E102 4 Reasons Homeownership is Better than Investing [RE-POST]

<p>America’s favorite billionaire Warren Buffet has said “<a href= "https://www.businessinsider.com/warren-buffett-annual-letter-quotes-2013-3#on-the-top-three-investments-hes-ever-made-his-home-and-his-the-two-wedding-rings-for-his-marriage-8" target="_blank" rel="noopener">All things considered, the third best investment I ever made was the purchase of my home</a>…” We’ll compare homeownership to investing, and we need baseline assumptions to understand the comparisons.</p> <p>Over a lifetime, your mortgage payments, taxes/maintenance (including amortized capital costs) will equal roughly similar housing for free-market rent. If I buy a house right now, the mortgage, taxes, and fees added up might be about the same or less than I’d pay for rent in the same area. Homes in the same area may be rented out for more than the average mortgage payment, but sometimes it’s cheaper to rent.</p> <p>Housing cost nets out. Some believe that when you buy a home, you’re not only investing, but you are also getting “free housing.” This is not the case. What we’re really comparing is the down payment plus any large mortgage reduction payments vs. same amounts invested in the stock market.</p> <p>Here are the four reasons that homeownership is better than investing:</p> <h2>1. Homeownership is More Familiar</h2> <p>You can touch and feel your investment. You live, eat, sleep, play, and possibly even work on this tangible investment! Compare this to stock investments, where you see a squiggly line on the screen with a green or red arrow. Even if the market crashes and the value of your house plummets, you still feel safe knowing you have somewhere to live.</p> <h2>2. Leverage</h2> <p>There is nothing else in the world like the benefits and infrastructure of mortgages. Average folks can get huge loans with standardized application processes and brokers/bankers to help you. In Korea there are no mortgages! There, you have to buy your home in cash. Oftentimes, Korean parents have to help their adult children buy homes. If you have o