Getting Over The Home Ownership Myth

Wifey's friend from university posted something on a Chinese Twitter-clone about needing to borrow some money (somewhere in the neighbourhood of $12,000 CAD) for a down payment on a house. As they were looking to get a house, but didn't have the 10% down payment, they were hoping for some help from their friends.

As this breaks our rule for lending money to friends, wifey ignored this post. A few days later, her friend happily posted that they successfully purchased a house for approximately $650,000 USD.

I guess there was some sort of humblebragging involved as the post detailed things like the amortization period (30 years), monthly mortgage payment ($2,000/month), and commute time for her husband (50 minutes one way). I guess the humblebrag is the fact that they bought a house in a relatively major US city. Not sure.

Someone asked why they bought a house. They answered that they felt like that was something they needed to do. That and the monthly mortgage payment would be the same as the monthly rent.

From a purely financial standpoint, it kind of makes sense right? Instead of putting your money towards someone's mortgage, why not put it towards your own?

Only one problem people seem to forget. Your costs are not only the mortgage payment.

You'd also need to factor in property taxes, utilities (assuming your rental was all-inclusive), and maintenance/upkeep.

Seriously. Houses don't maintain themselves. Wifey and I have been living at our house for over 3 years now, we haven't spent that much money on upkeep, but a couple thousand here for storm doors or a few hundred for a hot water tank or a few hundred dollars on outdoor paint and you can see that these costs can add up.

This is also not factoring in the costs of commuting. It doesn't sound so bad, but 50 minutes commuting is a long time. Compared to before, he was just walking to work. Assuming an average speed of 40 km/h, that's approximately 68 km of driving daily. Assuming a car with fuel economy of 8.2L/100km, that's around 5.6L of gas a day. As they are in the US, let's assuming the price of gas is $0.48/L (according to a Google search, the price of gas in their area is $1.80 / Gallon). That means they'll be spending $2.69 each day on gas. Doesn't sound like a lot, but that's an extra $600 a year on gas.

What about insurance costs? Now that he's commuting 68 km daily, their insurance will likely go up. Not 100% sure how it works in the US, but in Canada pleasure driving (using the car once in a while) is much cheaper than commuter driving (using the car daily to go to work).

Of course, all this doesn't even factor in the costs of wear and tear on the vehicle. In a previous post, I believe I estimated the overall costs of commuting (including gas, insurance, wear and tear, etc.) at $0.50/km. At 68 km of daily commuting, that's $34 a day!


Lastly, this doesn't factor in commuting time. Assuming it only took the husband 15 minutes of walking to work, that's an extra hour spent going to and from work. That hour could be better spent with their little girl, or on family time, or even on sleep.

Of course, none of these arguments wouldn't make a difference as they "felt like" they needed to get one.

Sure a house is nice, but spending upwards of $800,000 CAD on a house is kind of silly.

Wifey and I were fortunate we purchased the house when we did. House prices have done nothing but skyrocket after the past few years. Detached homes in our area now go for over $800,000 CAD. Semi-detached homes for $650,000 CAD.

If we were looking into houses now, wifey and I would likely stay renters.

So is there a way to overcome the home ownership myth?

It's not easy. For years our parents have conditioned us to get a house. I mean, it was easy for them, so it should be easy for us too right? Society (media/TV) has conditioned us into thinking that we're not really successful unless we get a house. It's not even just a house. It's usually a bigger house (one of the in-law's friends upgraded their home from a semi-detached to a detached in the same neighbourhood).

The best way, I think, is to not care a lick of what other people think!

Who cares if you're just renting? If other people care, they should be mindful of their own financial situation.

How does it affect them if you're renting? It doesn't.

If anything, you'll have more money to yourself. If you're smart, you'll be able to save some of that money towards retirement.

That's not saying renting is the only way of doing things. There are instances where owning a home is advantageous. It's just with house prices the way they are currently, renting, for the most part, is the cheaper option.

Don't get a house just because you feel you need to get a house. Get a house (or don't) because it's the right financial move for you and your family.


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