A new American Dream?

[cschin4]

I have been moving all over the world for the past few years with my wife. That's when we realize that the world really is just one place. Its as big as your heart is.

That's great! And, it sounds like you really enjoy traveling and are adaptable. However, I take great comfort in the familiar. I like familiar surroundings and familiar faces. I like living in my small town where I know a lot of people. I would feel very lonely going to a new town and while one can make friends, it just wouldn't be the same.

[cschin4]

There is a difference between renting and home ownership. Those who buy a home are generally planning a more permanent residence. I think it offers a community more stability versus renting. And, if govt continually taxes and taxes, eventually people will realize they really don't own their homes anymore so I think there will be a greater trend toward renting.

[segmond]

american dream is what you make it out to be.

for me the american dream is still the same, making it in a capitalistic society. making millions, ferrari, lambo, benz, 7 bed room house, 8000 sq ft, in malibu, hollywood, key west, piper malibu. yes, this is the american dream for me. it is reality for some, and so can it be for me.

[elessar78]

There was an article about this in The Atlantic earlier this year. One of it's main points was that in the modern economy the workforce needs to be mobile. Mobile in the sense that workers need to be able to relocate from regions without demand for workers to regions that do. And that type of work force can't/shouldn't be homeowners, because the latter is tethered to one area (selling a house ain't easy).

I'm still a renter and we plan on buying a home when the conditions are right for us. I hesitate to use the word "goal" or "dream" in this instance because it makes it sound like it is the right choice for everyone. We moved to a "depressed" area to be closer to family and we could be making much more if we lived in the major metro area where we moved from. So that move is always on the horizon, so I don't see much purpose to buying a house here.

With that said though, I am getting tired of moving every few years and with our next move want to stay put for 5–10 years.

But from a gov't/policy perspective I think gov't should be neutral toward home ownership. I think creating this American Dream myth is unhealthy and fiscally irresponsible. Gov't pushes for ownership because home building and related industries is one (if not the) of the cornerstones of our economy. But people have already bought into the American Dream myth, so politicians who want to get elected give the people what they want.

[elessar78]

That's great! And, it sounds like you really enjoy traveling and are adaptable. However, I take great comfort in the familiar. I like familiar surroundings and familiar faces. I like living in my small town where I know a lot of people. I would feel very lonely going to a new town and while one can make friends, it just wouldn't be the same.

I just moved to a small town after all my life in a big metro area. I don't hate it, but I don't like it either. I miss the anonymity of a big city. Here everyone seems to know your business. Not that I have anything to hide and what I've found out that people say about me seems positive—but I'm sure as soon as I do something negatively perceived it will spread just as fast.

[maat55]

Unless you rent below your capability of payment and save the difference, you are wasting a part of your wealth building resources.

Today, many buy their homes at full value and many do not keep them up or stage them well for sell.

To me, this creates an opportunity for those who wish to turn their housing funds into an investment. Renting is fine, but why not make very low bids on homes that can be turned later for a profit.

Say you find a home in an area you like for sale, what is the harm in offering a low bid for it. If you get it, you are buying instant equity and able to increase it with repairs upgrades and good staging later. It is best to stay in it for two years, but if forced to, you can sell quickly with lower profit.

Just an idea.

[cschin4]

Here everyone seems to know your business. Not that I have anything to hide and what I've found out that people say about me seems positive—but I'm sure as soon as I do something negatively perceived it will spread just as fast.

How true! Everyone's divorce is front page news. WHo is running around with who. WHo partied a bit excessively last week. Who's kid is failing algebra and on and on. And, the worst thing is that people think they know their business better than you! People do engage in this at work and I try to walk away and not take part. I am sure I have been on the recieving end as well.

[elessar78]

Unless you rent below your capability of payment and save the difference, you are wasting a part of your wealth building resources.

I think it's sometimes hard to allot what "the difference" is. I guess you just have to put forth your best educated guess. But you're right in the sense that home ownership is part of your wealth building tool kit, but I think too many people sink too much money into the purchase price or not enough in maintenance to keep it's value or too much in home improvements that it dilutes the equity they're building.

Today, many buy their homes at full value and many do not keep them up or stage them well for sell.

To me, this creates an opportunity for those who wish to turn their housing funds into an investment. Renting is fine, but why not make very low bids on homes that can be turned later for a profit.

Say you find a home in an area you like for sale, what is the harm in offering a low bid for it. If you get it, you are buying instant equity and able to increase it with repairs upgrades and good staging later. It is best to stay in it for two years, but if forced to, you can sell quickly with lower profit.

Just an idea.

good points.

[cschin4]

Say you find a home in an area you like for sale, what is the harm in offering a low bid for it. If you get it, you are buying instant equity and able to increase it with repairs upgrades

There is a lot of potential financial harm there. First, buying a home you don't really desire or sinking money in to real estate can be financially damaging. There may be more repairs or the repairs may be much more expensive than you anticipate. And, you may be wrong about the resale value of the home even with improvements.
So, I think this is a bad idea all around. If you are buying the home because you desire to live in that neighborhood, like the house and are willing to fix it and live in it, it might maintain or increase in value or it might not.

The other point about keeping one's home up at "full value" can be an impossible task. There is a never end to constantly upgrading and changing styles. One can easily go broke trying to keep up with trends, etc. In my case, we completely remodeled our home. But, now it has new roof, furnace and on and on. I don't plan to do anything to it for the next 20 yrs other than maintanance and basic things. Will the home look "dated" in 20 yrs. Yes, probably. But, the home only needs to last as long as me. And, I have other priorities and things to fund as well such as my kids' college and so forth.

