for DF/renting a better option for many

[movie zombie]

http://realestate.yahoo.com/promo/renting-the-new-american-dream

we''ve always agreed re real estate. thought you''d enjoy this article from someone not afraid to call it as it is.

mz

 

[Lady_Disdain]

Interesting article!

Although I am not in the US (and I am quite mystified by the American housing market), I am a long time renter with no intent to buy. For me and my situation, it just makes a lot more sense.

 

[purselover]

I completely agree! It''s ridiculous how many people go into foreclosure, not everyone should be a homeowner and the sooner people accept that the better.

 

[NewEnglandLady]

I love these types of articles, especially after seeing years of articles talking about how renting is just throwing money down the toilet.

I don''t know how or when renting got such a bad reputation, but how do you think other people saved up enough money to put 20%+ down on a house? They rent!

D and I have rented for over a decade now and have never had a bad experience. Renting allowed us to live cheaply while we saved. It also gave us peace of mind when we were younger, poorer and didn''t have a fully-funded emergency fund in case the roof started leaking or our water heater broke. Renting also gave us a lot of flexibility--we wanted to live in at least three different neighborhoods before we decided to buy. We ended up living in four local neighborhoods and that was instrumental in us making a final decision about where we wanted to buy.

We are currently in the process of buying, but I have no doubt there are going to be many days when I will miss renting! Particularly when the property taxes are due or when something breaks

 

[janinegirly]

I think most would agree with the concept that renting is better if you can''t afford to buy. Makes total sense.

But home ownership is a better long term investment of same cash if you can afford the purchase without draining your bank account and taking out all kinds of loans/only putting minimum down etc..

I also rented for years--it did allow me to save $ and frankly I enjoyed the feeling of freedom! And NEL is right, property taxes are awful, and I live in the state with the highest ones!

 

[iheartscience]

Date: 4/19/2010 2:34:17 PM
Author: janinegirly
I think most would agree with the concept that renting is better if you can''t afford to buy. Makes total sense.

But home ownership is a better long term investment of same cash if you can afford the purchase without draining your bank account and taking out all kinds of loans/only putting minimum down etc..

I also rented for years--it did allow me to save $ and frankly I enjoyed the feeling of freedom! And NEL is right, property taxes are awful, and I live in the state with the highest ones!

Ditto! My husband and I rented for years (9 at least), but I don''t regret shelling out for my house at all. More space, better amenities and it''s MINE so I can do what I want in it and to it. (And our property taxes are part of the monthly mortgage payment so I don''t notice them other than when I filed our taxes. Having them as a part of the payment is painless!)

If I lived in an area that suffered a major drop in housing prices I wouldn''t have bought when I did, though. (We closed on our house in August 2009). Luckily in my area the prices are pretty stable. In fact, my neighbor 2 doors down just sold their house (saw an inspector there last week), and the list price was considerably higher than what we bought our house for. Can''t wait to see what it ended up selling for!

 

[E B]

Date: 4/19/2010 2:25:43 PM
Author: NewEnglandLady

I don't know how or when renting got such a bad reputation, but how do you think other people saved up enough money to put 20%+ down on a house? They rent!

This is what we're doing. We're in no hurry to buy because we've given ourselves the 'DP goal.'

 

[Lauren8211]

Date: 4/19/2010 3:43:16 PM
Author: E B

Date: 4/19/2010 2:25:43 PM
Author: NewEnglandLady

I don''t know how or when renting got such a bad reputation, but how do you think other people saved up enough money to put 20%+ down on a house? They rent!

This is what we''re doing. We''re in no hurry to buy because we''ve given ourselves the ''DP goal.''

This makes me feel better! DH has it in his head that we can''t TTC until we buy a house. I don''t see why that is such a big deal to own vs rent?

Maybe he''s just using it as an excuse to not TTC for a bit.

