Tuesday, May 20, 2008

On home ownership

Ever since Torsten and I started seriously managing our finances, we've been thinking about the idea of owning a home. This seems to be the logical next step in the whole muddle of marriage and kids and all that Future with a Capital F stuff. And we fully plan to buy a house at some point in the next couple of years. We divide our savings between a down payment and our retirement funds. Every now and then one of us admires the beautiful houses in the real estate section of the paper, and tries not to cry upon catching a glimpse of the prices.

The current mortgage and housing crisis doesn't deter me from the idea of buying a house. It seems that with depressed prices, now would be a good time to buy--but only if we're willing to hold onto the house we buy for a few years at the very least. I think what this burst housing bubble has done is hurt the concept of a starter home--a little house that you'd live in for a couple of years, maybe through the first baby, and then leave behind as you became more financially stable and your family grew.

But now that housing prices aren't going steadily up and up, and it's getting harder to sell, the idea of buying a small house and then flipping it when you're ready to upgrade doesn't seem so feasible. Which means that if we were to buy a house, we would truly have to be willing to stay in it for awhile, an undetermined amount of time.

Our lives are in so much flux that it's kind of hard to think about what our housing needs will be five or even more years from now. In five years we could have two kids and be thinking about school districts and second bedrooms and big yards for the dog and a swing set. Which means that if that's what we want five years from now, it should be what we're looking for in a house at the moment. But that's not what we can afford at the moment. At least not in DC. If we want to move to, say, Idaho, we'd be set. But we don't.

Also? I know that everyone says that home ownership is the holy grail, and I know it means you have equity and all of that good stuff. But I LIKE renting. I like that we pay a fixed amount every month, and there are never any unexpected costs. I like that we don't pay utilities, and that if the dishwasher breaks or the tub gets clogged, all I have to do is call the front desk and someone will come by to fix it without us even needing to be home. I like that if we receive a package that needs to be signed for in the middle of the day, neither of us has to stay home from work because the package room will sign for it. I like that the building has a gym right in it, and the security that comes from having a 24-hour front desk monitor and a security guard, and how cheap renter's insurance is. I like that we don't have to mow the lawn and that if we ever want to move, we can do so without worrying about having to pay two mortgages until our old place sells.

And from what I hear, buying a house basically makes you broke. Down payment, closing costs, fees, interest, a monthly mortgage payment--plus contractors, inspections, repairs, upgrades, furniture, decor... it just seems like the costs never end. So yeah, you have the house and the equity, but it's not like that actually leaves you with any more money, at least not until you've paid off your mortgage, which only happens if you live in the same house for 30 years.

Plus, DC has extremely tenant-friendly laws that include excellent rent control. I love that.

We do plan to buy, though, eventually. But not quite yet. We're still contributing to our down payment fund, and figuring out what we want to do, where and what we want to buy and can afford. But it's a big step--it means that we're not as free to move around, to pick up and go whenever we decide that we're looking for a change. I guess that's a part of the whole Settling Down thing that we're in the process of doing. It's kind of a weird feeling.

So am I crazy? Am I missing some huge benefit of home ownership that everyone knows about except me? What about you--do you rent or own? Which do you prefer?

65 comments:

Jen @ The Cubicle's Backporch said...

We rent our little house, but expect to buy one in a couple of years or so.

I'm excited to have our own house so that we can do upgrades and what-not instead of just having to deal with the crappy water pressure. I know upgrades=money, but it stinks when something sucks (like the water pressure) and you can't really do anything to fix it.

lspoon said...

Home ownership scares the bejeezus out of me...probably b/c I still don't think of myself as old enough to be thinking about buying my first home.

Anonymous said...

Home Ownership is great. You have more control about what you do and when. You don't have people living right above, below or next to you. You can make upgrades without having to talk to anybody else. If you don't completely overextend yourself, it doesn't havae to make you completely broke. And your mortgage interest is tax deductible - read "large tax return".

