Why I’m ALWAYS Going to Own a Home

On Tuesday, Forbes.com posted James Altucher’s “The Altucher A-List” investing column/blog titled, “Why I’m Never Going to Own a Home Again.” While I can usually resist temptation, this was out of the question — how could I not respond to this?

I love the First Amendment. James has every right to shout into his blogging megaphone about why he doesn’t believe in home ownership, and I can only hope that he, and his 8,069 Twitter followers, and the 1,254-plus people who shared his article via Facebook read this, too.

My responses are directed toward the people who choose not to own – not those for whom home ownership is not a viable financial option. I believe that for some, especially those who need to take a financial break from ownership, renting is a good option. There are plenty of people who cannot purchase a home, and thankfully renting is an opportunity to live in the town they choose.

I am going to follow along with Altucher’s list, in the same order – James’ points are in italics; mine are below.

Financial:
“Cash Gone. You have to write a big fat check for a down payment.”

• Yes, you do have to write a big check for a down payment. And? You have to pay for everything in life. Everything you eat, learn, drink, watch, visit, do, wear, drive – you name it. It costs money to live. Your house contains everything else that you pay for. The difference is, when you sell your house, there is a chance that you will make some money. Not the case with vehicles, clothing, jewelry and everything else you can use, enjoy, experience and then re-sell. You can pay a good solid six figures for an education, but you don’t make that money back the day you graduate. The house doesn’t depreciate like a car does. For many, as soon as you move in and do whatever you are going to do to it, it will either maintain the value or increase it. What James isn’t thinking about is that after you pay for the house, you are living in it. Sleeping, eating, entertaining, relaxing, working – doing everything that you would do on a daily basis.

“Closing costs. Lawyers, title insurance, moving costs, antidepressant medicine. It adds up.”

• Whether you buy or rent, you will have moving costs. Renters insurance is always recommended. Lawyers are paid to protect your purchase.

“Maintenance. No matter what, you’re going to fix things. Lots of things. In the lifespan of your house, everything is going to break. I rent. My dishwasher doesn’t work. I call the landlord and he fixes it. Or I buy a new one and deduct it from my rent. And some guy from Sears comes and installs it. I do nothing. The Sears repairman and my landlord work for me."

• When you own, you fix the things you use. You fix the things that make your house work. It’s called taking responsibility AND maintaining or adding value to your house. If your dishwasher doesn’t work, you get it fixed – you don’t have to call anyone to tell them that THEIR dishwasher doesn’t work. It’s not working to clean the dishes that you bought and could never resell, but rather to enjoy the benefits while you eat the food that costs you money that will only see the light of a septic system that you don’t own either. See James, the non-working dishwasher isn’t yours. And the landlord you are paying for you to live there – you actually work for him/her. You are paying them, probably more than what they need for the monthly mortgage.

“Taxes. There’s this myth that you can deduct mortgage payment interest from your taxes. Whatever. That’s a microscopic dot on your tax returns. Whats worse is the taxes you pay. So your kids can get a great education. Whatever.”

• This is a benefit to home ownership. You can deduct a portion of the interest from your taxes. And the taxes you pay, YES – so your kids can get a great education. It’s one of the greatest gifts you can give your children – a solid educational foundation for their future. What’s next? James Altucher’s “Why No One Should Ever Go to College?”

“You’re trapped. Lets spell out very clearly why the myth of home ownership became religion in the United States. It's because corporations didn’t want their employees to have many job choices. So they encouraged them to own homes.”

• Home ownership is not a myth, nor a religion. Strong corporations want strong employees with a solid foundation and happy family life. It’s why relocation companies work tirelessly to keep employees and their families together. Happy employees are employees who are more productive, more attentive, and more focused on getting the job done, and done well. So, then they can go home to their family who isn’t complaining that the landlord hasn’t returned their calls and the dishwasher that keeps breaking is on the fritz again.

“Ugly. Saying 'my house is an investment' forgets the fact that a house has all the qualities of the ugliest type of investment: Illiquidity. You can’t cash out whenever you want.  High leverage. You have to borrow a lot of money in most cases. No diversification. For most people, a house is by far the largest part of their portfolio and greatly exceeds the 10 percent of net worth that any other investment should be."

• Unless you are going to live with your parents rent-free, the opportunity to make money on a house will always be more of an option if you own, rather than rent. I am just as, or more so, aware than most about the state of the market and the activity - and decline during the past few years. I am sensitive to those who did not make any money, and to those who wound up writing checks at the closing. However, a house was never intended to be a vehicle for investment. It is your home. In many instances, home values do increase and when it is time to sell, homes may be sold at a higher price from when the owner bought. This is a bonus - this is not the primary reason why people buy. While some may prefer to rent, once you start paying — let’s say $1,600 a month — at the end of five years, you have now given your landlord at least $96,000. With renting, you can’t cash out whenever you want because the only cash you will receive is your security deposit – and that is only if you leave when you promised you would. If you go whenever you want, you may forfeit that, too. You give your money to the person who was smart enough to buy and rent to you – no chance of getting it back.

The following are James Altucher’s personal reasons to not own a house. Below, you will find my personal reasons TO own a house.

“Trapped, part 2. Some people like to have roots. But I like things to change every once in awhile.  No hassles. I like to live a hassle-free life.”

