patrick.net

Yep, same boat.

In California it's the rational choice.

People who have to drive "cool cars" are suckers in my book. Buying a house would be just another irrational economic decision driven by OTHER people pressure and advertising.

mnsweeps says

I know we are still way better than other financially and socially. Like we go on cruises, travel around, weekend movies and all that but our friends hardly do that.. So i do understand that even though we dont have a home to call ourselves, our lives are more colorful and merrier than other home owners…

Just wanted to vent and see what peoples opinions are..

We are in a similar situation to yours, we didn't sell but we never traded up from our 1200 sq ft sh*tbox in a blue collar neighborhood, owner equivalent rent is VERY low for the Bay Area.

It is never good to compare ourselves to others because there will always be someone else with more or better. Instead just consider what is best for your own selves like the flexibility that comes with financial stability.

In answer to your original question, yes, we are fortyish, with kids, and renting. While this has been absolutely the best choice of the available choices, it is starting to feel sort of dead-end, as I don't actually want to be renting in retirement or paying off a mortgage in my late 60's. So we must consider whether it makes sense to continue living in California, or whether it might make sense to invest in property elsewhere, in a place we like, and hold that for retirement. We do have a cute rental place, and we are able to save a bit, but we don't invest in the rental place as we would in a home, and quality of life stuff is starting to matter. That said, I wouldn't buy the half-million dollar place we rent, on the general principal that (absent hyperinflation), this is not, to me, a half million dollar house.

Eliza says

In answer to your original question, yes, we are fortyish, with kids, and renting. While this has been absolutely the best choice of the available choices, it is starting to feel sort of dead-end, as I don’t actually want to be renting in retirement or paying off a mortgage in my late 60’s. So we must consider whether it makes sense to continue living in California, or whether it might make sense to invest in property elsewhere, in a place we like, and hold that for retirement. We do have a cute rental place, and we are able to save a bit, but we don’t invest in the rental place as we would in a home, and quality of life stuff is starting to matter. That said, I wouldn’t buy the half-million dollar place we rent, on the general principal that (absent hyperinflation), this is not, to me, a half million dollar house.

The theory is that the money you save with renting you should be actually saving, and you end up with more money in the end due to the extra costs of owning a house (tax, maintenance, loan interest). Then you can buy something nice to retire in with cash. Hopefully you aren't going crazy with your money though.

Yes, except for being 28, and with no kids. Ok, so not so much like you except for renting and enjoying the money we're saving. My wife and I would like to buy a home before we have kids but I don't see a problem renting if prices haven't come down by that time. In the mean time we are building up our savings and investments, and enjoying ourselves. In fact right now we're planning this weekend's road trip to Vegas.

You shouldn't feel like a loser, you should feel pissed that your generation got slighted in such a shitty way. Your prime real estate buying years were stolen from you by a housing bubble.

I'm at the point (and you may be too) where my family is growing and a decision has to made about a bigger place with better schools, yada yada. And just like I don't want to waste money on an infalted mortgage, I don't want to spend "extra" on a nicer rental if my goal is to save money to buy a house.

I wish I could take my savings and plunk it down into a house I can buy and live in for the rest of days without worrying that it was the worst financial decision of my life.

jessica says

You shouldn’t feel like a loser, you should feel pissed that your generation got slighted in such a shitty way. Your prime real estate buying years were stolen from you by a housing bubble.

I think a lot of folks share that feeling.

My advice is just save the money and buy something with cash later. Prices will come down and interest rates will rise, and it will be a good time to buy all cash.

I'm 40 and my wife is 36 with a kid on the way and we are perfectly content renting in the Silicon Valley. We wanted to buy a home back in 2007 but were turned off by the ridiculous prices and we wanted to stay flexible in case I had to change jobs. Since 2007, we've saved up a lot of money and got lucky in the stock market so we thought again about buying a home this year because prices have dropped so much but decided to hold of longer because I don't see much appreciation in home prices for the next few years. The reduction in the high balance conforming loan limit http://finance.yahoo.com/news/Federal-Retreat-on-Bigger-nytimes-3995455694.html?x=0 and the large inventory of foreclosures and slow job growth will restrict home price appreciation.

