Homeownership Myth: Why Not Everyone Should Be a Homeowner

Part of what has gotten the economy into such a mess is the belief that everyone should be a homeowner. Everyone from the government, to the mortgage brokers, to the banks, to the realtors and the homebuilders thinks that everyone in this country has the “right” and “duty” to own their own home. “It’s the American Dream!” they cry. While it’s true that property ownership is a right in the U.S., the truth that no one wants to put out there is that not everyone should or can afford to take advantage of that right.

Sure, owning a home is great, most of the time. Sometimes it stinks. I own a home and enjoy it. But I also didn’t mind living in an apartment. There are good and bad tradeoffs to both. When we made the decision to become homeowners, we put a lot of thought and research into the process and decided that it made sense for us. But it doesn’t make sense for everyone. Yet so many people were sold the myth that homeownership is the only way to go, and they were sold the myth that everyone can afford to own a home, that now the housing market is in the tank. Too many people bought homes that they couldn’t afford and, even worse, don’t even enjoy owning. Now they’re out a lot of money, time, and frustration. However, if they’d slowed down and thought about it for a minute, they might have concluded that, while home ownership is great for some, it just wasn’t for them. That would have saved a lot of heartache.

So how do you know if home ownership is right for you? Many pieces have been written about the benefits of home ownership and the investment potential. However, money isn’t everything and home ownership may be one investment you don’t want to make. There are other ways to invest your money. Here are some things that may signal you aren’t ready for home ownership. (Remember, every situation is different and only you know what is right for you.)

You have a variable income or you work in an industry where employment is iffy: Unless your variable income is very high, even in the slow periods, you may find it difficult to budget effectively for the mortgage, taxes, insurance, etc. that owning a home requires. Also, if you tend to be in and out of work a lot (your industry has a lot of unpaid furloughs, for example) it may be difficult to keep up with the monetary demands of a house.

You don’t have the time, skills, or inclination to handle even basic maintenance and repairs: Home repairs can be expensive. If you have to call someone for every little thing that goes wrong, it can be even more expensive. Handling things like lawn care, cleaning, and basic repairs on your own can reduce the costs to a manageable level. If you don’t have the time, desire, or know-how (and you don’t want to learn), home ownership might not be for you unless you have a ton of money to spend on these things.

You have no extra money to pay for repairs or improvements, taxes, insurance, HOA dues, or larger utility bills: Even if you save up for the down payment on the house and you can cover the closing costs and lawyer fees needed to get you into the house, you are nowhere near done laying out money. You’ll need to have enough available to pay all the other costs associated with home ownership. If buying the house wipes you out, you’ll have nothing left for everything else, leaving you very quickly with a house you cannot afford. Just making the mortgage payment isn’t enough.

You move a lot: If you tend to be nomadic, home ownership can be a pain. Just when you’re settled in, you have to deal with selling the house and buying another one. This can get old (and expensive) fast. Moving is costly and stressful enough without dealing with realtors, lawyers, and potential buyers. Nomads may do better with a housing option that they can move into and out of without much hassle.

You can’t afford to own in the area where you want to live: If you want to live on the “nice side of town” where the good schools and stores are, you’re likely to find that it’s costly to own a home there. Your budget may only allow you to own a home on the “bad side of town.” If this is the case, it may be to your advantage to rent in the better area.

You have only one person in the household who can earn an income: Notice I didn’t say only one person who IS earning an income. Many stay at home parents manage to own a home with only one spouse working. But this assumes that if the bottom falls out, the other spouse can go to work to cover the shortfall. If you have only one person in the house who is capable of earning an income (the other is disabled or you are a single parent, for example) keeping a house and a family on a single income might be challenging if you lose your job and it takes a while to find another.

You are financially irresponsible, generally: Home ownership requires a basic level of financial responsibility. You have to have the discipline to save up the down payment and then you have to make sure you always have enough to pay the mortgage each month, and the taxes and insurance which crop up at odd times. You also need to be able to save for repairs and maintenance costs. If you never know where your money goes and you are always living at the bottom of your checkbook, you might have problems owning a home.

You like a simple life: Owning a home complicates things. You spend your weekends doing yard work or maintenance. Your taxes go from the EZ form to the regular 1040 form so you can deduct your interest. When it’s time to sell, you have to deal with that whole mess. You find yourself waiting for repairmen at inconvenient times. Then there are the never ending “improvement” projects. It’s not a large burden, particularly if you enjoy your home. But if you’re the sort of person who just wants to write a check each month and let someone else sweat the details, then a home might not be for you.

You like the extra amenities that come with apartment life (and can’t afford to replicate that in your home): Many apartment complexes offer things like pools, hot tubs, clubhouses, and game rooms. You may not have the money to replicate this lifestyle in your new home. If you like these amenities, you’ll find them more affordable if you rent them.

