Posts Tagged “home”


  • It is better than coming home to a rental. There is a sense of increased comfort when everything is yours and you know that if you don’t like the way the kitchen is…you can tear it out and make it how you like. (Not that I’m likely to do that, but the thought is comfortable.)
  • Women LOVE houses. It is almost orgasmic for them to talk about a home, to talk about “fixing it up”, to add to it, even just to look at a home. When you own a home, you are instantly more attractive. Unlike the argument with penis size….bigger is definitely better when it comes to house size. I think there is some kind of nesting gene in women that make them coo over houses.
  • Also, since I rented a piece of someone’s house previously, as a homeowner I now know I won’t disturb anyone if I want to perform ancient rituals, practice witchcraft, walk around dressed up as a zebra, or anything else that might strike my fancy. The freedom is nice…but as they say: Freedom is not free.


  • It ain’t free. Spending money is a huge stressor. It doesn’t even matter if you can afford it. The act of spending money itself, when you know you work so hard for it, is stressful. I think this is a man thing as women seem much better about spending money when they know they can afford it…since many are even able to spend stress free when they can’t afford it.
  • It is a time vacuum. It is never “fixed”. A home is always under improvement. There is always something else you can do, until you’ve done it all…at which point what you originally did is out of fashion and so you must upgrade again, but unlike this season’s new clothing…home improvements are expensive.
  • It requires a new set of skills. I am not a plumber, electrician, carpenter, engineer, brick-layer, etc. Whoever said there are no more blue-collar jobs…think again. I know we’ll never outsource these jobs to India. Also, I can do some of my own work…which I’ve done. Replacing my toilet I thought: “I save alot of money doing it myself…but is it worth it if I leave on vacation, the seal breaks, and floods the second floor?”.
  • The asset itself is a stressor. Like a stock, its value can fluctuate…and as your biggest asset, it is stressful to think about losing it. What if I lost my job? What if my home were swept away in a flood (floods aren’t covered by homeowner’s insurance)? What if my policy is crap or I don’t have the right things covered? What if the entire housing market tanks (which we might see)? What if alien’s attack (is that covered)?
  • It will not make you any happier (not many things do). When you add up the items I’ve outlined above (and the ones I can’t think of right now), I bet I’m LESS happy with a home. You quickly acclimate to the fact that its your own place and you can walk around naked it you want. The freedom and comfort is nice…but again, does it outweigh the added stress? On the flip side, I will also acclimate to the stress eventually, and it will seem like its not even there. At least at that point I’ll have a house out of the deal. I remember when I first got out of graduate school all my student loan debt really got to me…to think about owing that much money when I didn’t even have a job. Now I don’t care. That debt will be with me until I’m retired.
  • A home is a warehouse. It stores inventory and YOU stock it. Just like a business, sitting inventory eats into your bottom line. It will nickel and dime you to death when you originally stock up on home wares: Dishes, vacuum cleaners, sets of linens, sets of trash cans, lamps, tools, towel racks, night stands, etc, etc. People say to me about this observation: “Yeah, but you do it once and then you always have it.” My thought, “So what? You can say the same thing about herpes.”

Maybe next time I’ll write about “eating out versus buying groceries”. It is a myth that it is cheaper to eat at home. I can demonstrate it mathematically.


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Or more to the point: does it make sense for me?

In a word, No.

I’ll explain why: A 150 to 200k dollar mortgage ends up between $1000 and $1200 bucks a month. Then you add on internet, gas, power, maintenance, cable, insurance, etc, etc, etc. The price is getting up there past $1500 bucks a month…not cheap for one person (me).

Currently, I pay a ridiculously low rent of about $500…that includes power, gas, internet, etc.

You can run the numbers on that as many times and as creatively as you like: Its a better financial decision for me to stay where I am…period.

But what about the tax write-off? After its all said and done that may lower my monthly payment by 100 to 150 bucks…no where making up the difference. Additionally, the vaunted tax break on mortgage interest really is no tax break at all, but simply avoids double taxation. How? Easy…you still pay tax on the value of the asset (property taxes). If you paid tax income tax on the mortgage interest and paid property taxes, you’d be taxed twice on the same thing. There is no real tax break for homes….simply the lack of being double taxed.

Additionally, even the mortgage interest you do write off is only eligible once you pass the standard deduction. If you can’t reach that, then there is no deduction at all.

But what about the equity? You don’t really get any in the first 5 years. Most of it is interest. There isn’t much difference between rent and interest.

