Just WHY are people buying homes anyway?

[Deja Q]

Nice to have that big fancy home...

While unable to have a job long enough to pay for it; or be less than likely to keep up with payments "inbetween jobs".

[Redstone]

1. I work for myself, so I'm never "between jobs."

Redstone

[evlbstrd]

2. I needed a place to grow kids.

They take a lot of space.

[Evoman]

90. Not really..I mean, space is nice...

but me and my siblings (3 of us) grew up in a 3 bedroom (okay..more like 2 and a half) bedroom house with one bathroom.

[evlbstrd]

95. I'm the oldest of six.

We never had a house bigger than 3 bedrooms. I kinda wanted better for my family.

[greguganus]

3. Alot of people dont care if it gets paid for.

I know people in their 60's buying homes with 30 year mortgages! I can't believe banks will finance them. I asked one man about it and he told me he'll let his children worry about it after he's dead.

[Misunderestimator]

7. So someone in their 60s shouldn't buy a home?

Why not? It makes good fiscal sense to buy a home no matter what age you are. And taking out a 30 year mortgage also makes sense, since you can deduct the interest you spend on it on your taxes.

You build equity in a home, and the home usually increases in market value. So his children should be pleased that they will have something to sell when he's "dead." Better than cash stuffed in a mattress, or in the stale stock market, or in horribly low interest CDs or savings accounts.

I'm fascinated that you think it's a bad thing for someone in their 60s to take out a 30-year mortgage.

[greatauntoftriplets]

9. Uh....ever hear the words appreciation or equity???

Housing values go up. The children will worry about it after he's dead because they'll be hot to get the equity out of the house when they sell it.

I just bought and am past 50. Lenders loved me because I have an excellent credit rating and virtually no debt.

[Momgonepostal]

11. One advantage to that is he can get a fixed rate

Rents are a lot more volatile and I can see how many seniors, or anyone really, would rather lock into a fixed payment than be at the whim of a landlord. It's easier to plan with a fixed amount.

His heirs will be able to either sell the place when he dies and pocket the profit, or refinance and live there themselves, for a much lower payment than if they we're to start over. If he were renting, the heirs would get nothing and have to clean out his rental unit by the end of the month.

[jwirr]

38. 30 year mortgages were a part of housing plans since FDR. One

of the reasons no one can afford housing to day is because this idea has been dropped. Think about it. If you pay rent for 30 years you have nothing. If you buy and die before it is paid for at least your kids have the equity. I am speaking as someone who is virtually homeless. I live at one or the other daughters homes throughout the year. I wish I could buy a small trailer to call my own.

[cynatnite]

58. Geez, what a way for that guy to love his kids...

Most parents don't want their kids saddled with crap like this.

[mccoyn]

81. That only works if it appreciates faster than the interest accumulates.

Its a good deal if interest - appreciation < rent. I'm not convinced it is. Too many people value houses for non-financial reasons for it to be profitable, unless your a flipper who only holds them for a short period without accumulating too much interest.

[uppityperson]

4. better than living in a car or a box on the street

self employed generalists can usually find something to do. No large mortgages though and a low standard of living, few expectations and needs all helps.

[wakeme2008]

5. moving to mid state California

and am dreaming about a single wide mobile home.... that all single me needs.

But I do have a couple vices....

[NMDemDist2]

6. cuz I bought one in a growing market 10 years ago

sold it and paid cash for this one

no rent, no mortgage and taxes less than $200 a YEAR

seemed like the thing to do at the time. and 10 years ago I got more house for less money than what I could rent.

today, well..... maybe not so much but in 10 years lots can change

[Phx_Dem]

8. Why is your property tax so low?

[Momgonepostal]

12. That seems low to me too

Here that would be about a $15,000 house.

[NMDemDist2]

19. ahh yes, I remember California property taxes. the bungalow I owned

there cost 4 times the taxes as here in SE NM for a comparably priced property (what the bungalow was worth then is what I paid for this place now)

[lutefisk]

67. Here, that would be about a $7500 house (Wisconsin) n/t

[NMDemDist2]

18. cuz part is just for the land

and the other part is the tags for the mobile home

since it isn't "officially" on a permanent foundation it doesn't count as a house.

