patrick.net

PolishKnight says

Renting pros: Flexibility, don’t worry about neighbors so much, save money, gain perspective about what really matters.
Renting cons: Have had landlord ask us to move due to sale, have to worry about rent increases, can’t call a place your own and customize, need to worry about space.

My only comment is .. "Not having to worry about neighbors?"

Sounds reclusive to me.

Building community, having strong relations with your neighbors should be a good thing. I grew up in a nice neighborhood where we knew everyone. There was that sense of community. Summer weekend BBQs, playing with the neighbors' kids,etc...

That something I want for my family.

Big Joe says

You know, you’ll have to declare that NAR kickback as income, right?

You think I am somehow related to NAR? Sorry, I am not. Market (be it stock or RE or anything else) don't really reward extreme bull or extreme bear. The market seldomly go to the extreme scenario. Think Bell curve. The likely housing scenario will probably end up in the 80% quartile. I was more bearish during 2004-2010. Thats when I sold (2005). Now, I am more bullish. That's all.

Did I buy at the bottom of the curve? Don't know. Don't make a make difference. The decision I made from the downturn already get me (and a lot of people) ahead of the game, that allows us freedom to take more risk and get back in the RE game. Do you see? There are many different variables out there and buying RE or any investment is a really personal, and local, decision. There is no absolute right or wrong here. If the decision make sense t you and your priority, then you are in the right path. Just like stocks, it you make 51% of right decision, you are ahead of the game there.

One way to success is to think a bit opposite from the crowds. When everyone say BUY BUY BUY, you should think if it's time to sell. When everyone is saying SELL, SELL, SELL, you should think about buying. That's all. In 2004-2005 timeframe, I considered selling when everyone around me are buying $600-900k houses. Some even bought with one income (and foreclose later on) because they rather do ARM only than be "priced out forever" or "miss out a great chance to make fast money". At that time, when your nearby soccer mom tell you buying RE is the way to wealth, you know you need to sell. Just like these days, when Lindsay Lohan tell you inflation is killing us all and we need to move our money away, it's time to think again.

Personally I'd rather rent until next summer when prices bottom, but that's just me.

rowemoore says

Personally I’d rather rent until next summer when prices bottom, but that’s just me.

That's very fine. As long as you research and guts tell you that's the right thing to do. Good luck finding a new place.

I was happier when I was a renter.

As a homeowner, I've invited a parasitic relationship with a banker and the taxman, neither of which is as good as a decent landlord.

I'm now responsible for all the continual deterioration that houses go through as they age. I'm a pretty good handyman but some of the bizarre and arcane requirements of the Chicago building code seem to say "Contractors know best how to do this our way".

I owned more of my life before I owned a home.

Cook County resident says

I was happier when I was a renter.

As a homeowner, I’ve invited a parasitic relationship with a banker and the taxman, neither of which is as good as a decent landlord.

I’m now responsible for all the continual deterioration that houses go through as they age. I’m a pretty good handyman but some of the bizarre and arcane requirements of the Chicago building code seem to say “Contractors know best how to do this our way”.

I owned more of my life before I owned a home.

If that's the case, why don't you sell your home then and go back to renting?

ch_tah says

If that’s the case, why don’t you sell your home then and go back to renting?

I will. My wife and I put down a big downpayment when we bought the house in 2008. She died a year later. Even with the high taxes, renting wouldn't be a whole lot cheaper.

I'm hoping that unemployment will go down and house prices will go up. People who want to buy tell me how much they like the house, but their financial situation is lousy.

“Not having to worry about neighbors?”

"Sounds reclusive to me."

Sadly, that's more of a problem with society in general rather than owning/renting. Most of my neighbors don't socialize with each other. It's not that we don't try to be friendly. We say hello to people and chat with them, but nothing happens. Perhaps it has to do with us not having a lot in common.

When I grew up in a working class Polish neighborhood in the states, 90% of us went to the same church, I delivered papers to the neighbors, kids would come by for trick or treating, and 90% of mothers were SAH and shared babysitting.

When we go to parties, the slavic people tend to form a table as well as other ethnic groups. That's not to say that inter-socialization doesn't go on (the party organizer met everyone from work) but one of the problems with diverse, metro neighborhoods is that people socialize beyond their neighbors. When I was growing up, it was called the "California syndrome."

So unfortunately, most of my interactions with my neighbors are things that cause me to worry. One is a smoker. Another calls in people who violate association rules. Another has dogs that yap at you and make noise. If I was an owner, I probably would be really peeved at them but since I'm not "married" to them, so to speak, I have a more live-and-let-live viewpoint. I wonder if they think the same way towards me versus someone they'll need to spend the next 20 years with.

Cook County resident says

I will. My wife and I put down a big downpayment when we bought the house in 2008. She died a year later. Even with the high taxes, renting wouldn’t be a whole lot cheaper.

