Given that homeownership is a core concept of the American dream, and pretty much the same in the UK, this may seem like heresy, but in many cultures, people rent instead of buy and are better. Countries like Austria, Germany, France, and Japan have a much higher level of renters.
The cost of homeownership is high, especially if you live in a state, town, or county with very little appreciation of real estate happening — and there are plenty of those! The house prices in central Florida have been stagnant for two decades, until six months ago where they finally started going up.
In the United States, home ownership costs starts with property tax usually somewhere between 1.5 and 2.5 percent, so $25,000 a year on a million-dollar house!
In condos and planned communities, there are association fees, often $200 to $1,500 a month or more. Add in insurance costs, maintenance costs, and repairs, my AC just went out at a cost of $13,000. A new tile roof three years ago was $70,000, the sprinkler just broke $650 and lightening took out my entertainment center for the third time at $3,000 a pop. Even when your home is bought and paid for, it still costs you, in my case, over $6,000 a month to operate! The gardener, pool guy, odd jobs guy as I fix nothing, tree triming, power washing and the list goes on… and on.
Almost a Million Dollars in Losses
I have owned three beautiful homes previous to the one I live in now. Each for more than a decade, each was bought below the peak of the market, and each was in high-end community. I sold two at a 50% loss, and one at a 20% loss and that one was in California where real estate always goes up right?
Now let’s consider my summers in Europe. I can rent a nice one-bedroom apartment with balcony overlooking the ocean, pool, twenty-four-hour hotel services, and Wi-Fi for $3,000 a month in a very nice place like Mallorca! To buy this home would be 500,000 to 600,000 euros plus fees and upkeep. I could rent this home cheaper than I could own it — and invest the savings!