Is owning a home a liability or an asset?

Beware of the Money Pit!

Owning a house might give lower returns than the market but the peace of mind it gives you is massively understated. I would say that it's worth it

Well a mortgage is rent to own, basically.

you "have" to pay your taxes or HOA, but in some states there are even laws where past an age they can't foreclose on that basis while you are alive. so it's only a hard and fast rule through the retirement age. then, if you don't care if anyone inherits or your house has a lien, you could forego it.

guy down the road a little has a fence falling over and his house is a falling apart mess. but it's "his house." up to the point maybe the place gets condemned, you can live for free in a house you own that is falling down, and not do maintenance.

in older age, the deal is that they will still expect your rent check or you will land on the sidewalk on your kiester with cardboard boxes. when people retire and are on a limited retirement and fixed social security, such things matter.

The main benefit of owning a home versus renting is that it is a hedge against inflation. I bought my house 16 years ago. Back then, renting a similar home in my area cost about $2,000 a month. My mortgage started out at around $2,500 a month, included taxes and insurance. Today, renting a similar home would be at least $4,500 a month. My mortgage has only gone up to about $3,000 due to taxes and insurance going up. $4,500 a month does not include renter's insurance, which you really need to have when renting a house. And having a family makes renting even more difficult. My neighborhood was full of rentals when I moved in, but as it gentrified many of the rental properties sold to house flippers. $4,500 a month would not get a house on a nice street like mine. It would be something closer to the busy thoroughfares or highways. It would cost closer to $5,-6,000 a month to live on a nice street like mine that is quiet, close to parks, etc. And those properties also change hands often or are people in the energy biz who are doing a few years in Saudi or Malaysia. To be in a rental house for 15-20 years in my neighborhood would easily require a half dozen moves. And most of the rental homes require the tenant to maintain the property and pay for any repairs.

The Volatility Crisis has chopped pricing across the world, every security, every dollar has dropped. See youtube for more.

we have hurricanes here. if a natural disaster comes through and wipes the place out, you cannot insure the apartment itself, which you don't own, only your stuff, and you no longer have a place to live, and zero equity or insurance to start again with, beyond a contents settlement check.

if the market crashes, depression happens, or AI/robots take everyone's jobs, you may be out of work, you may run out of benefits, and you don't "own" anything to live in. you rent. using a salary. that you no longer have.

you live in the family home, or buy your own place, and have made your payments, you lose your job tomorrow, taxes or a mortgage might be an issue, but a literal home owner at least has that.

as i was saying with my retirement critique, this thread is trying to provoke a discussion that works best for capitalistic, healthy 30-40 somethings, with a job, in a good economy. i thought we saw with the last 2 crashes what happened when jobs and credit briefly dried up.

this isn't really true, if you sell before anything bad happens. your payments pay down the mortgage. if you are able to sell rather than be foreclosed, you walk away with the equity, crudely, the difference between the sales price and how much the mortgage payoff was.

The government massively subsidizes home owning. No reason to avoid it if you can get the capital together.

It's an investment in living longer. Housing insecurity is the single biggest driver of suicidality now. Buy a home, pay it off, eventually you will have the safety net of having a place to live and feeling secure in that. Plus no longer being treated like a second-class citizen.

Depends on your situation. If you are a victim of FOMO and overpaid for a house where the interest and escrow payments are far in excess of local rents for comparable properties in an area where housing costs are declining or stagnant, then I would argue that it is more of a liability. If you didn’t overpay, are in an area of modest growth and can even take on a tenant in a room, the you have a decent asset. The two houses I bought have been good investments. The medical office building I built was a great investment. The first home I bought, I was patient. I didn’t overpay. I put down 20% so that I didn’t have to pay mortgage insurance. I rented out a room to my brother. I put in a little sweat equity and I sold it three years after I bought it for enough profit to cover transaction costs and pretty much all of the payments I had made. Essentially I lived in the house for three years rent free plus a little extra when I took into account interest write offs. The second house has been a good investment. Again, I didn’t over pay. I put in sweat equity. I paid it of in ten years and I have a solid investment that continues to appreciate. The MOB has been a great investment. Again, I designed it well, saved money on construction by specifying and procuring quality materials for less than the CM, paid it off quickly (nine years), and have an asset that provides a steady income stream, has been a wonderful tax shelter, and continues to increase in value as construction costs continue to rise.

If you are under-water its a liability. There are developments in Florida where almost all owners are underwater cuz home values plummetted 50% in 2 years. Home-owners selling now are having to pay the deficit to the bank

I was 8 years old bro... how tf am I supposed to afford a house now

My grandmother owned her home (paid off). When she could no longer live on her own, she sold it and was able to pay for a nursing home for years with virtually no savings otherwise. My parents paid off their house and now can live rent free in retirement. Sure, there are maintenance costs, and some are big like a $10k roof, but that is a 25yr interval, water heater 8-10 years, etc.

I still have a mortgage payment, but refinanced at 3% and make more in an FDIC savings acct. Plus my monthly payment is fixed and has been for >10 years as rents have increased. My salary also went up and so did the house value (3x+). So I can easily afford the monthly and could borrow againt the house if needed.

A renter is spending unrecoverable money every month. Rentals will always be priced at market value which rises over time.

Buying isn't always the best idea, but in most stable situations, it is the better financial bet.

Owning a home is an asset, by definition. A mortgage is a liability (also by definition). Taking out a mortgage to purchase a home is therefore an investment. And like all investments the investor must weigh the risk (that they will default and the house will be foreclosed) and returns (the value of the equity).