On Home Ownership


I bought my first house in 2012.  I moved from South Dakota to Chicagoland in May after completing grad school to start my firs job.  The housing market had collapsed, the housing bubble burst, and Illinois was 4th in the nation for foreclosures.

My wife and I were looking for a place to rent but couldn’t find anything.  Everybody that was getting foreclosed upon couldn’t buy, so the rental market was insane.  Every time we looked at a place, by the time we got our background check check (check to pay for the background check) in, the place was rented out from under us.  We were panicking.  I needed to start work and had no place to live.  On realtor contacted us.  We had looked at three rentals in the same development, our credit was excellent, if we could scrape together a minimum down payment, we could buy for cheaper than rent.

We ended up buying a place across the street from a rental we looked at.  Mortgage/HOA/escrow/etc was $1450/mo for 3 bed/2.5 bath, 1,650 sq-ft.  The rental was $1750 for 2 bed/2.5 bath + loft, 1,450 sq-ft.  The house cost $197,500 at the height of the bubble when the last owner bought it.  I got it for $147,750.  The seller hated me, because I was getting $50,000 of free house from them.

My grandmother gave me the 5% down payment as a graduation present.

In February of 2015, I was relocated to Omaha.  I couldn’t sell my place in Chicagoland on short notice, the market was swamped with foreclosures for sale.  I put it up for rent, but by that time the rental market had slowed down.  My first tenant bailed on me and I was stuck paying for a mortgage in Chicagoland and rent in Omaha for three months.  I finally got a second tenant but I was only able to get enough to cover costs.   Without a down payment, I had to rent in Omaha.  3,000 sq-ft, 4 bed/2.5 bath, for $1,400/mo.

I was there until July of 2015 – yes, only five months – before relocating to Alabama.  Found a rental here for $1,200/mo, 4 bed/2.5 bath, 2,000 sq-ft.  It’s been a year and a half here.

I am contemplating buying a house outside of Huntsville.  $225,000, 5 bed/3 bath, 4200 sq-ft.  Still only doing a minimum down payment from some inheritance I got from my dad’s passing, I’m back up to $1,300/mo.  If I do it.  It’s an OK house.  It is big for the price, but lacking on amenities.  I’ve been told at $55/sq-ft it is a steal.  I don’t know.

I need to sell my place in Chicagoland.  I can’t be on the hook for two mortgages.  I have about $28,000 in equity in it.  If I sell it for what I paid for it, best estimate is that after closing and realtor costs I will have a take home of $0.00.  I will have lost everything I put into that house including the initial gift money.

I say all this because I hate buying houses.  I hate the housing market.  I hate the whole institution of realty.

I have been told that a house is a good investment.  Own property.

I got my first job and entered the real world right when the housing bubble burst.  For me, a house is not an investment.  It is not an asset.  It is not even a durable good.  I have pants that I have owned longer than my house.  I have work boots that have provided a better return on investment than a home.

I’ve read a lot of articles by various people on why millennials are not buying houses.

If you want some idea, here’s why.  Between the age of 18 and 33, I’ve lived in (in order) Florida, Indiana, New Jersey, South Dakota, Illinois, Nebraska, and Alabama.  I’ve lived in four apartments, three rental homes, and one place that I’ve owned.  In the one place that I’ve owned, I stand to lose about three years worth of savings.

My assumption is that every dollar I pay towards a home is just thrown away.  It will never be recovered.  A house is just a temporary place used for storing guns, kept warm by burning paychecks.




  1. A few years too late to do you much good, but look into extended-stay hotels. Expensive, at first glance, but the package includes utilities and housekeeping. When I moved out to Illinois in 2004, I stayed in one for about three years, until I got around to buying a house.

  2. Tough to hear, but I (personally) think you are on the right track. Buying a home is no longer the sure bet it used to be. I made easy money on the first two houses I owned, but third house is now worth less than I paid for it and a fourth house can’t be sold for what the mortgage is so is being rented at a slight loss. I found the movie “The Big Short” instructive. Some will certainly continue to do well in the housing market, but it’s not the no brainer it used to be.

    There is also the matter of being “house poor.” Hence my wife’s somewhat pathological interest in “tiny homes” and “container homes.”

    My students told me the other day that they expect to have 8 to 12 different jobs in their lifetimes. I don’t envy them that.

    Good luck to you!

  3. Houses are a long term investment and only if you were lucky to hit the market at a good time to buy. We bought our house back in 1999 for under $120K and then the bubble happened. We ended up having offers for up to $260K before the bubble bursted and the value dropped, but only $5K lower than the original sell price.
    I did some checking online and depending which bank you “ask” the house is now between $198K and $250K.
    The era of a one year roll-over with profit died long gone.

  4. Realtors & bankers never lose money on these deals
    Realtors & bankers tell you buying property is a good investment

    Odd, it’s almost as if there’s a conflict of interest there.

    Got to go, my barber says I need a haircut, and after that the buggy whip guy says I absolutely need one of each size buggy whip.

  5. Out of being broke and out of a real job, I built my plating shop and then built my house on top of it. 576 square feet, 1 bed,bath, living room kitchen with a loft over the bed/bath. I have less than 15 grand in the whole thing over the last 6 years. Been living in it for 3. No kids and when I started building, no wife. Now its me and my wife. If you are staying put,build small. I never understood 2 people in 7000 square feet of house. “Tiny” houses here are 30plus thousand to buy..stupid money, might as well buy an RV. My 2cents. I feel for you guy, moving around cause of work aint fun.

