Everyone tells my partner and I to buy a home right now. “Buy a home!” they say, “Don’t waste your hard earned money on paying someone else’s mortgage!”
As if the spark of the idea was good enough in itself to actually acquire a mortgage, buy, and maintain a home. Why people continuously say this to us, I have no idea. Obviously if we had loads of cash hanging around we’d be buying houses left, right, and centre. Buying a home is like the Number 1 preached/celebrated/enforced goal that ever existed. I’m sure a 3 year old would say her goal was to buy a home one day. As I’m not a complete knob, the idea of home buying crosses my mind regularly, but because I’m not a knob, I do not want to buy a home yet.
Home buying and renting are often compared as similar activities. I can tell you they are not. My housing expense is $755 every month, flat, done and over. For $755 I have a one bedroom basement apartment, laundry, heat/hydro/water, cable, and Internet. All this in downtown Toronto where I am a 1 minute walk from the subway. There will never ever be a day where I have to buy a new kitchen appliance, fix the roof, replace the windows, pay property taxes, or install air conditioning (or any installation of any kind, really). There will never be a day I’m surprised with an expense, or require to pay thousands of dollars to fix something out of the blue. I can spontaneously go on vacation, take time off work, or indulge in some other expense because my emergency fund doesn’t have to include new roofs.
This is why one rents. Because the fear of being house poor is not worth owning a home if its not fundamentally important to your happiness. A home is also not an “asset” because assets should bring in money. A rental property is an asset, a stock is an asset, a valuable artwork collection is an asset, but your own home is something you pay to live in, pay money to maintain, and then have a possibility of actually losing money on it, or just breaking even. And if you are lucky enough to make money off the sale, here’s the catch: you will probably just put that money into another home, and probably a more expensive home where the costs to maintain and live in it will be even more expensive.
Now I get owning a home is nice; you can do the lawn up real nice, or renovate it (yay HGTV). And you can reinvest that money into a bigger place or have an “asset (as the bank likes to call it)” to borrow against. But you can also have stocks that do that same thing or other investments that aren’t as risky as home ownership.
I believe the average household debt for a Canadian family is hedging up to $100,000. To me, I’d rather know my bottom line will always be my bottom line and spend money living my life with a sense of freedom while I’m young. I’ll worry about home ownership in my 30s or 40s, when I want my kids to grow up in a family home and have a really fancy lawn.