My jaw dropped; I couldn't believe the words I was hearing – Pop culture and self-proclaimed financial guru, Suze Orman, advising people that it no longer makes good financial sense to own your own home! It's Okay to be a renter for the rest of your life, she now says.
Now to be blunt, I’ve never put any stock into Suze Orman or any of the pop media “financial advisers” blather. Others often tout the importance of having savings, even when holding high credit card or other debt. You do the math: which has the highest financial return, aggressively paying down outstanding credit balances on your 14% interest credit card, for example, or putting that cash into savings account which only may be earning a measly percent or two?
Orman did admit that her opinion of home ownership has taken a 180 degree reversal. But this idea that our home as an "investment" in the traditional sense of the term, is only a fairly recent phenomenon. I recall the “American Dream” being instead the comfort and security that comes from home ownership in your retirement years – not viewing your residence as a big ATM machine. I would love to ask Orman just how much more retirement income should you plan to earn to pay for ever-increasing rent?
The reason most people (including me) chose to purchase our homes was, at some point in our lives, hopefully about the time one expects to retire, the mortgage is paid off and your remaining cost of housing drops down to a more affordable property tax and insurance. In our case, we were only able to retire because we no longer have housing costs (mortgage). There is no way we could afford to retire if we had to pay rent to some landlord. Did Orman forget that housing costs are the most significant portion of one's living expenses?
I’ve been listening to these so called media financial adviser shows for decades. Interestingly, in all that time, I have NEVER heard any of these advisors recommend for people to invest in real estate. Though its taken us decades, my wife and I did just that; pulled some equity from our home to invest in rental properties. Over time we were eventually able to shift our home mortgage over to the rentals which meant that our renters essentially purchased our properties and paid our mortgage for us. You will never hear such advice from financial "gurus" like Orman.
There is another advantage to owning your own home, particularly as one enters retirement age. Some of our friends have actually turned their homes into monthly income by taking out “reverse mortgages” on their paid off homes. In a reverse mortgage, one actually sells the equity in their home to a financial institution and so receive a monthly income. The owner is allowed to live in the house indefinitely. You can't do that if you rent all your life.
The prospect of being a permanent renter may have some short term benefits for a few. But I still see home ownership as an American Dream to the extent that, once owned outright, one can retire comfortably on a reduced income. The prospect of paying ever-increasing rent as a retiree appears downright frightening.
Because I'm a Skeptic I take the advice of “experts” with a generous dose of doubt. I like to ask the question, “who stands to benefit”? In most cases that turns out to be the person giving the advice. Besides, whether renter or owner, you still have to live somewhere.