I’m hoping that unemployment will go down and house prices will go up. People who want to buy tell me how much they like the house, but their financial situation is lousy.

Well, if you agree with most people on this board, you'd be better off selling now rather than waiting. With the crash that is about to occur (next year, until next year when it is next year and so forth), it'll be 50 years until we get back to current prices.

"PolishKnight, I am happy for you. You sound like a real happy renter. Enjoy it!
Owning a house has its cons. I agree that each has their own path to take. Happy that you made a conscious and educated financial decision."

We certainly would love to buy a house, but either renting or owning one would certainly hit us financially for about twice what we pay now in rent.

So ironically, the biggest bubble selling point "You THROW away money on rent!" also helped us to economize and prioritize. We'd LOVE to own a home and hey, throw in a learjet too. :-) Oh, and going out to expensive restaurants 5 times a week.

But as adults, we balance out all the factors. It's fantastic to have money in the bank. We can go on a vacation without guilt or worry.

This begs the question: Why don't we just buy the condo then?

It's not that we can't afford it. After 5 years, we can buy it outright in cash. But we wouldn't save a lot of money so where's the benefit in giving up the good things about our rental I just mentioned?

As little as 30 years ago, my parents faced a similar dilemma: they had a "love nest" when they first got married and us 4 kids were in a 3 bedroom rental duplex. For a little more in PITA, they could buy their own SFH. So it was a no-brainer for them. But at this point in the market, it still isn't a compelling reason for me either financially or personally. If I buy, I want to upgrade AND save money. Promises of future bubblicious profits via a pyramid no longer are a motivator for me or other buyers.

YoY San Jose Asking Prices - last 5 years

PolishKnight says

Sadly, that’s more of a problem with society in general rather than owning/renting. Most of my neighbors don’t socialize with each other. It’s not that we don’t try to be friendly. We say hello to people and chat with them, but nothing happens. Perhaps it has to do with us not having a lot in common.

I think this really became common place when the bubble started, people just kept on swapping out all around with constant buy/sell on housing that we lost all the permanent neighbors. Everyone became just a transient home owner who simply sold a few years down the line and moved away.

This housing bubble didn't just screw people financially, it for many of us destroyed our communities.

I sold in 06 and I'm ready to buy back in this year (or next....depends if I can find a deal)

I need a house since I need a garage to store all the awsome toys I am collecting as a direct result of all this cash I have due to selling at the peak.

Seriously now is a great time to buy anything that was typically paid for with HELOC money by loan owners who now need cash (they all do! lol). RV, Harley,German Cars,Boat, High End Furniture. Anything that cannot be moved into a small apartment can be had for very cheap now used.

Its really a great deal for them, they might have paid 120k for a new 2005 mercedes (actually they paid zero its heloc money and these people are defaulting on everything). So now they can get say 20-30k for that mercedes and its WIN-WIN for them and the new buyer of the car! They get 30k cash after driving a sweet ride for free for 5 years, I get a good deal on a bubble mobile. Thats better than cash for clunkers as no innocent cars are destroyed. Its basically as if they stole the car but they didn't....its completely legal! What a great country! Happy Sunshine Capitalism Time!

Everyone's situation is going to be different. Some people live in crappy houses. Some people rent really nice houses. And vice-versa. You mention having a place of your own to have people over for BBQ- to "Show off" and so forth. This week my parents are coming over. We're having a backyard BBQ this weekend, we're going to have home-grown tomatoes, strawberrys, peas, and fruit from the various fruit trees. They get to sleep in our spare bedroom. This is a 4 bedroom house that we rent.

Truth be known its a nicer house than any of the houses my friends who bought own. In our area what we could buy would actually mean a downgrade because our house would probably go for 700k. We could probably afford 500k- I say "afford" because to me anything over 350k-400k is ridiculous and I don't want to pay that amount.

We've lived in this house for 8 years. The rent has never been raised. I know all the neighbors. Like yourself- I collect mid-century furniture ( Except almost all of mine was founf in the trash for free) I also collect various other things. I used to concern myself about the hassles of moving it. There's such a thing as storage you know.

We have painted rooms to our taste, landscaped the yard, some projects here and there. Either the materials to do so were free or the landlord paid for them. In other words- I get a nice house the way I want it and it didn't cost anything except my time. 8 years of living in a large house, furnished with things I like, with a nice, big backyard to "Show off". Oh- and the rent is $1,300, or about 1/3rd the cost of buying the same house.

So does it bother me that we rent? nahhh... seems to be working out for us. Do we want to own? Sure. But not because we want to paint and knock down "Our own" walls. Its more that someday we'll retire somewhere else- preferably early- and buy a house to live in with zero debt.