Back when I was 35, it was an issue for me that I didn't own a home, but now that I'm older and wiser I realize I wanted to own a home just to fuel my ego. When I was in my 20's and early 30s I always drove a nice late model European car to impress girls and show off to my buddies. My current car is now 10 years old and I can easily afford a $60k car but have no urge to get buy 1 because I know it's a waste of money.

In my situation, a home has to appreciate at least 5% a year and I have to stay in it for at least 9 years in order for me to be better of owning than renting (based on the NYTimes rent vs. buy calculator. http://www.nytimes.com/interactive/business/buy-rent-calculator.html

I'm kind of in the same boat (a bit younger, single parent), I've been renting and saving with the hope of one day purchasing a home. I felt like a loser before when seemingly everyone seemed to be purchasing, but I'm just grateful I didn't purchase a home others told me I could afford when my calculator said I couldn't.

I'm 45 and renting, but own a house. I
had to move for a job change. Professionally, it was a great move. I miss my house a lot and have had no success in selling it in 6 months.

I am 45 with two kids renting in Mountain view.

I'm also 45, married with two kids and renting, in Menlo Park.

Renting is definitely the best financial decision we ever made. I know at least four families like mine around here that got into trouble by "owning" a really expensive house, when they could have rented the same thing in the same school district for half or a third as much per year. We never even got close to financial trouble, and we took some great vacations too.

It also gave me the freedom to keep working on Patrick.net even after I got laid off. That would just not be possible with a huge mortgage, and I'm grateful for the opportunity to do what I really want to. If I can just make a bit of money from my data service (to be re-launched in a day or two) then I don't think I'll have to work for a boss at all.

I'm also really cheap when not on vacation, which helps a lot. We have just one car, and it's an old Corolla. I don't think our more status-conscious neighbors like seeing it around our very nice neighborhood, but I'm willing to let them disapprove. They think we're a bit weird anyway, because we keep chickens and grow vegetables in the front yard. We have a great landlord who does not object.

I think sometimes feeling like a "loser" is exactly the button that realtors push to get a commission. Realtors ruin the financial lives of millions of people every year. Fighting against that button-pushing is what this site is all about.

The best way to fight it is to stand up with other people and say "Yes we are renters and we save a ton of money!"

Maybe I need to sell or give away some kind of button or bumper sticker that says that.

I am 40 with kids and renting, feel like a winner. Had a home which cost me $5500 per month including property taxes, insurances, gardner, pool man. Got out of the house when I realized that it was all over for the housing market. Now I rent nicer house for $3000. I believe that prices will go to the level where I will buy again much nicer house than I had before for half the price. Just chilling and enjoying life.

I’m also really cheap when not on vacation, which helps a lot. We have just one car, and it’s an old Corolla. I don’t think our more status-conscious neighbors like seeing it around our very nice neighborhood, but I’m willing to let them disapprove. They think we’re a bit weird anyway, because we keep chickens and grow vegetables in the front yard. We have a great landlord who does not object.

I think sometimes feeling like a “loser” is exactly the button that realtors push to get a commission. Realtors ruin the financial lives of millions of people every year. Fighting against that button-pushing is what this site is all about.

Totally agree,..at 42, I too have suffered some shots to the ego over the years. I've been told my situation is weird by a few. I share a 2800 sq/ft rental house with three younger brothers. my share of the rent is $350. here are some facts that have helped me hold my head high.

My family is better off than they where a few years ago.

same neighbor that said my situation was weird also said " he is at least glad we are all white people (um what?)

all neighbors are currently under water from what I can tell.

3 of the 8 properties on my court have been forclosed on since the three years we have been here.,.. one of them twice.( second was a short sale)

I have been able to start a small home business ( cleaning up bank owned properties), and have employed two of my brothers.
2010 was really a lean year for me in Riverside County CA (lots of bid competition) But I'm still here and now doing great IMO.
was able to buy a bunch of new equipment for the business last month and now am looking at taking some time off. and am finally paying off some credit card debt at $1000 a month ,..mostly business start up stuff but not all :-(

I drive a 2001 Subaru with 178,000miles on it.

I shop at goodwill and always look for free swag on Cracklist.

DIY is my style and renew, reuse, recycle, is my mantra

I still have more time than money. And love it! I can garden for food,.. enjoy a week day off when I choose and feel like I live a very stress free life.

Money is still tight because of some debt. but I'm moving forward,.. reading, learning ,..watching,.. wishing,. waiting.

