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Is buying a house still the American Dream?

by Erika Torres
18 comments

Eric and I have talked about owning our own home and buying a house within the next five years.  It’s always been assumed that we would eventually own our own place. And it got me wondering as to why?

Home ownership is expensive. Property taxes around these parts, easily run into the high four figures or   low five figures. What if you want to upgrade as the years wear on? That’s more money to add to the house. In addition, there is upkeep and maintenance and fixing everything that is broken yourself. How will we ever find the money to pay for everything?

And yet, we still want to do it. We still want a piece of land and home that is ours. We really want to make our house a home. Even in our current townhome—which we love—there are always things we want to fix and upgrade, like the bathrooms. If we owned it, we could make those changes and customize our place to fit our needs. You can’t do that in a rental.

However, we also get away with not having to take care of certain items, like a recent home association letter asking us to trim the trees. All we had to do was send an email to our landlord.

Is housing still a good investment? I believe it is. I feel like my parents retirement fund is basically sitting in their home equity.

By looking at refinance options recently, they’re even able to pay off their home faster.  And even with home prices at the lowest prices in 10 years, housing is still expensive and out of reach for many—like us in the southern California housing market.

Economist Karl Case on Yahoo Finance recently said the “American dream is just gone.”

Do you agree? Is the American Dream of owning a home outdated like the Walkman?

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18 comments

The Newlywed Book Challenge | To Buy or Not To Buy June 12, 2012 - 9:23 am

[…] commented on a blog post about a similar question last week from Newlyweds on a Budget and it got me thinking that if […]

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B. (Below Her Means) June 10, 2012 - 11:56 am

Solid question. M. and I keep talking about being rental nomads forever.

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Elizabeth @ Broke Professionals June 10, 2012 - 9:47 am

Complicated question, complicated answer. I feel like home ownership is no longer the American dream for people who only want to live in a property for a few years before moving up or on; if you want to buy a house and live there until you pay off the mortgage, then yeah, it’s still a worthwhile investment of your time *and* money.

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Adrienne June 8, 2012 - 4:37 pm

I think it depends on where you’re living. For example, home prices where you live are outrageous! But we’re contracted to close on a 3 br/2bath 1200 SF townhome for 91,000 in a good part of AZ. Our mortgage will be hundreds of dollars cheaper than rent would be. Hundreds. So, for us, it’s worth it. If we were in your area, we would not be able to buy. Especially on my husband’s nonprofit salary! I do think things are changing for Americans, some good, some not so good. There are also new laws that are supposed to help prevent huge real estate crisis like the one we’re in now. It’s all about perspective. 🙂

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Well Heeled Blog June 8, 2012 - 7:16 am

Home ownership is still part of my American Dream. Home ownership plus rental property ownership. 🙂 I’m hoping to get started on that path after we pay off our graduate loans, so ideally I would be owning a place (even if we rent it out) by the time we are 35.

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six figure investor June 8, 2012 - 5:18 am

In my case renting is better hands down. I live in an expensive town (average home: 750K) in a 2br apt. My rent is less than the property taxes for some of the homes here.

I live in the downtown, have a train that goes to NYC within walking distance. I get all the advantages of living in an expensive town without paying for it.

All the money I save goes into investing, 30-40% of income. Plus I blow a lot on entertainment.

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Shannon June 8, 2012 - 5:01 am

As you know we are in the process of building and man are we behind for our age. I know you and I have had this conversation before but it is very normal around here to buy/build a home quickly. My bro is 25 and just bought his first. Hardscape was 23 when he bought his. it is a lot of work though! It does just have to be the right time for every person. For me, I’m just so over the renting thing it is unreal. There is something to be said about owning that little piece of land when you are ready:)

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Rubysongbird June 7, 2012 - 11:13 pm

I agree with Hannah. Buying a house is a dream for some people but not THE dream for everyone. If its your dream, you should do it! At the right time, and the smart time, for you, of course 🙂

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Cat June 7, 2012 - 10:28 pm

i still think homeownership is held as the ideal, despite the housing market crash. much of the actual problem wasn’t the real estate, it was the loans. that bubble led to over-valued houses, but the problem was the “margin” of equity- everyone counted on values to continue to rise aggressively, so having no equity was no big deal. until everything fell apart.

folks are forced to be more practical and less romantic about property now, and that’s a very good thing. owning a home is still a great way to build wealth long term, but the first purpose of homeownership is an affordable primary residence. we lost sight of that with all of the speculation in the mortgage and real estate markets.

