Rethink Your Housing Costs

I just read that renowned economist, Robert Shiller, has been awarded a Nobel Prize, well actually only one-third of one -- the prize in economics he shares with two others. When I was reading about who he is and why he deserved a Nobel, I learned that he thinks owning a home is a terrible investment. I am not an economist, far from it, but I think he is right, and I've thought this for some time now.  It just makes NO sense whatsoever to pay $1,200 - $1,800 a month for a mortgage. Even if -- and maybe ESPECIALLY if -- you make $60k/year and are raising three kids at home!

I personally know too many people who mistakenly think that home ownership is in the best interest of their family, even as they struggle daily to survive poverty conditions. Some are even cutting back on buying food and doing without healthcare and needed medications, in order to meet their mortgage payments each month! And, the enormous amount of day-to-day stress this creates is wrecking their health, and even killing some folks. I am not joking.

Housing prices are NOT going to rise enough for them to EVER realize a profit and still, they blindly drive by house after house, on block after block, that have "For Sale" signs posted in the yard, in every single neighborhood. The message those signs tell us, just by the sheer numbers of them, is that home buyers are few and far between and decreasing in numbers exponentially yearly. Waiting a few years for the economy to bounce back so you can sell your house for a reasonable price, at this point, is a pipe dream. The painful realization for many is the value of their house can be slashed to half of what the purchase price was in as little as 5 to 10 years.

The economy has been bad for awhile now, and it may take several more decades before we are able to see any lasting improvements, and even then things will never go back to the way they were for the parents of baby boomers. It seems the only places where any housing is being built at all is in gated communities where the rich reside. Look around. In my neighborhood and most likely in yours, too, no new "affordable housing" is being constructed. And, all across the country "low-income housing" is being bulldozed to clear space for high-rise condominiums, with each unit having the typical purchase price of 5 to 10 dollars per square foot.  Do the math.


Make no mistake, it is not by accident but by design that the only places any of us can afford to live are areas as much as a 1 or 2 hour drive away from where the jobs are typically located, unless of course you work in the fast food industry. The commute will make you go insane, rob your family of your time and attention, and/or kill you, figuratively if not literally. Controlling where we live by raising the cost of housing and deciding where housing is to be built has long been an effective tool for controlling the masses.  It doesn't take a leap to realize all the things we struggle with are interconnected.  It is pretty much true that creating long commutes makes us need to buy new cars every few years. And who has time to shop for and prepare nutritious meals when both parents work full time and have daily commutes? So most of us eat fast food too often or can only afford highly processed, boxed or frozen foods that contain little to no nutritious ingredients, but only take 5 minutes to nuke. It is easy to connect the dots: instead of paying $1,500 a month for a mortgage, renting a 3 bedroom house for $1,200 could put $300 into your meager food budget.  And, then there is the monthly cost of required home owners insurance, maintenance and repairs, and a bunch of other expenses I overlooked like exterminators and lawn care and roof damage repairs from last week's hail storm.

Those who bought their own homes in the time period 1950 through 1980 had a chance to live long enough to pay off their mortgage. And, maybe those who began purchasing in the 20 year period from 1980 to 2000, have paid enough to earn equity of some value, provided they were fortunate enough to have and keep a good job. Ever since the mid-90s decent paying jobs have become increasingly hard to get, and then keep for most. Even folks with college degrees have been forced to accept jobs that pay low wages, when many industries have 150-300+ applicants for each and every job vacancy.

For those who began buying a home at any time since the year 2000, listen up: if it is NOT a struggle to pay your mortgage, fine. Keep on keeping on. However, if you struggle to financially meet other survival needs, such as food, childcare, clothing, and medical care: it is in the best interest of your family to dump the mortgage and go back to renting.


For many, this is the ONLY way they will have enough money in their monthly budgets to be able to buy kids clothes and shoes, have enough money for food, medicine, and dentists, not to mention, funding enrichment activities such as swim lessons, soccer, and dance/karate classes. Self-esteem building enrichment activities should not only be accessible for kids of rich parents.

Struggling with poverty not only wrecks the health (and sanity) of the parents, but puts horrible stress on children, as well. So, at the very least, do a budget with your mortgage payment(s) and another paying rent for housing, and then compare the two. Look at the purchase power of your monthly income, in terms of the overall quality of life for you and your children. Taking into consideration the uncertainty of the housing and job markets of today, you may decide that having the same life-goal that your parents had, of home ownership, in reality is a nightmare instead of a dream come true.

If you disagree with my opinion, I urge you to go read what economist Robert Shiller has to say about home ownership.