No. of Recommendations: 3
That said, I understand that different folks have different ideas about real estate. A friend of mine grew up in Youngstown and everyone was a steel worker. Then one day they just up and closed the plant and no one could sell their house. This guy married a nice middle class girl from New Jersey who wanted to buy as much house as they could 'cause they never go down, they only go up. My friend said "Where I come from, you don't speculate about how much profit you will make when you sell, you worry about whether you will be able to sell at any price."

Ownership always comes with increased risk. Some you can mitigate with insurance, some not so much, like depreciation risk. Generally the risk is minimal, and appreciation (usually also minimal) is more likely. But there is still risk. And the point is that there is so much of your wealth tied up in one asset.

But then there are also the costs of owning:

Buying costs
Repair costs
Maintenance costs
Insurance premium costs
Homeowner association costs
Property tax costs
Selling costs

But to me the real kicker is opportunity cost. There's a lot of difference between the average return on home ownership and the average return you can expect in the stock market over time.

This led me to an easy decision a few months ago: I'm selling my house. And I don't know if I'll ever own a house again. Easier to rent one and let someone else worry about all the risks and costs of ownership. Not owning not only decreases your risk and costs, it also gives you more flexibility and freedom.

Bear
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