NM has some very low property rates in the smaller counties. they make their money on sales taxes which is comparable to Phoenix (8.1%)

[LSK]

10. because I dont want to pay rent for my WHOLE LIFE????

You have 2 choices, a mortgage or rent. One of them eventually no longer has to be paid. Tough choice...

[sarge43]

14. Yes and fixed rate mortgage is handy, too.

Having the rent jacked every time you turn around gets old fast.

[Clarkie1]

48. Yes, but...

Rent for a comprable property is generally quite a bit less than a mortgage payment, and the difference can be invested. If it's done right, the investments can make up, or even do better than, the property appreciation.

Renting makes more sense than buying for a lot of people, and it comes with less risk and less responsibility.

[Clark2008]

62. Not true. Not unless you're in a big city.

I have a two-bedroom house with a bonus room that I pay less in mortgage for than I could EVER rent for. And we're talking about $100 to $300 bucks less a month.

It's actually CHEAPER monthly in most of the country to buy. Granted, you have to pay for repairs yourself, but you build up equity that usually surpasses what you spend in repair.

[Clarkie1]

69. That's not the reality in the S.F. bay area.

I'm saving a lot of money by renting...and live in a nicer place than I could buy.

[sandnsea]

13. It's like rent control - one payment the rest of your life

Plus a tax deduction and probable profit on the sale. Buy two homes, live in one and then sell the other for your retirement. Really is the best thing to do at any age.

[judaspriestess]

15. cause its better than paying someones else's mortgage

and piss your money away. Sure my mortgage payment is higher than rent but its a HOME. not an apartment and you can earn money on your home. My home has gone up 125K but I am not going to touch my equity.

Now on the other hand, lets see someone pays rent at oh 800 a month = 9600 a year
9600 a year x's 10 years = 96,000

No thanks.

[JuniperLea]

26. It's still a gamble

Your equity could just as easily go down. And all the money you pay doesn't go to the principal balance of your mortgage. An astounding amount goes to the bank... some banker's pocket... to pay for his lifestyle.

It used to be a safe bet.


I wish you luck.

[LSK]

30. and with rent ALL the money goes to someone else

[JuniperLea]

37. I'll be able to rent at a much lower rate than the interest I'm currently

paying on my mortgage... and I'll save the HOA fee... and I'll be able to put a couple hundred dollars in savings every month. That couple of hundred is a far greater gain than anything I'd be able to realize in the real estate market at this moment.

Oh, I guess I should mention I live in Los Angeles County... where for $500k you too can be the proud owner of a 1200 sq ft, split level townhouse in a gang infested ghetto... no joke.

On what I make flipping properties in LA like I have for the past 25 years, living here making big bank income that I couldn't make anywhere else BUT a big city, I have earned enough to go to a small town somewhere and pay cash for a house with plenty left over.

Every situation is different and not everyone SHOULD EVEN CONSIDER owning their own home.

[Clarkie1]

50. I hear ya. I'm in the S.F. bay area...happily renting.

There is nothing for less than 1/2 million here.

[JuniperLea]

76. People just don't have perspective

San Francisco and Los Angeles are not in Colorado or Iowa or Montana or even Ohio... If you want to buy a house worth $600k, and I'm talking plain old house in a plain old neighborhood, with grass and trees and a couple of parks... not freaking Beverly Hills... you need a yearly income of about $120,000.

Or, if you're like me, you buy a house in the ghetto for half that.

It's ridiculous. And people just don't get it.

[kestrel91316]

56. Boy, ain't THAT the truth!

"Los Angeles County... where for $500k you too can be the proud owner of a 1200 sq ft, split level townhouse in a gang infested ghetto..."

Spend $800k+ for a TEAR-DOWN.

I never thought I would be one of the Have Not's.............

[JuniperLea]

77. Me either

We are the displaced middle class. There's no way in hell I can do as well as my parents did, and by today's standards, they didn't have a pot to piss in. But they were able to afford a house in a nice neighborhood... The house I grew up in. That house sold recently. My folks paid $25,000 for it in 1970. It sold a few weeks ago for $750,000. I kid you not. That is the reality in southern California.

[kestrel91316]

84. I can't figure out where the people that spend this much on

average middle-class homes are getting the money for the down, the mortgage payments, and their expensive cars to boot.

