I agree with Scott Burns. After owning 3 homes over the past 25 years, I've now decided to rent. Some factors to think about.
Do a rent v.s. buy calculation to determine the number of years to break even. A big variable is estimated annual home appreciation. Anyone want to guess what that number is in today's market ?
Home maintenance. My experience is $400-500 per month. This is a conservative estimate for a modest mid west home.
Don't forget property taxes, insurance, and association fees.
What's your time worth ? I'm done with those sweat equity projects. You work a good chunk of the week to pay the mortgage then comes the precious weekend. Who want's to spend 4 weekends ripping into a bathroom remodel job ? I gave all of my sweat equity away for free on the sale of my last home.
How stable is your job and how easy will it be to get rid of the house ?
In summary: A home can be an anchor offering stability for your family....or it can be an anchor limiting your options and flexibility.
I guess part of the "equation" is where you are at in your life. Being that I'm in my early 60's, retired, and not "humping" (e.g. job) anymore, I really get to enjoy the home we have (our fourth, since we've been married almost 40 years).
When I (and my wife) were young, all we could afford was a mobile home (e.g. trailer). As we went through life (and our income increased) we progressed from a twin (2-family), a small single, and finally our current home (4 br, 2.5 baths, 1+ acre) - enough for my wife and me :lol: ) along with our dogs.
Today, I enjoy just getting on my JD and mowing the lawn, "tinkering" in our small garden, and just "enjoying life". Now, since I have the $$, I can afford to have someone else do the maintenance (little that there is). I have someone else paint (very little paintable surfaces) or repair as needed. When I was younger, I "had" to do it myself (and hated it). That along with other "normal maintenace" (such as "coating the driveway") are left to others. Could I do it myself? Sure. Do I need to do it myself? Nope :lol: ...
My wife and I have discussed the future (as related to housing). We realize that if/when we downsize, a lot of our "treasures" accumulated over many years of travel (acutally trinkets) will wind up in the "quarter box" (e.g. a box of "unknows" that are sold at auction for $.25 at an estate sale.)
For us, it comes down to a couple of simple questions....
- Is our house an investment? (Nope - never was, and is not expected to provide income, nor "leverage on loans" in the future).
- Are we happy where we are living (regardless of any "outside considerations" of expenses or "alternative investment returns")? - Yes!
- Do we look at our home as an investment, or a place (lifestyle) to "hang our hats"? - Most certainly, it is "food for our soul", but certainly not looked at as an investment (e.g. we do not require some "ROI").
- What would we have done in the last 40 years to change our view of our (numerous) home in order to "maximuize our investment"? Nothing.
- Finally, "are we happy" (e.g. with our home)? - Yes.
Home "ownership" is a bad investment (per the OP's title).
However, as a "place of comfort", it can't be beat!
Just a view from some "old folks"...