 

[NewEnglandLady]

Date: 4/19/2010 3:45:30 PM
Author: elledizzy5

Date: 4/19/2010 3:43:16 PM
Author: E B

Date: 4/19/2010 2:25:43 PM
Author: NewEnglandLady

I don''t know how or when renting got such a bad reputation, but how do you think other people saved up enough money to put 20%+ down on a house? They rent!

This is what we''re doing. We''re in no hurry to buy because we''ve given ourselves the ''DP goal.''

This makes me feel better! DH has it in his head that we can''t TTC until we buy a house. I don''t see why that is such a big deal to own vs rent?

Maybe he''s just using it as an excuse to not TTC for a bit.

I teased my DH about the same thing--ideally we wanted to buy before TTC, but buying a home took a bit longer than expected. I told him the baby timeline was the same regardless of whether we bought a house or not

The house we are in now is a 2 bedroom "just in case" we decided to TTC before buying. You never know...

 

[elle_chris]

I do both. I have an apartment that was paid off years ago that I currently rent out, as well as renting the apartment I currently live in.

I don''t buy into the whole owning your own home fantasy because even with my apartment, anything that goes wrong inside is my responsibility. So two years ago I spent thousands re-doing the bathroom because of a leak to the apartment downstairs. Had i been renting, the landlord would of had to fix it. This year I need to re-do the kitchen before selling, another 10k easy. Plus the constant worrying about my tenants. The reason I bought was because at the time, renting vs buying came out even monthly. It was just not worth it to rent. Today it''s very different.
I don''t know about other states, but here in ny (city), i would never, ever, ever, buy with minumum down. that to me is throwing money away, and when renting starts to cost half the amount of the mortgage plus cc payments. It''s just not worth it.

Currently, for us here, there''s no reason to buy. Eventually, we''re hoping to put between 50-60% down. If that''s not possible, then I''ll never own again. And I''d be fine with that.

 

[Lauren8211]

Date: 4/19/2010 3:53:42 PM
Author: NewEnglandLady

Date: 4/19/2010 3:45:30 PM
Author: elledizzy5

Date: 4/19/2010 3:43:16 PM
Author: E B

Date: 4/19/2010 2:25:43 PM
Author: NewEnglandLady

I don''t know how or when renting got such a bad reputation, but how do you think other people saved up enough money to put 20%+ down on a house? They rent!

This is what we''re doing. We''re in no hurry to buy because we''ve given ourselves the ''DP goal.''

This makes me feel better! DH has it in his head that we can''t TTC until we buy a house. I don''t see why that is such a big deal to own vs rent?

Maybe he''s just using it as an excuse to not TTC for a bit.

I teased my DH about the same thing--ideally we wanted to buy before TTC, but buying a home took a bit longer than expected. I told him the baby timeline was the same regardless of whether we bought a house or not

The house we are in now is a 2 bedroom ''just in case'' we decided to TTC before buying. You never know...

I drilled that into his head the other day! I also reminded him that you''re pregnant for nearly a YEAR before the kid comes.

We have a 3 bedroom now, so we have room JIC!

 

[geckodani]

I am still working on this concept.

We tried to buy a house, it faile, DH is looking for a jon so on so forth ad naseum. We need to move or re-sign our lease. We were thinking about buying a house, but now it looks more likely that we will just find another apartment, or stay where we are at, and keep saving for a down payment! Part of me hates renting, and part of me loves it.

And the TTC... I really wanted to be in a house before we TTC, but at the end of the day, as long as there is somewhere to put the kid, who cares?

 

[Lady_Disdain]

Date: 4/19/2010 2:34:17 PM
Author: janinegirly
I think most would agree with the concept that renting is better if you can''t afford to buy. Makes total sense.

But home ownership is a better long term investment of same cash if you can afford the purchase without draining your bank account and taking out all kinds of loans/only putting minimum down etc..

I also rented for years--it did allow me to save $ and frankly I enjoyed the feeling of freedom! And NEL is right, property taxes are awful, and I live in the state with the highest ones!

Buying a house is not necessarily a better investment and it is not of the same cash (a mortgage is significantly higher than rent in most markets).