When they come to me with their cats they usually plead poverty.......but I know where they all live, and they're anything but poor. Maybe lots of people are just foolish with money.

[judaspriestess]

52. if you divide one payment into twelve months

and apply that to the principle you knock off eight years of the mortgage and so on.

There are ways of paying your mortgage off sooner.

[JuniperLea]

74. Yes, of course there are ways of lowering your mortgage

But it's still a gamble in this day and age. No matter how careful and how frugal and how smart you are about managing your mortgage, you can still very easily end up with more mortgage than house value because the market is so unstable. It has become very much like buying stocks.

[ReadTomPaine]

16. To FLIP it, baby!

Where have you been?

Incidentally.. that's also one of the main reasons for the bubble.. but at least some people can say with pride "I got mine!"

[ShaniqaPie]

29. Thanks you Alan Greenspan

The same house I could buy ten years ago for $100,000 now costs about $300,000. Funny thing is, the monthly payment is still $1000 a month because the fool Greenspan lowered interest rates to near zero. Tell me what my house goes for when rates reach historically normal levels. Hint: The monthly payment will be about $1000 a month. Nobody's getting that big a raise, and no movie stars or CEO's are going to want to live in my house, so answer: $100,000. Just bought recently at historically low interest rates (fixed, no fool), and expect to lose a lot. Gotta live somewhere.

There are some idiots buying townhouses for their kids to live in and go to college. There is no-sh*t a radio ad by a bank promoting the idea that you will double your money in a couple of years. I'll bet there is some weeping and gnashing of teeth over this. In 1929, it was a stock market bubble bursting. Now we've got a housing bubble, a stock market bubble, and a great big aging generational bubble about to quit working, quit paying taxes, and stat collecting pensions and social security. We are all so very screwed.

Do I blame Alan Greenspan? Not so much as I do Richard Nixon. He's the one who converted us to fake monopoly money backed by nothing but the promise that the government and central banks would do things to promote a good economy. Gold-backed dollars are now politician-promise backed dollars.

S.

[SoCalDem]

70. My college friend's dad did that decades ago

he bought and old house that had been made into two apartments.. We lived upstairs, and she rented out the lower apartment. The rent from that apartment paid the mortgage and half the utilities for the whole place.. The downstairs guys got a cool apartment, and when she graduated, dad sold it for a profit..

So basically, he got the tax deduction, she got free rent for 4 years (I paid a whopping $40 a month), and Pops made aprofit when he sold it

Everyone won


and we had som fantastic parties

[OPERATIONMINDCRIME]

17. What Are You Talking About? Is There Any Context?

[Deja Q]

35. The context has been spoken by many.

I hinted at part of it in my OP.

[OPERATIONMINDCRIME]

40. Still Don't See Any Real Context Of Validity.

Millions of people buy homes, afford their homes and hold jobs just fine. If you would've provided more insight in the OP as to why you asked such a broad generalized question, or included a link to some story, or gave a rhyme or reason for the seemingly illogical question of "why do people buy houses", then maybe the concept of the OP wouldn't seem silly to me.

[JuniperLea]

44. Methinks you over-think

I think you are a very smart person and sometimes smart people over-think, and thereby miss the simple.

It was a simple question and it got simple answers... and it got complicated answers too.

Not everyone thinks in terms of context.

[Name removed]

45. Deleted sub-thread

Sub-thread removed by moderator. Click here to review the message board rules.

[JuniperLea]

73. Darn! I missed it! n/t

[omega minimo]

78. "Ow. Ow. Humorous Smilies Hurt My Feewings. I'm Tellin'!"

[JuniperLea]

80. haha! ok

[OPERATIONMINDCRIME]

91. See The First Reply? It Was Basically A Bunch Of Childish Stuff Like That

and other immature and unproductive attacks.

Believe me, you didn't miss much and consider yourself fortunate for not having had to waste your time in reading it to begin with LOL

[Poppyseedman]

20. Here is a beautiful home for $65,000

http://www.homesonsale.co.uk/index.php?page=out&id=1590...

