Houses are often called "money pits" because they consume so much money in so many ways that homeowners are often financially drained after paying for the mortgage, property taxes, insurance, utilities, cleaning, maintenance, repair, pest control, moving expenses, and many fees and taxes associated with buying or selling a home.
People often take comfort in how the mortgage interest deduction reduces their income tax liability, but they get back only a fraction of what they paid. Spending $100 to get $25 back is hardly cause for celebration. Cameron Huddleston, a Kiplinger.com contributing editor who focuses on personal-finance topics, was shocked by the true cost of home ownership.
Folks who are less financially savvy are more likely to be blown away—perhaps even financially devastated—by those expenses. One analysis in The Wall Street Journal found that a home purchased for $290,000 in 2007 will really cost its owner over one million dollars. Think of how many decades of full-time work it would take you to make that much money; is it really worth it?
I think the answer is a resounding "no" even in good economic times. During tough times, such as the current recession that is bound to get much worse, owning a traditional (non-micro) home is a great way to ensure that you lose lots of money. The average home lost 28% of its value after the real estate bubble collapsed in 2008, but prices will certainly fall much further.
However, there is a silver lining in this cloud. By owning an unusually small home—a microhome—you can make money from it and have a wonderful life with lots of free time and fun instead of working like a dog and worrying about money. If you're tired of the rat race or are looking for a way to prosper when others will be struggling for many years to come, read my free e-book, Microhome Living. It doesn't contain any viruses, adware, spyware, or other catches—I am a doctor, not a spammer.
Incidentally, as a doctor, I know that the stress level has skyrocketed since the subprime mortgage crisis revealed how inept our politicians are in managing the economy. However, the subprime mortgage crisis is just the tip of the iceberg. I spent a few months researching our economic crisis and found other cancers lurking in our economy that will make the subprime mortgage fiasco seem like the good old days. If you read my other free book, From Bailout to Bliss, you'll understand why we're headed for some very rough times, but you will also see that there are ways for us, individually and collectively, to sidestep much of the fallout from this crisis.
