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The Opportunity Cost of Home Ownership

Some might think me crazy, being a person whose livelihood depends largely on commerce in real estate.   But it has to be acknowledged!   There is an opportunity cost to being a homeowner.  I have been a homeowner since I got out of school and found a seller crazy enough to owner finance my first home for me.   But I do occasionally think about what I have lost through the years by the “ball and chain” of my home.  I might have had more money to invest in the stock market, more money to spend on surfing trips to exotic destinations, more mission trips, more romantic getaways, fewer staycations.   And if home ownership is somehow seen as a bigger and more dire commitment than renting, it might make a person feel less freedom to leave a good paying but unsatisfying job.

This “woe is me” mindset may be behind a fascinating article that just came out on the surprisingly high rate of post-closing “buyer’s remorse” among millennial buyers.   According to one study:  “63 percent of Millennial respondents who owned their own residence said they had regrets with their current home purchase. In comparison, only 35 percent of Baby Boomers were remorseful over their home purchase, while 44 percent of all demographics admitted to be less than pleased with their residential acquisition.”

The cynical part of me wonders if this discontent is the result of just being kicked out of the nest and not having had sufficient time to savor the experience of being a tenant.   In our market, the mortgage payments in any given desirable neighborhood may be comparable to or even lower than the rents in that neighborhood!     So the idea of saving money for recreational purposes by renting may be a fallacy (unless your parent is your landlord).

But the article above in the National Mortgage Professional Magazine said the mortgage payment itself was only a factor in the discontent for a small percentage of the cases.   More often it seemed that the disgruntled new homeowners were upset over surprise maintenance expenses or bad neighbors or a neighborhood that had a downside they had not seen until after moving in.    Many of the factors causing discontent could be eliminated or lessened by better planning. . .  e.g., asking your seller to purchase a 1 year home warranty for you in your purchase agreement, buying new construction, or if buying a fixer upper lower your purchase price to allow for a maintenance and rehab budget.  Embrace the adventure of becoming “handy”.     The part about the neighbors . . . well that is often what you make of it!    If a home is seen as an absolute sanctuary of privacy and solitude, buy in the country!

It is true that residential portability and flexibility can go down after becoming a homeowner versus a tenant.   You can’t just move out and walk away at the end of your lease when you have a mortgage.    But I like the idea of “making a stand”.   No time wasted on the home search.   I benefit from the equity that will grow in the property.  More than once my “forced savings account” I call my home has bailed me out in an emergency.      I have a legacy  to leave or sell and split up when I die.

In those moments where I feel a little remorse over my home purchase decision, I read these famous passages out loud, two from Solomon, the wisest of the wise:

True enrichment comes from the blessing of the Lord, with rest and contentment in knowing that it all comes from him.

He might live a thousand years twice over but still not find contentment. And since he must die like everyone else—well, what’s the use?

Yet true godliness with contentment is itself great wealth.