Somewhere along the way the “American Dream” was to own a home. But, should it be? It has been somewhat of an ideology for generations that owning your home means that you have achieved a certain milestone in life. That status symbol of owning a home has been one reason home ownership has remained at around 65% since 1960. But I am here to tell you that the status symbol of owning a home may not always be worth it.

Don’t want to be house poor.

Not buying more than you can afford may be obvious, but buying a home usually ends up becoming an emotional purchase versus a rational purchase. It is easy for people to fall in love with a home, in which they can easily talk themselves into taking on a larger mortgage and tax payment as well as wiping out their entire savings or dipping into retirement accounts to afford the down payment. When this happens, it presents what we like to call in the industry house poor. The consequences of being house poor can be dire and often include creeping credit card debt and an inability to save enough for retirement. The rule of thumb is to spend no more than 35% of your income on your monthly housing obligation.

Timing is not right.

If you listen to a realtor, they will always tell you “now is the time to buy” and that home prices will only continue to appreciate. We only have to go back to 2008/2009 to know that is not true. Real estate has been experiencing boom-bust cycles and times of slow growth since the 1800’s. Predicting the best time to buy or a bottom in the real estate market is near impossible. However, there is data out there which could prove helpful determining if prices are continuing to appreciate or starting to decline in your desired area. Also, unless you are living under a rock, following the state of the economy as a whole could help you determine if the real estate market will hold up. When unemployment starts to pick up, more people may not be able to afford their mortgage and may have to sell at a depressed price. Timing will not be as much of a factor if you are selling a current residence and looking to replace it with another home.

Your home may not be the investment you expect.

As we mentioned above, real estate does not always go up in value. But if you bought your home 9 years ago in 2010, you are probably pretty happy with the appreciation in such a short time period. The fact is, most Americans today will only be in their first home for an average of 7 years and unless you are fortunate enough to buy at the low of a historical downturn in housing, well, it may not be all what you expect. When you take into consideration the additional expenses (taxes, insurance, maintenance & repair, furnishings, cost of buying & selling and the possibility of not being able to deduct the full amount of interest if you have a mortgage greater than $750,000), the total return on your personal residence may not be what you thought it would be. Especially if you purchase in a state or location that is less desirable or does not have the higher rate of population growth.

Able to get more bang for your buck.

Circling back to the first reason, it may not be worth it to put yourself in a situation where you cannot afford other discretionary items in an attempt to afford that larger home that you think would fit your lifestyle better. Chances are, you may be able to rent a larger house for the same or less than what it would cost you to own and maintain a smaller home. Of course, rents do fluctuate and eventually may get to the point where it would cost either the same or even less to purchase a similar size home than rent. When this happens, you see more individuals trying to purchase homes which in turn lowers the demand for renting and forcing rents back down to a more favorable price.

Don’t want to be tied down or stuck to a property.

It used to be at one point, you landed your career job, get married, buy a house, have kids and stay put for the next 30 years. These days it feels a little different. During the financial crises there were a lot of people that found themselves without a job and not able to afford their mortgage. They were not able to sell without taking a huge loss or foreclosing on the property. Packing up and moving to where you could find a new job was not easy. Trying to stay in a particular location for family reasons or keeping kids in a specific school district are good reasons to set down roots and buy. But with technology and transformation of jobs in America making it easier to work remotely, the appeal to settle down may not be there for you. Perhaps having the flexibility to explore and try living in different cities or countries for that matter, may appeal more to your lifestyle.