How important is it to own your own home?

Eric Ringham March 15, 2012, 5:00 AM Mar 15, 2012

Despite low interest rates and good incomes, fewer young people are buying houses. Today’s Question: How important is it to own your own home?

The decline and what it means for the housing market are discussed today on The Daily Circuit.

About the blogger

Eric Ringham

eringham@mpr.org

Charlie Peliska

That was a great Atlantic article! With the skyrocketing costs of education, many young people who are getting out with a college education are barely able to afford their own rent. Add up loan repayment, car payments, car insurance, plus any other insurance (health, life, etc.) there is hardly money to pay for an apartment, much less being nickel and dimed by a house which included not only the mortgage, but then all the different utilities, taxes, house insurance, and any other areas which a bank would require a young lender to take out in order to buy a house. Once established, it IS important to buy a house, but it’s getting harder to get to that established point when already starting out life so far into the hole with all the other points the article brought up.

Rich

Younger generations can’t afford to pay as much for housing as older generations, because they are poorer.

Rising housing prices are good for older sellers and their lenders, not younger buyers. They aren’t a society-wide good because they don’t increase society-wide economic well being.

Younger generations of Americans, adjusting to their own diminished circumstances, are more likely to want to live in smaller housing units in walkable city centers where they won’t need cars. Multifamily development is increasing as a market response.

So what is the federal government doing? Borrowing (or printing) money younger generations will have to pay back, to push them to buy larger suburban houses they cannot afford, and will end up selling for less.

All the massive support has gone to existing one-family homes, not new multifamily development even though the private sector is pointing the other way.

Subsidizing older genrations, banks, and suburban sprawl.

Steve the Cynic

I think it’s a good sign that young people are realizing that owning things is not an end in itself, but a means to other ends, and if one’s goals can be met without buying a house, buying can be more trouble than it’s worth.

Ownership of things is overrrated. Private property, and respect for property rights, is a useful social construct that helps set limits on ways people abuse and exploit each other and what they can fight about, but it’s ultimately a human invention, not something inherent in the nature of the world. Consequently, all ownership is temporary. The instant you die, you own precisely nothing.

david

I can say buying a house was the worse mistake I ever made… At least buying a first house in 2008 was. I had been trying to buy a house for 10 years, but the prices were climbing faster than my income. Saving enough for a down payment was nearly impossible, as that target was constantly going up too. I finally went back and finished school, got a good job, and sacrificed to get into a modest home. That home is now a prison. I’ve lost 53% of its value to date. After being laid off I spent a year commuting 130 miles a day to a new job because I couldn’t sell it. Wells fargo was no help until every last cent of my savings was gone, and my credit card was nearly maxed out in an effort to keep it. They finally came through after 2 years of effort with a “modification” the week I got my old job back, only extending the mortgage back out to 30 years, and making my prison sentence even longer. I wish I knew what I knew now and just walked away the day the bubble burst. I could have rebuilt my credit, saved a new down payment, and bought the exact same house for less than half of what I originally paid for it. Live and learn. On the plus side this got me active in our political process, as I vowed to do my part to not let something like this happen again.

I don’t blame anyone for being hesitant in buying a house. My only solace is that my house payment is slightly lower then renting it would be. Buying the house at its current market value would have a payment way lower then it’s rental cost. And there is the comfort of not having to deal with a landlord.

Jen Mays

I think the market is shifting how important we deem home ownership to be. I bought my first and only home in 2005, mainly because a) I considered it important and b) purchase prices were going up so high, I was actually worried I would not be able to afford a house if I didn’t act then. (Oy, vey, what I wouldn’t have given for a crystal ball regarding home prices!) Now, I think what I really bought was the “opportunty” of worrying about foreclosure and becoming an unintentional landlady, since it would not work to sell my now severely-underwater property. If I were new in the market today, yes I might still buy, but I might be more apt to leave the worry to someone else.

Mark in Freeborn

It’s a good thing for many, but not so great for many others. I own a home in a small, rural town, and with property taxes increased by 8% this year, and water/sewer/garbage rates increased by over 100% starting this year, I’ve noticed a big increase in the number of empty houses around town. I don’t see many of these houses selling anytime soon, and so, although I would like to sell mine, it seems pretty impractical in the current economy. It’s hard to imagine why anyone would want to move to a town that seems hell-bent on driving its residents away with unsustainable increases like these. Unfortunately, I think many small, rural towns are in a similar boat. No surprise that so many flock to the Cities and the suburbs and away from out-state Minnesota.

david

Sorry typo, I bought my prison in 2006 not 2008.

