eh, kinda, sorta, maybe, could be true depending on your circumstances...

It's a pretty short treatment of a very complex topic.

Buying a home has a lot of positives.
Financially, while you might not be building equity in the first few years, eventually, you ARE building equity. Don't buy a home unless you can afford to pay the damn thing off.

There's also a big difference between rents and mortgages. Rents go up over time and mortgages (depending on the structure) generally go down (either on a reducing mortgage or as a function of your income).

Also, mortgages stop when you've paid them off. Rent doesn't. If you're renting when you retire, well, have fun paying the same rent (or more!) until you die.

Also, if you get that dream job in Hawaii... you can actually SELL your house. Or even better, rent it out.

That doesn't even cover the intangibles like the fact that you can do whatever you want to the house. Don't like that wall? Knock it down. No asking a landlord! *

Also, no property inspections and while the bank can kick you out if you don't pay... that's the ONLY reason they can kick you out, unlike renting where you can be evicted for "damaging the property", "being a disturbance" or "because the landlord doesn't like you".

All that said, there are plenty of reasons not to buy, and they are highly dependent on your income, ambitions and the local property market.

Just don't ever buy anything where your mortgage is more than 30% of your take home pay.


* you should really ask an engineer and your local government in case your house falls over and/or you need building consent.

Adam really does ruin everything - in this case, it's his credibility.

There are many reasons home ownership is better than renting - not the least being that you have far more flexibility in your lifestyle than a renter would. And while you are paying off a mortgage (which, in part, is subsidized by the mortgage deduction on your income tax) you are building equity and paying off the bank with progressively "inflated" dollars over the life of the mortgage (that's why they charge "interest"). The rents go up with the inflation, the mortgage payment doesn't (unless you are fool enough to buy into an adjustable rate mortgage). In the end, if you are careful and smart about when and where you buy, the home is nominally worth more than you paid (in inflated dollars - and possibly in constant dollars) and that value can be recovered if and when necessary. Renting, you walk away with a bunch of receipts...

Of course, if you are lazy and irresponsible in when and where you buy and how you maintain the home, then you could again walk away with nothing...

*controversy

Adding video to channels (Controversy) - requested by MrFisk.

Locally, it is generally cheaper to buy than rent... you need the deposit and all that of course, but the per month costs, even after insurance, property taxes and mortgage still end up cheaper. Now other expenses such as upkeep, utilities and the like may go up, but given you can get into a super nice home in a good school district and good neighborhood, for well under $150k (under $100k and even under $50k for less good areas) and rent is still in the $450-500 for smaller apartments... ownership appears to be the better idea. More space, for less money. When I had a house, I went from a small one bedroom apartment to a 3 bedroom house, 2 stories, walk up attic, basement (minor leaks)... saved a bundle per month, though gas ended up being ultra high, and job changes caused me to lose it eventually. Still, it was per month cheaper.

Heck, I know somebody, not local, but in Pittsburgh who moved from an apartment to owning a condo, and even after mortgage, association fees and utilities, it all comes out cheaper than her rent was alone before utilities, and the places are the same size (if not a bit bigger at the condo)... and that is still in the much coveted North Allegheny school district . Obviously homes and the like there are much more expensive than where I live, but still, seems cheaper to own than to buy for equal square feet even out there.

Yeah, this is way to short to cover the topic.

Freedom / choice is worth considering but people need to treat home buying as an investment because it is often the biggest single investment they ever make. Buy low and sell high. Putting that out of your mind because you're planning to never sell is a huge mistake. You would think that other countries would have learnt the lessons of the US, but housing markets in places like Canada, Australia, big Chinese cities are just waiting to pop. The mantra of 'house prices always rise' continues.

The most obvious measure broadly is price to median incomes. Here in Sydney (and some of the other Australian capitals) it's at eye watering levels. Buying a house here right now is basically banking on preferential tax treatment (in our case, called negative gearing), restricted supply continuing forever (the main driver of house prices by the way), and heroic increases in income to forestall the inevitability of prices simply becoming unaffordable.

It's gotten to the point here where lenders are asking home buyers (who want a loan to value ratio of over 80%!) to pay so-called lender's mortgage insurance (LMI) which adds a substantial amount to their loan and guarantees the bank (not the home buyer) if the borrower defaults. The insurance company who issued the insurance contract then goes after the defaulted home buyer to recoup the payout to the bank:

http://www.macrobusiness.com.au/2016/09/7-30-report-lenders-mortgage-insurance/

From what I understand there is still plenty of reasonably priced property in the US (in some cities) but even there you have plenty of places that have become ridiculously overpriced.

Ya, totally depends on where you live. In most big cities buying a home is just too expensive and it's FAR cheaper to rent. Where I live an average tiny/crappy detached house is about 1.2 million $. So the down-payment alone would be more than a house would cost in a small town.

If you buy a house, buy one you could see yourself comfortably retiring into. If you have to move for work, rent YOUR house to someone, and rent in the new city. Should you lose this new job, you can always move back "home". If it becomes permanent, list the old house for sale.

...and yes, if you don't have enough money to do what I just laid out, then you don't have enough money to buy a house in the first place.

This is also the first time I'm not upvoting one of these. I upvote for the ones I agree with, I upvote the ones I vehemently DISagree with. I won't upvote one they threw together in 20 minutes to make a bunch of gay and lesbian jokes with.

You should also probably only buy a house if you have a career that you plan to stick with. If you are somewhere where you can see yourself jumping to a better job sooner than later, don't tie yourself down.

Dunno. Rent here is just as exorbitant as house prices. And yeah, the deposit is usually the major block for new buyers - if you can afford to rent where you want to buy chances are you can afford the mortgage repayments. If you don't have the bank of mum and dad backing you, goooooood fucking luck.

House prices in major cities are a huge problem, undoubtedly.

But I see that as orthogonal to whether buying a house is a smart decision or not.

Obviously, if you can't afford the deposit, then buying is really an option (and don't get me wrong, that sucks, and we NEED to do something about that), but this video appears to be aimed at people who COULD buy a home.