In the meantime we've saved enough cash to buy a house lock-stock-and barrel almost anywhere in the country minus the overpriced coasts. If we bought in the Bay Area we could easily put down at least 60%, which I wouldn't because again- the prices are ridiculous.

masayako2456 says

Can we remodel the kitchen to our taste? Can we have a pet? Can I have my own band room like I always want? I love vintage mid century furniture, should I buy them now or wait until we have a house ‘cos the furnitures made not fit the new house? Can I build a dream backyard to really enjoy it or do I just bring my kid to a public park and call it a day? Can I get a new fridge now or stay with the old, inefficient one? People said you can rent a good house in a nice neighborhood.

I have both rented and owned at various points, and it made sense at various points to do one or the other. Certainly there were times where I could have afforded to buy, but rented instead, so let's get rid of that canard right now. We could take these rationalizations one by one:

1) There's no evidence I would customize my kitchen if I bought a house without seeing that house first.
2) I have had pets in rentals -- plural for both pets and rentals.
3) I don't know what a band room is, but I don't see why not.
4) What stops you from buying furniture? If you're like many people during the boom, paying big bucks for a non-ideal house, you could easily have the same problem with a house you bought, and then you're stuck because you own it.
5) I don't know what a dream backyard is, and although I haven't personally done it, I have friends who rent who have improved the backyard and made arrangements with the landlord to apportion the payments appropriately.
6) The fridge? You're talking about making a multi-hundred thousand dollar purchase (in my area, half-million minimum) based on a fridge you could buy for $300? I question your judgment if that's the case. For one place I rented, I did buy a fridge, and then sold it to the next tenant (no need for me to cart it around). In another, I actually bought new water-efficient laundry machines because the landlord didn't provide them, and that turned out to be a great decision. There's no reason you couldn't move the fridge to the garage and buy your own.
7) I've lived in perfectly nice rentals. Some of them were nicer than places that were bought, at least to start off (pre-remodeling).

Look, these are all factors to consider, but let's not pretend that these are the factors that should apply to everyone. There are financial factors, mobility factors, job factors, personal preferences, etc.

clambo says

Get a copy of Skrunk and White while you’re at it.

Clambo, you made a good point about the subway, but if you're going to be snarky, it's STRUNK and White.

@edward2: I am happy for you. Looks like you get a great deal $1300 for a nice big house in a great neighborhood. Great!! :-)

Seriously?

A faked foreign written accent, braggado unlimited, near absurd positions and statements,

and Im the only one that understands that masayako is a troll?

what part of yourself is the same no matter if you rent, borrow, or really own?

what part of you is the same whether you are single, married or divorced.

what part of you is the same when you had no kids and what part is the same, now that you do?

the real part of you, that does not change with this temporary category or role, is your true self. This part ( the real you) can truly be happy no matter what.

many of us do not really know ourselves. to truly be happy, one must find this person.

it has nothing to do with things, having or not having them, roles or other ego driven perceptions of self.

so ask yourself. "who am I, what makes me happy?"

hint it's not a thing or object is it?

Great Post Masayako - I couldn't agree more. Well said. Of course, the haters here will crucify you for it...

This message board is fun. The trolls make it more fun.

Real Estate is a spectator sport in CA (similar possibly to watching christians getting massacred by lions in ancient Roman colliseum) and this board is how we communicate our pleasure or displeasure to the emperor or each other.

dodgerfanjohn says

Troll.

haha.

be happy where you are is what I got out of the original post.

debt slavery is not my version of happiness at this time.

dodgerfanjohn says

Seriously?
A faked foreign written accent, braggado unlimited, near absurd positions and statements,
and Im the only one that understands that masayako is a troll?

Troll.

bubblesitter says

http://en.wikipedia.org/wiki/Post-purchase_rationalization

Exactly. Ironic that a self-professed student of human behavior can't recognize his own motivations.

SubOink says

Great Post Masayako - I couldn’t agree more. Well said. Of course, the haters here will crucify you for it…

Homeowner circle-jerk begins.

Edvard,

If you are renting a nice 4 bedroom home with a big backyard in a good neighborhood where equivalent homes are going for $700k... Then your landlord is a very benevolent man, your father or a moron!

When i moved to los angeles in 2002... My first 550 sq ft 1 bedroom apt rental in Burbank was $1100 a month. The fact that you found a $700k 4 bedroom home at around the same time to rent without a single rent increase even during the bubble years... Well you basically won the lottery... 99% of the population couldnt get the sweetheart deal you got, its a fairy tale for the majority of renters.

this sounds like a fallacy, a fallacy of false dichotomy.

There are more than 2 choices here. People have their options, housing preferences don't make everyone happy or sad. Some of us might not care much about these issues, and we are capable of being more than just happy or sad like some bipolar chick.

Happiness to me is being free, not being tied down to debt, mortgage, place or a job. We live very comfortably, and somehow do not seem to care for NAR propaganda about how our happiness must be attached to certain commercial goods or huge debt.

