Is home ownership worthwhile?

Buying our first house
My wife and I bought our first house last year. It wasn’t an impulse buy; we watched the market for two years prior to making a move. However, it happened very fast because we bought when the market was very hot, and we bought a house that was livable but well under $100,000 — a scarcity where we live.

The house was in good shape and kept up (and built more soundly than many comparable homes in Arkansas). The appliances were less than two years old, with the exception of the older AC/Heater unit which was still in great shape. With the exception of the studio, all of the windows had been replaced with a modern, insulated double hung variety.

Our reasoning for buying a home seemed sound. First of all, living in an apartment didn’t allow me space to pursue my artwork. And in a Divine appointment of sorts, the home we bought was previously owned by a local painter; the third bedroom functions wonderfully as a studio space. Further, renting a place with adequate room for a studio costs as much or more than our mortgage payments.

That leads into the idea of equity. Most people we knew at this point in our life “owned” a home, and most of them believed accruing equity in a home was far better than “throwing your money away” by renting. Also, living where we do, others thought it good we bought when we did so we could still afford something — before prices really went through the roof.

Neither of these ideas played a major role in our buying a house. It had more to do with the perceived and felt need for space and timing — seeing this bungalow that fit our needs at the right time. This process of buying our first house, reportedly a “scary” adventure of sorts according to some of our friends, sort of just fell into our lap.

“Owning” said house
We are glad to have the house. We really are. Especially our living room, with the colors we put on the wall and the built-in bookshelves I put together out of salvaged pine boards; it’s a great room! Nonetheless, I sometimes wonder how things would have been if we hadn’t bought this little bungalow. When I stop and consider the financial situation, it doesn’t seem so great to me as so many people make it out to be. The following breaks down costs we incurred by buying a house and not staying in our old apartment:

Difference between rent and mortgage: $3,375
Closing costs for purchase of house: $1,500
Remodeling and maintaining receipts: $2,500
Difference in utilities from old apartment: $500
Total: $6,390

So if we sold our home, say after two years to avoid paying taxes, for $105,000 the realtor’s commission would be around $6,300. The price I’m suggesting is comparable to others in our neighborhood. And if we sold the house after two years (at which point equity would be approximately $2,500) we would net a profit of around $12,000.

This doesn’t account for remodeling and maintaining receipts I accidently threw away, or maintenance required over the next nine months. It does not account for furniture we’ve purchased — only about $200 worth — to put in a couple of the rooms. It also assumes we get what we ask for the house and hopes that the present downturn in real estate levels off or reverses course.

Of course, a lot of people will live in their houses for more than two years — even Americans. This gives a person more time to build equity. And if the circumstances allowed some time to wait for the sale, I would try and sell the house without a realtor. This would also increase the profit. Some of the remodeling costs could possibly have been done without as well, but most of what we’ve done has been pragmatic more than aesthetic.

What is our time worth?
I really do like remodeling, as one of my earlier posts this week eluded to. And I like gardening as well. But is my time worth $12,000? What would I have been doing if not adding a shower, tiling the floor, painting walls, mowing the lawn, trimming trees and cleaning the garage?

Again, is $12,000 over two years worth my time? Instead of sweeping more floors, washing more windows and spraying weeds should I be using that time to help the poor and the widows, volunteer at the soup kitchen or spend time with my family?

Moreover, if we wouldn’t have purchased the house last year, we could have paid off my student loans a last year. Being free of debt is worth a lot of peace of mind.

Cultural implications and ramifications
The American dream is to own your own home. My wife announced at some point in the process of purchasing the little bungalow that owning a home meant she no longer felt like white trash. She’s really tired of me saying this — hearing her say it was a complete shock to me at the time — and I don’t say it again in this writing to chide her about it. However, it’s worth mentioning in relationship to cultural and social norms.

Even I like the idea of having a piece of property — a piece of ground — that I can call my own. Something that I can’t be evicted from (assuming the property is paid for). Somewhere I can put some seeds in the ground and cultivate my own vegetables if I need to, as a matter of self-sufficiency.

There is peer pressure in our American culture to own a nice house with the picket fence in the good neighborhood. And it’s easier than any other time in American history to take on large amounts of debt in order to live in such a house.

I tell people I don’t regret buying a house. But I still wonder if the trade-off in time is worth it. I still wonder if there isn’t a happy medium, somewhere. I still wonder . . .

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