Why I’m Not Buying Another House
March 6, 2015 : Miranda Marquit - Guest Contributor
Ed note: When we bought our first house, we didn’t question it at all. All of our friends were buying, there was a first time homebuyers tax credit and wasn’t it just what you were supposed to do? With five years of hindsight now, we definitely would have done it differently, and it seems Miranda Marquit has learned many of the same lessons in a different way.
In September 2014, my husband and I closed the sale of our home. It had been under contract for two months, we had moved across the country – and we were finally free.
After going through the process, and even after I enjoyed living in the home for seven years, I’m pretty sure I don’t want to buy another house. Why, you may ask?
Homeownership is expensive
We bought our home in 2007, at the top of the market. If we had stayed in our home for the entirety of the 30-year term, we would have paid $216,617 in interest. Even after we refinanced to a lower rate, our interest costs would have been in the hundreds of thousands of dollars.
And that’s just the interest. It doesn’t include homeowners insurance, property taxes, maintenance expenses and repair costs. At the time we moved, we had replaced the flooring throughout the house and some of the fixtures were a year or two away from replacement.
All of those expenses add up. In fact, they could easily add up to another $50,000 spent on the home. Our property taxes alone would have cost us $36,000 over the course of 30 years – assuming rates never rose during that time. Even when you figure some of the tax breaks that come with homeownership costs, the reality is that it’s a huge expense, and you have to take care of everything yourself
On top of that, you might not even come out ahead. Buying a home in the local market cost us $300 more per month than renting. If I had invested that money each month, instead of buying a home, that $300 a month would have turned into about $31,000 over the course of seven years, based on my portfolio’s performance during that time period.
Lastly, depending on when you sell your home, you might not see profits. Even if your home appreciates in value over time, by the time you subtract all the costs associated with it, your profit might not be very big. The main advantage to buying a home and staying in it long-term is the equity you build, and the ability to get a big chunk of capital from it later. However, you might not actually see true profit.
You’re tied down to one location
When my husband got a new job in Pennsylvania, we needed to sell our home and move. Everything happened on short notice. We could have retained the home and rented it out, but we didn’t like the idea of being landlords, especially for a property on the other side of the country.
If you buy a home, and then need to leave quickly, you are stuck selling it for what you can; you can’t afford to be picky. Your choices are to either keep the home (perhaps renting it out) until you can sell it for more later, or to sell it quickly and take what you can. In our case, due to still-unrecovered home values, we had to pay more than $10,000 to unload the house.
Our current situation is more flexible. We can leave if we want, without going through all the paperwork. While we hope to stay for a few years, we don’t have to fret about home values, or take care of the maintenance.
So far, I enjoy renting and living in an apartment. When something breaks, someone else fixes it. The community has a pool and a fitness room. Our apartment isn’t too much smaller than our home was in terms of square footage, and I don’t have to worry about yard care, broken pipes and other inconveniences.
I have a greater sense of freedom, and I’m no hurry to tie myself to homeownership again.