Monday, March 12, 2007

The Real Cost of Home Ownership

While the media, banks, builders and Realtors wants you to own a place (or more than one) at any price at pretty much any place or otherwise be priced out forever, most people never purchase homes for purely financial reasons. Unless there are the primal feelings of fear or greed.
A very pertinent article at the right time from WSJ Journal explains the same point that others like Kiyosaki ('Rich Dad Poor Dad') have been saying for a while. Your house is not an asset and if it is one, it should not be considered an 'investment'.
In my opinion, a house is a consumer and lifestyle item, just as a car is. No doubt, every woman's dream is to own a beautiful home, have a nice family and probably have kids. Having a nice home and a loving family almost completes life from a materialistic perspective.
But this decision to own a home should not be confused with the economic realities of home ownership.
There is generally a price to be paid for home ownership. And that is more than the mortgage and down payment. It includes the property taxes, insurance, maintenance, snow shovelling, title insurance, mortgage insurance, heating and other utilities and lots more.

As we are going through this mania, I wonder how many people are actually even thinking about costs of home ownership. And whether this is the right time to buy given their life priorities. They have only seen the prices going up, never faced a real recession, never seen homes getting sold for a buck. And perhaps not fully realized the costs of selling a house in a 'buyer's market'. And how they are tied to a place and can miss on exciting opportunities that could be offered by relocation.

The funny thing is that WSJ article mentioned above would not have been printed two years ago at the height of the real estate bubble. Just a couple of years ago, you could not go wrong with real estate and now they are questioning the fundamental premise itself-whether you should buy a home at all?
How long before Globe and Mail runs a reprint of that article or does something similar?
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