Moreover, Altucher says the notion that buying a home is a ticket to financial security is a "scam" perpetrated on the American people by corporations seeking to keep us in debt, less mobile and with the storage to purchase all sorts of needless consumer goods.
James Altucher of Formula Capital
The discussion was about the investment return of a home. Since 1929, on average, a home has returned 0.4% per year. Compare that with stocks at roughly 8%, including the latest nasty downturn.
There are so many other expenses involved with a house that you would not spend if you were renting:
- Insurance premium.
- Property taxes (which usually offset any tax deduction you get from your mortgage interest).
- Maintenance (pipes break, electricity problems, etc.).
- Remodeling costs.
- Utilities (utilities and maintenance for renters is often reflected in the rental price, but it's not reflected in a mortgage when you own).
- Yard work, pest control, etc. (again, rents usually have this built into the price, but mortgages don't).
Many people say - "But, you have to live somewhere..." - true. But, you could rent, save a ton of money, and buy something else with all that money. A boat for instance. Or a RV. A house is so stationary. It doesn't do anything. I know some people like putzing with a house - home improvements, the garden; some even like repairs. Not me.
Now, with high unemployment, the stupidity of owning a home becomes especially clearer. In this economy, you can't just pick up and go where the jobs are. You can't unload the house. That's its largest flaw as an investment. It's not liquid - and it's not liquid at the most important time: when its value is tanking.