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Some of the ideas for this week’s “everything’s f****ed” are from Owning a Home is Literally a Scam https://youtu.be/ZL5vMCXcfQ4 ~The FHA was created to encourage to home ownership because when people can own things they will work harder.~
Home ownership creates problems when seeking job opportunities.
Tactic #1 Stay put and commute. People really underestimate the cost of commuting. https://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/ “So each mile you live from work steals $795 per year from you in commuting costs. $795 per year will pay the interest on $15,900 of house borrowed at a 5% interest rate. In other words, a logical person should be willing to pay about $15,900 more for a house that is one mile closer to work, and $477,000 more for a house that is 30 miles closer to work.”
Tactic #2 Move. Few people stay in a home long enough for pay off a 30 year mortgage. Everyone should be aware of how mortgage amortization works. At the beginning of a 30 year loan, most of the payments in the first years goes to interest and little goes toward repaying principle. When you get a new mortgage the amortization restarts from the beginning. And you’ll have closing costs each time.
Tactic #3 Work from home. You might need or want a separate office room. Hopefully you can do this in a low-cost area.
We are told that home ownership is an investment. Maybe that’s true if for people who would otherwise spend their money on useless crap. But after paying property tax, utility bills, insurance, repairs, and interest will you actually make money when you sell the house for a 300% gain?
Who really benefits from rising home prices? Not you, the homeowner.
Governments because they can charge more taxes. Both property tax and capital gains tax.
Banks because they get interest on larger loans.
Realtors because they get a larger commission on more expensive homes.
Insurance companies because they sell bigger policies. And if you have a mortgage you must have insurance.
Owning a home (or any kind of real estate property) is probably the only way for people to ensure their savings does not disappear before their future generations can make use of it, beyond the limitations of investing in Gold and Silver.
I think what you have made the case for is "Mortgages are scam" because they are. You spend almost 15 years just paying interest and you can expect a typical recession in less time than that to wipe it all out.
Property ownership is the most powerful thing for the liberty of humanity.
What is happening is a million ways to make it unfeasable and to detract people from it.
Titles - Not owning Alloidal titles is what causes all kinds of taxation and other costs, while making sure people dont really own their properties.
MBS (Mortgage Backed Securities) - Pumps the magic money from the CBs into mortgage securities and transfers ownership of houses to the Banks, while also making the prices soar catching more people into mortgage trap.
Other indirect factors finishes the job
Theft via Inflation
Income Taxes
Defocusing skilled trades that allows people to work for themselves and not having to commute
All these things adds to the illusion that "home ownership" itself is a scam.
Own nothing and be happy?
If you're renting, you're still paying those - but for someone else. Do you think the landlord doesn't calculate those items into the cost of rent? Of course he does! Right down to the interest he's paying if he has a mortgage.
Owning is always better. You don't have to get an FHA loan, you don't have to get a 30 year mortgage. Yes, amoritzation is completely bogus and a rip-off, but you don't even have to borrow from a bank, mortgage lender or credit union. You can make a private deal. There are lots of options. Bottom line, WORST case scenario, you spend 30 years paying for your home. But then you're done. If you don't buy, you rent. I know a 74 year old paying $4500 per month, rent. Insane. That person would literally have at least 2.5 million in equity if they had purchased years ago.
Property Tax has entered the chat
You'll own nothing and be unhappy. It wasn't long ago we heard about people getting forced out of the homes because they couldn't afford the tax.
House prices don't need to go up for ownership to be worthwhile. As long as the expenses are less than rent it makes sense.
Always? Rent vs buy isn't always apples to apples, especially for a single person. If a 1 bedroom works, why buy a 2 or 3 bedroom? Utility bills are money literally up in smoke.
$4500/month is crazy! It would be slick if that was a tax efficient way to transfer money to other family who owns the place. Otherwise pretty dumb. They can't take the money with them though.
No, it's not owned by a family member. And that is considered a 'good value' due to the location. Like you said, you can't take it with you. But if you had someone else in your life, you could leave it to them and help lighten their load.
The commuting costs aren’t properly discounted for the overlap of having a mode of transportation for travel besides commuting.
Can you explain more? I didn't see anything in MMM's article that assumed you would get rid of the car. Of the $795 per mile per year, $170 is car mileage based expenses and $625 is time based.
While MMM isn't technically wrong with his interest calculation, we don't buy houses on interest only.
The article mentions:
The IRS estimate doesn’t include people’s time (which widely varies in value) yet the cost per mile is still relatively high because it includes the costs of owning the vehicle, Gasoline at $3/ gallon and 30 mpg comes to $0.10 per mile, which is less than 20% of the $0,51 driving cost. The lion’s share is the vehicle cost.
Commuter cost is mostly people’s time, but it also includes driving costs which are vehicle costs plus fuel costs. To eliminate commuter costs, you’d have to eliminate vehicle costs by not owning a vehicle anymore.