Gary F

Buying a home is a great thing, if you can afford it.

The sense of pride and responsibility is great and is character building. It’s good for neighborhoods to have the houses owned and lived in by their owners. People take care of their property and neighborhoods better when you have skin in the game.

But we can’t encourage or entice people to buy houses if they can’t afford it.That is what started the whole mess we are in right now. If you can’t afford it, no government agency needs to pressure a bank to loan to you.

Jim G

The dishwasher is broken and is being replaced today. Before that it was regrading the the yard to solve a water seepage problem. Then there was the a new roof, and we needed to replace the driveway after the roofing trucks broke up the old brittle one. Also on the list are remodeling the new kitchen cabinets, new hardwood floors, the master suite remodel, and let’s not forget the sump pump going out on the day we left for vacation. Ah, yes our house is our castle and a financial sump pump that empties our bank account at random and inconvenient times. Wouldn’t have it any other way!

Drae

It’s more important for those about to retire than it is for the young. Retired people do not want to end up homeless.
Amanda Harvey

I am 25, married, and bought my first home this year. It was really important to me to own a home so that I had a sense of belonging in my community. I save $300 a month over paying rent. Plus I don’t have to move every year, paying for water, electric, and internet hook up costs. It’s great to have my own land because I don’t have to ask for anyone’s approval to do something on it. I have planted vegetable gardens and have plans for raising chickens, this will ultimately save money on groceries. Home ownership has been a great experience for me.
CJ

I disagree with Mark from Freeborn. I live in a village in west central MN and I bought my two story 3 bedroom house on a double lot with double garage 18 years ago for $20,000. I think the value went all the way up to $40,000 a few years back but now it’s at 20,000 again, so my taxes actually went down. I love this place, love small town life and knew when I bought my home, I’d leave it in a pine box. I intend to get some remodeling done to it to make it easy for an old broad to get older. I’ve grown gardens, planted trees, built a greenhouse and basically made this place a refuge for my soul. I wasn’t ready to do all that when I was in my 20s. I was still a gypsy. Now, I’m glad I settled in a gentle place; a small town that’s managed to find creative ways to stay viable and welcomes a diverse population so it can stay viable into the future. So what if it’s not a liquid asset. Buying a home was a gift to myself, not an investment. I wonder what the young city folks would make of a place where a home can be bought for less than you’d pay for a single car garage in the cities. I feel like we’re the best kept secret in the state but one day, they’re going to come around and figure out this amazing place where you can set roots and still have enough cash to travel.
Carrie

Buying a home is not for everyone. Don’t let banks and realtors talk you into a home you know you cannot afford. It’s up to you to figure that out. If you can afford a home go ahead and buy one but it should be looked at as a roof over your head. Nothing more, nothing less.
Rich in Duluth

For us (at the time in our mid-20s), it was important because buying a house fit with the life style we wanted. That life style included room for the kids to play away from traffic, to do gardening, solar and wind energy projects, and space from our neighbors (we are on 4 acres). In addition, we wanted to settle in one location and make a life there. We were willing to do the maintenance and remodeling mostly ourselves. We were willing to be frustrated and fix it ourselves, when appliances quit working or the well ran dry.

Before buying, we thought carefully about our expenses and our ability to pay them. We were making less than median income, but we had some savings and we did without a lot of things, so we never lived from paycheck to paycheck. It helped that we were willing to purchase a home slightly below our means, with the intent of improving it as we could. We put 10% down and paid off the 7.25% loan in 20 years.

We didn’t buy the house for an investment; we bought it as a home for our family. So, we’ve been in this home for 39 years, and hope to be here another 30 years. We’re glad we made the decision to buy a home.
Kent

We’ve been soured by the greed and corruption in the lending and realty industry and are renting from my parents. It’s really too bad that these organizations continue to strive and are offered incentives when they are the source of these problems.
the militant man and his yam racks from hell

As long as the gap between the uber wealthy and the impoverished continues to widen, there is no ‘owning’ anything. The wealthy have the monopolies of most everything and can undermine your existence with ease.

