The Joy of Home Ownership

In 1960, 62.1% of Americans owned their home (house, condo etc.). Of 179 million Americans, that's about 111 million homeowners. My mom and dad's split-level three-bedroom house cost $13,500 back then. 

Today just over 67% of 311 million Americans, or 210 million, own homes. Buying our current home with two bedrooms in 1979 cost $35,000.  Next we got a Home Equity mortgage (second mortgage) to build a Master bedroom/master bath addition in 1987, desperately needed because our son and daughter needed their own rooms. Bunk beds didn't cut it anymore. 

That was over $21,400 then, and we saved money because I did some of the work, like staining all the woodwork before it was installed, and putting down the plywood and vinyl tiles in the bathroom, etcetera, etcetera. Yes vinyl -- that's how houses are to us: we don't over-invest and make ourselves house-poor. And the vinyl has held up just fine. Years later we refinanced and consolidated everything for $70,000 to renovate the kitchen, add a car etc. 

Owning a home in America has remained stable, but the difference today is that 50% of our homes only have 50% of their value -- they're that dirty term -- underwater. Even so, my $70,000 final mortgage investment, with interest paid up to now of $160,000, together with $88,000 of further out-of-pocket improvements (total $318,000), means we could maybe sell our house now for $250,000 or possibly $275,000. So we're not that bad off. Only 14-20% underwater.

But it's 2013, and in reality our home is NOT under water or undervalued. We bought the house (both our names on the mortgage) in 1979. I recommend you jointly sign the mortgage as well, until one of you goes into the nursing home. That way if one person dies unexpectedly, the other automatically inherits the home and property, well, at least if you're married. 

Its also smart to take the ill or demented patient off the mortgage before they either can't sign documents, or before you as the healthy spouse can't obtain Power of Attorney from them. (Best if you have a POA for each other - get 'em done when you get your wills done -- cheaper that way.) It really is a lot simpler that way, and this way the healthy spouse is protected as they get older.

Besides, if you think Medicaid will pay for the nursing home, think again. You're only allowed $2,000 a year in assets by Medicaid; owning a home means you don't qualify. And who has money at $6,000 -- $9,000 per month for a decent nursing home? 

Bottom line, we've enjoyed the comfort of our own home for thirty-four years, and our children have also for twenty-five.That's worth something. So all those thousands of dollars sunk into it had their rewards, and tons of great memories. 

One reward basically meant we could do what we wanted with our property, within local building codes of course. After painting all the rooms, and doing basic fix up in the first year or so, the first expensive thing we did, in 1983, was change the 100 amp electrical service to 150 amps. Installation cost $400 back then., plus the new breaker box etc. for $200, a good investment. That left room for the extra circuits I installed in the basement later, enough amps for the newer electric dryer, as well as getting rid of the old fuse box in favor of Push-o-matics which were much safer push-type switches. I wouldn't be able to sell the house easily with only 100 amp service. In 2007 we updated that electrical panel with new flip-type breakers for $600 again. Still a bargain.

And that brings me to two points I'd like to make: one, don't buy a home unless you're prepared to maintain it properly (which costs $$), and two, someone in the household has to become part plumber, carpenter, mechanic (don't forget the cars!), electrician and landscaper. All those skills come with time. 

I've already mentioned our Reader's Digest 600-page Do-It-Yourself Manual -- that and updates to it are indispensable. And updates are important or your big book will become obsolete like the Car Manuals did in the '70s and '80s. And books on special projects like decks and patios abound. Building codes are always changing. It seems in Jersey they make you pay for a copy of the UCC -- Uniform Construction Code, which is ridiculous -- it should be available free online, or paid only if you want to order a printed copy (but you shouldn't).

For years they said you had to stay in your home at least five years to recoup your investment before you could move on to something better. Well that isn't working all that well now. And if you're neighbor's property is not as good-looking as yours, well, that's another big hurdle to recouping your cost. That's why real estate will always be location first.

The best deal in my opinion is home ownership -- at least you build up some equity. That 50% underwater is better than 0% of nothing, when you lease or rent. Customize your home the way you like. Maintain the interiors and exterior. Heck, I scraped, and caulked and painted my house twice over ten years, until we could afford a professional. And now, after 30-odd years, we've got the house and the sidewalks, and the gardens and the yard in top shape. Not perfect, that'll cost another 25 grand, but in very good shape.

And we are enjoying it. And our kids, and our families, friends and guests also enjoy it. That is what it's all about isn't it?

By Rodney Richards, NJ