I don't seem to impress the Va Jay Jay much yet but, I think that has actually helped.

Thanks Patrick.

DC

Another great weekend for me... Saturday me and daughter went to Universal city ( we are annual pass holders ..passes we got a good deal for $60 for 2 with no blackouts on craigslist )....Sat night me and wife went to see Bridesmaid.. Just today me and daughter went to JPL open house in Pasadena.....Late evening I called up a friend who bought a home in Stevensons Ranch and he mentioned he spend the whole weekend cleaning up the yard ;-) On the phone I smelled something from the other end of the phone when I mentioned my weekend fun runs ...and it smelled like envy ;-))

I'm almost 40, with a child and rent in the bay area.

I'm so glad that I didn't get sucked into the housing bubble a few years ago.

I do think about buying at times, but not until it makes complete sense financially. In the meantime, I rent a house where the landlady lets me do as I please. I garden, paint, store crap in the garage just like everyone else, but I have the freedom of knowing that I can leave at any time. I put my spare capital in sound investments, cash and cash equivalents that are doing so much better than housing + mortgage would. It works for my landlady, it works out for me.

I don't think housing prices will rise for some time, and when they do, it will be a gradual increase. Salaries would need to increase, interest rates would have to *rise* significantly, and housing prices will have to drop significantly before it makes sense for me.

I don't feel like I'm missing much, and I gain a lot of piece of mind in knowing that my family has and will have everything they need.

mid 30s not married, a few very expensive toys but generally lived reasonable frugal. Zero debt and way above average in savings and retirement due to the fact that I've haven't fell into the American debt dream. Live in a spacious house in great neighborhood in the heart of the Silcon Valley. Super short commute... (damn..do I sound like I'm bragging?...sorry.)

Yep, almost 40 with a couple of kids and renting in the Bay Area.

While we have been frustrated that people making %25 of us priced us out of the market; we have never felt like "losers".

Even during the build up to and the peak of the market, we thought we were making the right choice to rent.

We are zero debt and are general pretty frugal, but... Recently replaced our old car with a new one. About 30K in cash for the new car, not too much of a big deal to us today. A few years ago I quit a job that I hated, and took a few months off with no worries. We always have a couple nice vacations a year. We eat out several times a week, out anniversary dinner this year was a Gary Danko. For the kids we have season passes to the zoo, Fairyland and they get trips to play cafe's.

I don't think any of that would have been possible if we had bought during the boom, we would be running a tight budget that did not allow for much in the way of extravagances.

39, Married with two young kids. Moved to our CT town as renters a few years ago just as the market was beginning to fall so we decided to rent. Looking to buy something this summer, but worried that prices will continue to fall and might wait until next summer. (please see my question on this post about how decreasing conforming loan limits will effect prices: http://patrick.net/?p=696753)

Meanwhile, some of our friends & acquaintances in town, many of whom bought just before the peak and are now stuck, ask us too many personal questions -- imagine sitting in the living room of a cozy cocktail party with five couples and one of the wives asks all about when we will buy a home and how much money have we saved for it "its a great time to buy! A house is not an investment -- it is a place to live [so, what's wrong with you guys -- do you have bad credit?]". Imagine the silence in the room as everyone focuses on the answer.

I've gotten used to being polite and following up with a doozie of a personal question for them.

A drawback is that we are not a fully engaged in the town as we might be because there's always the possibility that when we ultimately do buy something, it will be in a different town -- a town that we were priced out of a few years ago and that has lower taxes and better schools (our school budget is being cut)!

tenant in foreclosed house says

A house is not an investment

Did I hear "grapes are sour"?

tenant said
"I’ve gotten used to being polite and following up with a doozie of a personal question for them. "

I always ask.
"so when did you all buy?"

tenant in foreclosed house says

Meanwhile, some of our friends & acquaintances in town, many of whom bought just before the peak and are now stuck, ask us too many personal questions — imagine sitting in the living room of a cozy cocktail party with five couples and one of the wives asks all about when we will buy a home and how much money have we saved for it “its a great time to buy! A house is not an investment — it is a place to live [so, what’s wrong with you guys — do you have bad credit?]“. Imagine the silence in the room as everyone focuses on the answer.

I’ve gotten used to being polite and following up with a doozie of a personal question for them.