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Teacher Girl June 7, 2012 - 7:53 pm

I think buying my home was more about stability than anything else. I knew I was in it to stay in my city for a long time and rent prices here are through the roof. Rather than having to constantly worry about where I was going to be living and dealing with landlords and rent increases, I wanted something of my own. In the past four years I have had 4 roommates, but my house is always mine. I am not constantly moving my stuff around and I feel like I have a life here. Sometimes I regret the decision. As a commenter said, I am one of those “house poor” people, but at the same time, I would be paying just as much for rent in my city, so I don’t really think the lifestyle is that big of a difference for me. My income sucks and there isn’t a way out of that. I also sometimes wonder if living in this city is the best thing for me and whether or not I would be happier elsewhere, but I think all 20-somethings have theses fears and so I try to focus on the positive aspects of owning my home rather than the downfalls.

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Jessica @ Budget For Health June 7, 2012 - 5:28 pm

The hubs & I were looking at homes in our area and have since started thinking about buying a condo. We just renewed our apartment lease for another year, so we have time to think about it. We aren’t totally set on staying in this city and buying a home really makes things more permanent…all I want is a real kitchen! and a washer/dryer… that’d be nice too.

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SavvyFinancialLatina June 7, 2012 - 4:39 pm

This is something I tackle with all the time! For so long, people have told me that a house is awesome because you build equity and save money. I think that initially in terms of comparing mortgage to rent, you do save money. But then you want/need to spend money on renovating or fixing things. Plus, you have to be in your house 10-15 years. Logically, I feel like it just doesn’t make sense. It’s not cheaper.
Instead, it’s a big emotional decision! How much are your emotions worth?
As far as earning your home, most people take 30 years to pay off their house. Until then, the banks owns it, if you don’t pay your mortgage.
So many mixed feelings.
Right now, we are going to rent. Not sure when we are planning to buy our house.

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Vanessa June 8, 2012 - 6:31 am

@SavvyFinancialLatina
My husband and I feel as you do; watching my parents get caught in the undertow of the economic meltdown was a real wakeup call – you don’t own ANYTHING until you don’t owe anyone else for it. It doesn’t matter how much you personalize your home – it’s not yours until it’s paid off… so I see renting as living in a home you don’t own but aren’t responsible for anything, and buying as living in a home you don’t own (yet) but are responsible for everything (and can build equity).
Maybe we’ll change our minds if/when we have children (you’re so right that it’s an emotional decision) but right now we’re secure as renters. I think the “American Dream” our parents’ generation had is still so pervasive in many of our lives that it’s very hard to look at home buying logically but we’re trying to do just that.
Overall…I think it’s still a dream for some but not for others.

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CeCe @Frugalista Married June 7, 2012 - 1:42 pm

I’ve asked that question myself. Even with the tanking housing market and so many horror stories people still want to buy and are still buying. I don’t know how much of an investment our house will turn out to be if at all when the day comes that it’s time to move on. My goal is for us to just break even when that time comes. I do know that I love having our own house that we can do whatever we want to it. I love having the space and to rent a home of our size we’d have ended up paying about the same that we do for a mortgage.

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KendraD June 7, 2012 - 1:09 pm

I don’t think it’s outdated. I just think that we have to learn to be smarter about it. There are times to buy and there are times to be content with renting. For my husband and I, with moves every 2-3 years (hah, more like 18 months for us so far) there is no sense in buying. We’d be gone before we could even break even.

We do want to own a home of our own someday. But, that’s so far down the road right now that I don’t do more than dream of layouts or peruse floor plans late at night when I’m bored. I guess the good news is that by the time I’m looking for/building my own home, I’ll have lived in so many that I’ll know just what I want in my forever home.

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Hannah June 7, 2012 - 12:44 pm

We just bought a home and while I’m over the moon happy about it, it was not my American dream. For us it was the right time, the right place, the right price, the right house, and the right investment. We actually worked hard to keep our heads in the buying process and our hearts (and dreams) out of it. I try to be a bit more practical when putting 6 figures one the line.

What I am sick of is hearing “its the right time to buy,” “but a house is a tax write off,” and “get married, buy a house, have a baby.” Can’t people realize that things are changing – we don’t need to follow the social norms anymore 🙂

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Shelllie June 7, 2012 - 12:24 pm

There is nothin like the feeling of owning a home. Pride in ownership is a big deal and (at least to me) totally, totally worth it. I have never been happier than when I get to do any little thing I want to really make every inch of the place perfect for our taste and needs.
As long as you can afford it! Don’t be house poor. It’s definately not worth owning a place but then not having a penny extra to live your life, go out and make those little changes.

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shopping2saving June 7, 2012 - 11:51 am

I still think it is The American Dream…but I think instead of the 50s when buying a home, having kids and buying a television was THE dream, the dream now is so different for everyone. It still means the same in terms of – achieving success, but it’s different for everyone. I think in the back of my mind, the american dream means a house I can call my own and pay off sooner or later, as well as raising a healthy family.

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