Alice said...

i SO KNOW what you mean. i LOVE that i don't have to mow my own lawn. i love that i'm not financially responsible when the windows go bad and need to be replaced. i get that it's "secure" and i'm "throwing my money away" or whatever... but there is DEFINITELY something to be said about not being tied, financially, to the upkeep of a house.

of course, if it were MY house, i guess i'd WANT to improve it? i guess? gah. whatever.

fairydogmother said...

You are not crazy. I own a condo which I bought on my own 6 years ago. I didn't really expect to still be living here 6 years later but the size is right for us (although it would be wonderful to have our own fenced yard for the dog!), and it is cheaper than renting in this area. I love not having to worry about things like yard work or whether or not the roof needs repairing, although when the furnace goes out or the garbage disposal needs to be replaced that's on me to take care of. Deducting mortgage interest on my taxes is a nice benefit as well.

We hope to buy our first house in the next few years as well, but that is still prohibitively expensive in the Seattle area.

Tessie said...

For sure there are tax benefits to owning, which is so, SO boring, yet true. And you have more control over what you can do to your home. But still. I think many people are under the impression that owning is ALWAYS better, and that's certainly not true. Ask all the people who are now selling their homes at a loss.

Becky said...

Thank God someone else (it appears many people) sees renting as a plus instead of a negative all the time. We currently rent, and I love that when things break I'm not in charge of fixing them. I don't love having neighbors upstairs (why were they thumping something heavy on the floor at 5am this morning??), but I'll take that over having to mow the lawn, and shovel snow all winter long.

Alexa said...

there isn't anything wrong with renting!! yes i guess it is awesome to have the title of homeowner. but if you're not ready you're not ready.

there will be plenty of houses to buy in a couple of years.

don't fret : )

Janssen said...

We bought a house about 18 months ago and we've loved most of it - it's great not to have to walk upstairs, to have our own washer/dryer, to not have to worry about a parking spot (and yes, many renters have all these things, but we never did). We pay less on our mortgage than we would to rent something of equivalent size.

On the other hand, our AC has some issues right now (fairly minor) and we haven't fixed it because we just don't want ot afford it. And that's a hassle. Also, there is also always the fear of something major going wrong.

In short, although we've enjoyed having a house, we aren't sold on running out to buy a new one when we move. We really could go either way.

saly said...

I love this post ESPECIALLY because I am in the mortgage business.

We rented our house from FIL from 1999-2006 before we purchased it. Our mortgage was final on Lucy’s 1st birthday, which makes us still relatively new to the homeownership game, though I feel like a know-it-all having done it for a job for the last 8 years.

We’ve been able to use our equity to pay off the credit card debt we wracked up while living in our apartment and paying for our wedding. Most recently, we’ve put it in to our kitchen. And in about 6-8 months, once we have paid things down and hopefully the market is better, we will use it to do our upstairs.

The housing market is poor for those who are selling, yes, as well as those who got themselves in to adjustable rate products 3-5 years ago since their rate is skyrocketing and it is hard to sell/refinance. But is seems to be good for those who are buying in that you can get more house for your money. You never know what the future holds—it could be much better or much worse when it is your time to buy.

La said...

Hi! Come buy my house! It's very pretty!

I'm planning on a condo, I think, when I move to Mass. I like the fact that I would have my own space that I can decorate the way I like (unlike an apt) and that I'm building equity and can sell if/when I want to. And the fact that I don't have to do any of the maintenance or exterior upkeep. It's a lot of work for just one person.

Hazel said...

i rent because 1. i'm only 23 2.i only have one, very small income and 3. i'm just not ready to deal with homeownership.

i've always imagined that the first house i buy would be with my husband after we were married. and i'm sure that's what will happen because i don't want to live in a house by myself. i'm too chicken.

A Margarita said...

I def enjoy having the doorman, gym, and rooftop access in my building. Owning a home seems like it takes over your life.

each of the two said...

I agree about the crushed idea of a starter home, makes for very difficult looking.

but I hate renting, its like throwing away money, despite all the good points you bring up about it. or at least to me.

sid said...

glad i'm not the only one who gets depressed by the sight of the prices of houses. i've also bought into the whole buy a concept.