You want to spend your money on other things: Home ownership is expensive, usually more so than renting by the time you factor in the maintenance, insurance, and tax costs. Maybe you want to do other things with your money like travel, donate heavily to causes you believe in, subsidize an aging parent, or blow it all on gaming systems. If home ownership is going to get in the way of other things you want to do with your money, you’ll only end up resenting your house. We all have our priorities of how we want to spend our money and if owning a home isn’t yours, then so be it. You should be happy with what your money does for you, not cussing at it every Saturday when you head out to mow the lawn.

You just don’t want to: If, for whatever reason, you just don’t want to own a home, don’t let anyone push you into it. I know many people who followed the Joneses and the advice of “investment pros” and gave into peer pressure to buy a home when they really didn’t want to. They all had different reasons for not wanting a house and no one reason was right or wrong. It was just their feeling, but they gave in and regretted it. Everyone makes the choices they feel are right for them so don’t let someone pressure you into something you don’t want to do.

If you choose not to own a house, there are several living options available besides basic apartment living.

You can buy a town home: These cost a lot less than a detached single family home. Very often, the developer/owner of the community takes care of the outside maintenance (you’ll probably pay dues for this) and you are only responsible for the interior maintenance. You still “own” something (and will have to pay taxes) but it is likely to be more affordable and easier to keep up than a traditional house. You might even get extras like a pool or clubhouse.

You can rent a house: Your landlord will probably be responsible for most of the maintenance and repairs (you may have to mow/maintain the yard), but you still get to enjoy a home with a yard and escape the property taxes.

You can buy a duplex and rent the other half: I have a friend who did this and it has worked out very well for her. She gets to “own” something, live in it at the same time, and collect rent to offset the mortgage.

You can live in a hotel/extended stay property: Don’t laugh, people do it and for some it works out wonderfully. It’s probably best for those without a lot of stuff or who move around frequently, but it might work.

You can own a condo: Similar to owning a town home, except the building is probably laid out like a traditional apartment building without as much exterior green space as you’ll find in a town home development.

You can move in with family or friends: Offer to pay rent, of course, and only if you can stand the people you’ll be living with (and they can stand you).

Buy a house as a group: If a group of friends or family members want to buy a house together, that lessens the costs/responsibilities for everyone. However, make sure these are people you trust and can live with, and have everything handled by a lawyer. That way, if someone decides to shirk their responsibilities or move out suddenly, you have legal back up. You’ll also need legal advice about how to set up the deed and what to do in the event the house needs to be sold.

Home ownership just isn’t for everyone, no matter what the government, media, and financial gurus might tell you. Some people are just happier and better off renting. And there’s nothing wrong with that choice. Some people are happy owning a home and will swear you absolutely, positively have to buy one, but it’s not your life they’re living. They’ll tell you that you’re throwing your life and money away if you don’t buy, but a home is not the Holy Grail of life. So before you buy, take some time and think about whether you really are the sort of person who should/wants to own a home, or are you only giving in to societal pressure that says you should. Then do what’s right for you.

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14 Responses to Homeownership Myth: Why Not Everyone Should Be a Homeowner

  1. disneysteve says:

    I totally agree. Homeownership is NOT for everyone. Not everyone needs their own home. Not everyone wants their own home. And most importantly, not everyone can AFFORD their own home. Forcing people into homes has caused a lot of the current problems.

  2. Blame the 90s congress for believing homeownership was a born right. They passed legislation (signed by Clinton) that made it easier to do mortgages at every stage of the industry. When the tech bubble burst it was a flight to stability – real estate.

    This is why I don’t trust the government to set economic policy.

  3. HOAGOV says:

    You didn’t mention homeopwners associations, and the extra burdens of assessments and special assessments that don’t go away until you diw or move out. Or, the fact that most new homes are in HOAs, mandated by the municipality. However, given the above, HOAs do not want renters!

  4. My cousin used to broker subprime mortgages for people with credit scores around 550. I didn’t know how bad that was until my mom, who declared bankruptcy 5 years ago (so it’s still on her report) checked her score last year for the first time: 620. I took that as a benchmark for how bad the subprime market was. And for the record, my bankrupt-but-otherwise-responsible mom has no desire to become a homeowner. She can’t bear the thought of coughing up $10K for a roof repair or a new heating unit.

    Me? I live in Manhattan – a severely overpriced market. It would cost me twice as much to live where I do if I owned, and what I pay is already sickening.

  5. baselle says:

    The thing that I got me was the “cult” of the homeowner. Everyone saying the same thing, zombie-like: You must own a home, homeowners “save” money, you are throwing your money away on rent. Please.

  6. Crow says:

    I agree, it’s not for everyone. I think one of the biggest mistakes people make though is renting a horrid cheap dump to “save up for a house.” Being in a desperately miserable home makes people buy prematurely, then they get stuck in a house that’s not right for them. If you can’t afford a house comfortably, move a lot, etc, these are all good reasons not to buy. Instead rend a decent place you can be happy in and get over the industry-spawned spin that there’s something defective about you if you’re not a homeowner. We also need to stop vilifying renters. Everyone from individuals, to credit card co’s etc, deem home owners more valuable citizens. Hogwash.