Reception Rooms: 2
Bedrooms: 3
Bathrooms: 3
Type of Property: Detached
Price: USD65000
Central Heating: Gas
Burglar Alarm:
Parking Facilities: Drive
Gardens: Front & Rear
Double Glazed:
Near Shops:
Near School:
Loft:
Utility Room
Patio: Yes

[Clark2008]

63. To each his own, I suppose.

I think that house is hideous. I like yards and trees. If I wanted to live like that, I'd live in an apartment.

I also wouldn't want to be bombed by Israel.

[JuniperLea]

72. Yeah, to each his own

Some of us can only afford a townhouse like that and you just dissed us all by calling our homes "hideous".

I could afford a house with a yard and trees and all that if I wanted to live in the middle of nowhere USA, but I live in Los Angeles and unless you want to spend half a million, minimum, you will buy a townhouse as shown above and be proud you can do that much.

I swear, people have no sense of perspective at all.

[NMMNG]

71. Nice house, great price.

But the location is a bit too unstable for my taste.

[Texasgal]

21. Ummm... I don't have a big "fancy" home

It,s only about 1200 sq feet.

I bought it for the yard and being able to paint every room in my house another color. I also am gaining equity by doing so... what's your beef?

[napi21]

22. Wellll, I own a paid off home. It's not a great big fancy one, but

it's a nice, 1600sq ft 3BR, 2BA single story with a garage on 1 acre with a fenced yard and utility building. My taxes are $1,000/yr, and I don't want a damn mortgage!

I understand anyone wanting to buy a nice big new house and anticipate the appreciation, but for me, I prefer just not having any expense except the annual taxes.

[JuniperLea]

23. It made sense when I bought my first home

and again when I sold that one, nearly doubled my money, and bought the second home. It was literally cheaper than rent. Not anymore! I don't know where people are getting all the money it takes.

I divorced and screwed myself in the settlement just to get the hell out of the relationship faster... tired of it all. So I only had enough to invest in a three bedroom townhouse. The neighborhood is going to hell in a hand-basket, but the properties are still selling for $400+!!!

I just put my place on the market. If it sells for what I think it will, I will make a clear $100k profit. I will take my money, lay low, and hope for the best when the dust settles.

I just don't want to have a mortgage right now. I don't want to have any debts, period. I don't want to owe my soul to China, or to whomever it will be that calls in all the loans...

[LSK]

28. i dont get it

Whats the difference between a rent and a mortgage??? Mortgage can remain constant and eventually goes away. Rent keeps rising and never goes aways.

I dont understand people sick of mortgages??? Do you live free somehow???

[JuniperLea]

32. Sure, mortgage can go away... in decades!

I'm just saying... I've been a homeowner for nearly 25 years and I've done very well. It's been a great investment. It's not looking like such a great investment right now, so I'm taking my marbles out of the game for a while. My last house gained 25% in two years. I KNOW for a fact that it will not gain anywhere near that much in the next several years. I could in fact loose a lot of money that is now in equity if prices fall drastically. Cut and run, yep.

Edited to say... you can't base anything on past performance. And with the economy in a tailspin, and trust me, it is, I just don't feel it's safe to leave my money in a real estate investment. It's like any other investment... you have to buy low and sell high. Well, I'm selling high and I'll bet you dimes to donuts I'll be buying low AGAIN! in about five years.

[LSK]

33. you dont want a mortgage or rent when you retire

My mortage should be gone before Im 50.

[JuniperLea]

34. And I won't!

I've made a lot of money in my real estate investments and I feel it will be safer in CD's for the next five years. I could easily loose the whole enchilada if the market goes to hell.

[NVMojo]

65. we are feeling just like you, Juniperx. Currently waiting for our house

to sell in one town and we're renting in another and then we'll be laying low. The next two years don't look to good for that old housing bubble. Economists say it has already burst in CA, and the rest of the states will be following soon.

[JuniperLea]

79. Yep, I think it's the only safe thing to do

Unless you've been in your house for 10 years and your equity is far greater than your mortgage, it's a freaking gamble to hold onto a house and mortgage right now.

Don't feel bad. I think we are making a very sound decision and we'll come out of this ok

[bridgit]

24. hard to figure, foreclosures are at a record high as well...

we're staying right where we are in our little 1bdrm

[Raine]

25. Cause when you pay rent

you are only enriching someone else and are at their mercy, and it doesn't have to be big and fancy.