Jummy said...

Parts of Canada like the area I'm in have a slightly different housing situation so owning a home in your mid to late 20s is actually possible and you can even get a new house too (with minimal repair costs 5 or more years down the road).

The biggest reason I want to own a home is because I'm one of those "Failure to Launch" kids who still lives at home despite being in her late 20s and who has never lived anywhere else, I think home ownership should be the next logical step because I feel it's too late to be a renter (don't ask me why!). I'm going to start small, and I'm hoping to buy in an area that's undergoing a lot of development so that when the time to upgrade comes, selling won't be too difficult.

I must say where you live sounds pretty sweet!

Dolce said...

As a one time renter now owner, I would NEVER go back to renting. Some of the benefits your not thinking about (besides finacial) and it a place your making your own. Finish the basement? Fine. Paint the walls any color you want? Go for it. Re-do the bathroom and put in a jacuzzi tub? You got it. Believe me, its heaven.

pseudostoops said...

We own our little condo and for us, we can get more space and amenities for the mortgage payment than we could paying the same amount in rent in our neighborhood- if that makes any sense. But we didn't mind renting, either- I especially longed to be a renter again 2 weeks after we bought our place when the washer broke.

L Sass said...

I think that building equity + tax benefits still makes home ownership make a lot of sense. As crappy as the current housing crisis is, people like you (steady incomes, good credit, down payment saved up) who are traditionally good mortgage candidates should still have an easy time buying. I have faith that you'll find a good place at a reasonable price--and maybe even someplace you'll want to stay for the long haul!

Whether you decide to buy sooner or later, saving for the down payment is a super idea!

LoriD said...

Buying a home is something you do when you're ready to "settle down". If you're not sure where you will be living in three years, I would keep on renting. While it does seem like a good time to buy right now, your points about being free to move wherever you want are valid. A home makes you less free.

-R- said...

We own a house. One of the biggest benefits for me is having a yard and not having to share a wall with any neighbors. We bought a pretty new house and haven't had to do any upgrades or fix anything yet, so it hasn't been a money pit.

However, I think renting also has a lot of benefits. Less responsibility, not being tied to the location, less expensive, etc. You definitely don't need to rush out and buy.

pessimisticredhead said...

I'm moving in with HOM in August. He's a bit older than I am (hence the O) and is more ready to buy than I am. I'm 26, pretty much broke, and happy to live in my lovely, rented apartment for another year or so. I totally feel you on the convenience factor.

Ms. Karen said...

We ended up getting a really good deal on the place we're in now (my parents sold it to us for a very low price). The place where we had been living had some nice features, and a manageable mortgage, so we rented it out thinking we would become land barons or something.

I'll never do that again without some kind of property management company, because wow! We got totally screwed when they trashed the place.

Anyway, I love owning a home, but it is more responsibility. Repairs/improvements are expensive, and if you end up with crappy neighbors, moving isn't an easy option (nor do you have a landlord or manager to take care of the problem).

Marie said...

I rent, but am seriously thinking of buying this year. I'm sick of throwing my money away and not owning anything at the end. Plus rent is only bound to go up even more this year with the way real estate is going. At this point, I just want something of my own.

3carnations said...

I haven't rented in over a decade. It would be SO hard to go back. Hearing your neighbors through the walls, or above your head. Not having a place all your own for the kids to run around.

There are certainly unexpected costs...But rewards, too. When you spend a load for some repair, you know you're taking care of your home. When the leaky faucet doesn't get fixed for a year, you grumble at someone in your home, instead of calling the landlord 50 times.

Plus the idea that the last 10+ years of home ownership my money has gone TOWARD something, rather than just TO someone. Someday, in theory, I won't be making a mortgage payment anymore, because the house will be paid off. :)

JRM said...

I'm a renter and will continue to be for a few more years. I think I've finally decided to stop moving, which for me, is what kept in the past from buying. I agree that I loved the fixed amount and that if something breaks I don't have to worry about it.

bren j. said...

