Monday, February 17, 2014

Buying A House May Not Be The Best Thing For You

Like most other members of Gen X and Gen Y, I grew up hearing about how buying a house is the best investment you can make. It's not. At least, not in all cases. There are times when a house can become an anchor around your neck, holding you back from being able to make better choices in your life.

Writer "Anton McDowell" at Return of Kings (I placed his name in quotes because many of their writers use aliases) put up a post about 7 Reasons Why Buying A House Is A Terrible Idea. I concur with him.

No, I am not saying that buying a house is a global binary choice, where every single person on Earth either buys a house or nobody buys a house. That's stupid. Like the other choices you make in your life, you have to decide based on pros and cons and research what option works best for you. Not for your dad, not for your coworker, for YOU.

In my case, several years of bad choices during the housing boom left me with an upside down house I couldn't get rid of for seven years. Then in the divorce last year, the only option I had was to put it up for short sale. The house closed a few weeks ago, finally. And in addition to crushing amounts of debt from the divorce, now my once stellar credit is shot.

Being stuck in an upside down house limited my choices severely. When I lost my job in 2010 and the job market was poor in my area, I was able to get a decent job in Virginia. But I could not move my family because of the upside down house (no, I wasn't going to rent it). I don't think three years as a geographical bachelor was what ended my marriage, but it sure didn't help. But because the house was so badly upside down, I had no choice. And I had to pay to live in two places.

For all the positives of a house, there are some serious negatives. Your municipality laws are bad enough; throw in an HOA and you have to live under even more rules. Some of them are comically stupid. When I owned a condo in 2000-2001, the HOA had a really stupid policy about trucks. As in, they couldn't park there at any time or for any reason. If you were having work done, you had to get approval from the HOA for the contractor to park a truck or van. I was once threatened with a $25 fine because my ex-wife (girlfriend at the time) had her pickup parked there for less than 5 minutes. That's right; if a friend owns a pickup truck, they can't stop by for coffee. Or to drop a DVD off.

Trash was always fun when I owned a house. You have to separate your recyclables from regular trash. Oh, and you're only allowed 5 trash cans or bags or combination thereof. You can sometimes bribe the garbage men. They'll take almost anything for a $20. 

Some municipalities issue you a trash can, and you can only throw away at each trash pickup what will fit inside it. A neighboring township in New Jersey took all the issued trash cans and replaced them with trash cans that had pink ribbons. You apparently didn't have a choice but to use the trash can with a pink ribbon, whether you support the cause or not (and I don't). I support my own causes. I shouldn't be forced to support anything just because some municipal bureaucrat thinks everybody should.

In New Jersey, nobody had done a tax assessment in years. So they decided it was time. At that point, my property taxes were calculated on some past value of about $80,000, and even then my property taxes were $5500 a year. I had just refinanced the house for $180,000 thanks to my bad decisions during the housing boom when I was naive enough to listen to the opinions other people pulled out of their asses. I was terrified of what was going to happen to my property taxes. Oh, and the appraisers the government hired; you had to let them in your house. You know, so they could appraise it. You had no choice in the matter.

Somehow, none of this got finished before I sold. Whew! What would really suck is, after the bubble burst, housing values in that area tanked. My short sale price was far less than I bought the house for in 2001. They got a good deal on it. So imagine having your housing value for property taxes recalculated during a boom, only to find the values of houses in your area drop like rocks in the bust. How many more decades do you think it will be until they reassess property values for property taxes again?

Before I go on too long, stop basing your life on the opinions other people pull out of their asses. Buying a house is NOT always the best option. Sometimes it is. Sometimes it isn't. It all depends on what YOU want out of life. If you're going to settle in one area and be there for a long time, it could be a great idea. If you like to be mobile, renting might be a better fit for you.

I'm tired of hearing people say "If you rent, you're just throwing money away." No, you're not. It's an economic transaction between yourself and a landlord. And there are scenarios in life where this is better for you. Water heater bust? Put in a work order. If you own a house, a water heater can run you hundreds of dollars. Toilet clogged? Work order.

My ex and I had to absorb some family members due to economic reasons (theirs, not ours- long story, and it put a LOT of strain on us financially and otherwise). One of them was really good at clogging toilets to the point where a plumber had to be called out. The plumber they liked to call would usually charge $300.  This usually happened when I was at work, so I'd get home to find out a check was written for $300 to unclog a toilet. They really loved that plumbing company; at least as long it my account paid for it. This is a scenario where renting an apartment is preferable. "Hello, maintenance? Shitter's full."

Sure, there are drawbacks to renting, especially in apartments, such as noisy, uncouth upstairs neighbors who can't even roll over in bed without making a noise and who spit and throw cigarette butts of the balcony. Some of which land on your car. And if they have children and are shitty parents, there's lots of running, jumping off furniture, crying, and screaming. And meltdowns on both the part of the children and the shitty parents.

But there are occasional times when it's a better deal for you.

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