patrick.net

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)

everything says

Nope, they say it costs $250k to raise a kid these days, figured I'd never be able to come up with the money.

If that were true then you would see the birthrate in this country approach zero. Few would be able to afford one, let alone multiple children. Yet such families exist and those kids do just fine.

Darrell In Phoenix says

Rin says

western MA

The berks aren't exactly "the" place to be.

Not exactly Berks, though I have plenty of friends there, more in the zone approx 1 hr from Rte 495 and 1 hr to Northampton/Amherst college towns. When I work on 495, I don't rent a sublet; I only rent, when my work brings me to Boston (or North shore of MA), Providence, or Hartford-New Haven. Thus, I have 3-4 days of clothes, packed for the road.

I basically write off that extra cost, circa $500-$600/month x 6 mos contract or $3K-$4K (i.e. http://providence.craigslist.org/roo/index100.html), since it's away from the tax home, primary residence, and near a place where I conduct business.

That's only 13k per year, of course if you've noticed the explosion of single parenting, you can let the government help pay for it instead that way. I pay for it through my taxes, so I'm raising someone else's kids already either way you look at it.

New renter says

everything says

Nope, they say it costs $250k to raise a kid these days, figured I'd never be able to come up with the money.

If that were true then you would see the birthrate in this country approach zero. Few would be able to afford one, let alone multiple children. Yet such families exist and those kids do just fine.

E-man says

We'll see whose kids will be ahead of the curb financially in the future

Haha that's a good one, on different levels. Ahead of the curb. Yeah, we know what dogs and drunks do in the curb. Ahead of the curb. Yeah that's right.

B.A.C.A.H. says

E-man says

We'll see whose kids will be ahead of the curb financially in the future

Haha that's a good one, on different levels. Ahead of the curb. Yeah, we know what dogs and drunks do in the curb. Ahead of the curb. Yeah that's right.

Ah. That should have been "curve". Too much real estate thinking and not enough women thinking. ;)

everything says

That's only 13k per year, of course if you've noticed the explosion of single parenting, you can let the government help pay for it instead that way. I pay for it through my taxes, so I'm raising someone else's kids already either way you look at it.

New renter says

everything says

Nope, they say it costs $250k to raise a kid these days, figured I'd never be able to come up with the money.

If that were true then you would see the birthrate in this country approach zero. Few would be able to afford one, let alone multiple children. Yet such families exist and those kids do just fine.

Where did that $13k come from?

E-man says

Send them to public schools instead of private schools. Send them to community college for 2 years before transfer to a university. That should save a bundle.

People are so anal about education so they deserve to pay through the nose for those private schools. I'd rather take that $500k and invest it. We'll see whose kids will be ahead of the curb financially in the future.

Agreed.

everything says

That's only 13k per year, of course if you've noticed the explosion of single parenting, you can let the government help pay for it instead that way. I pay for it through my taxes, so I'm raising someone else's kids already either way you look at it

How about getting that kid a part time job.. after 2 years in jr. college their last 2 years is fully paid without govt help.. thats how people in the past did it.. and it works!

I sat out the bubble too but finally ended up buying.

Prices are down, rates are 3.75%, 8% GDP deficits suggest a high probability of future inflation.

Declare victory and move on.

As a 55 year old professional, my wife and I raised two kids and have a wonderful granddaughter, but we never owned our house. Around the time when we were planning on buying, an opportunity to simply rent in the same neighbourhood where we wanted to live came up. Fortunately it was newer townhouse in public housing. The rent has stayed low and is about 10% of income. Over time we have had the house completing renovated with new windows, furnace, patio, roof, hardwood kithchen with ceramics, new bathroom, new appliances etc. The rent sometimes goes up but many years did not. The average increase was less than 2%. Fortunately my own income over the time I rented has tripled and now that I am close to retirement the rent will still be a small fraction of my pensions.

The homes in the neighbourhood are still expensive at about 1 to 1.5 million. Using Patrick's rent to own calculator is a good tool to use and it shows our opportunity cost to owning is massive.

There has been incredle freedom renting. A vacation to Hawaii with my family and my mother-in-law (who is great) and another vacation in Israel and Jordan likely would be difficult if I didn't feel comfortable with my cash flow. Owning a house would mean that I would have too much personal equity in a non-productive asset and that as the property appreciated the property tax, insurance and overall expenses would also increase.

benviews says

The main problem with this scenario is my inability to "do up" a rental place... So I find myself facing rental options that are either overpriced or a little worn at times.

We fixed up our rental about 18 months ago. We aren't leaving the area in the next 10 years. We looked at the price of a nicer rental and the cheap rent on where we are. The math worked out to rent and spend about 5k on the rental.

Sean7593 says

Remember the story of the grasshopper and the ant:

The ant works hard in the withering
heat all summer long, building his
house and laying up supplies for the winter.

The grasshopper thinks theant is a fool
and laughs and dances and plays the summer away.

Come winter, the ant is warm and well fed.
The grasshopper has no food or
shelter, so he dies out in the cold.

Just some food for thought while you are enjoying your next cruise

When you don't own a house with a tanking value that costs more than an equivalent rental, you can save money and go on a cruise.

I don't think you are going to die out in the cold.

Sean7593 says

Remember the story of the grasshopper and the ant:

The ant works hard in the withering
heat all summer long, building his
house and laying up supplies for the winter.

The grasshopper thinks theant is a fool
and laughs and dances and plays the summer away.

Come winter, the ant is warm and well fed.
The grasshopper has no food or
shelter, so he dies out in the cold.

Just some food for thought while you are enjoying your next cruise!

The real ending to that story however is is the grasshopper being well rested and in good health from a summer of leisure easily "liberate" all the food from the ant. The ant, exhausted from his summer of back breaking labor, is cast out into the cold to die penniless and alone while the grasshopper enjoys the fruits of the ant's labor throughout the winter. The next summer the fat grasshopper simply finds another industrious ant victim to prey upon.

The original story is told by the grasshoppers to encourage the ants to work harder, to not worry about the lazy grasshoppers as they will get theirs in the end. The grasshoppers do "get theirs" but not in the way the ants think.

Don't soil your hands like those silly ants, come laugh and sing and play and dance... "Oh the world owes us a living..."

Gudhjem says

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 worry about that, but I feel that the loss in value in a house is pretty compelling at the moment.

elliemae says

AF is rapidly becoming my (snotty) hero. LMAO

He had me at "plant potatoes"