[asmom]

I posted an article about the mortage default and now renting as the new way of living.

But that got me thinking. Maybe renting is actually a new "american dream". Not because of affordability, or mortage defaulting. But because of us becoming a nation of mobile workers.

Do you think that the future holds that people will end up having to move where the work is? More of a transient lifestyle out of necessity?

I'm sorta living that now. During the week, I'm out of state going to the work. On the weekends, I'm home. But I can't image doing that with a family situation.

But I can see legions of people moving for a 12month assignment, then moving again to another one in a different place. Makes no sense to own a home if you are living like that.

Is that the future?

No. You discount the importance of feeling connected to a community and having roots. There will always be people who are transient and who move frequently due to their jobs (military comes to mind first) but there will always be more folks who want to maintain a home and belong to a larger community.

[maat55]

[QUOTE]

There is a lot of potential financial harm there. First, buying a home you don't really desire or sinking money in to real estate can be financially damaging. There may be more repairs or the repairs may be much more expensive than you anticipate. And, you may be wrong about the resale value of the home even with improvements.
So, I think this is a bad idea all around. If you are buying the home because you desire to live in that neighborhood, like the house and are willing to fix it and live in it, it might maintain or increase in value or it might not.

Your kidding right? All homes are owned by someone, most are bought just out of want and not as an investment. Combining both mentalities is a wise decision as apposed to just buying out of want.

Despite our recent history, home ownership has been a better financial decision than renting, long-term. Using good judgement, it can be a good decision short-term as well.

The other point about keeping one's home up at "full value" can be an impossible task. There is a never end to constantly upgrading and changing styles. One can easily go broke trying to keep up with trends, etc. In my case, we completely remodeled our home. But, now it has new roof, furnace and on and on. I don't plan to do anything to it for the next 20 yrs other than maintanance and basic things. Will the home look "dated" in 20 yrs. Yes, probably. But, the home only needs to last as long as me. And, I have other priorities and things to fund as well such as my kids' college and so forth.

The discussion was whether renting was the new american dream. Owning has always been the american dream.

Owning with investment as an factor, is wise in any case. There is nothing wrong with buying out of want for long-term use, the discusion is about short-term possibilities.

[cschin4]

Your kidding right?

No, I am not kidding at all. I do believe there are other schools of thought other than what you proposed. And, I see danger in people just assuming that real estate is always desirable, will always go up, and so forth. If you are serious, maybe you should buy some homes in Detroit and fix them up and resell in a market with 30% unemployment. Real estate can absolutely be a wise investment or your worst nightmare which is rarely talked about.

[elessar78]

Off the top of my head, I think most wealthy people own their own. I can't imagine that even a good percentage would be renters.

Can a renter become wealthy? Obviously they can, but I struggle to think of any that are. Maybe there's some relationship to wealth building and being anchored to one place. Although the inverse might be true too that people that should move for better jobs don't and are mired in low earning potential.

I think it'd be interesting to do the math and figure out if one would come out ahead if one were to "rent wisely" and invest the difference between renting cost of ownership (mortgage, maintenance, taxes, etc). But can you even put a price tag on human/pyschological/emotional values like having a place to call your own?

Ric Edelman, I don't know if any of you listen to him but he said that basically a house is a place to live first and foremost. Don't approach it as an investment. Appreciation on real estate is just a side-effect. If it's goes up, great. If not, you still have a place you love in an area you like to live in.

[maat55]

Your kidding right?

No, I am not kidding at all. I do believe there are other schools of thought other than what you proposed. And, I see danger in people just assuming that real estate is always desirable, will always go up, and so forth. If you are serious, maybe you should buy some homes in Detroit and fix them up and resell in a market with 30% unemployment. Real estate can absolutely be a wise investment or your worst nightmare which is rarely talked about.

I understand your conservative view, this is why I am suggesting that people buy at below market value, just as investors do. You will likely give a large number of bids before you find that dream deal.

I can certainly understand someone not buying in an severly job depressed market. This is just another factor. I really do not see housing prices moving up or quickly when it does, so anyone buying should do so with an good deal in mind.

But sitting on the sidelines long-term does not sound wise to me. Especially in an very low market. But, it could go lower, one has take ones job and liquidity serious before jumping in.

[cschin4]

I think it'd be interesting to do the math and figure out if one would come out ahead if one were to "rent wisely" and invest the difference between renting cost of ownership (mortgage, maintenance, taxes, etc). But can you even put a price tag on human/pyschological/emotional values like having a place to call your own?

A friend of my mom was divorced and rented for years. For him, it gave him mobility later in life and money in the bank. People sink huge amounts of money into their homes in terms of repairs, furniture, other "stuff" for yard work and on and on. Often, people are buying bigger homes now and therefore have more rooms to fill with even more stuff. Heating costs, taxes, maintenance and on and on. I think a home is more of a "break even" deal if you accept your home and enjoy it for what it is. If you are a fan of HGTV, you will quickly spend a lot of money trying to keep up with the Jones. I think a home is a bit of a risky venture nowadays. I own a home but if I was single with no kids, I really wouldn't see the point. I could be perfectly happy and was happy in times past in an apt or rental. But, that was me.