Saturday, March 26, 2011

Should You Buy a House?

I came across this article about a guy who said he will never, ever, buy a house again. It seems like a pretty extreme stance to take, kind of like having your heart broken and swearing off ever falling in love again!
The situation in the housing market has hit people pretty hard. For those of us with long enough memories, this sort of thing seems to happen every once in a while like the plunge in the housing market in the 1970's, the blip in the mid 1980's, and this most recent downturn in the market which, perhaps, impacted more people than in previous episodes because more people were lured into buying houses they couldn't afford with loan products that were downright (financially-speaking) stupid.
Even in light of this and even considering that we recently sold our house and willingly become homeless for at least a year or so while we travel, I would not rule out purchasing a house again. In fact, with house prices so low, now is an excellent time to buy a house if you are ready for one. How do you know if you are ready? Here's how:
  • You can pay cash for a house (ideal).
  • You can buy a house with a 15 year mortgage, a low interest rate, a good-sized down payment, and payments that will be no more than 25% of your net monthly income.
  • You intend to stay in your house for at least ten years or longer.
  • The house is located in a good area (good location, good schools, fairly stable housing base meaning not every other home on the block is a foreclosure).
  • You have a houseful of kids you are providing for (living in an apartment with a houseful of kids is less than optimal. It's nice not to have to worry about them stomping on the floor, yelling like maniacs, or doing all of the other things that kids do that tend to annoy apartment neighbors).
  • You have the means to take care of the upkeep on the home (this means the money to hire projects done or the skill/time/energy to do it yourself).
  • You are buying a reasonably-sized home that will suit your current and future needs. I am hoping that the McMansions of the 1990s will become a thing of distant memory. No family consisting of mom, dad, and 2.3 kids needs a 5,000 square foot house! If you buy a house that will fit the kids now but still not be too big for you after the kids move out, you will be set. Also, smaller houses are cheaper to heat, air condition, clean, decorate, and take care of.
  • You are buying a house because you really, really want one, not because you are tempted by low payments/low interest rates or someone else tells you it is a good idea.
  • You have faith that the market will rebound. No one can tell you what the market will do but historically, the housing market always rebounds although it can take years for that to happen. I tend to have faith that the housing market--and housing prices--will eventually make a turnaround.
  • You realize that renting can save you money but you also realize that renting leaves you nothing in the end. Historically the investment potential of buying a house has been a big impetus for people to buy houses and keep them in good condition so that when you retire or want to sell, you will be able to pull a little nest egg from the sale price which will fund your future. Note that that hasn't happened in the last few years since house prices took a nose dive so, again, the buy and hold strategy seems to work best here.
  • You aren't buying a house to "flip", you aren't timing the market (no one's crystal ball is that clear!), and you aren't investing and expecting a quick payday. A house can be a good investment but like any investment, there are no guarantees!

Hubby and I have tossed around the idea of buying a new home when we decide where we want to settle down again. I have been a home owner since I was 19 and while it is more work and more expense than renting, I feel that it is, for the most part, well worth the effort and extra money. I also like the feeling of being rooted and the idea that I don't have to answer to anyone about what color I paint the walls or how loud I play my music. We will, of course, take all of the tings above into consideration when we do decide to buy.


  1. First, I wanted to say that I love your blog! I'm a married mom of 2, and we live a sort of nontraditional lifestyle. Husband was laid off in 2008, and we took advantage of the timing for him to return to college and be a stay at home dad. I'm the breadwinner, and blessed to work from home 100%. Some think we're crazy for how we live, because we share one car and cook on the cheap, grow what we can, and use every trick in the book to live a frugal lifestyle that is really lots of fun. We're a very close family, and involve our kids in saving, talk to them about setting goals for your life and your finances, and being very honest with them about our past financial mistakes. We bought our second house last year, we had moved a few years earlier and needed to be in a good school district and wanted another home of our own. We feel that it is crazy to allow for more than 500 square feet per person, that's more than most people in the whole world have, anyways! We set the price we wanted to pay for a house and told our loan agent we didn't want to know how much the bank thought we could afford. After some patience, we found the perfect house for us. It's been great to do the work ourselves, and we barter with service people or family members for the things we can't do on our own. Having a great lifestyle on a strict budget is very achievable and tremendously rewarding. I'm thankful for my family, for my husband who is such a great partner, and my faith for reminding me every day of the value of all these moments together. Thank you for your tips, please keep writing, and I'm so glad you're sharing your story! Sorry for the novel, just wanted to send you some blogland love :-)

  2. Great post! We don't own but love the house we're in. Fr us buying wasn't an option, so for now renting works for us! Our landlords were looking for a "forever family" to move in, so I feel like we're "firmly planted". :)

  3. Thank you both for the comments! Home really is where you make it and HOW you make it.

  4. I love owning a home too, despite currently renting in Texas. When people say they will never own a home, I always wonder how will they afford ever increasing rental payments when they are retired and on a fixed income?

    Part of the benefit of owning a home is having a near free place to live by the age of retirement; provided the home is paid off.

  5. We needed more space did this by moving to another town from where we lived previously.a\All the extra space we needed for the same dollars.

  6. The advantage of buying a home is clear on people who are thinking of long term investment, owning their own place allows them to personalise their property.