A little over ten years ago, Sarah and I moved into the home that our family has lived in ever since. Back then, we had one toddler and another baby on the way; today, we have three children, two of which are inching toward the precipice of their teen years.
Those ten years have taught us a lot of lessons about being parents, being part of a community, being partners in a marriage, and, yes, being homeowners.
Let me start off by saying that if there’s one thing that home ownership has taught me over the last decade, it’s that home ownership is not for everyone. Homeownership offers a number of tremendous perks while also coming with an equally heaping hand of challenges, and those things won’t balance out quite the same for everyone.
Here are ten reflections I have on my experience as a homeowner over the last ten years. All of these are things I would tell myself before considering buying a home at all (though I’d offer these ten tips for first time home buyers if I decided to buy a home anyway).
A Home Really Stabilizes Your Financial State
I should be clear here that I’m not talking about directly tapping home equity, though that can be done. Rather, I’m talking about the fact that once you own a home, your monthly housing expenses are pretty low (with a few caveats, which I’ll get to).
Having your monthly housing costs being quite low makes it easy to make other financial moves. If you’re not facing monthly rent, it becomes easier to do things like pay off credit card debts or save for a car or save for retirement or other things. It makes it easier to take a career leap.
The challenge, of course, is getting to the point where your house is paid off. That can be rough, and it’s one of the reasons that I’m strongly in favor of the idea of a “starter home” for first-time homeowners, many of which I’ll get into in this article.
At the Same Time, You Are Going to Be Nickel and Dimed
One of my firmest memories of moving out of the dorms and into an apartment was how many little expenses there were that I didn’t consider. Things like light bulbs and trash bags and toilet paper were suddenly expenses when they weren’t expenses before.
That gets substantially worse when you become a homeowner. You’re now buying things like furnace filters and window caulk and smoke detector batteries and lots and lots of light bulbs. It seems like every week there’s a list of items you need for your home, items that go substantially beyond what you needed in an apartment.
This is a “nickel and dime” expense. Many of these expenses are small and forgettable, but they pop up so often that they start to add up to significant money over the course of a year or a decade. Be prepared for it. Your household supply budget is going to go up significantly.
Our strategy these days is to bulk buy many of these supplies and stick them into storage. We have a storage area under the stairs in our utility area/laundry room where we keep things like unused furnace filters and light bulbs and other household supplies. We buy them in large quantities knowing that they will eventually get used. While this does save some money, there’s still a significant expense here.
Maintenance and Minor Repair Is a Real Cost in Both Time and Money That You Must Consider
As you might have guessed from the “nickel and dime” issue, one of the biggest issues I’ve faced as a homeowner is the constant unceasing trickle of little projects that need to be done around the house. There’s always a furnace filter to change or a cabinet hinge to fix or a light fixture to replace or a window that needs to be caulked or something that needs to be prepared for winter or a lawn that needs mowed. Virtually all of those things were just magically handled for me when I lived in an apartment by just calling the landlord; now, they’re my responsibility.
Obviously, when there’s a big issue, it makes some sense to hire an expert, but for maintenance things (like caulking windows and winterizing the lawnmower and replacing filters) and minor repairs (like replacing a light fixture and fixing an issue with a toilet tank and repairing a cabinet door hinge), you’re going to be doing it yourself. In either case, there’s a notable time cost for each of these things (the time spent diagnosing the problem, visiting the hardware store for parts, getting out the tools you need, watching a Youtube video or reading a book if this is your first time doing it, actually doing the job, and then cleaning everything up) and a notable money cost (the hardware store will become your friend).
For some, this is a fun thing. I can say that there are times when I’ve actually enjoyed repair and maintenance projects, both in the sense that the task itself is engaging and in the sense that doing something with my hands that have a physical result that improves my home is an enjoyable thing.
Still, one can’t deny that the costs of these tasks really add up over time, both in terms of money and in terms of time, and it’s that grind that makes it less fun. I like small home repair and maintenance projects sometimes, but it often feels like there’s a new one every single week without cease, and that gets old.
Even worse, sometimes this stuff has to be done when it’s really inconvenient. A few weeks ago, our kitchen light fixture that’s been questionable for months finally gave out on us, rendering our kitchen area really dark once the sun went down. It needed to be replaced, but the time when it happened was a really busy time and I didn’t really want to devote the time to buy a new fixture, getting out the tools, and doing the job. Sarah and I ended up working on it as a tag team effort (I did the actual wiring, she held stuff while I did the wiring, and we both screwed in various screws at the same time), but it was still time we could ill afford.
For me personally, this is one of my least favorite parts of home ownership. When I can ill afford to deal with an issue like this, I can’t just call the landlord and have the landlord deal with it. I have to fix it myself (with some financial cost and time cost) or else find someone to do it for me (with somewhat less time cost but a lot more money cost). I don’t mind fixing a toilet on a Saturday afternoon, but home repairs and maintenance are unceasing things, plus sometimes repairs are urgent (and even maintenance things can be) and they pop up at inconvenient times.