EMan says

housing preferences don’t make everyone happy or sad.

That's cultural. In USA happiness and sadness is tied to home, in the psyche on common mass.

Happiness is a state of mind and can not be qualified or quantified by mere possessions.

I own my home but to explain why would be an exercise in futility.

Does owning my home make me happy? Let’s just say that my dog greeting me when I come home makes me happy; it’s only for a moment but one that is frequently reborn.

I can’t say that about my house.

If you're happy and you know it...clap your hands!

Happy 4th of July everybody!!

@masayako

Great post. I too rented for about 3 years in a "nice neighborhood with good schools" (or something like that). We REALLY liked the area and the rental but we never knew if we might have to move out (we had a year to year). We also had a very basic kitchen, basic bathrooms, etc.

We bought an REO two months ago and pay about $200 more a month than our rent in the SAME neighborhood.

There are two sides to the "residential fence". There's the Bears on Patrick.net and the Realtor Bulls. I'd say both our wrong. Take Patrick's rental calculator for example. 0% rental inflation? About a half percent deflation on a home forever?

Do people really think that 20 years from now homes will be worth less than they are today? Our economy is hinged on inflation!!

I really don't care if the our home decreases because it's IT'S A PLACE TO LIVE FIRST and an investment second.

kronicade says

Do people really think that 20 years from now homes will be worth less than they are today? Our economy is hinged on inflation!!

it's not 100% chance of inflation. 0% chance of deflation. the odds are somewhere in between.

historically, houses roughly track inflation.
there are in fact 20 years period where housing markets have deflated; just not in the united states. don't be one of those people that say it can't happen because it's never happened before (eg prices --never-- fall in the US). those people are short sighted.

so yes, there's a greater than 0% chance houses will be worth less (after adjusting for inflation) in 20 years.

@Hysteresis

You are correct, anything is possible. I'm hoping that "somewhere in the middle" means there will be SOME inflation in the next 20 years. And I'm not necessarily talking housing inflation.

Right now houses are essentially worth what there were 11 years ago but I would bet that things will change in the next 9 years.

Maybe not, but at least I'll be almost paid off with my mortgage.

:o)

Hi kronicade,
I am happy for you. You are making a right decision for you and your family. A home is more than just 4 walls and a roof. It's a place you build memories with. As long as price is make sense compare to rent, you should be fine. Will the price drop more? Maybe, maybe not. It becomes less important compare to other priorities in life. Also, if the price is dropped low enough, I will buy another property for investment purpose.

kronicade says

decreases

kronicade says

@masayako
Great post. I too rented for about 3 years in a “nice neighborhood with good schools” (or something like that). We REALLY liked the area and the rental but we never knew if we might have to move out (we had a year to year). We also had a very basic kitchen, basic bathrooms, etc.
We bought an REO two months ago and pay about $200 more a month than our rent in the SAME neighborhood.
There are two sides to the “residential fence”. There’s the Bears on Patrick.net and the Realtor Bulls. I’d say both our wrong. Take Patrick’s rental calculator for example. 0% rental inflation? About a half percent deflation on a home forever?
Do people really think that 20 years from now homes will be worth less than they are today? Our economy is hinged on inflation!!
I really don’t care if the our home decreases because it’s IT’S A PLACE TO LIVE FIRST and an investment second.

masayako2456 says

Hi kronicade,
I am happy for you. You are making a right decision for you and your family. A home is more than just 4 walls and a roof. It’s a place you build memories with. As long as price is make sense compare to rent, you should be fine. Will the price drop more? Maybe, maybe not. It becomes less important compare to other priorities in life. Also, if the price is dropped low enough, I will buy another property for investment purpose.

I say with utter certainty that I believe Kronicade now feels entirely validated since he has a stamp of approval from an anonymous internet poster. Good job!

masayako2456 says

A home is more than just 4 walls and a roof. It’s a place you build memories with.

Are all japanese this bipolar and emotional or just you? House and home are two different things. If you are incapable of building memories while saving for the future than you really have to figure it out man.

I totally agree with Post .......I have been a sad renter from ever but after buying my first one , I'm really enjoying it. No words can express it.

"House and home are two different things"

I wish more people would understand that. Of course memories can be in a building but it is the people that create those memories not the building itself.

mdovell says

“House and home are two different things”

I wish more people would understand that. Of course memories can be in a building but it is the people that create those memories not the building itself.

Nobody argues that. But how may people do you know rent the same house for 10 years? I always wanted to but there was always something that came up. Landlord needed to sell, Landlord was a dick so we moved, landlord wanted to raise rent, etc...

So the memories you built in your own home are very different because one day your kids are old and inherit the house they grew up in. Quite different than looking back at the 15 rental houses you jumped around in, don't you think?