For years people have raved about how much better it is to own a home, “when you pay rent you are throwing money away” “owning a home is a great investment” blablablah. With the housing market recently dropping, many people are rethinking their “great investments”.

In a healthy market, the average home prices go up about 3% a year. If you have a $100,000 home in a good market it should go up $3,000 in value every year. But as we have seen recently, that is not always the case.

By the time you pay off a $200,000 home in 40 years, how much will you have spent in paying all of the hidden costs to owning a home?

Taxes: federal, state, county and city.
Utility fees:Water, garbage and sewer fees 
Insurance: fire, flood, etc.
Building maintenance: siding, roofing, plumbing, garage door, patio door etc.
Appliances: refrigerator, stove, dishwasher, hot water heater, etc. 
Yard maintenance: mowing the lawn, tree removal, new fence, new porch, sidewalk and driveway repairs, etc.
Unexpected costs: broken sewer pipe that needs excavated, broken water pipe that flood the home that insurance won’t cover.

When most people sell a home, they usually don’t recoup any of the additional costs they invested into it. They usually have to sell for fairly close to straight market value.

You can sometimes get a monthly mortgage payment for a home that is a little more or equal to renting, but when you add in all the additional costs, is it really that much better of a deal?

Yes, there are many stories about how people are getting rich “flipping” homes and wheeling and dealing real estate, but there are also many stories about people getting rich in Vegas. The reality is, people usually buy and sell homes at market value and never regain remodel or maintenance investments.

I’m not saying owning a home is bad, just that there are trade offs in time and money for general maintenance. Be sure you do your own independent homework and really understand the costs of home ownership. Owning a home is not always the great investment the real estate industry likes you to believe.