{"id":341,"date":"2021-08-11T12:00:00","date_gmt":"2021-08-11T12:00:00","guid":{"rendered":"https:\/\/moneywithkatie.com\/our-combined-assets-are-worth-more-than-500000-this-is-why-we-still-rent-our-homes\/"},"modified":"2025-09-05T16:58:35","modified_gmt":"2025-09-05T16:58:35","slug":"our-combined-assets-are-worth-more-than-500000-this-is-why-we-still-rent-our-homes","status":"publish","type":"post","link":"https:\/\/moneywithkatie.com\/our-combined-assets-are-worth-more-than-500000-this-is-why-we-still-rent-our-homes\/","title":{"rendered":"Our Combined Net Worth is More Than $500,000 \u2013 Here\u2019s Why We Still Rent (and When We\u2019ll Choose to Buy)"},"content":{"rendered":"
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This is my fourth article about this topic, but who\u2019s counting?<\/p>\n

In the past, I\u2019ve tried to present the most objective, data-driven, and math-backed explanations<\/a> for why your primary residence is not an investment in the traditional sense<\/em>. <\/p>\n

When you look at the constant flow of cash outlaid to maintain a home (closing costs, agent costs, property tax, insurance, HOA where applicable, maintenance, and mortgage interest), it becomes clear quickly why the ROI isn\u2019t very good \u2013 even if your property appreciates wildly. <\/p>\n

But the funny thing about home ownership is that people take it really personally<\/em>. When you point to the facts \u2013 to math<\/em> \u2013 and say, \u201cSee? It\u2019s not an investment if you purchase it for $400,000 and end up spending $985,000 over the life of your 30-year mortgage, on average!\u201d Some people don\u2019t take it very well. <\/p>\n

And because I have a sick compulsion wherein I have to argue with every angry commenter who raises an objectively unfounded counterargument that ignores reality, I decided I needed to take (again) another approach. (I\u2019m a pleasure to live with, in case you can\u2019t tell.) <\/p>\n

Rather than trying to convince anyone else that it\u2019s objectively not a good way to build wealth, I decided that I\u2019d tell you why we<\/em> choose to rent instead. <\/p>\n

Because half the time, the angry comments I get (always from people who don\u2019t follow me, but rather stumble across my housing content out of context) seem to imply that I\u2019m only pushing renting because I can\u2019t afford to do anything else \u2013 when in reality, it\u2019s actually my best option financially. Buying a home right now would hurt my financial goals. <\/p>\n

I can\u2019t take credit for my housing skepticism<\/h2>\n

When I was 23, I was hellbent on buying a condo. <\/p>\n

I (erroneously) set my budget at $250,000, and decided a condo was my gateway to affluence. <\/p>\n

At the time, I just saw that I was paying $900\/mo. in rent, and saw the mortgage on $200,000 wasn\u2019t too much more \u2013 I didn\u2019t understand that owning property opens you up to a world of other costs (some predictable, some unforeseen).<\/p>\n

My view was really simple, and probably flawed in the same way that most people\u2019s view of ownership is flawed: One method of housing meant I was handing over $900 per month to a landlord, and the other option presumably meant my monthly payment would go directly toward paying something off that I\u2019d own. <\/p>\n

It seemed like a no-brainer\u2026<\/p>\n

Until I started reading personal finance books.<\/p>\n

The first one I read, a cult classic by Ramit Sethi called \u201cI Will Teach You to Be Rich,\u201d mentioned almost in passing that your primary residence is a terrible investment.<\/p>\n

Ramit, this millionaire money expert, rented by choice and had no interest in buying a home.<\/p>\n

What the hell?<\/em> I thought, Does he know something I don\u2019t know?<\/em><\/p>\n

I figured it may be weird personal preference, but then I noticed another prolific personal finance writer saying almost the exact same thing. JL Collins, writer of \u201cThe Simple Path to Wealth,\u201d wrote that many people falsely believe their primary residences are investments<\/a>. He clarifies:<\/p>\n

\u201cYour home is not an investment. It\u2019s an expensive luxury.\u201d<\/p>\n

Okay, seriously, what gives?<\/em><\/p>\n

It wasn\u2019t until I read Kristy Shen\u2019s \u201cQuit Like a Millionaire\u201d that all the dots connected. <\/p>\n

In a few pages, she completely eviscerates the idea that home ownership is a wealth-building tool (chapter 9, pages 78-88 \u2013 these 10 pages will change your life if you\u2019re gearing up to slide in my DMs with vitriol over these claims).<\/p>\n

She breaks down \u2013 inch by inch \u2013 the conservative, average costs of owning a home, and how even hundreds of thousands of dollars of appreciation often isn\u2019t enough to offset the costs the homeowners had to pay in property tax, mortgage interest, closing costs, and the cost to sell (because yes, even the cost to sell a home is usually 10-12% of the sale price paid to the seller\u2019s agent and buyer\u2019s agent \u2013 you lose 10% of the value in one fell swoop!).<\/p>\n

Those few pages opened my eyes forever, and now I feel like I can\u2019t un-see the Capital-T Truth. <\/p>\n

But try telling that to someone who\u2019s been told their entire life that owning a home is the American dream! The way to wealth!<\/p>\n

They look at you like you\u2019re QANON. <\/p>\n

And I would\u2019ve too, had I not seen the math \u2013 but what gets me riled up is people who, even after<\/em> seeing the math, still insist that their<\/em> house is different. That\u2019s why I decided it makes the most sense (after posting the true mathematical assessments) to simply share why I\u2019m<\/em> not in any rush to buy a home. <\/p>\n

If you spend much time in the personal finance world online, you\u2019ll see that this opinion is not controversial. It\u2019s not a hot take. Most money experts are in agreement that it\u2019s a shitty investment \u2013 the rest of American society just hasn\u2019t caught up to it.<\/p>\n

(Keep in mind I\u2019m speaking purely in financial terms: It may be an amazing investment in your mental health, your family, and your sense of security \u2013 just not your wallet.)<\/p>\n

Reason #1: It\u2019s not tax-efficient for us because we won\u2019t be purchasing a home worth more than $800,000<\/h2>\n

One of the most surface-level arguments for home ownership is that it\u2019s tax-efficient \u2013 like owning a home is good for your taxes.<\/p>\n

But as with most things, it\u2019s important to break that one down a step further.<\/p>\n

Thomas and I are married filing jointly, which means our standard deduction \u2013 the amount that we get to deduct from our taxable income, like every other married couple that files jointly \u2013 is $25,100. <\/p>\n

How do tax deductions work?<\/h3>\n

A tax deduction is basically the government just saying you don\u2019t have to pay income tax on a certain amount of your income.<\/p>\n

In this case, it means we get to keep $25,100 of our income, tax-free.<\/p>\n

That\u2019s the \u201cstandard\u201d deduction \u2013 you can either take the standard deduction, or you can itemize your deductions. Most prospective homeowners are likely sold on the fact that they can \u201cdeduct\u201d some of their costs! Woohoo! \u2026but not so fast.<\/p>\n

When you itemize your deductions, you forego your standard deduction.<\/p>\n

That means \u2013 in order to decide that itemizing your deductions makes more sense than taking the standard deduction \u2013 you\u2019d have to be spending more than $25,100 per year on certain aspects of your home. Which aspects, you ask?<\/p>\n

Ah, only the unrecoverable costs \u2013 the ones that don\u2019t build any equity anyway! <\/p>\n

How great is that?<\/p>\n

There are two things that you can deduct when you\u2019re a homeowner:<\/p>\n