  7. Diane says:

    You are SO right! I happen to love owning a home – I’ve been in the same house for 25 years.

    I love gardening, I have kids & pets, so it’s best for me. I’ve made a lot of sacrifices over the years to afford it.

    But, even as a 50 yo female I don’t mind doing some repairs & maintenance myself. I can lay tile, paint, tape, float & texture sheetrock (house flooded once), etc. I mow & edge the lawn, trim the bushes. I LIKE being active and working around the house.

    Of course I have to find help or pay someone for things I can’t do myself – electrical work & plumbing, for instance.

    If you do not enjoy spending weekends working on the house & yard, keep renting – you’ll be happier that way!

  8. monicalker says:

    Jennifer raises a great point about understanding the motivation of people who buy homes. When my husband and I were moving to a new state every year for our jobs, we always rented houses. We had several people express surprise that we were ready to have children during that time. They kept saying “But you don’t own a house yet! That comes first.” As if millions of kids (both in America and around the world) aren’t raised in rented houses or apartments each year!!!! The bad news with homeownership first and then kids second is that when they destroy the house, you have to fix it yourself instead of calling the landlord!

  9. Joe Rivera says:

    Jennifer is 100% right on the button!
    I have lived in South Florida for 30 years and have enjoyed renting and owning and renting again. I just started my second career ( my first was hotel management)and totally agree (even as a Realtor) that owning is not always the best choice, financially speaking. It may come as a big surprise to other Realtors, that I will do my best, to provide the best advice, (according to all the financial information available) as to whether a potential client is better off renting (perhaps in a better community with all the amenities he would like to have)or own. In the short term, I may not earn a large commission, but I will know that I did “the right thing” for the client, and he or she, may still provide me with other potential buyers or sellers (or renters) in the future. Most important for me, is that I will be able to sleep good at night!!!

  10. Michael Harr says:

    Don’t forget that owning a home is also a net loss annually after paying for taxes, maintenance, insurance, etc. People thought real estate was such a big money maker, but the reality is that housing is always tied to income. It simply cannot outpace incomes over a long period-otherwise people simply cannot afford it.

    In pricey areas like Manhattan, there are many more with high net worths to offset ownership costs via a large cash down payment. This leads to escalation in pricing. The best places to look for real estate gains will always be in areas that attract and create high net worth individuals and families. I live in Kentucky…not so many HNW peeps around here and housing is stable and affordable. Frisco, Seattle, Chicago…not so much.

  11. Michelle says:

    Great article. Before the pricing really escalated I went out looking for things in my price range and found that I could not buy the type of condo I wished to live in for the money I had to spend. So I rent.
    And I’m so happy I did. I have a child now (didn’t when I was looking at housing) and it was great to be able to move into a neighborhood with a decent school and lots of amenities in walking distance. I wouldn’t have that in the areas I could have bought, or would have such a small condo we would be miserable.

  12. Gwen says:

    Yes, Jennifer brings up many good points. People have been brainwashed into believing they have to do certain things at certain times in their lives or else they are eccentric or a misfit of some sort. Home ownership is just one of these “thing”. Well, everyone is different and not everyone wants the responsibilities which go along with home ownership. There is nothing wrong with this, at least these people know what they want and they are not caving into peer pressure. Personally I am one of the most responsible people I know; however, I have little desire to own a home. I rent a little house with a large yard and a lot of privacy and all I have to do is write one check every month for the rent. If anything breaks I call the landlord, if I want to move all I have to do is give two months notice. At this point in my life I am not ready to give up this flexibility and simplicity and I may never be ready. If I rented forever I would be perfectly happy. However, I have a co-worker who has accused me of not wanting to grow up. When did owning a home mean you were more grown up than someone who rents? Utterly ridiculous! The ironic part is that this person is one of the most immature people I know and obviously has a very different method of measuring maturity than I do. In any case, it does not matter what anyone tells you, you know what is right for you. Home ownership is not a one size fits all sort of thing. For some home ownership is a great option. I have a friend who is very handy and loves to buy and fix up houses. For him, home ownership is the only way to go. So, do what is right for you and disregard the silly comments from people who do not know you and assume that you are just another American trying to keep up with the Jonses.

  13. Channe says:

    The biggest lie of the last century that has been shoved down the faces of Americans is that you are not an American until you buy a home – which is often overpriced and unnecessary. I’m 30, single, with a solid job and I have enough to buy a house/condo but when you actually crunch the numbers it doesn’t make sense to buy. I get everything I want with renting without the worry of selling if I have to move. Personally, I think more Americans renting will lead to a better economy because it will lower debt and increase spending money.

  14. CH says:

    I was told to purchase a home because my income kept rising and I needed something significant to offset this. After years of renting and falling for the “renter’s guilt trap” I purchased a condo in 2007 for $190k. Now I’m in debt and fighting a foreclosure due to a misunderstanding between myself and my loan company and I’m underwater by over $100k. I’ve never been more miserable my entire life. In my opinion, singles should never own a home. It’s too expensive for one income and this is my biggest regret to this day.

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