Used to own, but now rent. You'll never buy again. Is this you? (foreclosure, mortgage)

[PNW-type-gal]

Originally Posted by MrRational

The reasons to own a property are MOSTLY financial...

The reason I own my house - no one can tell me if I can have a dog or not (or what breed or weight), no one can tell me I can't paint that wall green. I don't like sharing walls and I like my small private yard, private patio, private 2 car garage and the spouse's "2 car garage sized shop" - he'd be really unhappy without a shop. The last house had several acres of land and I certainly don't want to have to maintain that size property ever again, but this house and the roughly 9,000sf land is about right.

I bought a house that was a great value for the money that I could sell tomorrow for more than I paid for it (including the reno I have done).

Since I live in a small town with a very low vacancy rate and prefer a house, I couldn't rent a house for what my mortgage is (including tax and insurance). Sure, part of the fee in renting goes toward the landlord being responsible for certain items, but in my younger years of renting I never found the landlords I had to be particularly responsive to issues with the property. A water heater that went out? Sure, that was replaced quickly. A leaking roof that was staining the ceiling? That fix took 10 months and 2 attempts, since the cheap first one didn't work. In the houses I have rented, I was expected to mow the lawns, clean the gutters, etc, no different than owning the place except without the ability to make changes to suit myself.

I can see the logic in renting a townhouse, condo or apartment, rather than buying, but not so much a house. Of course, as mentioned, the economics of owning vs renting a home work here, other places probably not so much (and depending on when the house was purchased - during the run-up in the bubble you might well be upside down still).

[Hemlock140]

Some of us enjoy doing work around the house, gardening, home renovations. We can do whatever we want, replace a slider with french doors, put in a greenhouse window, knock out a wall, or add another bathroom. Despite the crash of the economy, we are already back to the same equity of about $450k that we had in 2006. For us the key success in home ownership was buying something big enough for potential family size and staying there. We have been here 20 years now, bought (3,000 sf) for $190k, now valued at $640k despite dropping below $500k in 2009. Despite the kids being grown and on their own now, we are staying until we retire, and based on current prices would be able to pay cash for a house in a less expensive area when we downsize and don't need to be near jobs. Renting over the last 20 years, at an average over those years of about $1,800/month would have been about $435,000 that we'd never get back. Not to mention the income tax deductions every year for mortgage interest, of $15,000.

[luzianne]

I like the IDEA of being able to easily move any time I like. But the reality is my house is paid for and as long as I stay here, I will never have another rent or mortgage payment in my life. That is a pretty powerful reason for owning.

[MrRational]

Originally Posted by MrRational

The reasons to own a property are MOSTLY financial...

Originally Posted by PNW-type-gal

The reason I own my house - no one can tell me if I can have a dog or not,,,
no one can tell me I can't paint that wall green...

I never found the landlords I had to be particularly responsive to issues with the property.
A water heater that went out? Sure, that was replaced quickly.
A leaking roof that was staining the ceiling? That fix took 10 months and 2 attempts...

Correct.
In order to have the same lifestyle options and the same level of management competence
(that can compare only with ownership responsibility) you'll pay through the nose in rent.

[Pfhtex]

I like the flexibility of bouncing from city to city, I like that I can call someone if the A/C goes out. But one day when I find the right area, I definitely will own again.

Having owned, renting sometimes feels like I'm getting away with something, I can take a very "who gives a [something]" mentality to that part of my life that deals with home maintenance, etc. But I love yard work and upgrading my home, and can see a time when renting feels empty and costly.

[semispherical]

Originally Posted by pdxmilw

I don't know if it's me or not. I do know that for now, I'm happy that on my day off I can sit and read a book, rather than thinking about the many home projects I should be working on. Was a homeowner for 16 years, have been a renter for 4 months now, house sold 2 days ago. Woo!

I'm sure there will be times that being a renter is annoying. While having shared walls is an adjustment, my old neighbor's living room was only 6 feet from my bedroom window, and she played loud music and had screaming fights a lot, so my 86 year old apt-neighbor is pretty good so far.

I made a decent profit on the sale of both houses- bought 1998, sold 2004; bought 2004, sold 2014, so my timing worked out pretty well. I haven't ever sat down and actually figured the nitty gritty of whether or not buying was significantly better than renting would have been for those years, although I may do that one of these days.

40s, no kids.

Just for "fun," I just did this calculation yesterday. I bought my place as a short sale in the depths of the recession and spent about $140K in repairs and improvements (the previous owners had not kept it well). It now looks like I will probably have to sell in two years. When I project what I should be able to sell it for vs the amount it cost me, I will make about $100K profit. BUT when I consider what I would have spent in rent for a similar place (the house across the street is rented, so I know pretty much what I would have spent) it turns out that buying was still more expensive than renting by about $100K.

Bottom line is that, at least in today's market I will have paid a $100K premium over seven years to live here. Now I happen to think it was worth it; the property is drop-dead beautiful and it was the culmination of a life-long dream to buy it. I've been a renter, and always ended up resenting the lack of freedom. But $100K might be too much for someone else to pay for psychic gratification.