A better doozie to lay on them is why you don't want to buy something that based on your own views and analysis will tank in value. Maybe put a quip in there like "since it's the biggest purchase in our lives, we gave it a lot of thought." See if they can sense the distinction, sense that they did the opposite:)

APOCALYPSEFUCK says

Really, the only reasonable course these days is to squat in an empty foreclosure, use a cell phone and PO Box for all correspondence and hoard cash, potatoes and ammo.

I really like your style!

AF is rapidly becoming my (snotty) hero. LMAO

Just thought I will update my status...well there is no update.. I am still renting and keeping my eyes and ears open. We have increased our area of interest by 20 miles north ..

I'm in the age range but bought in the last year. Very happy with the purchase. What will be, will be.

I'm in my mid-30s, I own my home in western Massachusetts, outside of greater Boston, Providence, and Hartford.

Well ... it's all paid off, due to some lucky hedge fund contracts in the past year and half. Thus, I now rent rooms, periodically, wherever I do contract work in those cities but spend Thurs-to-Sun, at home.

Here's my take on housing ... you want a home, eventually, because you don't necessarily want to be a renter, during retirement. But during your key working years, well, all bets are off. Can one afford to pay $600K-$800K, to live next to Boston, with the hope of continued employment when employers are sending jobs to Texas, N Carolina, or abroad regularly? I think that's a huge risk for anyone these days. Is it worth, looking at a dive or a mediocre neighborhood, to cut that bill by a fraction? Well, think about it, at some point, if you have kids, it would be nice for them to meet their neighbors. Right now, I don't have that issue. My neighbors are quite nice, granted not the posh, elitist Bostonians of the top 'burbs, but so what? There's nothing wrong with being a bit rustic. What's most important is that you like where you live and are content with your surroundings.

I'm pretty close to fitting your profile. Kid is only 7 months old though. Remember, unless people have their house paid off in full, we are all renters. You either rent money from a lender (corrupt to the core) or rent a house from a landlord. To each his own, but I have a lot more friends as landlords than I do banks. Banks are all touchy feely until you actually need them to do something for you except take your money. My landlords are awesome.

I will buy, when I can do it without a bank and I feel good about the purchase. In today's market I don't see anything worth buying. Cash is king though, so I'll wait. I'm years ahead because I didn't buy into the hype of 2005-2007.

Good luck to you. Remember, many many home owners would love to be in our shoes. Believe me.

RentingForHalfTheCost says

ash is king though, so I'll wait. I'm years ahead because I didn't buy into the hype of 2005-2007.

Good luck to you. Remember, many many home owners would love to be in our shoes. Believe me.

Believe me, many of my colleagues, former and present, 'owners' living around Greater Boston or NYC, have a lot of stress in their lives.

The reality of the situation is that the average white collar worker is stretched and is struggling to pay one's bills, regularly.

I was astonished to see how few people had it as a good as me, with a fully paid off home in western MA, but have the ability to travel for work in various urban locales.

I think what I did was reverse an old maxim ... I'd bought the so-called vacation home in the countryside w/o considering buying a primary place in the city.

No. One of the reasons I didn't move to CA when I had the chance is housing prices (and to an extent, the price of everything else).

Not quite 40 yet, 2 kids. Renting for the past 3 years. Owned a house in a different state for 3 years (bought in 2007, lost $10k)

Happy to rent for the most part. We live in a top notch school district (perhaps the best in central Denver?) but our neighbors aren't really like us for the most part. Many bought with bad timing and may be underwater, but it doesn't matter -- their incomes are quite high. In fact, they are the ones going on vacations, buying nice cars, and having the free time and money to do whatever they want.

We can afford to rent here, but buying at the bottom 10% of this neighborhood would be a stretch for us. Renting for now is OK, but we are cramped (900 sqft house, + partial basement). Also we have no room for a garden (or chickens, or goats). We may move out to where we can afford an acre or two. The nice thing about Denver is that we can actually do that and still have a manageable (~30 minutes) commute.

I'm not one who things prices are going to fall another 40%. Maybe 5-10% over several years, but I'm not anticipating a big drop. If anything I expect tighter lending standards which will lead to a less mobile (and tighter) housing market. Who knows.

I think if you save now, in a year or two there will be a much better market allowing for entry.

