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Why Owning a Home is Not Financial Suicide: A Deconstruction

Recently, we came across an article by one James Altucher, an investor and apparent hater of property ownership. In his article, James declares that owning a property is “financial suicide” and goes on to describe (at length) all the reasons why.

We have to say, we found his analysis of the topic somewhat comical. While he does have some valid points, his article lacks one major factor: balance. Of course property ownership has its pitfalls, but so does renting – and so does everything else in life. We hardly think ‘financial suicide’ is a sound conclusion to reach.

His article was heavily skewed towards America, and we didn’t want to make you sit through the whole thing, so we’ve pulled out some of the corkers from James’ writings and provided our comments. Enjoy!

  • “If [I] were to write an autobiography called: “My life — 10 miserable moments” owning a home would be two of them.” Would the other 8 be all the times you moaned about this topic online instead of doing something constructive?
  • “I am sick of me writing about this.” There’s always the option to stop…
  • “So [the banks] say, and the real estate agents say, and the furniture warehouses say, and your neighbours say, “it’s the American dream”. But does a country dream? Do all 320 million of us have the same dream?” Ladies and gents, we present James Altucher – investor, and perhaps the greatest philosophical mind of our time.
  • “And the bank that was so friendly lending the money, starts calling within 12 hours of not getting their cheque. And then starts suing me.” Maybe you could try paying your mortgage?
  • “Do you ever get that bank money back?” Generally not, as it’s being paid in exchange for, you know, a roof over your head. Seems like a pretty fair deal to us.
  • “So the original reasons for owning a house (a guaranteed easy commute into an urban area where the jobs are) are no longer valid, as demonstrated by the increasingly short lifespan of house ownership. This is a trend that is continuing forever.” Wait, he’s also a psychic?! Wow. We should get him in to do some market forecasts…
  • “Some people like to know where they will be in 30 years. They feel comfort in that. When you rent, you never know if you will be kicked out eventually or if the house will get sold and you have to move.” Finally, a good point!
  • “I always look at rentals. Right now there are better houses for less rent available within a mile of my house. But I like my landlord and house and I don’t blow a good thing if I have it. I live right on the river and can watch the leaves turn green and in the summer there are giant parties in the park next to my house.” Mmm, good point. You can’t do those things when you own a house. Wait… yes you can!
  • “But I still want the ability to pick up and move at a moment’s notice if I want to. Freedom makes me happy.” We are quite sure a lease generally disallows this…
  • “Many people like to own real estate because of the word “real”. It feels more real than money.” This comment is extremely puzzling, at best.
  • “This will sound corny so please skip to the next part: but property rights are not real. Loving who you are and where you are and what you are doing is the only thing that is real.” Roger that – we’ll just skip this part.
  • “The America Dream has us chained us to the land so they can feed us like pigs in a trough with debt, with factory/cubicle jobs that we can’t escape because it’s so hard to move (until they kick us out with two-weeks severance), with forced friends in our neighbours, with supposed roots for our kids even though the statistics show those roots are a lie.” This is actually true. A group of people known as “they” dreamt up this terrible concept known as ‘property ownership’, so they could trick us into eating pig slops. Really, it happened. It’s the America Dream.
  • “But I’ve also seen the pain [people have] gone through when jobs were not as stable as they thought or marriages are not as stable as they thought and that mortgage would’ve been nice in their hands instead of in the bank’s hands. We need a little bit of breathing room in order to survive when the noose is put around our neck.” Sure, times get tough sometimes. But we’re pretty sure it’s illegal for the bank to put a noose around your neck. If they’re doing this, you should contact the authorities.
  • “If you believe in housing as an investment, there are companies that just own houses that you can invest in on the stock market. So you get all the benefits of a long-term investment in housing and get your cash out in five seconds if you need it.” Didn’t you just spend quite some time telling us that housing isn’t an investment? Now we’re confused…
  • “It’s a lot of work to own a house also. Have you ever spent time in the Death Star? I mean Home Depot. That place is huge. And I only need that one special colour of paint. But where is it? The stormtroopers at Home Depot are never around when you need them. And what about that “snake” that can clean my toilet. Where is it? And how do I use it? And is it gross? Why do they call it a snake? It’s no wonder that plumbing is one of the highest paid professions in America. And how long does it take to paint a house. Or who do I go to? And will they overcharge me if they pave the driveway? Did I calculate that into my total cost of owning a house?” Someone get a paper bag so James can CALM DOWN.

At the end of the day, one thing is always true: not everything works for everyone. Some people may prefer the fluidity of renting, for various reasons. Others prefer to own their little piece of real estate and do it up and raise children there and all kinds of nice things.

And everyone should do whatever works for them. Sure, you should take into account your financial circumstances before deciding to buy a property – but this is also true of any other decision that involves an exchange of funds, renting included.

As for Mr Altucher, we wish him all the best. While we believe his article lacks balance, you can say one thing for sure: he’s darn passionate (and entertaining).

 

Image credit: https://timedotcom.files.wordpress.com/2015/03/150319_ff_financialdivorcesign2.jpg?quality=75&strip=color&w=1100

 

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