[bridgit]

31. there's a tipping point with rent, if you start paying upwards of 900...

1,000 bucks then yeah, take a look around for a mortgage...but that may put you somewhere near 1,400 to 1,500/month maybe more so

[mccoyn]

89. And that $500 would make a nice investment. -nt

[NewJeffCT]

27. with the price of gas these days...

it might be worth it to buy a home if it cuts your commute considerably.

My wife & I are considering it.

[Deja Q]

36. Bingo. But a problem is,

when you lose your next job (average job length is now under 5 years because employers don't want to retain their workers), you'll be stuck with another job that's some distance away.

And we've all seen how the creditors operate these days. They're not going to continually want to refinance a person who, get this, "can't keep a job".

[Texasgal]

39. Not necessarily true.

Most lenders will look at your job history, if you have changed jobs they will look to see if you stay in the same type of work environment.

Example: I am an RN, the hospital laid me off. I went to work for a private surgical center. I am still a nurse. Most lenders understand that and it will not be a mark against you.

[LSK]

41. thats what savings are for

[Earth_First]

42. Because we're tired of building some else's equity...

For ~$200 less per month, we can build a modest home with the principles and responsibility towards a self-sustaining lifestyle that we desire.

[LordLovesAWorkingMan]

43. Um, to live in?

Is that a trick question?

Can you please define "fancy?"

[newyawker99]

83. Hi LordLovesAWorkingMan!!

Welcome to DU!!

[Clarkie1]

46. Not worth it for me to buy.

I'm in the S.F. bay area, and it makes much more sense to rent.

I have no interest in putting almost everything I have into paying mortgage payments. It's nice to be able to afford things like nice vacations, a nice car, etc. And right now I'm leasing a very nice condo with a view of the bay...life is good.

If I bought a place like where I'm living now I'd be paying about $1200 a month more than I am paying in rent, plus almost $300 a month homeowners, after a perhaps $75,000 downpayment. I'd rather keep the 75K, invest it, and keep saving.

[lectrobyte]

47. Because I looked at what I'd been paying in rent for 10 years or so.

[zulchzulu]

49. I moved to a place where I could afford a decent home...

I like fixing things up, so it's been fun...and it beats paying $2,300/month for a shithole that I'll never own...

[Rockholm]

51. Because People Need A Place To Live.

Excuse me, but some of us are able to afford nice homes because we have really good jobs that pay very well.
Get off the class crap and the pity pot.

[LWolf]

53. I bought a little over a year ago.

I couldn't get anything at all, let alone anything close to what I wanted, for the price I paid if I were buying today. The housing market has effectively priced me right out of it; if I hadn't bought then, I not only couldn't buy now, I could barely afford to rent an apartment.

So my place is falling apart and needs more work than I will ever be able to pay for barring some unseen future influx of cash; I'll be living in a run-down fixer for the rest of my life.

But...my payment will never go up. My equity will continue to grow. I don't have to ask anyone for permission if I want to tear something down, paint, plant, etc.. I can do whatever the hell I want, within the law, of course.

[tyedyeto]

54. My s/o's son just bought a house

He's tired of throwing money down the drain. The house is less than a year old, but 'nothing fancy'. A place to call his own?

[lectrobyte]

55. It doesn't have to be a big fancy place. And if you're out of a job,

it doesn't matter if you're renting or whatever, you got a problem. BTDTAGTTS.

[lastliberalintexas]

88. Yeah, neither the mortgage company nor the landlord will be very

understanding of missed payments due to layoffs. I don't understand why that would supposedly be a knock against buying a home versus renting, unless of course one is only taking into consideration the $500K McMansion type houses.

[MazeRat7]

57. Because its cheaper then renting. (n/t)

[Clark2008]

59. Because I just got married in January and my family

is tripping over each other.

My house was great for just my son and me and our two dogs, but you move in a grown man and another dog and, Voila, no more room.

Besides, we didn't buy a McMansion - we're moving into a nice 40s era brick A-frame with about a 1,000 more square feet and lots of room for the doggies in the basement/den and backyard.

That's why!

(BTW, we didn't spend a small fortune, either).

