If you buy a house and pay off the mortgage, once you're older and don't want (or aren't able) to work any longer, you can live in your house for the cost of your utility bills. If you don't own a house, you still have to pay rent.
But why a house? I could just as easily say that if you take a loan to get a McDonald's franchise, then once that's paid off you'll at least have that store. Or the same logic for any other investment.
And the counterargument would be that you don't want to be fully leveraged because there's some risk involved in that. In the case of a loan maybe something will go wrong and you won't be able to afford the payments. Or maybe a new opportunity arises and you don't want to live in that town anymore and need to sell, possibly at a loss.
Maybe I actually should go out and buy a house. I just get this feeling that I don't really fully understand all the risks involved in this decision.
It very much depends on where you live, and how the markets develop what pays off. But I'm very happy I bought.
If you buy your house as an investment, it's a big risk. If you buy it as a hedge, and intend to stay long term, it's generally pretty cheap insurance against getting priced out of the area you want to live in.
It is, however, more complicated than the train of thought that says, "After 30 years, you'll own your own place, instead of having thrown away hundreds of thousands of dollars to a landlord."
Not trying to be nosy but did you make the move with children? (How did you help them adjust?)
Owning a home is super expensive even without a mortgage. So even going into retirement with a paid off house, you'll still want to set aside a decent pot of gold to keep that house "going" even aside from utilities (some of which are optional anyway, like cable/landline).
In most large metro areas this is impossible for ordinary mortals without a liquidity event or a very high income.
We are still very much in a housing bubble being driven by insanely cheap money -- near-zero or even <0 effective central bank interest rates. The only places housing is affordable are places where there are no jobs.
Too few jobs from too few employers, especially specialized one like ours, is probably more accurate. And therefore a potential need to move to another area where there is a job needs to be factored in.
If this is impossible for ordinary mortals, how are ordinary mortals buying houses?
I ask as a small city homeowner, so forgive my ignorance of the metro area real estate world.
I agree that buying a house in central London (for example) is probably outside the reach of mere mortals, but I think that problem occurs several steps before the "paying off the mortgage" bit applies!
Many very interesting replies to my initial comment; it certainly is useful to see things from a different perspective.
Right now I'm living with my father, and we have some neighbors who moved here after Hostess died. They have a big garden, which my father and I help with in various ways; they get a lower cost of living, we get wonderfully fresh veggies.