Not Buying a Home Was the Best Life Move I Ever Made
I was five years into my career, saving $10,000 a year, making my 401(k) contributions, and flush with a big raise. The logical next step was to buy a house -- a place I could call my own. Society supported it. It would allow me to feel established, and buying real estate was a great investment -- right? Well, two months later, I quit my job, and six months after that, the economy crashed. I never made that home purchase.
Here's what I learned by avoiding disaster.
It's the American Dream
There are certainly good reasons to buy a home. Owning a home allows you to create a comfortable living environment you can call your own, in a neighborhood that suits you, with good schools for your children. You might even be looking far down the road, thinking of it as a place to retire.
But I wanted to buy because society said it was the next step for me, and that in general owning real estate is a good thing. I wanted to buy because it would prove to everyone that I was established, like I was staking my claim and owning my land. (That has a certain Wild West feeling to it, don't you think?) I wanted to buy because real estate was viewed as "always a good investment." But where did these thoughts come from? Why was I thinking this way?
Society has a funny way of planting seeds in our heads that sprout into full-blown ideas that look like facts. Yet, many of these ideas are completely irrational. The truth is that I was considering this major life decision under false pretenses.
People say hindsight is 20/20, so let's look back and see why a home purchase at age 27 would have been a disaster for me.
Putting Down Roots
For one thing, buying a home is a little like a tree growing roots. Once that home is purchased, you don't have all that much freedom to move around. And, as a guy in my late 20's who hadn't found his place in the working world and didn't have a significant other, being tied to a single location wouldn't have worked for me.
%VIRTUAL-pullquote-My options would have been limited at a time when I needed the complete opposite.%What would I do if I was presented with an incredible job opportunity in another state? What if I met the woman of my dreams and she lived four hours away? Could I simply uproot and go? No. Sure, I could have sold my home, but that would have taken a while. And in 2009, I would have suffered a huge loss even if I could have found a buyer. And paying rent elsewhere while I still owned my house would have been unaffordable. My options would have been limited at a time when I needed the complete opposite.
"Sure, Eric, but owning a home is so much better than throwing away money to rent. Real estate is always a good choice," said the voice inside my head back then.
But in fact, we don't have any idea what the real estate market or the economy are going to do tomorrow, and there's no certainty that even historically common real estate returns will continue -- let alone the high-powered gains of the decade before the bubble burst.
That alone is no reason to avoid buying a house -- but it is a reason to be darn sure that you're buying for the right reasons.
Freedom to Explore
I'm thankful that I did not buy a home back in the late 2000s, and not simply because I missed the crash. I would have been buying for the wrong reasons, and the decision to remain a renter allowed my life to unfold. It provided me with the opportunity to explore several career paths in various locations, before creating a location-independent company (which I still run today). It also allowed me to date women outside of my area without having to worry about a major financial anchor tying me to one place.
Sure, the economic meltdown reinforced that my decision had been the right one for me -- but it was bigger than that. I learned that life isn't lived linearly, and that just because many people follow similar paths (graduate college, get a job, meet a significant other, buy a house, have kids, etc.), it doesn't mean that I have to do that. Buying a home didn't (and still doesn't) fit into my vision for what I want for my life. I am committed to traveling, having a flexible lifestyle and investing in my business -- not fixing the sink, mowing the lawn and going to block parties.
Sure, the block parties might be fun. But not at that price.