Home ownership is not a path to wealth

It might be the American dream (soured a bit recently), but it's not a path to wealth, unless you buy it with the intention of selling at a profit, or build it for others to buy, or finance the mortgage for others to pay you back, or own stock in Fannie or Fred, or rent it with someone else paying the mortgage, real estate taxes, insurance and repairs plus a percentage for your risk. Poor people aren't poor because they don't own homes, and they won't become wealthy by signing up for a government deal with no money down (you can still do that with many government programs despite what we learned in 2007-2008). In fact, you can be rich and lose it all, and will have nothing to do with your house, but everything to do with your values (lazy, rude, promiscuous), your bad habits (alcohol, drugs), your health (something you may or may not control) or your marriage (many women become instantly poor after a divorce--it's much more common than "she took me to the cleaners" story--and if she's smart, she won't accept the house in the settlement of assets).

What is a path to wealth is the life style you choose, or should choose, when you become a home owner. You're choosing neighbors, schools, playmates for the kids, distance from employment, public transportation, access to highways, parks and leisure opportunities. Don't renters do that? Not so much--their values are different. Will they be voting in the school or library bond issues, will they complain to the city or the landlord if the trash isn't picked up or the streets not cleared of snow? Like the new employee, the renter isn't "vested." He can move on--he's got his eye on a different ball.

Drive through any high-end suburban neighborhood of any city (I live in Columbus). Look at the people north of Dublin or east of Easton. Do you really think the 30 year old out there trimming the rose bushes got to a $750,000-$1,000,000 house by buying a "starter" in the city and then moving up? Really? With college loans? Car payments? If he's 30, he probably had family help, either for the house down payment or for the college tuition that got him that $150,000 job managing a business. If he's 50, he's probably moved around taking advantage of more responsibility at higher pay with each move. The house is just a symbol of values--hard work, discipline, and genes--it's not wealth building like investing, starting a business, inheritance, or honing your athletic skills and being first pick in the draft (become a millionaire at 19).

We have owned four homes as primary residences (2 in Champaign, IL and 2 in Columbus), and one as a "second home." We haven't had a mortgage in many years. But we are here, not wealthy but comfortable, because the first home we bought was a duplex, and we rented half, invested sweat equity in remodeling, were willing to live in a less than desirable neighborhood, didn't go into marriage with debts, saved when we could, lived on one income even when we had two, didn't take vacations other than visiting relatives until we'd been married 14 years, and got help from our parents.

However much your primary home appreciates, your next place will probably eat that up. You have to live somewhere. Just don't use your equity by thinking your home is a bank that won't come after you.