Home ownership is expensive, much more than renting. Of course, there are many benefits of home ownership but there are better ways to build wealth. Just save and invest the difference between owning and renting and watch your fortune grow. It will grow faster if you're single as you can share space with others and save even more.
Rent and invest the difference, like buy term and invest the difference. Nobody does that shit.
I worked the retirement market for more than two decades. Income planning was what I was known for. Some financial advisors, who had helped their client build their wealth, would refer them to me when they retired and started to take income. I had clients in every income and wealth quintile. I learned one thing, or at least it became pretty obvious pretty early.
Farmer John, Carl that worked in a furniture factory, Steven the surgeon, I learned income really didn't determine what someone saved for retirement. Sure, it had an impact. And yes, personal financial responsibility played a part. But the biggest factor that affected the "nest egg" of someone going into retirement. How soon their house was paid off, and at what age.
The value of a home ownership is not in the "home", it is in the ownership part, like a damn car. Someone comes in the office, ready to retire, and they still have a mortgage, get out of here. You are beyond hope. Paid your house off when you were 50, you probably got a nice little stash. My oldest is 39, she owns her home, there is no mortgage. Her sister is a couple years behind her, she will still have a mortgage at 40, but not 45. Oldest son, 29, he will have a mortgage at 30, but not 35. He routinely gets cash offers that are double what he paid for the house. Closed on the house the week before he graduated from college.
And I got a real world test of your very theory going on, kind of. My middle son, he is extremely agoraphobic. After he graduated from college, he went no where. Lost his job at Amazon, he stayed in his apartment for two months, ordered in groceries. His Mom and I went to get him and pick up his car. He lived with me for more than a year. Never left the house. But got a job, working remote.
He has the same job now, knocking down six figures. We drugged him up, moved him to his swanky apartment, and he has been there for more than two years. Yes, he goes places, that he can walk to. But he has the whole grocery delivery thing down to an art form. Splurges with Door Dash once in a while. But last week, we were so happy. He drove his car to the grocery store, and not even the closest one. Maybe two miles. He didn't go in, just drove there, processed it, and drove back. home.
And he is a minimalist. Less stuff, less stuff to worry about is his take. His strategy, rent and bank the difference, and then some. Come on, he goes nowhere, is a minimalist, doesn't drink, doesn't smoke, and his girlfriend lives half a world away in Bangladesh, visits a couple times a year for a month or so. He is throwing back all kinds of Benjamins.
But the purpose is, to buy a house, with cash. It literally is a race. These kids are one competitive lot, sometimes it is hard to watch. On one hand, they are my army. They team up, focus, it is game over, you won't be able to see through the dust they will stir up. And they are thick as thieves, a constantly going group chat, scary actually. But on the other hand, OMG, get them all on the basketball court, well somebody is going to be getting a broken bone cast in the next couple of days.
So the oldest set the bar, house paid for at 36. The second has already lost, but she is pushing hard to finish a close second. The third was on pace, but life happens sometimes. Number four, that is the oldest son, he is probably going to come in under the bar.
And really, if he does, then that answers the question. He is five years in to a 15 year mortgage thats outstanding balance is not one fourth the value of his home. At less than three percent. To pay it off early, and comically the two of us actually talked about this this weekend when I went to visit. Well it is just a pride thing, a competitive thing. So yeah, he will pay it off early.
Thanks for reading. The real point, the value of home ownership is in ownership, not home
