Buying a House (AKA How Not to Get Rich)

Initially appeared on doktroko.com 8/1/2007.

As early as a few months before turning into a full-fledged Attending Physician (more on this later), friends, family, and even passing acquaintances were already asking whether or not i was planning to buy a house.  I of course replied that i didn't think i could afford it, at which point they began expounding on the myriad of benefits that i would receive with the house purchase.  One of the most significant was that i would not be "wasting" money on rent but rather be "building equity."

I had always suspected that this line of reasoning was faulty.  After all, i currently spend $700 per month on an adequately-sized two-bedroom apartment with free heat (a must in Michigan).  How could i conceivably save money by shelling out two to three times that amount (just to pay interest - at least in the first couple of years) PLUS utilities, PLUS all the wasted time (time equals money  after all) cleaning my yard, etc. (or all the wasted money paying someone to do so)?

This is however the kind of thing where you can't make a decision unless you have the cold hard facts.  Unfortunately i'm too lazy to do that kind of research myself.  FORTUNATELY, other people are not.

Here's a link to an article written a few weeks ago going through some of the relevant number-crunching.  Surprise - you actually don't save any money buying a house.

The only situations i can think of where buying a house would save or make a body money would be:

1. if you were planning to "flip" it in a short period of time.  but that would require a housing boom, which we are definitely not in right now (especially not in Michigan), or

2. if you were planning to settle down in the place permanently, in which case it would not make sense to throw money into a black hole for the next 50 years.

People will always believe what they want to believe.  People who have bought a house (or are in the process of buying now) will regard me as stupid for refusing to acknowledge all the benefits.  The reverse is also true.  And for all i know, maybe i'm just too pig-headed and will just never take financial advice from anyone else.  Maybe i'm completely in the wrong on this and will have egg on my face 30 years from now when i realize i've pissed all my money away.  Perhaps.  But for know, i'm content in the knowledge that my hard-earned money (whatever little i have) lines my pockets - not my banks'.