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...but let me have five seconds of "GOTCHA!", willya?

Years, literally years I have been saying this, and everyone laughed at me. This is the first time I have ever seen a financial analyst on my side of the argument.


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Mar. 10th, 2009 01:17 pm (UTC)
Fuck yes!

My girlfriend is trapped in Connecticut two years longer than she wants to be. And why? Because she bought rather than rented, because she didn't want to be "throwing money away." I say this gently, and with love, because, well, she was operating from upper-class assumptions, but I'm guessing she'd rather have the condo fees and mortgage payments back ....
Mar. 10th, 2009 01:43 pm (UTC)
I mean, people can own homes if they want, and if they want to own a home, they should say they just want to own a home, but they shouldn't act as if it "makes more sense" financially, and they shouldn't just ignore the very real liabilities involved with wearing a house-shaped millstone around their necks...
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Mar. 10th, 2009 01:43 pm (UTC)
I have seen other analysts say it over the years, if it's any consolation.

I personally say there's no substitute for carefully thinking out one's specific life needs, and that while home-buying is good for some people, it's not an unmitigated good nor one that everyone should be forced to chase after.

The other problem is that people inevitably conflate a house as "an investment" and as "a place to live." The former is only valid if it's an investment you plan to recoup - if you're hoping to sell in the near future and/or rely on home equity loans (though that can be risky). The latter is *sometimes* a good idea for people who intend to be in one place for a long time, have carefully evaluated their local market, etc. It's also often helpful for retirees to have paid-for houses, as that deducts from the total costs of survival in a way that renting OR still having a mortgage payment doesn't.
Mar. 10th, 2009 02:09 pm (UTC)
I seriously hope my friends who bought a house ... 14 months ago are not looking to get a great return on their "investment" when they try to sell it so they can move to Florida in May....
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Mar. 10th, 2009 01:51 pm (UTC)
I heard a statistic the other day that said that 32% of Americans are in a mortgage and 31% rent - the rest just own their homes outright or are listed as "other." Why, then, do renters get the ass end of the stick? I think that's also where the "Real" America thing comes into play, too. Most renters are city-dwellers and while home "owners" live in rural areas.
Mar. 10th, 2009 01:58 pm (UTC)
Good point. Might have something to do with color, too .... but hey, that's never played a role in home buying before...
Mar. 10th, 2009 02:03 pm (UTC)
I'm on my second year of renting a home in a low-density suburb and I'm loving it. My heat breaks? Not fixed on my dime. :) (Plus, we have wood stove heat anyway, boo-yea).

Rent is about $100-$150 more than an apartment, but the utilities are lower due to the wood heat, bless. Screw buying. I don't need an empire.
Mar. 10th, 2009 03:03 pm (UTC)
I think a lot of Americans have really dumb ideas about home ownership. I think a lot of people in the upper-middle-class, children-of-baby-boomers generation suffer from this. Take me for example; my parents started out with not a whole lot and a lot of their wealth has to do with the smart real estate decisions they made. Some of it was smarts, but mostly it was just luck and timing that they bought at good times and in good places. I think many people like me grew up thinking "buying is what you are supposed to do."

Did you hear Richard Florida on NPR this morning? Or did you read this article: http://www.theatlantic.com/doc/200903/meltdown-geography

That said I think buying a home can be a really good investment if it's done sensibly, with careful planning,at the right time and for the right reasons.
Mar. 10th, 2009 03:12 pm (UTC)
Toe May Toe
Toe Mah Toe
Mar. 10th, 2009 03:30 pm (UTC)
Can't talk, mouth full
Just threw my money away on breakfast.
Mar. 10th, 2009 04:17 pm (UTC)
I am totally on board with you. My boyfriend doesn't agree, which is hugely frustrating because he has a house he can't make mortgage payments on nor sell, and he still wants to *buy a fucking house* anyway when he moves down here.
Mar. 10th, 2009 04:26 pm (UTC)
I’ve always thought this, although I live in NYC, where “buying” usually doesn’t mean houses (although I agree about houses as well). I used to work in real estate here and for the life of me, I could never understand why anyone would give up their reasonably-priced rental to “buy” their apartment when the building went co-op. In other parts of the country, I guess maybe it might make some kind of weird sense, rather than lose your home, but in NYC eviction plans are illegal! You can’t be tossed out of your apartment as long as you’re in compliance with your lease, even if the building goes co-op or condo. You’re basically paying the landlord hundreds of thousands of dollars for nothing but the privilege of continuing to live in the same exact apartment you were already living in, only now you have to make all the repairs yourself, you’re carrying an extra few hundred thousand dollars worth of debt, and you need the co-op board’s permission every time you want to hang a picture on the wall. With a co-op you don’t even own your apartment, just the shares of stock in the corporation that owns the apartment, which means that in some cases (depending on the bylaws), you can’t even sell the place without the board’s approval. Also, since co-ops (at least back in those days) are not considered “real property” but “personal property” (i.e., stock in a corporation), even the old myths about real estate always being a good investment don’t apply.

