According to popular belief, buying a home is a sound investment to take you into retirement, and renting is considered a waste of your hard-earned money. Having grown up and lived now in three countries where the landlord is king this belief has always been ingrained in my brain. In countries like the UK it is quite common and considered very sensible to not only own a home at home but abroad too and to keep expanding your property portfolio. I have heard that in many countries, like Germany and the Netherlands, renting for life is far more common and there is little to no societal pressure to be a homeowner.
Millionaire Mommy Next Door has an interesting argument for renting we don’t often hear:
I calculated the total cost of living in our [purchased] home. Due to our sweat equity, our mortgage balance was very low … but once I added property taxes, insurance, maintenance and, especially, lost opportunity costs (home equity not available to earn money), it became very clear that our shelter “need” was costing us too much in life energy.
Her arguments are based on solid calculations and they are guaranteed to astound you. She discovered that your home purchase doesnt even break even after 30 years!
via
Wall Street Journal,
“Economic studies have demonstrated over and over that houses (1) cost more than most people make when they sell and (2) rarely match the long-term returns of stocks or other investments.”
“The costs of owning a home — buying it with a long-term mortgage and then paying taxes on it, insuring it, repairing it, renovating it — sap most of what most homeowners think they make in price appreciation.”