Too Much Space Means Too Much Easy Accumulation of Stuff
When you buy a home, particularly your first one, it’s usually a significant space upgrade from the apartment in which you once lived. At first, the house will feel pretty empty… but then you’ll slowly start filling it with stuff.
It becomes much easier to talk yourself into buying something if you have this sense that there is abundant room at home to store it. You start building up collections of the things you collect. You buy home furnishings. You pick up interesting things at yard sales. Before you know it, you’ve begun to really fill up your home. One’s possessions often continue to expand to fill all space provided for them, after all.
This causes a few problems, of course. The more stuff you have, obviously, the more money you’ve sunk into that stuff. Beyond that, the more stuff you have, the more difficult it is to move it or to find what you want amongst all the stuff or to maintain and organize it. It also requires a certain amount of space, which means it can make it very difficult to downsize to a smaller place as you’ll have to purge a lot of possessions to make that work.
The home we bought was substantially bigger than our apartment, but it wasn’t what I would call “huge,” either. Still, we’ve gradually filled up that additional space with odds and ends over the years, making the concept of moving seem like a much more significant task. It’s also a reminder of how much money we’ve spent on stuff over the years.
It’s Easy to Let Your Eyes Get Really Big During Your First Home Buying Experience. Don’t.
When we were shopping for our home, we started by touring a lot of homes in a lot of price ranges, and some of the most expensive homes we toured made some of the least expensive ones look pretty mediocre by comparison. We ended up going in the middle of the road (perhaps a bit on the lower end), but looking back, if we hadn’t looked at some of those very expensive homes, we probably would have bought a less expensive home than we did and been perfectly happy with the choice.
The best thing you can do as a potential homeowner is to figure out the price range that you can easily financially accommodate in your life and stick to looking at only homes in that price range. Don’t look at stuff out of the high end of that range, because it will skew your perspective and expectations. Don’t even bother looking at houses outside of that range.
Be conservative with that range, too. Don’t push the high end of it. You’re far better off buying a less expensive home that you’re happy with than pushing the high end of your range to get something only marginally better. In fact, one good strategy is to start looking at homes on the lower end of your price range and work upwards until you find a home that you’re happy with, then make a move on that home. (Honestly, this isn’t much different than the strategy I use for buying clothes or many other items – start with the “dirt cheap” clothes and move up in price slowly until I find something I like.)
The Tax Benefits Aren’t That Great Unless You’re Buying a Fairly Expensive Home
One of the big benefits of home ownership that’s often loudly lauded is the tax benefits. There are countless articles out there about the huge tax benefits that you’ll get from taking out a mortgage to buy a home.
Unfortunately, the reality for many homeowners who aren’t quite buying a McMansion is that these tax benefits are pretty small. During the four years in which we had an outstanding mortgage, we only itemized our taxes once. Why? The “tax benefits” from our mortgage were so small that the standard deduction is better.
You can see this clearly illustrated if you play around with a homeownership tax benefits calculator like this one. Until you start looking at homes that are in the $400K and above range, the tax benefits of homeownership are actually pretty small, if they exist at all. Tax benefits might be there for people living in expensive parts of metro areas, but for the rest of the country, the tax benefits of owning a home in this relatively low-interest area on home mortgages is pretty slight.
Even if you do get a nice benefit, it’s still not going to be as big as you think. Let’s say you pay $30,000 in interest on your mortgage in a year (that’s somewhere near the amount you’d pay on a $700,000 mortgage). If your income is $300,000 a year, all that means is that your taxable income dropped from $300,000 to $270,000. You won’t save $30,000 on your income tax bill – you’ll instead save somewhere around $11,000 in that scenario. Furthermore, the standard deduction for a married couple is $12,700, which means that you’re really only deducting $17,300 due to the mortgage, so the tax savings is actually somewhere around $6,000, even on a $700,000 mortgage. That’s not a huge saving, and that $6,000 dwindles rapidly to zero if you’re buying a less expensive home or you begin to pay off your mortgage.
You do get the ability to deduct property taxes, but that just means you’re paying taxes to one government office rather than another.
I’m not saying there are no tax benefits in owning a home, but that you shouldn’t expect gigantic tax benefits. They’re pretty small in the big scheme of things and can be nonexistent for a married couple in a starter home.
Insurance Doesn’t Mean There Won’t Be Expenses for Major Repairs
New homeowners often have the idea that homeowners insurance will magically cover everything in the event of a major repair to the home, like a damaged roof after a big hailstorm. “Well, if something big happens, we’ll just report it to insurance and they’ll take care of it.”
The reality is that for most affordable home insurance packages, the deductibles on most repairs are fairly high, meaning that when a major repair happens, you will be paying some expenses out of pocket.
For example, one common element of homeowners insurance is that many repairs will come with a 1% deductible, where that 1% is the assessed value of your home and contents. That means on a typical $200,000 home, you’re going to be covering about $3,000 of the repair right out of pocket. A big hailstorm that damages your roof? $3,000. A wind storm does some damage? $3,000.