  6. “My assumption is that every dollar I pay towards a home is just thrown away. It will never be recovered.”

    Probably true in many cases, but if you stay put for long enough or otherwise pay off your mortgage, you do end up ahead. I know that if I had not been able to pay off my mortgage right after I was laid off a few years ago, having that expense would have led me to take jobs I otherwise would have rejected. As it is, I’m not working right now (voluntarily) and my expenses are low due to no mortgage, so I’d consider that being “ahead” for me.

    • Only if you make double-payments and pay off your mortgage WAY early.

      We bought our home for about $120K after the bubble burst, when we were told the market hit bottom and “now” was the time to buy. So we bought. A while later, the market hit the REAL bottom and we discovered that our house had lost about 30% of that value, and we had NEGATIVE equity in it. It’s gotten a bit better since, but….

      On a standard, fixed-rate, 30-year mortgage, we will end up paying nearly $300K on this house that if the market ever booms (and I mean, BOOMS) might be worth $160-180K (but probably won’t ever be worth more than $140K).

      Buying a house as an investment only makes sense if you can buy it outright (and avoid a mortgage altogether), buy during a burst bubble that would make the Great Depression look like Candyland, or buy a foreclosed fixer-upper for pennies on the dollar and spend a considerable while improving it. There are some situations in which you might come out ahead…

      … but for the realtors and brokers, it’s a quick commission on a sale, not a long-term investment. They ALWAYS come out ahead.

  7. If you bought at the bottom you’re good though. My home was originally assessed at $450k. I purchased it for $160k. Unless fire or termites are involved it’s not going lower than that.

  8. I’m surprised no one has mentioned the mortgage interest deduction, which changes the whole equation with regard to throwing dollars away, especially compared to renting. Of course, there’s other factors in the equation, which you are already well aware of.

  9. “I’m surprised no one has mentioned the mortgage interest deduction, which changes the whole equation with regard to throwing dollars away, especially compared to renting.”

    Actually, not so much. It helps, but the amount it helps varies widely depending on income, tax bracket, other savings/investments.

    Just using some round numbers, let’s say your mortgage interest averages $1000 a month. And, your are in a 28% tax bracket.
    So, you can deduct $12000 a year from your income, which will reduce your gross tax burden by $3,360. Meaning that you paid the remainder $8,640 to the bank for nothing. No gain.

    On the other hand, if you put the same $12,000 into an IRA/401(k), you get the same tax break, but you also get to keep $12,000.

    Important to note that the above ignores the fact that you would have to pay rent, but my experience has always been that rent is lower than mortgage, typically by a few hundred. Of course, anecdotal proof is no proof at all.

    The reality is the home ownership is not for everyone. If you do not have a significant down payment, and you do not have the cash to pay the costs of home ownership, while still having money left over for savings/retirement, you should seriously consider renting.

    When I bought my first house, I really should have rented. We barely scraped by on the down payment, or the monthly payments. But, i learned the lesson, and for my next house, it was have more than 20% down, and if either of us could not afford to pay for it on one salary, we did not look at the house.

    As a general rule, when you take inflation and all other costs of home ownership into account, the appreciation of the property over time is close to flat. You may make some money, you may not. But, weigh those disadvantages against things like being able to paint whatever color you want, etc…

  10. I’m on the fence with this one.

    Living in the same space for the last 25 years, I was lamenting just yesterday about how I wish I was free again. Then, thinking about it a bit more, I realize that since the home is paid for, as little as it’s worth, my “rent” is just shy of Two Grand a year. Split between lights/electric utilities and property taxes with some thrown in for incidentals, like occassionally filling the propane rather than burn wood, it’s slightly more than $170 a month. I can earn that kind of money sitting on my hands. So in many ways, having a home paid for is well worth the effort.

    On the flip side, owning a home does give me a cramped feeling, “caged”, if you will. I despise being tied to one location. Like you, much of my youth was spent traveling around the countryside for work and pleasure. I rather miss those days and am considering selling for whatever I can get, load the van, invest in gas and go enjoy what little freedom remains in this country since it won’t be long before even feeling free will be an imprisonable offense.

  11. As someone currently trying to buy a house it’s a shit show. The market is flush with houses but everyone is still trying to recoup their losses from the house bubble. A really good deal in my area would be a 2000sq foot house with nothing major wrong for $250k. Many houses are being listed for 225-275 that need a roof, for Nance, electrical work etc. Obvious listing price is not sale price but it’s a pain in the ass.

    In my area renewal or exceed mortgages and I want private space and to get something for my money eventually so I’m buying.

    I disagree that a house is not an asset. It’s certainly not a liquid one right now and it certainly is a liability if you are moving around frequently. You got forced to buy when you wanted to and really should have rented, but you know this.

    And the whole not buying a house by millennials thing has more to do with how the job market has changed with people moving around very few years than anything else. Buy hey my friends and i buck the trend, four own a houses (one outright) I already own 2 properties from inheritence and I’m looking to buy now.

    • I should add a fifth friend is trying to buy now as well but running into the same over priced crap as me. We both are thinking there will be another bubble burst.

      Another major reason millennials aren’t buying many houses is the unprecedented amount of debt we’ve graduated from college with. I’m down from 90k to around 70k in debt after 4.5 years of paying. Without my girlfriend I could not buy on my own.

      This brings me into the next point, banks and lenders are doing the same things that helped get us into trouble last time around. I will only say that the mortgage we can get is absurd for two young people. This is another reason I think there will be another collapse of some sort.

Feel free to express your opinions. Trolling, overly cussing and Internet Commandos will not be tolerated .

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