But the maintenance is so much cheaper than the rent! Right. Okay. Except, is the maintenance PLUS the loan payment still cheaper? Oh, not so much? Also, call it maintenance all you want. It’s still rent. You’re paying rent for something you supposedly own, and you’re getting less value for it than you were previously, because the landlord is no longer responsible for anything that breaks, collapses or explodes within the walls of your “investment.”

Archaica is right — own a home because you want to own a home. Buying a house purely because you think you’re going to turn a profit on it is just nuts. Ask anybody to appear on just about any show on HGTV in the past eighteen months if you don’t believe me.
Mar. 10th, 2009 05:03 pm (UTC)
Yeah, my friend just bought a co-op in Queens .... I do not understand that.
Mar. 10th, 2009 09:31 pm (UTC)
Well, here at least, houses absolutely never appreciate in valu; We aren't paying any more than when we were renting, though, and I can do anything I want to the yard, so I think we came out ahead there.
Mar. 10th, 2009 11:33 pm (UTC)
I think renting is pretty keen. I don't think it's ALWAYS better, but I do think that we fetishize home-ownership--often to our detriment.

On the other hand, I whole-heartedly support girl scout cookie ownership.
Mar. 11th, 2009 02:05 am (UTC)
The more this mortgage thing worsens, and the more reasonably priced apartments I find that do not allow cats, I want to go out to the edge of town, find an empty lot, and start mixing mud. I bet I could make an awesome Santa-Fe style bungalow with passive solar heat, a jacuzzi tub and a conversation pit if i just try hard enough.
Mar. 11th, 2009 01:55 pm (UTC)
I prefer passive-aggressive solar heat.
Mar. 11th, 2009 04:10 am (UTC)
I like it as a refutation of the argument that you should spend more on housing than you can afford if the main reason is to nominally own that housing. It never makes sense to go heavily in debt in order to be a playa investor, even if the debt is tax subsidized.

What I find lacking is that there is no discussion of use value. You might get zero return on a house after 30 years, but if you own it outright you're sitting mighty pretty compared to your friend the renter. And zero return is certainly a better position than massive depreciation; we still find reasons to buy other things that don't earn us a bunch of money, like cars, and scratching posts, and toasters.

I think many people said this better and more straightforwardly than me. I more wine will now have thank you.
Mar. 11th, 2009 02:08 pm (UTC)
Yeah, obviously for the sake of utility, if you wanna buy a house, buy a house; even the guy who wrote the article says he's probably going to do that at some point. And in the VERY long term, you might come out ahead. But running that calculation -- the owner has the cost of the house, the fees and costs involved in buying the house, the cost of maintenance, repairs and utilities, the cost of property tax, and all the peripheral costs -- you buy the thing at 30 and pay it off by 50, how long before you really come out ahead? Beats me, I plan on being dead by then.

Anyway, you're right -- cars, man, those are the worse. The minute you sign the papers the thing has lost half its value. Insane. Yet everyone does it...
Mar. 11th, 2009 04:42 am (UTC)
There are a lot of reasons why renting can be superior to buying. A lot of it depends on what your plans and expectations are.

Our family owns a condo, and I don't necessarily think we're better off financially because of it. I'm happy we bought it, though, because we used to have shitty neighbors when we were renting (God, they were horrible) and our co-owners are pleasant, quiet people. And we're not great with saving and investing; paying down mortgage principal is a way of forcing yourself to save money. Someone who's better at financial discipline might not need to buy.

We're also not in a house that's too big for us; we're in an apartment that's barely big enough. And it's an old building, in an old, high-density suburb, so we're avoiding some of the mistakes that author pointed out.
Mar. 11th, 2009 05:36 am (UTC)
It's all in the timing and location. But that's true of all real estate, not just houses. Long-term increases in value are highly localized, and entirely dependent on lots of people making other kinds of investments that actually generate growth. You have to be very knowledgeable to make a profit in real estate over the long run, unless you're really lucky.

That said, it's worth a premium to me not to have to deal with a landlord- which is why I wouldn't want to buy in a co-op or condominium. Co-op boards and condominium resident's associations are every bit as bad as landlords, if not worse. You get all the disadvantages of ownership without one of the main advantages.
Mar. 11th, 2009 01:57 pm (UTC)
Yeah, I hear so many horror stories about condo associations -- you basically still live in an apartment, but you pay a lot more for it, you have to pay for the maintenance, you still don't own any land, and you have this unbelievably hard-ass group of people telling you what you can and can't do with something you OWN. I don't get it.
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