guess.
Re: Why You Should Never Buy a Home Again
#26>Starting March, 2009 I was renting an apartment directly across the street from the New York Stock Exchange. It was fun. I’d look out the window and see Wall Street. How exciting! Before that I lived in The Chelsea Hotel with Chubb Rock. Last year we decided to relax and move a little north. Now I look out the window and see the Hudson River. And its quiet and I can walk along the river in the morning with no noise.
I can't imagine that was cheap. Most of the article is inflected with desire to retain hoards of cash and sleep on top of a pile with many beautiful women (well, that's the undertone). Yet he's blowing what must be a huge wad on an apartment in NYC in an upscale area.
Re: Why You Should Never Buy a Home Again
#27Yeah, I used to have a similar mindset before starting my (big) family. I can understand what he's saying (though very arrogantly) but I hope he's open to changing his mind someday, just in case.
He mentioned he likes having a hassle free life. Once you have a lot of kids, not only do you have your own hassles, you get to be a part of everyone's hassles and there's no such thing as a hassle free life.
All I'm saying is, never lock yourself into any mindset as circumstances can change.
Re: Why You Should Never Buy a Home Again
#28(adds on to headline)..."if you have a difficult time reading market conditions, don't understand your financial situation and feel comfortable moving your belongings from house to house every few years."
..."and don't mind being at the mercy of inflation when your landlord jacks up your rent 10% with a month remaining on your lease."
Outside of property tax increases (at least in the State of Tennessee), the landlord can't increase rent on you if you've got a lease contract. Things are much stricter in many other states.
Re: Why You Should Never Buy a Home Again
#29I could easily refute all the points in that article if I had the time. I'll suffice to give this example: "A" buys a $100,000 house, "B" rents a $100,000 house. Both pay about $1,500 per month. At the end of 15 years, "A" owns an asset worth $100,000, "B" owns nothing. You decide.
I agree in theory, but in practice people don't go from renting houses to buying identical houses---they always trade up: from a 2 bedroom apartment to a 3 bedroom condominium, from a 3 bedroom house to a 5 bedroom McMansion, etc. Because of this the costs of ownership once mortgage, taxes, utilities and maintenance are tallied up are often more than what a person was previously spending on rent. Secondly, his major…
The analogy is similar re: stock. Is your $25 citigroup stock really worth selling @ $3?
Most likely those people sold at .60 cents.
Most people who are losing money in real estate were also selling stocks at the bottom (2 years ago) and were buying tech stocks with two hands in 1999.
Re: Why You Should Never Buy a Home Again
#30There are several advantages of home ownership that most people do not take advantage of. A tax free gain for the sale of a primary residence (2 years + ownership) is one in particular. I am on my 2nd 'primary residence' in 3 years.
Flipping houses, ah yes. This is a beautiful tax loophole created and endorsed by the lobbying NAR that enables salespeople the ability to make bucketloads of commissions based on unrealistic appreciation of house values in a very short amount of time. Housing market go boom, boom, bust.