[Fountain79]

60. Much better to buy than rent...

I rent, I should know. I am basically giving my money to someone and seeing no return for it. At least owning a house gives a person a nice break on their taxes and is an actual investment.

[ellie]

61. ? I just bought a house

after renting for years. I was tired of stupid landlords who watched everything I did. If they didn't trust me, why did they rent to me? I was never late, they had nothing to complain about. The last straw was my last landlord who told me that I would never find anything better than his $800 one-story house. I found a house in the city that is three floors plus a full basement for a little more than $800. Screw him. I was making him rich while I had nothing to show for all those years of renting.

That's why people buy houses.

[AlCzervik]

64. i need someplace to store the hundred dollar bills i light cigars with

doesn't everyone?

Why do you think people own homes...a place to live, raise or not raise kids, build some equity maybe?

[On the Road]

66. There's an Underlying 3-4% Inflation Rate

which is pretty much permanent regardless of fluctuations. If you buy in an area that is expanding or improving, it can be considerably more. Factor that out over a working life and a house you buy today will be well worth it when you retire.

On the other hand, you need stability to make it work. And a lot of people are buying houses today with unrealistic expectations. And if you bought six months ago, chances are you have negative equity.

[ProfessorGAC]

85. There's A Dual Dilemma Here Too

As real wages fail to rise, and as income security falls, there will come a point at which the added valuation makes the house unsalable. So, if one thinks of a house as an investment, it could actually go up in value (by the minimum 3-4% you mentioned), but then have nobody available to buy it should you want to sell.

So, the valuation increase has done nothing but increase the taxation level, but that investment cannot be recouped.
The Professor

[On the Road]

86. Well, I Was Referring to the Value as Determined by Recent Sales

I agree that houses are becoming unaffordable -- I don't know how ordinary people are buying some of properties in urban areas today. When that wall of affordability is hit, prices have got to stagnate or come down.

Personally, I think the fact that prices have spiked and have retreated only moderately is an indicator of general inflation in the future. But we'll see.

[ProfessorGAC]

87. Yeah, I Know

That's why i said dual dilemma. Even if the equity is enhanced by a lot early, and then falls a little, there STILL might not be anyone to buy it. So, you face the inflation issue you describe, but could face the possibility that there are no buyers, even if you stand to make a reasonable profit.

Two thorns on the same branch.
The Professor

[Throd]

68. 'Cuz if you can, it beats the shit out of renting.

[tenshi816]

75. Especially when you can just take one

left behind by the folks who get Raptured...

[MadHound]

82. Because for many people it makes fiscal and personal sense

I live in the Mid Missouri area, and renting a comparable place to my house(a twenty acre farm and house) would be more expensive than my monthly mortage payment. In addition, I actually have something to show for all that money, unlike a rental where you have nothing. In addition, if my personal finances go bottom up, or I have an emergency of some kind, I have another fiscal tool to tide me over until I'm back on my feet.

Then there are the personal reasons. In a rental unit, one is always uncertain of how long you will stay in any one spot. Unless there is a dire crisis, I know where I'm going to be living for the rest of my life, which is rather comforting. In addition, when you own a house you can make modifications and changes that you want to, rather than having to deal with a landlord. And then there is simply the soul satisfaction of improving and owning your place of residence. I have put in an orchard, berry bushes, gardens, remodeled rooms, etc. over the past three years since I've bought my house, and it brings me a great deal of satisfaction to see the improvements already in looks and value, along with the satisfaction of helping the earth itself rebuild after being treated harshly for many years.

These are a few of the reasons why people own their homes. It may not make sense for everybody, especially where the housing market is insanely high. But for the most part, owning a home is still a smart move to make.

[Vinca]

92. Why are people buying homes?

Because they need a place to live . . . maybe? Our mortgage payment is a fraction of what rent would be and most places don't allow pets. It's also nice to know you can paint the walls purple and puke pink if it strikes your fancy.

[Catherine Vincent]

93. I bought a home because I got tired of hearing the couple

having sex in the next apartment (and vice versa).

[Baclava]

94. I am sooooooooo glad I bought my house when I did...

6 years ago...I couldn't afford to buy where I live now...it's more than doubled in price.