Considering not ever owning a house again.

[Scanner]

I don't know. . .I'll have to consider. . .

"Cash in hand is better than 2 in the bush" (or whatever the saying is) when considering in the future it could be an income generator.

"Could" is the operative word.

[MonkeyMama]

I think age is another factor. If you are going to buy a home in your 20s and pay it off in 15-20 years, it's going to be more of a benefit to you (lack of paying rent longer) than when you start looking at home purchases when you are much older. 42 is still on the young side, but it's not the same as being 22, either.

Scanner - I totally know what you mean. Real estate had a HUGE run up in the city I grew up. Most of my friends and relatives have bought housing there thinking maybe their houses will be worth 10 times as much in 20-30 years time, too. Just like their parents! There is no way possible that past gains can be expected in the future. Is a small starter home is going for $500k today, who is going to pay $5 million in 30 years??? That ship has sailed. People may pay $500k today for a home that cost $50k in the 80s, but that rapid growth is just completely unsustainable. (I personally refuse to pay $500k for ANY house - much less a 2 bedroom house).

[Scanner]

MM,

Yeah, I thought of another way of expressing this for the Math Geeks here (Jimohio!). . .

Home prices exponentiated during the Baby Boomer careers. Home prices will only go up geometrically from here (at best).

Like all assets that exponentiate in value. . .it can never go on forever, until infinity.

Now, knowing that a house will not exponentiate in price (and the geometric line of taxes and repair may outpace the geometric line of the price), that lowers the value of owning one here on out.

Or like you said. . .that ship has sailed. The Baby Boomers were on that ship. It's gone.

Or to borrow a healthcare/body analogy, like a "bubble" or an aneurysm, this real estate aneursym has popped and will just continue to hemorrhage. I am not sure there is any clotting factor big enough to plug the hole and allow for a return of significant inflation, esp. when real estate is such a tax target. And there isn't enough blood in the body to refill the vessels of the housemarket.

In fact, to keep pumping blood (tax dollars, tax cuts) into real estate is just futile.

[Scanner]

Another valuable way of thinking about this may be in terms of "Time".

I am 42 years old.

Let's say I get $60,000 in home equity in payout on my divorce and rent is $1200/month.

I have my shelter (not utilities I realize) paid for 5 years. I am sheltered for 5 years, or until I am 47.

I need to accumulate enough wealth (but less and less as I age) to provide my basics until I die, which is statistically in 30 years.

Or if you look at me as a corp., like let's say, Scanner, Inc.. . .how many years can I operate until bankruptcy? I think Walmart has 30 years on it. I think with my retirement account and such, I am probably around 10 years. (making me a small cap bordering on a mid cap Some of you are Blue Chips like DisneySteve and some of you are microcaps )

Everything on life is kind of leased anyway the way I look at it sometimes. Not to get too philosophical, but do we really, really, OWN our real estate anyway? IF we think so, try not paying your taxes and see what happens.

In a way, we just rent it from the government anyway. It's not like I can pick up my house and sell it and ship it overseas.

[disneysteve]

do we really, really, OWN our real estate anyway? IF we think so, try not paying your taxes and see what happens.

In a way, we just rent it from the government anyway. It's not like I can pick up my house and sell it and ship it overseas.

This is a faulty argument. Just because you pay taxes doesn't mean you don't own your house. Your taxes pay for city services like schools, police, fire, snow removal, trash collection, etc.

And yes, you could pick up your house and move it somewhere else or sell it to someone who loads it onto a cargo ship and moves it. Farfetched but possible.

[cypher1]

Everything on life is kind of leased anyway the way I look at it sometimes. Not to get too philosophical, but do we really, really, OWN our real estate anyway?

I was just going to add to that statement (not referring to taxes); we don't own our houses, our houses (mortgage) owns us. Everyone told me congrats on owning my house when i got. I smiled back thinking of that statement. In my head, all I was thinking of, this mortgage is going to be there 12monthly payments*30 years! Or paid off just before 60, and that I can't take for granted my career/health, making me more appreciative of what I have now...before I'm not able to work.

[Scanner]

I hope that's not your argument, DisneySteve - that I could pick up my house and ship it overseas Parcel Post.

I'd imagine the postage and freight on that would be $700,000 for a $150,000 house.

Heck, I bet it's pricey just to move it down the road but there is a thought. . .someday sell my house to a landowner and then just sell my land with a hole in the ground for whatever

[disneysteve]

I hope that's not your argument, DisneySteve - that I could pick up my house and ship it overseas Parcel Post.

I don't know of any homes that have been shipped overseas but I have seen plenty of instances of people moving their homes. They literally lift the house off the foundation, load it onto a flatbed and transport it to another site where they set it down onto a new foundation. I have no idea what that costs but it does happen from time to time.