There is no stability in the economy and employment. Taking out loans puts the banks foot into your welfare and I wouldn’t advise giving them the opportunity to do so. Buying a home involves a huge gamble these days of putting alot of work into something that can be taken away by loss of a paycheck.

We need to cap the wealthy and the inheritance that it provides so that equality and rights remain available for everyone.
Gordon near Two Harbors

Critically important. Isn’t having a place that you actually own part of the American Dream? If you don’t purchase somethng beyond your means, and have some discipline,you can pay off a home in 15-20 years and never have to worry about someone kicking you out or raising the rent.

You also end up with an asset you can pass down to your kids or sell if you have to.

Renting is just paying someone else’s mortgage and throwing money down the drain.
Ann

Having a lawn is the worst part. It is a waste of time, energy, and resources. The neighborhood stinks whenever a lawn is sprayed.Who knows what it does to the water and environment?. Being assessed thousands of dollars for street and water upgrades is also a negative aspect.. It takes hours to rake up the leaves that blow in from other yards. Fixing the driveway and roof are expensive. There aren’t any jobs. It is difficult to move when you live in a house.Living in an apartment isn’t a perfect alternative. I lived in a fairly nice place and there were some pretty bad fires in the buildings.
Rita Resendiz-Abfalter

Owning my own home is very important to me. It is a great investment despite the current housing market. We bought a home that needed some tender loving care. It was a diamond that needed polishing! I rented for many years, became engaged and it was finally time to buy a house. Buying a house gives you a feeling of satisfaction. Final note, I thank GOD every day for my husband who is a carpentry contractor. Without him, my house today would not be a reality.
Amanda B

At almost 30, it’s not important to me right now. My rent is not thrown away, just like the money I spend on food or clothing is not thrown away. The resale market for homes where I live is dismal and my crystal ball is just not good enough to predict when or if it will change. It’s fun to help friends with home projects, but at the same time I’m glad I don’t have to worry about, or pay for, it. My landlord and lady and wonderful people. Maybe someday, but I don’t think the pressure to buy a house is like it used to be.
Steve the Cynic

It’s interesting to see how the real estate mafia have perverted the language over the years. When I was growing up, there was a clear distiction between the words “house” and “home.” You could buy a house, but you had to make a home. The first time I heard a real estate ad use the phrase, “buy a home,” I was irked by the blatant emotional manipulation involved in that terminology. Sadly, it has now become standard, so that the useful distinction between house and home has been completely lost.
John

Its more important to own your own gun, gold, and have an escape plan from the US in the next 2 years. My recommendation is South American countries.
Steve the Cynic

The sense of pride and responsibility is great and is character building.

I’d rather take pride in something that actually matters, like how the way I live my life actually benefits others. What I own is largely irrelevant in that regard, private property being a mere legal fiction.
Gary F

The sense of pride and responsibility is great and is character building.

“I’d rather take pride in something that actually matters, like how the way I live my life actually benefits others. What I own is largely irrelevant in that regard, private property being a mere legal fiction.”

And I still have time to volunteer at my church, my son’s school, my industry organization, and my community,
Steve the Cynic

That’s fine, Gar F, but any pride one takes in home ownership is still based on the mistaken idea that owning things matters. Are you a human having, or a human being?
Gary F

If owning a home means a reward for working hard and making prudent decisions in my life, then I’m a human being.

If owning a house means that I provide a home for my family, for their security and something we can call our own, yes.

If owning a house means that I have equity that I can pass on to my son some day or provide for myself and my wife into retirement, yes.
Steve the Cynic

Then you agree with me that ownership is not an end in itself.
David Poretti

Home ownership is valuable to the stability and long term viability of a community. The homeowner takes on a greater responsibility than just their “stuff”. Renters are often much more transient, and less likely to get involved in neighborhood or community quality of life issues. Like any relationship, the more one has invested into it and the greater the perceived rewards, the stronger the commitment.
Steve the Cynic

“Home ownership is valuable to the stability and long term viability of a community.”

Right. The community is what’s valuable, and to the extent that home ownership helps with that, it’s good. To the extent that people naively accept the idea that owning the house you live in, by itself, will raise your overall happiness, they’re setting themselves up for serious disappointment.