*shudder* We HATE being homeowners. We had all these pie-in-the-sky hopes and dreams and have become sorely disillusioned with the whole business. The only real benefit we see to owning is that as long as the payments are made, nobody can ever kick us out.
All the conveniences of renting are hard to leave behind. The best arrangement we've had is the one we left in WA when we moved here - we rented a house but had really hands-off landlords which was great. Until they decided to sell the house which precipitated our move out here.

All that said, we will probably still end up buying a house again, although the lure of a condo or some such thing grows.

dreamgrrl said...

ugh! i tried commenting and it gave me an error. My bottom line: when its time to buy, you'll just know, and just keep saving - why rush?

Christina said...

We just purchased our first condo an dmany of your fears were many of ours. We've been there a month and as stressful and as financially draining as it is.

We look around and thing that this is all ours. We can paint it any color we want, we can stain the wood floors. we can choose the fixtures.

But it was a bit stressful. The best thing about a condo is that the association has a person to do the landscaping, shovel the walks and mow the grass. But I would love to have a garden.

We know that we will be there for at least 3 years and when we move and if the real estate market is still a bust. We will rent it out until it gets better.

But we love it

BS said...

I live in the San Francisco Bay Area on one income. Oh, and did I mention I work in the arts? The idea of owning anything - home, condo, parking space - is so beyond my reach that I've stopped letting myself think about it. My ex thought I should be living in the cheapest apartment possible in order to build a savings to eventually buy a home, but since I will never, ever be able to buy, I figure I might as well enjoy a certain quality of life while I rent.

Heather said...

This is the first time I have commented here, but I thought maybe I could give some good advice. I work in the mortgage industry and I also bought my first home last year. Your concerns are valid which puts you ahead of a lot of people already because you aren't just jumping in head first. Right now is the perfect time to buy. Prices are low, lots of homes are for sale and sellers are more realistic and willing to work with the buyer. Since you like having someone to fix small problems a condo or townhome might be the best fit for you. Associations usually take care of that kind of stuff as well as utilities etc. The biggest piece of advice I can offer is that buying a house doesn't need to make you broke, as long as you are smart about it. Downpayments aren't always necessary. I did 100%financing on my home with a 1st and 2nd mortgage, my payments are small and the seller paid my closing costs. Essentially I paid nothing upfront to purchase my home other than the earnest money which I got back. There are lots of government programs like FHA where all you need is 3% down, and lots of states offer first time homebuyer assistance. I know in MN you can get a percentage of your downpayment paid for or closing costs paid for if you take a 2 day class for first time homebuyers. I hope my info helped a little. Owning a home is hard work, but it is worth it for sure. I wouldn't ever want to go back to renting.

Kristen said...

we own. we're on our third house together. i've actually never lived in an apartment (unless you count when we were dating and i had my own set of keys to his).

i think owning is better if you know you will be there for a while. i have the same philosophy with leasing cars -- why pay money each month for something that (in the end) isn't even yours?

GMan said...

I agree with heather's post. It is a great time to buy and it doesn't have to be expensive.

I now own my 2nd home at the age of 27 and love it. Sure I hate cutting the grass (especially since I have 3/4 of an acre and a push mower) but I also love having a yard to call my own.

I can do whatever I want whenever I want and noone says anything about it.

There are always pluses and minuses to every situation. And what works for one person won't necessarily work for someone else.

Be smart, think it through, take your time, and keep saving money.

artemisia said...

I am with you on the convenience of renting, but the autonomy of owning is great. A. and I own a VERY HUMBLE home now, and we are looking forward to buying something different in a couple of years. Luckily we both feel like a small, solid house is more than enough. That keeps me from being scared to buy again. You guys will be fine, especially if you are saving so much now. And, if you buy 20% below what the bank loans you, you can own and home and not be house-poor.

Banana said...

For me, buying a home was simply something I wanted to do. There are benefits to both owning (tax benefits, no crappy landlord, you can do whatever you want with your space) and to renting (usually cheaper, you don't have to fix it if it breaks, flexibilty to move whenever you need to), but I was ready to be a home-owner. I worked in real estate for a while, so I did my research and found a lovely (tiny) home for T and I. We love it.

