My previous article about my realizations after hurricane Sandy led me to think more on our relationship with our property. Specifically, I started to think on how we view our homes and the concept of homeownership.
As Americans, we are conditioned to believe that homeownership is a key cog in achieving the “American Dream.” Homeownership seems to symbolize success to many.
Our home becomes a part of us and we are tied to it in so many ways.
It is a place to make memories with our families. As a result, we develop a strong emotional attachment to our homes that we don’t with other types of property.
Additionally, due to the housing boom of the previous decade, we still view homes as investments. A home is purchased with the belief that it will double, triple or quadruple in value over the life of the mortgage. As we know, this is wishful thinking.
Finally, renting is no longer viewed as a viable long-term living solution. Perhaps there is a stigma attached to renting leading many renters to feel as if they need to better themselves and purchase a home.
The emotional ties, financial commitments and social pressures that accompany homeownership can blind us to reality and prevent us from doing what is best.
Separating the Emotions
A recent consultation with a client struck me. He was 9 months behind on his mortgage due to loss of employment and his house was “under water” by almost $100,000.
With minimal income and increasing expenses, I advised him to file bankruptcy, walk away from the home and start fresh. He was shocked by this suggestion and refused to walk away from his home.
The home had been in his family for 50+ years and had belonged to his Grandmother before being left to him. He could not walk away, despite the fact that it was ruining him financially and emotionally.
These strong emotional attachments to our homes can be disastrous, especially in these economic times.
Our homes are houses. They are structures built on the land we own to provide shelter and comfort for our families.
As a society, we have become slaves to homeownership and the financial obligation that goes along with it.
Invest in Your Retirement, not Your Home
Your home should be a place to live and should be thoroughly enjoyed for that purpose. Again, we have been conditioned to believe that homeownership is one of the main cogs in achieving the “American Dream.”
As our greatest asset, we assume that our homes should help us build wealth. Your home may be your greatest asset, but it should not be your greatest investment.
There are more efficient investment vehicles available and safer alternatives to relying on the real estate market. Even rising home values do not guarantee a profit when all is said and done.
Stay Objective
It is easier said than done, but when it comes to homeownership, it is very important to stay objective. Be realistic about what you can afford and how it will impact your standard of living in the future.
After the housing decline and the foreclosure crisis, many people are stuck in properties they can’t afford to pay for but can’t afford to lose. If you are a slave to your mortgage, consider letting go and breaking the chains of homeownership.
Image courtesy of t r e v y (Flickr).