Renting vs. Home ownership

[elessar78]

Am I missing something in that I don't want to be a home owner in the immediate future? A lot of people around me tout the wisdom of buying a home, but I'm skeptical (I'm contrarian by nature).

But I see property taxes, limited mobility (can't move easily to new jobs), high maintenance costs. I know I'm "throwing away" money by renting, but I can't help but feel that the financial advantages of home ownership are overstated. Maybe I just fear of tying up a good chunk of my income (and time) to a house and losing the opportunity to place that time and money into other aspects of life.

Hope someone can enlighten me.

[MonkeyMama]

Where I live, I would never want to be a renter. Demand is very high, rent is expensive, good tenants pay maintenance costs and don't ask question (another renter will if you won't). In the boom market landlords were selling off for gains. In the down market landlords are foreclosing. This means as a renter you move A LOT! You are showing your landlord's home or being foreclosed on with no notice...

Apartments are better for a lot of these issues, but not for price and demand issues. But at least you don't have to move every year.

That being said, I don't entirely understand why most people in the rest of the country buy. If the rental market wasn't so expensive and cutthroat, it seems it would be far simpler and cheaper.

I think buying makes sense if you never want to move again. Of course, that is a perspective of low property taxes and rent increases far above inflation. We personally like the stability. BUt the reason we bought, plain and simple, was because it was cheaper in our siatuation, than renting.

[disneysteve]

OP, I think you are right. A lot of benefits of home ownership are overstated. You do give up certain things to be an owner rather than a renter. You do take on a lot more responsibilities and costs. It isn't the right move for everyone.

I think buying makes sense if you never want to move again.

I agree with this. I am always baffled when people here and elsewhere post that they are looking to buy a house and plan to move again in 3-5 years. Why would anyone go through the hassle and expense of buying only to turn around and sell a short time later. Renting makes a whole lot more sense in those situations.

I think the time to buy a home is when you are ready to settle down in one place for the long term. We bought our house in 1994 so we've been here over 15 years and have no plans to move until at least retirement which is another 18-20 years away.

[Goldy1]

One of my best freinds asked me for advice if he should buy the home he is renting. The price is great, but I told him probably not b/c what if he loses his job and the school district is bad.

[elessar78]

I agree with this. I am always baffled when people here and elsewhere post that they are looking to buy a house and plan to move again in 3-5 years. Why would anyone go through the hassle and expense of buying only to turn around and sell a short time later. Renting makes a whole lot more sense in those situations.

I think the time to buy a home is when you are ready to settle down in one place for the long term. We bought our house in 1994 so we've been here over 15 years and have no plans to move until at least retirement which is another 18-20 years away.

We can't commit to staying in this area for 3-5, much less a longer term. Wouldn't mind settling in our current area long-term but also know that this area is not filled with other jobs. Although our jobs are pretty secure (knock on wood) we're not sure we want to stay here. Unlike the rest of our family in the area, we have "portable" jobs. My in-laws are farmers and other family owns a local business, so they're not going anywhere and they know that.

I guess it's part of my nature that I'm cynical, but I don't see home ownership as the "American Dream." (Frankly, mine are bigger (world domination, in case you're wondering)). Again, worrying about being house rich/cash poor.

[EEinNJ]

Well, if your dream is World Domination, certainly buying a home would be premature. If and when you are successful, you could simply pick and choose wherever you want to be.

There are a lot of downside risks to owning a home, from maintenance, lack of mobility, to market value and property taxes.

[Caoineag]

Renting tends to be a better financial choice but I couldn't stand having people barge into my house anytime it pleased them and not being able to have a wall color other than white. I especially don't like having to wait for the landlord to fix something major whereas my own home as long as I have the money, its fixed. That said, I definitely waited until I knew I wanted to live here for a long time to come.

[TBH]

I am always baffled when people here and elsewhere post that they are looking to buy a house and plan to move again in 3-5 years.

Like MonkeyMama, we bought partly because we couldn't afford to keep renting. We were paying $900 per month in rent and had about 1000 square feet to live in, with the rent poised to go up. We bought a 1700 square foot house and our payments were less than $600 per month.

Also, there was no way we could afford a house that would have worked for us long-term at that point. The house was a stepping stone.

Five years later, we sold it for more than twice what we paid for it, and were able to buy THE house that we plan on living in until something major changes in our lives, like we can't manage the stairs any more. I'm only 32, so you can see how long I'm hoping to stay in this house.

To the OP, I think if you don't have the desire to buy, and you can afford to rent a nice place, then you're right. It is not appropriate to buy if you may want to move at some point. For me, I just had the home ownership bug. I really, really wanted to own a home, and I wanted to do it in a way that made financial sense, but I wanted to do it just to do it.