Why I do not buy a house:
1 - too much of my net worth in one investment leaves me too vulnerable
2 - too much emotional attachment to a house makes it harder to disinvest if necessary
3 - too hard too disinvest (iliquid)
4 - too expensive (realtors, closing costs etc can easily reach 8% of the invested amount)
5 - depreciation hits a house hard (nothing like 70''s avocado green counters to help a house sell)
6 - I can get higher returns in other investments, which more than cover the cost of renting

 

[jewelz617]

I rent and love it. I don''t want to purchase a home yet, not for at least another 5 years. I simply don''t want the expense or responsibility at this point, and with my husband and I having family in both the North and the South, we don''t know where exactly we''re going to be permanently. Not ready for the commitment at all, and won''t be for a long time.

 

[Dancing Fire]

Date: 4/19/2010 1:34:57 PM
Author: purselover
I completely agree! It''s ridiculous how many people go into foreclosure, not everyone should be a homeowner and the sooner people accept that the better.

i knew this was coming 5 yrs ago. i''m piss off cuz taxpayers ended up paying for their mistake.

 

[Dancing Fire]

Date: 4/19/2010 2:25:43 PM
Author: NewEnglandLady
I love these types of articles, especially after seeing years of articles talking about how renting is just throwing money down the toilet.

I don''t know how or when renting got such a bad reputation, but how do you think other people saved up enough money to put 20%+ down on a house? They rent!

D and I have rented for over a decade now and have never had a bad experience. Renting allowed us to live cheaply while we saved. It also gave us peace of mind when we were younger, poorer and didn''t have a fully-funded emergency fund in case the roof started leaking or our water heater broke. Renting also gave us a lot of flexibility--we wanted to live in at least three different neighborhoods before we decided to buy. We ended up living in four local neighborhoods and that was instrumental in us making a final decision about where we wanted to buy.

We are currently in the process of buying, but I have no doubt there are going to be many days when I will miss renting! Particularly when the property taxes are due or when something breaks

IMO...that should be the law!!

 

[iheartscience]

Date: 4/19/2010 7:01:52 PM
Author: Dancing Fire

Date: 4/19/2010 2:25:43 PM

Author: NewEnglandLady

I love these types of articles, especially after seeing years of articles talking about how renting is just throwing money down the toilet.

I don''t know how or when renting got such a bad reputation, but how do you think other people saved up enough money to put 20%+ down on a house? They rent!

D and I have rented for over a decade now and have never had a bad experience. Renting allowed us to live cheaply while we saved. It also gave us peace of mind when we were younger, poorer and didn''t have a fully-funded emergency fund in case the roof started leaking or our water heater broke. Renting also gave us a lot of flexibility--we wanted to live in at least three different neighborhoods before we decided to buy. We ended up living in four local neighborhoods and that was instrumental in us making a final decision about where we wanted to buy.

We are currently in the process of buying, but I have no doubt there are going to be many days when I will miss renting! Particularly when the property taxes are due or when something breaks

IMO...that should be the law!!

Wait what''s that, DF? A conservative who wants more governmental regulation? What about the free market?!

 

[Dancing Fire]

Date: 4/19/2010 7:04:09 PM
Author: thing2of2

Date: 4/19/2010 7:01:52 PM
Author: Dancing Fire

IMO...that should be the law!!

Wait what''s that, DF? A conservative who wants more governmental regulation? What about the free market?!

not in this case. we do need some kind of regulation.

thing...i see you becoming the leader of the TEA PARTY in the near future.

 

[Hera]

I don''t see anything wrong with renting either, but I do think when the financial opportunity comes up for someone (stable job, nest egg,down payment etc) then I think it''s a good idea to buy. This is after all necessary research has been done of course.

I remember in 2005 I almost bought a one bedroom (625 sq ft) condo conversion in a seedy part of town for $250,000. I remember doing extensive research into the potential real estate bubble and some pretty solid evidence that I took to heart. It was hard sifting through it because there''s always those doomers and gloomers with their agendas.

