The Value of Establishing a Permanent Residence

A few days ago I wrote about the pros and cons of renting versus financing a home with a mortgage. In that post I presented mostly advantages to renting: no debt, more flexibility, less costs for insurance, maintenance and taxes, etc. However, I failed to present one major advantage to buying a home, and staying there until it is paid off – having a permanent residence for you and your kids.

This occurred to me just last night as I was logging on to ING Direct to check my savings account balances. One of ING’s security questions is, “What is the street number of the house you grew up in?” The question gave me pause. I didn’t “grow up” in any single house.

My mom was a Marine Corp brat, and traveled extensively around the country growing up, moving from base to base as my grandfather was reassigned. Eventually, she got married and had me, but was soon divorced from my dad and found herself a single mother trying to raise a son on her own. Thankfully, my grandparents were close and provided a lot of support.

Throughout my childhood my mom and I bounced around from apartment complex to another. It was a big deal when I was in junior high school because we rented a little house in a neighborhood – I had a yard! Unfortunately, that was short-lived, and we were back in an apartment for my high school years. In fact, my mom didn’t own her own home until she was in her 50′s.

Growing up, I was always a little jealous of friends who had their own house. Didn’t matter if it was a tiny shack, or a mansion, it was theirs. They always had a “home base.” My best friend in high school, and eventually my roommate in college, lived in the same home from the time he was in elementary school. His parents still live in that home today, and no matter where he goes, or decides to live, that is always his “home base.”

My wife’s experience growing up was much like mine. She did even more bouncing around than I did, especially when she was very young. Because of the background we both had, providing a stable home for our kids is something we have worked to provide for our own kids. I tend to believe home is where you make it, and I have very little emotional attachment to the “sticks and bricks” that make up your home. But I do very much value the idea of giving my kids a “home base” – somewhere they will always feel welcome and secure.

I know it must appear that I’m arguing with myself, after just writing at length about the benefits of renting only a couple days ago. I’m not waffling; I still believe renting makes a lot of sense in some situations. However, more and more, I find myself valuing the idea of settling into a permanent residence to raise our kids. My mom and my mother-in-law didn’t have a choice, but we do, and we plan to work hard and sacrifice a few toys to make it reality for our kids.

Comments

  1. i read in a blog that someone should reveal as much as possible to their readers. but this takes it to a whole new level. you would be surprised how many pple do not have a steady upbringing. if this post was for your readers to relate to you then the job is most excellently done. Robert Kiyosaki should read this post and it will shake his arguement that a home is not an asset.

    http://kenyantykoon.wordpress.com/

  2. Nice post. Sometimes we not only have to consider what might be the best financial option, but also consider the emotional side of our decisions. There’s definitely a balance to be had.

    Good luck!

  3. I absolutely agree. I have only moved once, and that was when I was a baby. Having a place to call home is amazing and something that not everybody can manage. In my senior year of high school, everyone had moved an average of 3 times. Some had moved 7 or 8.

  4. I appreciate how you are able to consider different options and opinions. It’s part of what makes me enjoy your blog so much. Not all decisions should be purely financial, and the same decision is not right for all people. My husband and I do tend to be home buyers, but have bought 4 houses in the 16 years we have been married. We would be off again if it weren’t for our kids. :) While what we have done is obviously not the best financial choice, we have made enough good financial choices that our situation is good anyway. I do believe it’s all about balance, unless your situation is critical. In a critical situation, you should do everything you can to make the best financial choice and suppress your emotions until you can move out of the critical situation.

  5. When I separated from my husband I promised the kids that I’d stay in the same school district and that was a mistake on my part. While everything worked out eventually, I was limited geographically work-wise, and spent almost 18 months unemployed in 2000-2001. Lots of lessons learned during that time and I’m glad we experienced it (maybe not as LONG though!).

    I anxiously awaited my daughter’s graduation from High School as I knew that I could relocate if I wanted to improve my financial situation. We’re in the same area until she’s done college (she’s a senior and commutes). I became disabled a couple of years ago and my next move will hopefully be my last one. I’ve started looking around at small homes, condo’s and even trailer parks in lower Delaware, Virginia Beach, and Phoenix. I’m looking for affordable, safe housing with low taxes and no list of restrictions.
    I’m open to any suggestions. Ideally, I’d rent part of our house to someone that is “handy” and can do the minor repairs that I’m no longer able to do.

  6. I love to have a permanent residence, it’s so much easier to manage personal document. I’m in college now and I change my address every year (or sometime twice a year). Nevertheless, my mailing address will always my permanent address where my parents are working so darn hard for the last 22 years to acquire. I don’t like the idea of chasing jobs around the country and bouncing from apartment to apartment. It feels like I have no place to call home. I like stability. It feels like I’m belonged somewhere.

