'Tis better than to have owned and lost, than to have never owned at all.
> Now, apartments can suck too. Especially in places like the USA where we have a landlord cartel actively pushing up prices, and a professional landlord president who shut down an antitrust investigation into said cartel shortly after entering office.
So rather than ever own a home, just rent. It's about the same as taking a pile of money out into the middle of the street every month and setting it on fire, but what else can a person do?
Die?
While not all stories are like that, many are (in fact most are).
Note that I'm very against cash out refinancing, which a lot of people are doing to get the cash that the house is worth. In my opinion the best reason to have a house is in 30 years it's paid off and now you can live there rent free for the rest of your life.
I am a fairly recent homeowner. Before that I lived in an apartment in the same neighborhood. I like owning the house and having control over the space. I like having a bit more space. But, after I add up home loan interest, taxes, homeowner's insurance, higher utility bills, maintenance, etc., the amount of money that I will definitely never see again adds up to quite a bit more than I was paying to live in an apartment that, square footage aside, was aesthetically much nicer and better situated than the house.
And then, yeah, some additional amount goes to equity in an "investment" that is less liquid and historically earns a lower rate than a decent index fund.
Every day, thousands of folks do emerge from that tunnel and gain the ability to make profound statements like "Well, at least the house is paid for."
This is in stark contrast to renting, wherein: There is absolute certainty that none of the money spent towards having a place to live will ever be returned. It doesn't matter how much is spent: Whether a little, a lot, or a lot more, that money is always just unilaterally gone. There's no chance at all of anything else happening. The odds of winning are nonexistent. There is no light at the end of the tunnel, and there never can be -- it's just inescapable darkness in there.
If you include opportunity cost into the decision, then your contrast can and often will disappear (i.e. renting is financially superior or "winning" in your terminology).
Also, is this an AI comment? Because it's surely poetic about something that doesn't call for it.
When I find these kinds of phrases to be directed my way, it is my most charitable interpretation that it is impossible for anything to be gained from the conversation.
Thanks for bringing this up! We're done here.
So your landlord was renting your apartment to you at a loss?
But it's also probable that the loan is fixed at a lower rate than you can get now, the maintenance costs less if you put a few people on salary vs hiring them for one off repairs, and the utility bills are lower because it's a smaller space.
As a general rule of thumb, the break-even comes out to be about seven years. It can be as bad as 15 years if you get unlucky and when you buy it what the economy does, but by 30 years it is almost guaranteed you are overall money head buying a house.
Although I do have to point out that I did not consider other investment options. If you take an apartment for cheap rent and then invest the difference between what a house payment would be including all that insurance and taxes versus your apartment and apartment insurance (less buy important) - and invest the difference in stocks, that is going to change your financial situation. All those equal that expect to be equal over in the long run. Since by investing, you are investing less money. However, just to make things tricky, in the U.S., we can invest up to a certain maximum in a 401k or IRA, both of which are going to be much better because of taxes, but it doesn't matter if you have an apartment or you have a house, you're at the same maximum. And so someone with a house can get that advantage of that and their future rent is paid for while someone with an apartment is still going to be pay for that apartment all their life.
There's a few other assumptions above. I'm assuming you're relatively young and you're going to live a relatively long life in the same area. Moving houses that's going to change things, apartments are much easier to move. Be the umlucky person who dies young: you won't get to take advantage of either investment.
Overall apartments and houses can both be good things and you need to examine the situation for your own life. Life includes your future, which is of course unknown. Good luck.
Anyone who claims there is a universal answer for everyone is categorically, utterly wrong.
Except you have to live somewhere, it's not like buying a boat. All of these dangers apply equally to owners and renters. Yet the protection you get from owning in that situation is massively advantaged over renting. Lose your job and can't afford your mortgage? Oh no, guess I'll have to take out a HELOC, or apply for forbearance, then wait years to be foreclosed on and declare bankruptcy. Lose your job and can't afford your rent? Sheriff's knocking on the door in 90 days to throw you on the street.