The article actually suggested that I wait until 2001 housing prices but they never came and I got tired of waiting(and still haven''t) so my DH and I bought in Dec 2008. We bought a house in a great area for just a little more than the cost of the condo. So far so good.

I try not to obsess about property values because we bought for the long term. That means I don''t worry too much because the value may likely go down and it will likely go up.

 

[kama_s]

We have easily more than 20% to put down on a house, but we STILL choose to rent. Why? Because it makes zero sense to buy unless you know you'll be staying in the same house/city for a very long time. Essentially, the first few years you're paying off interest on the mortgage and I see no difference between that and rent.

The article just seems like basic common sense (to me). It's rather sad that people need to be told this and that it's not automatically intuitive.

 

[partgypsy]

It reminds me of the stock market (tech bubble) - when everyone is screaming, gotta get in now it''s only going up, you''ll miss out if you don''t get in now! is the time to take a step back and look at things objectively. My father who was always completely happy renting in 2006 decided after much peer pressure (brother, accountant, attorney) to get a townhome. Even he said he was doing for business/financial decisions. During that time I was one of the few people who said to him, you know, if you are happy renting, why change now?
He put a 50K deposit for a 290K townhouse, and was paying more per month 1400 (versus) his 1100 a month apartment. He liked his townhome, but didn''t use half the space, and missed the indoor pool his apartment recreational space had. His business was greatly affected by the recession, had to close his business and due to the loss of income ended up having to walk away from his townhome when he couldn''t sell it for 270 or even 265K. So yes, he would have been much better off had he kept on renting, both the 50K he put as downpayment, all the transaction fees and property taxes, and additional money he paid every month for the "privilege" of owning.

The only benefit of home ownership is when you actually "own" the house (which we are less than 59K away from). Then you do have security because you have an essentially free place to live which does give you more freedom.

 

[kama_s]

Date: 4/19/2010 2:34:17 PM
Author: janinegirly
I think most would agree with the concept that renting is better if you can''t afford to buy. Makes total sense.

But home ownership is a better long term investment of same cash if you can afford the purchase without draining your bank account and taking out all kinds of loans/only putting minimum down etc..

I also rented for years--it did allow me to save $ and frankly I enjoyed the feeling of freedom! And NEL is right, property taxes are awful, and I live in the state with the highest ones!

I disagree. The return on other investments would be much higher than investing in a house. Plus, don''t forget about all the taxes etc you incur when owning a house. As purely an investment, a house would probably give you the least return.

 

[PumpkinPie]

Date: 4/19/2010 6:57:40 PM
Author: Dancing Fire

Date: 4/19/2010 1:34:57 PM

Author: purselover

I completely agree! It''s ridiculous how many people go into foreclosure, not everyone should be a homeowner and the sooner people accept that the better.

i knew this was coming 5 yrs ago. i''m piss off cuz taxpayers ended up paying for their mistake.

that must be so frustrating! I''m glad it didn''t get anywhere near that bad up here in Canada (or not yet at least).

 

[swimmer]

I agree about renting being a better idea for some folks. We have our down payment ready, but can''t figure out where to live! A few miles in one direction or another can make or break a commute in our urban area. Also, property taxes here can easily equal half a year of rent. Someday we will buy, but not yet.

Mostly I wanted to chime in on the TTC thing. Yes, everyone says "you gonna buy now?" and I tell them that our new little roommate will be doing little other than producing body fluids so why on earth would we want to own our place? I get the "nesting instinct" but am resisting the urge to own.

 

[E B]

Date: 4/19/2010 4:04:20 PM
Author: geckodani

And the TTC... I really wanted to be in a house before we TTC, but at the end of the day, as long as there is somewhere to put the kid, who cares?

Exactly! We've got plenty of room in our current rental. Room enough for one more, even!

(Not now...someday soon, though!)

