I really enjoyed Heidi's piece on the Wallpaper Wars: The Trials and Tribulations of Home Ownership, and it was interesting to me that the comments turned into a discussion of whether to buy or not to buy a house.
PCS enough, and the conversation is sure to occur. "Honey, do you think maybe we should buy a house this time?" There are many things to consider, and there is never a right answer.
I write about military folks and money at The Paycheck Chronicles, I do some financial counseling with the Navy-Marine Corps Relief Society, and I read and research about financial issues constantly. My professional opinion is that it is very risky for military folks to purchase houses. However, we have managed to acquire and retain two houses in the last 19 years. So, you can see I'm a little conflicted on this issue.
Because it is my professional opinion that you should probably NOT buy a house, I'll start with that:
Eleven Reasons Why You Should Not Buy A House When You Are Military
- Renting can be less expensive outright: Depending on the market trends on your area, you might be able to find a great rental for significantly less than a mortgage payment.
- Houses cost more than they seem: Sure, there is the purchase price of the house -- and you're probably smart enough to calculate insurance and taxes into the total mortgage price. What is hard to calculate are all the other costs: window coverings, and extra insulation, grass seed, new furnaces, decorations, and all the other expenses that come with owning a home. You can say that you'll skip all that stuff, but you won't.
- Things break, and housing won't come fix them: I swear, the universe does its best to teach me this lesson each and every time we move into a house that we own. Twice now we've had a sewer backup the first day in our house. (Same house, long story, now I know.) Keeping up with broken stuff can be tiring and expensive. And it is the last thing you need when dealing with extra stressors like deployments.
- Orders are never written in stone: You know it's true. Those three year orders that actually last six months - not an urban myth. You never, ever know how long you are going to live somewhere. And knowing how long you will live somewhere is an important part of knowing whether a home purchase makes financial sense.
- Sometimes houses don't rent or sell, even when they should: It is true that you can always find someone to rent or buy your house if the price is low enough. However, usually you are hoping that the price is at least enough to cover your costs. There are no guarantees, even for the most perfect house in the best school district around.
- House prices don't always go up: I'm thinking that most of you have probably figured that out after the last few years. However, it can still be surprising for a generation who has experienced amazing increases in real estate values. Having an underwater house is a nightmare - you can't sell it because you owe more than it is worth, and you are stuck. Stuck is bad.
- It is no fun to pay for a house in which you don't even get to live: Here at my current duty station, there are more than a few people paying for empty houses back in the States. Their budgets are not fun. There's no eating out, no traveling, no souvenir shopping. Just the prospect of a month or two between tenants makes me nervous; I can't even imagine dealing with a perpetually empty house.
- Tenants don't care for your house the way that you would: First, there is the economic side to this. Messed up houses cost money to fix. Then, there are the emotions. If you've gotten attached to a house, it can be physically painful to see that someone has not cared for it. And, the truth is, a tenant is almost never going to take as good care of a house as you would.
- You can't always get leave to go deal with problems, and even if you can, who wants to use their leave dealing with a house? I don't know about you, but flying 3,000 miles to go sell a house is not my idea of a good vacation. Neither is flying 3,000 miles to put in a new kitchen floor. In theory, a good property manager will make owning a rental property easy. The reality is that sometimes stuff is going to happen and it is going to need your personal attention. Thankfully, we've not had any emergencies huge enough to require my husband or I to go, but it could happen at any time. Last hurricane in the DC area, I was prepared to go because I had visions of our huge tree falling smack through the middle of our house. (Did not happen, thankfully.)
- Economic issues are the number one cause of marital problems: You know what? Maintaining a marriage in the military is hard enough. I don't need the stress of financial problems, too. My marriage is more important than owning a house.
- Security clearances are affected by financial issues: While the security clearance folks have been stressing that a single real-estate related issue should not be enough to affect your security clearance, it sure doesn't help. If your job in the military requires a security clearance, you have extra incentive to make sure that your financial records stay neat and tidy.
Seven Reasons Why You Might Want To Buy A House Even Though You Are Military
- It can be less expensive: Again, it depends on the market demographics of the area. In the area my family is probably moving, it is much less expensive to buy a house than to rent. For example, a single listing on Militarybyowner.com shows the same house for rent for $1,850 per month, or for sale for $275,000. A mortgage payment on a 30 year loan for $275,000 would cost roughly $1350 per month, a savings of $500 per month. You can either pocket some serious savings, or get a much bigger house.
- You have lots of kids or big dogs and it is near impossible find rental housing or live on base: This one is pretty self-explanatory.
- You really, really want to be absolutely positive that you won't have to move mid-tour: Even with a long lease, stuff can happen and you can have to move unexpectedly. Owning decreases the possibility to as close to zero as possible.
- You want to paint or plant trees or smoke up a storm: Renting means restrictions on what you can and can not do to and in the house. If you buy, you can pretty much do anything that is legal and isn't against the covenants of your neighborhood.
- This is your forever home: Whether you are leaving the service or just planning ahead, it is nice to get started paying off your forever home while you are still receiving Basic Allowance for Housing (BAH.)
- It could appreciate in value, and you could make some profit (either in sales profit, or monthly rental income): If the market works in your favor, you could see appreciation in the value of your house, or earn monthly rental income, or both. My husband and I own a house that we bought over 18 years ago, in a growing part of Virginia Beach, and it has seen significant appreciation. We're also making a little income each month, though it goes right back into maintenance.
- There can be tax benefits: Under the current tax laws, mortgage interest for your primary residence is deductible if you itemize your deductions on a Schedule A. If you then rent the property, you may benefit from the loss created by depreciating the property.