Is it better to buy and live in a house or an apartment/unit? How much money will I need to borrow? Perhaps a more important question is – how much time will this house cost me? This article compares the time implications of buying a house verses a cheaper apartment (unit).
The time cost of housesThe benefits of owning a house come at a cost in terms of money and time. Consider the following ways owning a house cost time:
1. Houses require more time to maintain than units (apartments)All homes require maintenance time. However, considerably more maintenance time is required for a house than a unit. For example:
- Cleaning and maintaining additional rooms. (Estimate – extra hour a week)
- Maintaining the lawns and gardens. (Estimate – extra 2 hours a week)
- Exterior building maintenance. (Estimate – extra hour a week)
2. People with houses accumulate more stuff and this costs timeThe more space we have the more we accumulate. People who live in houses tend to have more stuff, and this stuff costs more time and money to research, purchase, store, clean and maintain.
3. House owners need to work more to make mortgage repaymentsConsider the following - How many years of work are required to buy an average house? Say you could save $20K a year and wanted to buy a $500K house. Then that is 25 years to pay off the principle (alone), and then many more years to pay off the interest. What do you need to give up pay off a mortgage on a house? People with large home loans (and to their credit) make many personal sacrifices to make their repayments. For example some stay at home during their holidays (or take no holidays), adopt a stay at home lifestyle and are forced to eat discount foods, etc. In order to make the payments many people take second jobs, or both husband and wife work full time to meet the financial strain and end up spending less times with their kids. Along with all of this is more stress. Think spot – How many hours of your week’s work is going towards paying off your mortgage? If you were purchasing something at half the price, how would the numbers change? What could you do with the extra money that is not tied up in the house? If you are a parent which option is better? A. Raise kids in a house but spend less time with them. B. Raise kids in a unit but spend more time with them.
Personal benefits of living in a unitFor most of my life I have lived in houses. However, for the past 10 years I have lived with my wife (and now daughter) in a unit. For us the advantages of this ‘lifestyle’ include:
- Saved weekly time - My maintenance time on the home is minimal. Sure, my daughter doesn’t have a backyard to play in, but the time saved from maintaining a yard is spent in quality time with her. We have a great park across the road (which she loves), and she has visited far more places (and done more) than most of her peers. Further, time savings from living in a unit are often spent reading, exercising, and going out.
- Simple living – One thing I learn from my Grandma in her final years is the futility of accumulating stuff (but that is another article). Not having much storage space in a unit has encouraged me to have less and I feel this is good thing. (Actually, one of my yearly goals over the past 3 years is to finish the year with less than I started).
- Better investments – Problems with investing in houses include:
- A basic principle of investment is that you diversify your investments across a number of assets and not “put all your eggs in the one basket’. Yet, those who lock themselves into paying off a house over (say) 25 years are actually doing the opposite, and many around the world have paid dearly for this.
- Buying a house is often a highly emotional and irrational decision based more on cultural expectations than economic sense. Treating a house as an investment is fine, but clearly many people are not skilled at making sensible investment decisions of such magnitude. Look no further than the size of some peoples loan compared to their repayment capacity.
- Better holidays – Related to the above. Our unit lifestyle has freed us up financially to take holidays every year. Personally, I have been able to travel to around 25 countries, and my 4 year daughter (a seasoned traveller) has about a dozen flights behind her and a string of amazing experiences.
SummaryThis article is not meant to be an ‘attack’ on home ownership, but rather to hopefully create some thinking on the topic. Everyone's circumstance is different, and a house may be the best option for some, and a unit for others. In summary, it costs less time to own, maintain and repay a unit (apartment) than a house. The main benefit is that you have more time for other pursuits. Do you own a house? Is buying a house a waste of time?
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