 

[lightningbug]

In my twenties I owned two homes (in sequence) and realized a generous return on each of them ~ enough to be able to put down far more than 20% on another nice home today, if I wanted. But I don''t feel safe doing that right now -- instead, I put that money in higher-return investments and rent a lovely apt. in a fun part of SF, free from worry about repairs, new roofs, new plumbing, or watching my nest egg shrink before my eyes.

This market is still too precarious, IMO. Gone are the days when we could count on our houses increasing in value by 7%++ per year. Thousands upon thousands of Adjustable Rate Mortgages are going to be resetting in 2010, 2011, and 2012, balloon payments will be coming due, and all this =""> more foreclosures and more supply flooding the market, lowering existing values. Even here in the Bay Area, where people make BANK and housing prices are far, far more stable than the rest of the country, values are steadily dropping.

I would love to be able to pinpoint the inflection point so that I can buy low...but I''m not convinced it''s going to happen this year.

The downsides to renting? (1) I feel a little bit like a 2nd class citizen, even though my place is beautiful and I''m saving money ~ the emotional allure of the "American Dream" is very powerful, even when it''s not the right economic decision;

(2) Not being able to do something simple, like paint my walls or replace a shower head, w/o permission. Annoying.

 

[iheartscience]

Ha, how''d you know DF? I''m actually the President of my local Tea Party chapter! Me and all my anti-government friends like to get together every Tuesday and make grammatically incorrect signs!

As for the investment aspect of homeownership, I do think that in some areas it can be a solid investment. I could rent my house out for the full mortgage amount right now, and rents in my area go up every year. I live in a popular area of my city and rental properties are hard to come by here. We might end up keeping our current house and renting it out if we move to another house in our area eventually.

 

[Abril]

Kama_S is right.

Repeat after me. A house is not an investment. A house is not an investment. A house is not an investment.

Well, technically it is, but it''s not an investment that will give you stock-like returns (and don''t be snarky about the bear market that just ended--it''s big selloffs that lay the foundation for future bull markets, maybe like the one that started on March 9, 2009). Houses certainly do not yield the euphoria-inspiring returns everyone and their sister seemed to be raving about in the 90s/00s. If only people would stop to do the math instead of being impressed by the large numbers that are naturally involved in real estate. The annualized % returns are even worse once you subtract out all the mortgage interest, property taxes, maintenance/upkeep costs, insurance, etc.

The true value of a home is that you get to live in it. Don''t rely on it for much of anything else financial. It''s not going to fund your retirement. It''s not your ticket to guaranteed riches. It''s not a hedge against inflation. It''s not even that good a repository of value. Enjoy your house because it gives you shelter and treasure all the good memories of the experiences you''ve lived inside it.

 

[geckodani]

Date: 4/19/2010 8:48:51 PM
Author: E B

Date: 4/19/2010 4:04:20 PM
Author: geckodani

And the TTC... I really wanted to be in a house before we TTC, but at the end of the day, as long as there is somewhere to put the kid, who cares?

Exactly! We''ve got plenty of room in our current rental. Room enough for one more, even!

(Not now...someday soon, though!)

I must admit though, I''m still struggling with this one.

We have a 2 bed 2 bath 1200 sq foot apartment with a bonus dining room... finding a house that we could afford with the same amenities has been difficult. So. We wait. Boo, LOL.

 

[Dancing Fire]

Date: 4/19/2010 7:55:57 PM
Author: kama_s

Date: 4/19/2010 2:34:17 PM
Author: janinegirly
I think most would agree with the concept that renting is better if you can''t afford to buy. Makes total sense.

But home ownership is a better long term investment of same cash if you can afford the purchase without draining your bank account and taking out all kinds of loans/only putting minimum down etc..

I also rented for years--it did allow me to save $ and frankly I enjoyed the feeling of freedom! And NEL is right, property taxes are awful, and I live in the state with the highest ones!

I disagree. The return on other investments would be much higher than investing in a house. Plus, don''t forget about all the taxes etc you incur when owning a house. As purely an investment, a house would probably give you the least return.

yes and no...timing is everything. when everybody wants to buy you better run,cuz by then the prices had already been over inflated.