  7. So, the guy who lives in the house below ours (1 property; 2 houses) has lived there 18 years.

    As a renter.

    I swear, people pick up these sayings directly from real estate agents (“Renting is throwing your money away!” “You have to own a house to live there a long time!”) and somehow twist them into figuring that owing a house is better.

    I lived in my last place 5 years as a renter, and could have easily stayed another 5 or 10, but we moved to a different area.

    Even owners only typically stay in their houses 5-7 years. I’ve done just as well by renting.

    I want enough passive income to pay for my desired lifestyle. Period! I know exactly what I spend every month. I invest in investments that return at least 10%/year. Who cares if I own or rent as long as my investments make in excess of my monthly outlay?

    I rent a $1M house for less than half the cost I would pay to own it. I don’t want to take money out of investments currently yielding over 12% and put them into a house that is nearly guaranteed to depreciate.

    Get to the root of this stuff. You have something that is bothering you about your childhood, but you can fix it without owning a house. This is a classic example of spending money to solve an emotional need.

    -Erica

  8. You could always rent in the same place for a very long time. I live in a complex where I have neighbors who have been here for decades.

    I agree with you that having a stable home base is important for kids. They like stability, routine and predictability, and having to move around a lot poses challenges to those needs.

  9. I have to agree with Erica on this one..it is very possible to rent in the same place for years on end. It’s completely unnecessary to buy something to accomplish what you are looking for.

    In ordinary times, owning would be the way to go if you stayed someplace for a decade or longer. Right now in many parts of the country, renting is still far cheaper than buying most houses.

    We owned a house that we could afford and stayed there for 7 years. The neighborhood had no kids in it for our kids to play with and we spent most of a our free time and money fixing it up. I can’t tell you the relief we felt when we decided to sell.

    We now rent in an area with the kids have friends, all the electical outlets work in the house (awesome!!!), and when something big breaks, it’s not our money or time.

    The truth is, like all things, “stability” can be bought at too high a cost. Especially with kids, don’t buy a fixer upper because that’s all you can afford. Even if you are handy it will cost scads of time that you will want for the kids and yourself.

  10. @Erica: Who says I am spending more as a homeowner than as a renter to fulfill my “emotional need?” I was simply making the argument for buying a home versus renting one for more sense of permanency when raising a family, not that it is necessarily cheaper (as previously discussed, in many ways owning a home can be more expensive).

  11. I don’t see anything wrong with doing something to fulfill our emotional need once a while. For most of our life, we spent a great deal of time fulfilling emotional and financial needs of others (employers, blog readers, customers, boy/girlfriend, etc…). Cost and Value means different to people, don’t they?

  12. I relate to your story so much. I was a Navy brat. We moved all over the place until dad got out when I was 16 and even then we lived in an apartment. My parents bought a condo last year where they have settled in Western Washington.

    It’s the little things you miss growing up in one house, or even two as my husband did. I have trouble feeling like the place I live is home. It’s temporary. When you’ve lived in an apartment four years, it shouldn’t feel temporary. I don’t decorate. I don’t totally unpack. I’ve never lived in a place that was owned, either by my family or myself.

    I don’t regret my up bring. I’ve seen so much more of the world than most people ever do including three wonderful years in Hawaii. But I would like to be rooted somewhere when I have kids. Or, if not possible to buy, raise them with more pride in their home even if it is a rental.

  13. The argument that a renter doesn’t pay for home maintenance is false. Part of your rent pays for upkeep.
    Depending on one’s skill set, long term home ownership will cost from slightly less to substantially less than renting.
    Now I’m fairly handy and will do most home repairs myself, so I will fall into the substantially less than renting category. My home’s cost for mortgage (P&I), insurance, taxes and upkeep costs ~$300.00 a month less than what my next door neighbors pay in rent for a comparable size home on a smaller lot.
    Of course in the 18 years that I’ve had this home I’ve paid 3 professionals to do work on it. The termite company, the roofers and an electrician to upgrade my electrical service. I could have done the roof and electrical work myself, but chose not to for expediency. All the work I’ve chosen to do on my own has had any required permits and inspections.
    Once my mortgage is paid off, my “rent” will be just over $200.00/mo for taxes, insurance and upkeep. I can’t even rent a studio apartment in a bad neighborhood for that.