Problem now that I see with RE market is that entry point is set too high, so there aren't enough new buyers entering, only investors jumping in. This kind of business cannot sustain over a long enough period, market forces will blow this up leaving investors/flippers with heavy losses.

Prices drop when there is no money.

I've never owned, but am looking to now. Mid-forties, 3 little kids, I've been waiting and watching for nearly 10 years. I think prices are more likely to go down than up from here, but I've run out of time to wait.

One thing that's pushing me, that I haven't seen anyone mention here, is nervousness about wealth preservation as a renter. Keeping a bunch of cash in the bank, in the face of increasingly desperate government action, makes me lose more sleep than I think having a mortgage will. Watching coming inflation eat away at my down payment is an uncomfortable thought.

I think sometimes feeling like a "loser" is exactly the button that realtors push to get a commission. Realtors ruin the financial lives of millions of people every year. Fighting against that button-pushing is what this site is all about.

The best way to fight it is to stand up with other people and say "Yes we are renters and we save a ton of money!"

APOCALYPSEFUCK is Shostakovich says

Really, the only reasonable course these days is to squat in an empty foreclosure, use a cell phone and PO Box for all correspondence and hoard cash, potatoes and ammo.

My husband and I are 2.5 out of 6 on your list there.

41, 2 kids, renting in a great school district. Our rental is priced well below our 'means', yet still quite nice IMO. We earn roughly 400K a year in combined salaries. We take vacations without thinking too much about expense (as long as it falls within our yearly budget line item).
We save a LOT of money every year. We could easily afford to buy in (likely) 99.9 percent of US zip codes, and we could pay cash in most of those.

BUT - renting is still way better for us right now.

Hold your head up high renters, live below your means, and save as much as possible. Our time will come.

mnsweeps says

I am just curious if there is anyone out there who has a profile like. I am married, 40 and have a daughter and rent in a great neighborhood in LA.

I am married and both wife and I are in our early 40s. Son is 3. We rent in a modest neighborhood in south San Jose. Short sold our house several months ago after we watched $170k of equity vanish - then I lost my job. We only had $35k into the house not counting minor upgrades and sweat so in that regard we were lucky. We now rent a SFR a few miles from our old house for much less than the ITI of our old mortgage even with the tax breaks.

The main drawback I have with renting is the tight market. Its very difficult to find an affordable SFR here that allows pets that isn't a complete $#!*box.

Some examples:

One rental in Campbell had a horrible outbreak of mold in the master bath. Kitchen was torn up as well. Carpet was in very poor shape, yard was all weeds. Asking rent was in line with other rentals of the same size and neighborhood.

Another rental in Monta Vista had cracked windows, a bedroom door that looked to have been kicked in, laundry hookups in the master bath, yards gone wild, lots of nails poking out of the fence (great for toddlers) and my favorite, a giant blue tarp covering the roof because the owner didn't want to fix the tar and gravel.

At least this one showed some mercy on the rent but it really wasn't worth it to me or my family.

Once the rental market sorts itself out and prices deflate I think we will all feel much better about renting.

Gudhjem says

Keeping a bunch of cash in the bank, in the face of increasingly desperate government action, makes me lose more sleep than I think having a mortgage will.

If I start thinking that way, I'm starting a compound with AF. How does that make sense when banks ultimately hold the mortgage too?

FunTime says

Gudhjem says

Keeping a bunch of cash in the bank, in the face of increasingly desperate government action, makes me lose more sleep than I think having a mortgage will.

If I start thinking that way, I'm starting a compound with AF. How does that make sense when banks ultimately hold the mortgage too?

Move your money overseas while you can, more and more foreign banks are refusing to deal with Americans any more because of the IRS, but you can do it if you want. I don't keep much cash in the US.

Nope, they say it costs $250k to raise a kid these days, figured I'd never be able to come up with the money. Looked into marriage as well, dated lots of girls, feminism reared it's ugly head, and I decided I was going to be the one to tell me what to do and not her. To many people, mostly girls, I'm not just a loser, but a selfish loser. I secretly admire my independence. Could I afford to buy?, sure, but they don't make many houses around where I live single people size and I won't pay taxes on a pile of sticks, concrete, glue, plastic, and oil.

Katy Perry says

Thanks Patrick.

DC

I have a question, I accidentally pressed dislike then like, but the dislike still is counted. Is that a bug, Patrick?

(was intending to "like" your post, Katy Perry)