My point was just that you do, in fact, own your home and could move it elsewhere if you chose to do so.

[kork13]

Scanner, I won't try to argue the point based on numbers and all that, because it's all guesses and estimates anyway, and really I'm probably just not that smart on it all. But IMO, it comes down to a few simple factors/considerations:
- Forget the investment/asset argument altogether for a second -- above all, a home provides a place for you to live and plant your roots. Yes, both renting and buying serves this purpose. Just remember that it's not all about the long-run money aspect. You're living there too.
- A car is, without question, a depreciating asset as well. You pay registration fees every few years, gas every week, repairs and insurance regularly, and so on. Does all this mean you should rent/lease your cars for the rest of your life? Of course not! Same logic applies.
- You buy a house, and you can live in it for as long as you want. Once you pay off the mortgage (which typically can be done in 15-20 years or less), your monthly "rent" would only be like... $500-$600/mo, basically covering taxes, annual repairs, insurance, etc. Where else can you find that?
- If you're splitting hairs like this going between renting and owning (or any two options you're considering in any situation), that tends to tell me that the difference between the two options is very slim, and you're fine doing either one.

[buildmybudget]

You know, it hasn't come up yet anywhere in this discussion about the value of neighbors, neighborhood, or surrounding amenities that might just make it a bit more worth the cost of owning. Not to say you can't find an awesome location for an apartment full of amenities and such, but being a relatively new homebuyer who has lost some right off the top we are really happy where we live. We are two houses away from a best friend and have also become really good friends with two or three other couples in the neighborhood. This friendship is worth more than a couple percantage points or couple thousand extra paid in property taxes. Again, you can find the same friendship in an apartment situation, but having lived in both situations it's quite different when you own in and contribute to a community. I'm not 42, but given the circumstances I could see myself needing to be close to friends. Just a thought...

[irmanator]

I agree with build my budget. I can have dogs, a garden, I can change things if I want like the color of my living room or the light in the bedroom. I can change the lock whenever i want and I don't have to give a copy of the key to the landlord. I don't have to hear my neighbors fight or make up. But the neighbors are close enough that if I need a tool or to talk about the weather etc they are there

[Jehnavi]

I see your frustration here, but unfortunantly if your neighbors are willing to sell their homes at a loss or take a 30% less offer for a house comparable to yours, which do you think is going to happen? Hmmmm? Be logical here now and honest. If you were buying a home in lets say Wheaton like you are talking about and had two homes; one was $500,000 and the other was also listed at $500,000 and had comparable stuff in them and the one owner was willing to accept a $400,000 offer just to get out, you wouldn't take the house from him for that amt? I'll bet in fact you would, and be on the phone with your family and friends immediately telling of what a wonderful deal you got on the home.

That is what you are going to be faced with sadly enough. NOBODY has any $$$, and things are only going to get worse. Oil keeps going up, and as a result everything follows suit, so in a few years I can see a gal of milk being about $6 a gal and a loaf of bread being about $5 meaning a cart full of groceries at even Super Wal Mart will run you about $500. Who has this kind of $$$? I know I sure as hell dont.

[Scanner]

I agree with BuildBudget on putting the "intangibles" in the equation. Just because they are intangible, doesn't mean they aren't worth something.

I think I can still have neighbors though, if I rent a house in a neighborhood vs. buy one.

[Scanner]

I would like to add it's probably the intangibles (vs. the money) that would sway me over to buying, namely the intangible that if you suffer the loss of a massive lawsuit, it's very much hardter to take your home away vs. money.

I am not sure if retirement money is protected but I am pretty sure home equity is protected. (if let's say I lose a lawsuit for a ridiculous amount).

There was a trend years ago where attorneys were going for blood on doctors and sueing beyond generous policy limits and winning. With a stroke of a judge's pen, I could lose everything.

In the meantime, I am sure to order tests to CYA in the absence of any tort reform.

Anyway, things like that will tip me when I am on the fence.

[EEinNJ]

Scanner, more important than the $$ involved is the transitional period you're going through. Renting will give you more flexibility. If you find a new partner (and everybody in their 40's I know has) it will be much easier to move ahead with a new life with cash in hand than a house to sell.
In the long run, though, home ownership wins out as a hedge against inflation. Although, it sounds like you're in NJ like me, in which case I'd say all bets are off.

Home prices here have not gone down that much, houses are just sitting. At the shore, I know during the boom prices were going up 20-25% a year, but I don't think they've fallen back. In places like Ocean City they're still doing tear-downs, but I've heard vacation rental prices have come down.