[sfcambridge]

I will likely never own. I'm a female in my 40's. I came to this decision after watching how home ownership affected my parents as they aged, and from considering my lifestyle and financial goals.

My time is very limited and valuable to me. I do not enjoy home improvements/maintenance and find that is a waste of my time. My personal and future career needs require some flexibility, and I cannot guarantee that I can stay in one location long enough to be sure there is a financial sense to the investment. It actually does NOT make financial sense for me to buy. The cost of buying (and not investing that $$... which has exploded in the stock market) is also too high in the markets where I have lived. I can currently rent an apartment in an area/style I prefer for about the same as mortgage + fees.... actually, probably a nicer apartment. I am very frugal and save the money that I would have otherwise spent on a downpayment/home improvements etc.. I also wont live/retire in this area long term regardless, as I will definitely live in an accessible, weather friendly location as I get older. Taking care of disabled/older relatives have made me realize that smart planning for the future is key. Most people don't truly understand what this means.... until they get there.

I want the freedom to go where I want, when I want. My goal is financial independence, early retirement and following my career dreams wherever they take me. That will probably not include home ownership. If in 20 years I am certain I have moved to the place I will want to retire, only then will I consider buying something if I find the perfect place. It will be modest, easy to care for, in a very well-maintained and well-managed accessible building, in a good location for public transportation. Location is everything. And then I will pay cash with all of the savings I have from not paying for more home than I need for decades and all of the house maintenance costs.

But this is the life of a single person, without strong family ties to one location. Every person is different when it comes to this question. Just because this works for me, it doesn't mean it works for you.

[MrRational]

Originally Posted by semispherical

It now looks like I will probably have to sell in two years.

And *that* is where the problem lies: Longevity or time in place.
Too few today have any comfort making that forecast.

Bottom line ..I will have paid a $100K premium over seven years.

But if you hadn't spent $140,000 you would be $40K ahead.
Or had been satisfied with a $40,000 less in property you would be even.
Or absent the "have to sell" issue... let it ride for another 20 years and not care.

[AhRainess]

When I was a renter, I wanted to be a homeowner so bad.

When I was a homeowner, I missed being a renter and thought about all the money
I could've saved and the travels I could've done.

Now I'm a renter again, and I still would like a home of my own, but just less expensive. I like renting for now because we are able to really "test" out the neighborhoods to see if we really want to live there. If we don't like it, we just move. One of my hobbies is interior design and decorating, so I'm having a huge withdrawal right now. I don't want to buy any new furniture or accessories to decorate my rentals because I want to save that for a more permanenet place. Our last house, I gutted that thing once we closed on the house and had a home project every year. I enjoyed it, but it did drain our bank account.

[mkarch]

Originally Posted by Hemlock140

Some of us enjoy doing work around the house, gardening, home renovations. We can do whatever we want, replace a slider with french doors, put in a greenhouse window, knock out a wall, or add another bathroom. Despite the crash of the economy, we are already back to the same equity of about $450k that we had in 2006. For us the key success in home ownership was buying something big enough for potential family size and staying there. We have been here 20 years now, bought (3,000 sf) for $190k, now valued at $640k despite dropping below $500k in 2009. Despite the kids being grown and on their own now, we are staying until we retire, and based on current prices would be able to pay cash for a house in a less expensive area when we downsize and don't need to be near jobs. Renting over the last 20 years, at an average over those years of about $1,800/month would have been about $435,000 that we'd never get back. Not to mention the income tax deductions every year for mortgage interest, of $15,000.

All this sounds good, but aren't you leaving out the bit about how this was only possible because the government stepped in and forced banks to offer a loan modification, protecting you from being forced to sell your home at the bottom of the market?

I bring this up because people making the rent/buy decision post housing collapse can and should have a very different perspective on the issue. When I bought in 2012, I went in with the expectations that:

1) There is NO subprime mortgage lending market to help owners through hard times. That went away in 2007 and it's not clear if it's coming back any time soon. Government programs may be available, but no guarantee you qualify since they're politically driven.

2) Houses don't always hold their value, and sometimes they lose A LOT of value quickly

3) The biggest factor in whether home ownership is a net financial gain is if you can own for the long term, and not be forced to sell in a downturn - otherwise many of the financial advantages disappear.

4) The kind of house appreciation people saw over the previous 25 years might be highly unrealistic going forward. EX: neighbor bought for $88K in 1988, sold for $410K in 2013 . Extrapolating that same appreciation would put the value at close to $2M by 2038 for a 1500 sq ft 1970's split level in original condition! Could happen, but I'm not betting on it.

For me, buying 2 years ago turned out to be a good decision, and we've built up over a quarter mil in equity in less than 2 years - but I realize that's not everyone's experience, and was heavily dependent on being in a position to buy right around the market bottom. Some of that was planned, but a lot of it was luck.