And I don't think that the idea of a starter home is dead. It will take a few more years for the market to bounce back - but prices were getting so out of control, so I see the "burst" as a good thing. Things will be more stable and sustainable when the market repairs itself. We'll almost definitely be selling our starter home in four to six years.

Swistle said...

One benefit is it's like having fixed rent for the next 30 years, and then zero rent after that. That's assuming you get a fixed-rate mortgage, which OMG DON'T GO VARIABLE.

Anyway, let's say rent is 10 clams and a mortgage payment is 12 clams PLUS you have to pay a bunch of other crap like utilities and property taxes. Suckage.

Ten years later, renting is 12 clams, and home ownership is still 12 clams. But of course you still have utilities and so on. Suckage.

Ten years after that, renting is 15 clams on a 1-bedroom apartment, but you're still going along paying 12 clams on a 3-bedroom house, and your utilities cost less than 3 clams.

Ten years after that, renting is 20 clams and your monthly housing cost is ZERO clams, because you have paid off your mortgage. The other stuff only adds up to 4 clams, so you're essentially paying 4 clams for a house.

Ten years after that, renting is 25 clams and you haven't paid anything except utilities for 10 years.

And then when it's time to move into a nursing home, renters leave their apartment with nothing. Home owners cash out for 3,500 clams and use it to pay their nursing home fees.

Anonymous said...

Don't buy a house just because you think that's what you're supposed to do or supposed to want. Owning isn't best for everyone just like renting isn't the best option for every person.

That said, we were in the latter category. Five years ago, interest rates were very low and our area hit a tiny slump, making it a perfect time to get the most house for our money. That, the fact that the renting situation isn't all that great in our rural area and our need for space that was ours to do with as we please (hubby is Tim Taylor type) all made buying the right choice for us.

Since we weren't likely to move around, we didn't worry about what the market would be in five years. We just stretched to make sure it would be enough house to still be comfortable with additions to the family. We've always said, "This is where we will raise our children," and haven't regretted it. And we insisted on a fixed rate mortgage! We learned from the horror stories.

Anonymous said...

Plus, we hope to be mortgage-free by the time the kids are ready for college and we're thinking of doing all those things empty-nesters do, like travel and buy completely impractical toys. An extra $1500/month? Heck yeah, we can have fun with that!

Stefanie said...

First, I agree with you: there are lots of advantages to renting, and it's kind of silly when people say you're "throwing your money away on rent" when in fact you're getting all sorts of peace of mind in exchange for that money. If I were renting, I wouldn't have to worry about the cracking fake tile and the hole in my shower right now. :-(

Second, I think the idea of a starter home is overrated. I think we all think that we need more space than we really do. The previous owners raised a family of four in my little shoebox house, and I can only imagine in made them closer and kept them better in touch with what was going on in each other's lives. My house WOULD need more closet space if me and three other people were living there, though. I'll admit that, anyway.

Misty said...

Oh, man. We bought a house in 2006 and I wish to HIGH HIGH heaven that we never did. Renting is the way to go. No worries. And I don't believe the whole "equity" and "investment" line, as we are currently upside down in our mortgage. In our area, I would have been so much better off to just rent.

Sizzle said...

I really want to own my own home. I think sometimes even more than I want to get married! But I know it comes with a long list of trials and tribulations. I still want it though. That's why I took the apartment manager gig- so I could save money for a down payment. It's the only way I'd ever be able to do it.

Kat said...

Wow, so many different opinions! I think it totally depends on your lifestyle and where you are at. I like owning my home because it's mine and I could whatever I want to it. Truthfully I don't think that I pay anymore for mortgage and utilities than others are renting. In this area of the country there is no such thing as rent control and renters pay their own utilities.

Now if you were talking about cars - I'd say hands down lease that puppy and upgrade every couple of years!

Nilsa S. said...