If you don't have the bug, then good for you. You can make a good decision without being swayed by an irrational desire to own at all costs.

[kork13]

Elessar, I've put alot of thought into this topic, and I honestly still haven't totally figured it out for myself. So I can't give you any advice on your original question, but perhaps I can offer you some help on this one:

I guess it's part of my nature that I'm cynical, but I don't see home ownership as the "American Dream." (Frankly, mine are bigger (world domination, in case you're wondering)). Again, worrying about being house rich/cash poor.

Take a look through here and you'll prevent yourself from making some unfortunate mistakes on your rise to power

[atomicrc11]

It really all does depend on your situation. In my area I could buy but I'm still young, have no kids, and don't really think I will be at this current job more than another 3 years. I want to move into something different so I have no plans to buy.

I am saving up a down payment, which is good because housing is expensive and the place I would want to buy a house is expensive. Not out of reach, but a bigger down payment would certainly help with the monthly payments.

[elessar78]

Take a look through here and you'll prevent yourself from making some unfortunate mistakes on your rise to power

Hilarious. Although my legion of terror would be dressed like teddy bears. It would lull my subjects into a false sense of security.

[maat55]

One thing to caution is renting too expensively. You should try to rent lower than you would pay for an mortgage and invest the difference, along with the estimated ins., taxes and maintenance costs.

Typically, a house only appreciates around 3 to 5% per year. Buying does make sense in longterm or investment mentality type purchases(as apposed to buying for want, top dollar or specific locations).

[Goldy1]

I LOVE owning a home. I love doing things like painting it etc. I hate the cost of upkeeping it though, but it is worth it to me. I hate the concept of paying rent but it would be nice ot not have to replace things etc. Home ownership has worked for us b/c my dh has ownd it since 1997.
If we had been movers then no.

[snafu]

The choice to rent or buy a home is very dependent on your iindividual circumstances. Statistically, over time, your house will likely be an excellent investment a place to live, a roof over your head...forced savings as it appreciates for those who can't make smart financial decisions. Owners can make decisions about their premises that renters don't control. Ownership gives a permanence which many find feels great. Status is also an element that drives ownership. In the USA there are tax deductions relative to interest and taxes.

In our region the rental market is primarily controlled by a couple of very large corporations. If you cheese them you can find it extremely difficult to obtain good accommodation in a safe area. I was shocked to learn renters must supply more documentation to be approved than banks require for mortgages!

[elessar78]

Typically, a house only appreciates around 3 to 5% per year. Buying does make sense in longterm or investment mentality type purchases(as apposed to buying for want, top dollar or specific locations).

The "investment" aspect is what concerns me. We don't live in an area where the real estate market gets "hot," so unless we live in it for a long time, I'm not sure how we can come out ahead after we pay taxes and maintenance. I guess there's the argument that you just lose it at a slower rate (than renting) since you get some of your money back as opposed to zero.

I LOVE owning a home. I love doing things like painting it etc. I hate the cost of upkeeping it though, but it is worth it to me. I hate the concept of paying rent but it would be nice ot not have to replace things etc. Home ownership has worked for us b/c my dh has ownd it since 1997.
If we had been movers then no.

I would love to be stable and do those things. My thinking is that when the time comes, we buy something maybe smaller than what we need to keep costs (maintenance, furnishing, utilities, taxes) down, as to hypothetically leave more money in our hands.

Owners can make decisions about their premises that renters don't control.

I think my wife cares more about this than I do. So it is a legitimate concern.

Status is also an element that drives ownership. In the USA there are tax deductions relative to interest and taxes.

I think you're touching on a very undervalued concept here. I have felt that some of our friends wonder why we haven't bought yet (i.e. questioning our financial capabilities), but the funny thing is that the ones that probably wonder are the ones that are also hyperconsumers. Renting has a stigma in the US. Everywhere else in the world, Europe and Asia, a vast majority are renters (maybe that's why I'm more comfortable with it). I also think people attach a rite-of-passage quality to it, that it's necessary for a person to buy a home to earn their adult standing.

In our region the rental market is primarily controlled by a couple of very large corporations. If you cheese them you can find it extremely difficult to obtain good accommodation in a safe area. I was shocked to learn renters must supply more documentation to be approved than banks require for mortgages!

The problem here in our area is that people aren't very transient, so there is not a wide selection of rental houses (and not many nice rental apartments either). Couple that with relatively cheap real estate and people tend to be owners rather than renters. That's part of what is pushing us to look into buying a lack of options.