  14. I definitely agree with the idea of having a “home base” as I have experienced some of the same growing up myself. Even if one owns a home and has this home base, it does not prevent you from traveling, either, if that is important to you. But I am sure studies have shown how beneficial the effect can be on children growing up – even in their late teens and early twenties – having a home base gives psychological and emotional stability, period. Anyone who’s experienced otherwise can attest to that, I think. I also like the idea of being able to hand down a home over the generations – a real estate and base on which you can build your own traditions. There’s plenty of other room in our lives for change and chaos – it’s nice to know your home is your own.

  15. I moved around a lot as a kid. I’ve never regretted it even though I attended four 4 different highschools before I graduated. I consider my family farm (where my grandfather, uncle, aunt and several cousins live) to be my “home base” instead of my parent’s house. I agree that kids need some consistency in their lives but it doesn’t have to be their parent’s house.

  16. Renting is fine, but you are at the mercy of your landlord if they want you out, or plan to sell the place.

    Also, the rental stock generally isn’t as nice as the homeownership stock, hence why many people buy their own place.

    There’s something people don’t tell you about homeownership, and that is that once you’ve bought, the feeling is absolutely PRICELESS. I can’t explain it, it’s just an incredible feeling that sticks with you everyday.

    Homeownership helps the less disciplined save over the long run. 30 years from now, you have an asset…. it gets scary 30 years from now if you’ve just rented.

    If I were a renter now, I’d count my blessings and go out and buy something now after the correction.

    I’ll be writing about buying rental property tomorrow. Have a read.

  17. My husband and I both grew up in one home. My parents still live in the house they moved to when I was 4 and my husband’s mom still lives in the house they moved to shortly before he was born. We were lucky and we both value that home base as you call it. We are now looking for a house where we can stay for the next 30 or more years because we want our daughter to have that same stability. She isn’t quite 2 so I doubt she’ll even remember the house we’re in now, but we want her to have a place that she can consider home and that she will always remember.

  18. My parents moved a lot when I was a kid, although they slowed down once my brother and I were in school. Although I went through ten different moves, they were mostly finished before seventh grade. I went to one school for preschool, three different elementary schools, two junior high schools, and (mercifully) only one high school where amazingly I went all three years. My brother went to two elementary schools, a junior high school, and a high school, so it wasn’t as bad.

    Up until I started school, we seldom stayed more than a year in one place. It wasn’t a military situation, so my brother and I weren’t in the same boat with a bunch of other kids. Really I can’t call living in all the other locations an enrichment activity. If you’ve seen the inside of one classroom, you’ve seen them all. Same goes for gymnasiums. With all the activities kids get put into, there’s really no time to enjoy the cultural or social aspects of a town.

    All the moving and shuffling around has a negative effect. Dancing around between different school systems means that the curricula for the different grades never line up. There are things that will be repeated, and other things that will be missed. For example, I never learned cursive handwriting.

    Since my brother and I got so used to hearing: “We’re going to stay here until you both finish high school”, and since it was a lie every time but once, we learned early on not to get attached to places, houses, or people. My mother was always astounded by our inability to make instant, deep, meaningful friendships. Our position is that our mother’s friendships are pretty superficial, and that the deep and meaningful stuff generally has to develop over time. She’s likewise critical of our reluctance to accumulate material goods. What’s the point in accumulating stuff if it’s just going to be thrown out or packed up (and broken or “lost” en route!) in the next move?

    Old habits die hard. I’ve kept my current day job for more than ten years, but within the city I’ve moved three times. My house isn’t a “home”, just a base of operations. So now that I’m out on my own I find I still often develop a reason to move. Although I have the wherewithal to choose otherwise, my preferences are pretty well entrenched. Unfortunately they’re not conducive to social activity. Yet I do one thing different: I get to know the area I’m in. Museums, parks, restaurants… I check them all out and become very familiar with my city’s history and culture. I even learned the local language.

    If you want to help guarantee that a child will never marry or develop attachments to other people, yanking them around and moving them every six months to a year will definitely do it.

  19. This is such an interesting discussion, and one that hits close to home (so to speak!) for me. On the opposite side of the coin, I grew up in 1 house until I was 17, and now live as a renter and parent of a toddler plus a baby on the way in just over a month.

    We are certainly facing the renting/owning quandry right now: keep renting in this great location where we’re setting down roots every day, or look at buying in a totally new location where we would probably have to buy a car and then make all new friends and set down a totally new set of roots.

    One nice thing about our downtown location is that there are many long-term residents (over 2 decades!) and as it turns out, it is a wonderful neighbourhood for kids–tons of parks, services, museums, and other parents & kids within blocks of our place. I would hate to leave!

    A third option would be to buy something we really can’t afford, to keep the neighbourhood and the “roots”, but then have to work like crazy to keep up with the payments . . .

    I hope to have this all figured out by the time the kids start school (not so long now!), and it is a hard decision! But your posts on the topic give lots of good insight into both sides of the argument.