What a great post. I wish I had time to read ALL of it, but I wanted to stop by to say THANK YOU for your kind words today.

About the housing market. From what I understand, you need to stay in your home for a few years to break even on all the costs you put in to buying selling a house. However, I'm not sure that takes into consideration the huge upside of ownership (putting your monthly $$ towards equity, not throwing it away; tax breaks, they're huge!).

In my honest opinion, it's still worth buying a home. Especially if you think you'll be there a few years. The housing market will likely change between now and the time you want to get something bigger. And the equity you build between now and then will allow you to put a little more money towards that bigger house.

Good luck with the decision. It's stressful (I know!), but once you make it, it's really an amazing place to be - the owner of a home!

maggie said...

I totally miss renting. What I wouldn't give to just call someone when something breaks! And we are currently in the Starter Home Dilemma, you're right on there. On the other hand, it makes you feel all grown up and decorating is fun and it is YOURS. There is definitely something to the ALL MINE part of owning a house!

Pickles & Dimes said...

Before we bought the house, Jason and I were each individually paying more on rent than what our half of the mortgage turned out to be. Plus, I despised our apartment neighbors SO BADLY, so having a house was heaven.

I enjoy having a yard and no noisy neighbors and no weird cooking smells in the hallway, so home ownership was right for us. Plus, I love to do home repair stuff.

Before we bought the house though, I contacted all the utility places to estimate those costs, and showed it to Jason. Once he saw it in black and white, it helped him figure out the true cost of home ownership.

It all depends on the houses in your area and your budget, but home ownership is wonderful.

That reminds me, I need to look into refinancing!

Penny said...

Actually my financial advisor told me that house investments were very bad right now. As long as you take the money you WOULD have invested in a house, and invest it in something more lucrative (mutual funds, eg) then you're coming out ahead. There's all sorts of budgetary balancing things to do, rent vs mortgage interest, tax breaks etc, but the idea of renting until you save up for the Big House is not a bad idea.

If you do go the route of buying the "starter home," essentially you want to look for some kind of house who's price rises quickly. So it will have little to do with what YOU think is the perfect home, and everything to do with what the MARKET thinks is a big winner.

Good luck. Don't fear the house thing, it's really not as bad as we make it out to be (the stress is transient).

SLynnRo said...

These are my exact thoughts on renting. We are planning on buying next year regardless. Rent isn't the world's best investment. But I am so not ready for the responsibility.

Maria said...

My mom is in real estate, and she forbids me from ever renting, because she thinks that it's throwing money away. A house is a solid investment, even if you factor in all the other things, you have an asset.

Heather said...

We own and I love it. The mortgage is no more than renting would be (in fact renting this house would be $900 a week and we pay $1050 a month in mortgage repayments). Plus that money isnt going into a landlord's pocket, but back into our own as a sort of 'compulsory savings' if you will.

I love that my dog can dig to China every night and no landlord is going to care, nor inspect my property every few months.

Plus if you move, you could just rent your house out at a figure that would cover the mortgage and use your own income to pay the new mortgage if there was a cross-over time of mortgages.

jonniker said...

Actually, I would argue that the housing crash has finally brought the concept of a starter home BACK. Before, when the bubble was in full swing, a "starter home" would cost you a ridiculous amount of money -- so much that it was inevitable that you would lose money (the pinprick has been coming for a long time).

For what it's worth, I own a home AND I rent where I live. I bought a home in a "hot" market several years ago -- a home I lived in, in a neighborhood I chose for the right reasons, until career paths drew us away from the area -- and I can't sell it for the life of me, and I'd guess it's going to be several years before I can. I have a tenant in that home now, which means I'm a landlord, and I can't/don't cover the whole mortgage with her rent. Also? Being a landlord really and truly sucks hairy balls. It does.

I think that buying is a good idea if you want to stay in DC for sure -- provided that you want to live in it for the long-term and don't view it in any way as an investment. Prior to the last 20 or so years, homes weren't considered the big investment that they were during the real estate boom. The bubble changed the way people think of real estate, and frankly, I think the crash will do the same. No one should be looking for the kinds of returns people saw in the last 20 years. No one.