That’s a cost that apartment dwellers don’t have to deal with, and it’s the kind of unexpected expense that can hit a homeowner pretty hard if they’re not expecting it.
You’re Going To Be Investing More Time Than You Think
There are always things that need to be done in your home. Paint touch-ups. A faulty doorknob. A faulty light fixture. An unmoved lawn. A window that needs recaulked. A furnace filter that needs to be replaced. A driveway covered in snow. A faucet that drips. A toilet that constantly runs. A sidewalk covered in ice.
Most of those things can be handled with little financial cost, but every one of those things gobbles down some time. You’re spending an hour here and half an hour there and fifteen minutes there and it’s so constant that the time drifts away from you, leaving you feeling busier than you were when you lived in an apartment and all of those tasks were handled for you.
Your house will gobble up your spare time. Again, this isn’t a big deal if you enjoy those tasks, but if you don’t, you’ll often find yourself wondering where your time went after you become a homeowner.
Your House Will Increase in Value, But Property Taxes Will Eat a Lot of That Growth
During the ten years we’ve lived in this house, our property value (according to the estimates we can find on sites like Zillow and how prices have gone up in our area) has gone up by about 35%. In that same time, we’ve paid out almost that same exact amount in property taxes.
While this isn’t a perfect statement, I’ve found that, from talking to a lot of people in rural, suburban, and urban areas, their property tax payments tend to keep pace with the increase in value in their homes. In affluent areas, property taxes are quite high, so even though their property value is jumping, the property taxes are eating that up. In inexpensive areas, property taxes are low, but property values aren’t skyrocketing.
I’m firmly of the belief that if you’re looking at “making money” on buying a house, you need to either be renting it out or you need to be significantly improving the quality of the home via your own investment of time and energy. Otherwise, the combined cost of maintenance and insurance and property taxes will cause the vast majority of homes to not earn significant money. It’s not a bad investment, but it’s not a killer one.
The Best Part Is Modifying It and Making It Your Own
It may seem like I’m being brutal on home ownership in this article, as most of my points are negative regarding homeownership. I wanted to save the big positive for last because it’s a really big one for us.
When you own your own home, you can basically do whatever you want with it. You don’t have to listen to a landlord’s restrictions. The only limitation is things like city ordinances, which are usually pretty flexible.
If we want our walls to be pink, we paint them pink. If we want shelves all over the place, then we put up shelves. If we want to knock down our deck and build a new one, we can do that. If we want to completely refinish our basement by taking out a wall that isn’t load bearing and redo everything, we absolutely can. If we want a bunch of maple trees in the yard and a yard that’s half permaculture, we can do it. It’s our choice.
To me, that’s the best part of home ownership. You can make it yours.
Again, if this isn’t something you value, then this really isn’t a plus. If your apartment is just a place to lay your head and you intend to view your home the same way, then the ability to remake your home in that way isn’t going to have appeal.
For us, it’s this factor alone that’s made home ownership worth it. We’ve had, at various times, a dedicated guest room that turned into a girl’s bedroom, a bedroom that became an office and is now becoming a bedroom again, a family room that’s becoming an office/game room/library, a deck that’s becoming an addition, a flat yard that now has a few maple trees in it… you get the idea. We won’t even get into room redecorations without changing the purpose, painting, fixture changes, and so on.
Because our house is ours, we can change it as we see fit to meet our needs, and that’s a very powerful thing to have. It’s the “killer app” of home ownership for us.
After ten years as a homeowner, I have two key pieces of advice for anyone who’s just starting this journey.
First, buy a starter home, pay it off quickly, and fix up what annoys you. You can flip this home later on and move into something nicer as your life changes, but an inexpensive and relatively small home offers a number of advantages. It’s inexpensive, for starters, meaning that the mortgage bill is lower and it’s easier to pay it off fast. Utilities will be cheaper, taxes will be cheaper, and insurance will be cheaper. It won’t have room for accumulating stuff, which puts a natural cap on acquisitiveness. Plus, it gives you the opportunity to learn how to do a lot of home maintenance and basic repair yourself without damaging a lot of expensive stuff. You can also slowly upgrade it in the way you like and that’ll add to the value (especially if you choose upgrades with at least some general appeal).
Second, there are going to be unexpected expenses, and I encourage starting an automatic “house maintenance and repair” fund. Basically, sign up for an online savings account somewhere and start transferring about 0.1% of your home’s value into that account each month – $100 for every $100K in house value. Why? That money will be useful for taking care of emergencies and other problems that come up, like dealing with a flooded basement or an unexpected electrical problem in your kitchen or a hailstorm that damages your roof and you need to cover that deductible. Your house will nickel and dime you, sure, but you should be able to handle most of that without tapping this fund – this is for the bigger things that will hit you like a freight train once every few years. Start saving right from the beginning and never let up. If you’re lucky, money will accumulate in this account and you’ll be super prepared when a big thing eventually hits you. If you’re not lucky, you’ll be very glad you have every dime that’s in there.
In the end, I’m glad we bought the home we did. We bought what I would call a starter home, but somewhat on the higher end of starter homes in the area. It has served our family very well.