But what about the small amount of equity you would gain? Yes…I would get a small amount. But I currently get another kind of equity each month paying rent that is very useful: Cash. The difference between my mortgage and rent ($1500 minus $500)….about $1000 bucks a month…is mine. I build a thousand bucks of equity every month by not buying a house. (In reality I spend some, but not all, of that. If I bought a house I would have to change my spending habits…which isn’t all bad).

But houses are good investments? A) Uhh…..not in my situation. B) I’m tired of hearing that “home values always go up”. The Titanic was unsinkable. The world was flat. Yeah, yeah, yeah. The fact is that they are dropping now. Yes…this very quarter.

But they go up in the long run? Uhh….in the long run we’re all dead. In the medium run though…not always. In Japan the market has been depressed for over a decade. In economics there is the concept of “no money left on the table”. If houses ALWAYS went up; everyone would buy them…thus driving up the prices. At some point the price becomes overinflated….and it must drop. That time might be now…or it might not, but to say “home values always go up”….that just isn’t true. In finance there is also the concept that “past performance is not an indicator of future performance”. I don’t care if housing has ALWAYS gone up in the past. That doesn’t mean it always will in the future.

Here are some other myths vs realities about home ownership.

Regardless, I’ve been looking pretty hard for something. I’ve seen just about every home and townhouse in the Smyrna area at this point. Why?

Well….if I’m staying in Atlanta, which seems to be the case since I’ve gotten a job I want….then I might actually LIKE to have a house. It may not be the best financial decision, but it is not a bad decision if that is what I want, and I can afford it.

I will say to those who buy a house because it is a “good investment”…you are speculating. If you’re going to speculate, you might as well buy stocks, or start a business, or even gamble. If you buy a house, fix it up, and try to sell it…you are speculating. You are running a small business. Nothing wrong with that…but lets call a spade a spade.

Buying a home is about wanting a home, and making a commitment to a place. If you start talking about doing it for the purpose of making money…then I hope you know about homes…because its the same concept as knowing about stocks, or a particular industry. The only thing that makes real estate speculating less risky than other types of investing is that there is less volatility. Home prices go up a little, or down a little…they don’t peak and trough nearly as quickly as stock prices (as a general rule).

Home buying also does not have the upside of stocks, or owning a business. A home remains a home, and the land remains much the same. The demand is much the same (unless there is a large, immediate influx of people with money to the region)…and the supply is much the same (it takes time to increase supply and it will never fluctuate wildly, unless there is an earthquake).

Stocks/owning your own business though…those can go from zero to a million bucks a month rather quickly. The building and real estate that the business sits on…its value will remain much the same, much as your house will; however, the value of the business, because it performs some other function that can increase in value (the service it provides)….can really appreciate quickly.

The price of a home can only appreciate as quickly as more people move to the area that have money (which increases demand)…or you happen to own a house that has features that are in vogue (which increases demand). Increases of supply (building more houses) decrease the value of your home.

But home prices do appreciate, right? Yes. For two main reasons (yes, this is a simplified explanation): 1) Inflation. Home prices largely track inflation. Since that runs at 3.5% a year or so…your home price does increase. But that is an illusory gain. 2) Increase in GDP: The economy itself (mostly productivity) grows at 3% or so a year. As total wealth increases, people are more able to afford homes. (You can argue, that its JUST inflation that matters. With a fixed money supply (notes in circulation), economic growth actually produces deflation, which would cause your home value to drop..even though it was actually worth the same amount in absolute terms.)

If homes aren’t really good investments, then why is everyone so high on them? 1) You can live in them. You can’t live in a stock certificate as an investment. That is hard to beat. 2) They tend to work out as investments. The reason being that they FORCE you to save money on the tail end of the loan when you’re building equity. Most people wouldn’t save any money otherwise, so it seems to work out for them. If they’d been more financially disciplined and invested the extra cash in the stock market…they might have come out ahead. But because no one does that, its useless to talk about. Home ownership IS a good investment for most people, because it is their ONLY significant outlay of cash that has any chance of appreciating…and it usually does…a little bit.

Lastly, yes….on the tail end of your loan, when you get to that point…its a good idea. You are essentially not paying ANY rent anymore. All the mortgage value goes to equity.

So…..will I buy a house? Yes…mostly likely, because I want one. It won’t be my best financial decision though. That would be to live in my parent’s house, never buy anything, save everything, invest heavily in the market, and wait to retire in a Central American country. I’d be living on the beach in Panama like a king (maids and all) by my early 40s…..and never work another day for the rest of my life.

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