I guess what I'm saying is this: If you want to buy a house for all of the tangible benefits of ownership that people here outlined (your own land, doing home improvement, etc.), go for it. If you're doing it as an investment, or because you want to sell up and out in a few short years, you might want to think twice. No one really knows how this market will shake out, and as a person who got stuck in the market -- even when I did everything RIGHT (I bought at the bottom of the market, I didn't overpay, I didn't spend outside my means), I can tell you, you just don't know. I hope that we've bottomed out, but will prices start to climb again that quickly? Will homes return to their once-coveted "investment" status? I'm not so sure about that.

So, again: if you plan to stay in DC for the long-term, plan to buy a house that you could stay in in the long-term, then go for it.

Also, I mean no disrespect to any of the mortgage brokers or Realtors who comment or who are out there (and I count my dad among you!), but it's their JOB to be optimistic. There are countless articles written about how hilarious it is that Realtors and mortgage brokers -- no matter how shitty the market -- always announce, "It's a great time to buy!"

This is not always true. It just isn't. Although they may be right in this instance. Heh.

kristens81 said...

You have to move at your own pace. I dont think my pace will ever result into owning a home. Congrats on 20sb blogger!! You are pretty fab I love your blog.

jonniker said...

Also (and then I will shut up), renting, for many people is not "throwing money away." It's simply not true. For starters, again, no one knows how real estate will shake out as an investment -- no one. The market has changed forever. So that adage is out the window. Forget it. Gone.

Swistle's analogy will work if you plan on staying in the same place for a long time -- which is why you should think about where you're living and where you want to be before you buy. Plan on sticking it out for a while if you're going to do it.

Second, although your mortgage payment may be the same, you're incidental costs will rise. The cost of upkeep on a home is not cheap -- even a new home. So there is some math to do -- and the expenses may bring it up to more than you want to afford right now. And if you take away the investment portion (which in this market, you should, for now), then you have to think in the now.

Third, there are countless financial analysts who will tell you that home ownership -- no matter what the market -- isn't right for every person's financial situation. It's a personal decision, and one where renting may work out in your favor.

As with anything, there is no right answer. There just isn't.

I don't mean to be a dick about this, but I find that throwing around conventional wisdom around this is really flawed. I know far too many people who are stuck in this godawful downturn who did everything right and yet: they're stuck. They can't sell. They don't have an ARM, they didn't overpay for their house and yet, they cannot sell.

The market is not what people are used to thinking of it as. The crisis we're in now has been building, in one way or another, since 1985.

Leaf, probably... said...

I so desperatly want to own my own home, and not just because I hate renting. I know how expensive housing these days is, and I just don't care.

Maybe it's a security thing...

Chelsea Talks Smack said...

Oh man, if I could AFFORD to BUY a home. I would. I love the idea.

shay said...

We did a lot of renting when we were young marrieds and hands down I love having my own place.
We never bought over our means though so buying a house never made us broke.

We had a tiny house with little kids, there's no rule that says you HAVE to have the big house, two cars etc...

Buy smart and you'll never loose:)
Good luck...

Oh and maybe you should look at a condo? Sounds like you like that style of living.

claire said...

I know exactly what you mean. I'm not the ACTUAL home-owner right now, i just happen to live with the home-owner. And i hate it. HATE IT.
There's so much work to do and so much maintenance and it's all SO EXPENSIVE. Sure we have a yard for the dogs, and that's great, but i never liked to do yard work. I would love to live somewhere that I could call the maintenance guy to come over whenever i have a leaky faucet or the ceiling is cracking or whatever. Home-ownership is totally overrated. I've been trying to tell my brother and my cousin who are both house-shopping right now to look into condos or something with an association. I don't know why people want to do this to themselves. Seriously.

lifeintheleftlane said...

I own a condo, and I love it! Right now, living in a condo is better than renting and less responsibility than living in a house. My mortgage payment and homeowners fees are less than what my apartment in Atlanta cost. And home owner's insurance really isn't too bad - I think mine is $40 something a month.