• True. Some people like to have roots. Some people don’t. If you like stability, a sense of community, to not ask permission to do anything, to pay yourself instead of someone else, and don’t want to move every year to various parts of the country, home ownership is a smart decision. Hassles are in the eye and mind of the beholder. What one person considers a hassle, another views as just one more thing to accomplish. It's the difference between drama kings and queens and those who are more matter of fact. Something as basic as going to the supermarket can be a hassle for some, and for others, it’s enjoyable. 

“Walls. You can’t change the walls when you rent. A lot of people seem to want to tear down walls. Or paint them. Sometimes when you rent you can’t do these things. I don’t get it. I like the walls to stay right where they are.

• Generally, you can’t change anything when you rent. The walls, the floors, the ceilings, anything that would contribute to making the home “yours.” When you own, you get to do whatever you want (unless you require town/historic commission approval). It's the human act of the right brain – to express yourself, your creativity – to make a house your home. Knocking down walls is an expression of freedom. Knock them down if you want to, add more if you want to – open the room up, keep it closed – do what you want. It’s yours. It’s one of the reasons why people have emotional reactions to houses.

"Rent. People will argue that the price of the mortgage, maintenance taxes, etc., is all baked into the price of rent. Sometimes this is true. But usually not."

• People argue this because it is usually true. 

"Psychology. Look at your personal reasons for wanting to own. Examine the real reasons you want to own and make sure they are coming from a good spot in your heart."

• I completely agree. And if you have a financial choice and you lean toward renting, you should look at why committing to something scares you.

“Your time. Do you really want to spend all that time working on your house? Is this where your time is best spent towards creating a happy and fulfilled life for yourself?” 

• Not every house requires you do to work during each waking moment. Living in a well-maintained home contributes to peace at home. Living in a house that you can call your own is a part of creating a happy and fulfilled life for yourself. When I posted online that I would be rebutting this article, I received this from a friend from high school:  “I'm a single woman with one meager income living in a home I bought as a fixer-upper. Is it a pain sometimes? Yes, of course. But EVERYTHING in life is a pain sometimes. I bought a house because my previous landlords went into debt and had to sell the place we were living in. They offered us another apartment since we were their "best tenants." Seven months later, they lost that house, too. Having the rug literally pulled out from under me twice in one year like that was enough. I was so upset I said I am buying a house and NOBODY is kicking me out of my home again. Sure, I have to spend summer weekends doing yard work, and yes, things break and yes, it's a large portion of my income ... but home is what you make of it. If you appreciate what you have and if you don't buy "too much house" and live within your means then there's no reason to put up with noisy neighbors, landlords who don't care that a pipe burst at 2 a.m., no decent parking, other people's rules about decor and landscaping, and a MAJOR LACK OF PRIVACY. Owning a home doesn't have to be a trap, and it doesn't have to be a nightmare. It's a matter of picking a home that's right for you, and not doing it to keep up with the Jones'.”

“Choices. I feel when I rent I always have the choice to leave. To live wherever in the world I want whenever I want. Adventure becomes a possibility even if I never take advantage of it.”

• Aside from being a fleeting fantasy of everyone at some point or another, eating, praying and loving all over the world, living the world one outward bound adventure at a time is not realistic. Whether you live on your own, or with one person or with a family, having a sense of stability and not living in between has significance. Yes, it is always nice to have a choice. You can choose where you live, where you spend your time, where you eat, with whom you spend your time  – and it can have absolutely nothing to do with whether you rent or you own. A hassle-free life would be fabulous - if it were at all possible.

“Stress. For me (not for everyone) owning a home equals stress. I saw what my parents went through at their worst moments owning a home. I saw what I and others went through in the Internet bust when I first owned a home. I saw what people went through in 2008.”   

• No question, it can be stressful. I won't forget 2008, either. But you can have stress changing jobs, losing a job, moving to another state, getting divorced, dealing with death – these are the highest causes of stress. You don't suddenly stop working just because your job is stressful. You don't avoid things because it has the potential to be stressful. It's a matter of how you deal with stress – renting can be equally as stressful. As a classic Type-A, I also know that relying on someone else to do everything for you can be very stressful. When you rent, nothing is in your control – except when you move out. And that is never 100 percent in your control – it is actually up to the landlord. This is life, and to own your own home and to be in control and responsible for your life and the home in which you live is invaluable. 

“Cash is king. I like cash in the bank. I like having access to it.  I don’t like it all tied up in one illiquid investment.  I want to fill a bathtub with all the dollar bills I would’ve used as a down payment on a house. I want to bathe in that bathtub. I’m going to do that later today in fact.”  

• This visual of James and his dollars in a bathtub  – not sure how to respond to this except to recall my mother Carole Daniels’ reaction when she read it: “After reading the article, it appears that James wants to sit in his bathtub with all of the money he did not spend on a down payment. After he runs the water, the money will be wet and it will all go down the drain.” Of course, my thought is then that James would have to call his landlord to unclog HIS tub. Where is the money now?

"By the way, this is going to sound like a contradiction, but I think housing is a great investment right now. I think housing prices have gone down far enough and I can list the reasons why housing as an abstract investment concept is going to go higher from here."

• I am so glad that James and I actually do agree on something.