{"id":174067,"date":"2014-08-20T04:00:38","date_gmt":"2014-08-20T11:00:38","guid":{"rendered":"http:\/\/getrichslowly.org\/blog\/?p=174067"},"modified":"2019-12-02T23:54:31","modified_gmt":"2019-12-03T07:54:31","slug":"challenging-traditional-measures-of-financial-success-homeownership","status":"publish","type":"post","link":"https:\/\/www.getrichslowly.org\/challenging-traditional-measures-of-financial-success-homeownership\/","title":{"rendered":"Challenging traditional measures of financial success: Homeownership"},"content":{"rendered":"

(This is Part II in a series about challenging traditional measures of financial success. Part I is The “Ivory Tower”: Reconsidering the college investment<\/a>. Part III is The 9-to-5 job: Challenging how we earn a living<\/a>.)<\/em><\/p>\n

Last week, I was having dinner with my neighbor, a magnetic woman with a free spirit and a really youthful soul. She’s been renting the apartment above mine for something like 30 years.<\/p>\n

“Do you ever think about buying a home?” I asked her.<\/p>\n

She laughed. “You know how expensive home prices are here, don’t you?” she asked. Touche. In the Los Angeles metro area, the average home price is nearly half a million.<\/p>\n

“Well, do you ever think about moving?” I asked. “Prices are a lot lower in other parts of the country.”<\/p>\n

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“No, I’m not going anywhere,” she said. “I think I’d rather be a renter here than a homeowner anywhere else. Plus, I love my apartment.”<\/p>\n

From our conversation, I gathered that she’s perfectly happy living as a renter forever. Despite the discouraging prices in my area, it’s still a goal of mine to own a home someday. It’s always been a goal that I’ve had in the back of my head. I’ve always assumed homeownership is a smart financial move, something we should all strive for — become debt free, save money, buy a home, retire. That’s the traditional formula.<\/p>\n

But lately, I’ve wondered: Why is homeownership such a measure of financial success?<\/p>\n

<\/span>The Virtue of Homeownership<\/span><\/h2>\n

Owning land has long been a sign of wealth. It’s almost a virtue. In an article for the Federalist<\/a>, one writer stresses why buying a home is something to strive for:<\/p>\n

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“There is also a powerful social and political aspect to home ownership, one that transcends any particular culture or legal system. There is no more potent symbol of having made it, having achieved even the modest level of economic success and stability, than owning a home — there is a reason we immediately associate it with the phrase ‘the American Dream.’ The pride of a new immigrant family in being able to afford land<\/em> in America is a staple of the immigrant experience.”<\/p>\n<\/blockquote>\n

In theory, sure, it’s better to own something than to rent it. But in practice, it’s not always that simple. The pursuit of the “American Dream” led many people astray, as evidenced by the massive housing crisis. So is homeownership truly a symbol of economic success and stability? If you’ve done it responsibly, maybe it is.<\/p>\n

<\/span>The Cost of Renting<\/span><\/h2>\n

It’s long been put to me that renting a property is, simply, throwing your money away. I guess you can see it that way. When you rent as a retiree, your monthly payment is part of your retirement expenses; it’s not money you’re putting toward an investment. You also have less control over your living situation.<\/p>\n

I’m certainly not going to argue that, in theory, owning something makes more sense than renting it. Renting comes at a cost, yes. But I’d argue you’re not exactly “throwing money away” by renting. You do get a place to live in exchange for your money, after all. My neighbor, for example, loves her apartment. For her monthly rent payment, she gets a great place to live in her favorite city.<\/p>\n

<\/span>The Cost of Homeownership<\/span><\/h2>\n

Beyond the down payment, there are a handful of other costs associated with buying a home. You have to consider:<\/p>\n