On Home Ownership
by J. Kb
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.
January 23, 2017
January 23, 2017