  20. @LuAnn: Welcome, thanks for dropping by! Mandi is our newest Life Skills Network member, and we are thrilled to have her aboard.

    Keep in mind what others have reiterated here in the comments, you don’t have to live in a home you bought just to establish permanency. There are plenty of other options, and providing a loving environment for the kids in any home is the most important thing you can do.

  21. Reading this was like reading my own biography. My family growing up never had a home of their own and we bounced around a few times too. I actually did buy a home a few years ago, but the neighborhood got really bad, so we are now back to being renters in a nicer neighborhood. We are slowly starting to save for a house again. We have been renting our townhome for a few years, but it would be nice to have a home of our own with a yard for my daughter to play in. Maybe, someday!

  22. Such a good conversation. I agree that there is something settling and fulfilling about having a “home base”. The best situation is when that “home base” provides emotional AND financial stability. That stability can be achieved through renting or owning – depending on the situation.

  23. @Shogun -

    I have had the feeling of homeownership. It was really great – until the bathtub leaked and we spent a Christmas holiday remodeling a bathroom.

    Looking back, I would have rather had the time with my kids. The day we handed over the keys and weren’t responsible for a house was one of the better days of our lives.

    And ownership is not a “permanent” at times as we’d like. Homes can be foreclosed on or taken back for taxes. If you are extremely unlucky and the town or state would like to put a road where you live, good luck hanging onto that “permanent” house. And as mentioned previously, that same permanency can work against you in the form of limited job opportunities and/or being unable to move out of now bad neighborhoods.

    Yet another the problem is that the current correction may go on for many years. Normal real estate cycles are something like 7 years up, 7 down or flat. We’re coming off of the largest bubble in history. 3 years out is too soon, and indeed most numbers still don’t work when doing a rent vs. buy analysis.

    Would we own again? Sure, if the numbers worked. Is it vital to our mental health and that of our children? No. We create the home, where ever we are, in whatever we are living in. “Needing” to own a home for the emotional value rings of a possibly unhealthy materialism. Personally, I’ve felt much freer not needing to be an owner.

    I guess I think that life, ultimately, is a rental proposition. You can’t take any of it with you except, possibly, the experiences you collected. For the moment, I’d rather collect experiences with my kids than at Home Depot.

  24. We moved around a lot when I was growing up so it was also very important for me to provide a home for my children where we would live for years at a time. The funny thing is, you provide for your children what you want, then they end up not liking it. We lived in one home for seven years and now have been in this one seven years. My youngest son complained and asked how come we can’t move to a new house like his aunt and cousins are always getting to do. Can’t win for losing.

  25. I work in the property management field so hopefully I can add something valuable to the conversation. I definitely see the upside to owning a house. Your payments do not rise (and hopefully your income does), you will eventually pay it off and you can make any change you want. Don’t like that wall? Knock it down! Try doing that as a renter!

    As a renter you will never “pay off” your rent. In fact, it goes up as the owners mortgage stays the same. Maybe he wants to sell his house and now you have to move. Being at the mercy of the landlord has never sounded good to me.

  26. VERY interesting discussion.I don’t know what I would do or if I would do the same thing over again.We are married 32 years, together 37yrs have lived in our house for 27 years bought and paid for.Alot of hard work and sacrifice for the home base you talk of.Small little cape cod 1 acre of land nothing fancy just clean and comfortable.Early on we rented great apartments and moved maybe 2-3 times before purchasing the starter house lived there for 2 yrs then bought this house.It was the times and now with the economy maybe this is a dinosauer way of doing things I don’t know.If you always create the “feeling of family” and home where ever you live you won’t go wrong!

  27. For the same amount of living space, it’s cheaper to rent.

    And financially, residential real estate, at best, is merely an inflation hedge, not an investment.

    I understand the emotional attachment to ownership, but few objectively consider the whole cost (buying expenses, taxes/assessments, maintenance/repair, selling expenses) when they compare rent v. buy.

  28. My son- both in the Army and an Army brat- bought a house last week at the ripe old age of 24. My husband and I did not buy our first house until we were 40.
    I asked him why he seemed to NEEDED to buy a house at his first duty station. His reply was, “I will always have a home!” I guess he hated the moving more than we thought.

  29. Yes I would like to also add, while renting gives you the freedom of mobility, there is no reason why a family (single or married) can’t be a long term renter. Because in the end…unless you paid CASH for you house, it’s not yours anyway, it belongs to the bank.

    By the way I’m new to your website and I absolutely love your articles. I will be emailing them to ALL my friends. Funny…we always are talking about all of these issues with one another anyway. Keep up the great work!

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