The downside is that you are responsible for anything that goes wrong inside your condo, but the association takes care of any problem outside. Plus you do get a nice tax break, and I like having something that is mine.

Maybe you could shoot for a condo before a house.

Fine For Now said...

We bought our town-house with the same idea in mind: no yard work, exterior responsibilites, and a Home Owner's Association to keep the neighborhood looking nice.

Neither of us had ever lived in an apartment before, so we didn't really think to find out if there would be a problem with sharing two adjoining walls, one of which is in our bed room. The first year was sheer HELL because the neighbor's with the adjoining bedroom wall had opposite schedules as us and watched tv on the loudest possible volume all night long. Now, even with good neighbors we are very conscious of tv volume, calling to each other too loudly, etc.

Two years later, I realize I would really love to have a bigger yard than 20 x 20, and hate the fact that the second & third bedrooms are upstairs, so the feeling of having a lot of room isn't there since I find every reason possible not to have to go upstairs.

I do have to say though besides the fact that we would love to move but can't because our house is now worth $30,000 less than what it was two years ago....being able to write off the mortgage interest is a huge bonus.

So, I guess I'm telling you things that kind of suck about owning a town-house, in case that was the route you would maybe go in!

the frog princess said...

I, of course, rent... because let's face it, with real estate prices in NYC, there's no way in HELL I could afford to buy.

I know one friend who owns her own place here. It's a 1 br apartment. She is 36. I know a couple with a house, but only because it's been in the guy's family for practically a century.

So yeah, I consider between real estate costs--not to mention real estate TAXES--I will be a renter for the duration of my life in the city.

And I'm kinda Okay with that.

Vanessa said...

You have just outlined everything I love about renting. We rent our house right now and I have had to do more of the traditional home owner type chores which has only made me want to move back to NYC more and live in a building with a nice front desk staff and put the rest of the money into energy funds. Plus, if I can move back to NYC I can give up my car and not worry about gas prices except how they would benefit said energy funds I could then invest in! (yes I know that is the wrong way to end a sentence, sorry!)

Tia said...

I didn't read all the comments, but as a former condo owner, a former homeowner, and a current renter, I can 100% say I will never own a house again. This market is awful for ownership. Many people are losing money on their houses. Closing costs are wasted money. Taxes are wasted money. I love calling up a landlord if I have a problem. My house cost me so much money. I might go back to a condo, since only the inside is my responsibility, but never a house again. It took away all of my free time and my extra money. Bah!

Tia said...

Oh yeah, barely any of your house "payment" actually goes to the house in the first 5-10 years anyway. Most is interest. No interest on an apartment :) Also nothing to tie you down if you want to move.

pie said...

I'm late on this but all I have to say is that you took this post from my brain. Impending adulthood has M and I having these same conversations often. we are looking to buy in the next year or so too but man. so so so scary!

Good luck. the shit is scary but you will come out alive. I guarantee it.

Have a great weekend!!

poodlegoose said...

Looks like I'll be renting for quite some time, especially in the near future, and I'm ok with that. I think it's the fact that I'm ready to go wherever the fiance is ready to go is what makes me really excited.

Plus, we're poor grad students, and we can't afford a house anyway. . . but that's beside the point ;)

anne said...

(I came over from Slynnro)

This is a topic I feel so strongly about - though your readers seem to cover the topic very well. Jonniker seems to have said it best and she lives in the same "hot" market I do.

I think it is definitely different for everyone. I tend to think what makes it different is if you are the kind of people who will make improvements to the home, if you are the kind of people who will spend your Saturdays at Home Depot or mowing the lawn. If so home ownership is a good idea and of course a good investment. If you are not - it may be a waste. We spend SO much time either frustrated or spending money to pay someone to fix things. This is not a cost you recover it is not an investment.

You do get some tax benefits from home ownership including big rebates if you pay interest only - but honestly that money goes into paying for other household expenses that you just don't have when you are a renter.

Just my two cents!