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Rents get out of whack when renters are not able to buy, regardless of cheaper cost to buy. (Another one of my supreme pet peeves!)
e.g. when credit is constrained as it was after the housing bubble popped.
I think ownership and renting will largely be multigenerational for the foreseeable future, i.e. if your parents did not own a home, you probably won't own a home either.
My parents owned a home... so did my grandparents...
From as far back as I can remember I was taught to save my money so I can buy a home... it was not even an option when you come from a farming family where owning is EVERYTHING
Of course... no one was happy with the house I bought but ME... and I still am and now they have all come around...
There was no help from family, they didn't even know about it until I made the announcement I was in Escrow... my friends were all looking for nice rentals and I was an owner...
I moved to a place I could afford. Ten years later, the place became unaffordable. I should have to keep moving every time other people move into my area?
Exactly, I am glad you figured this issue out, I am happy that I was able to assist you.
Quote:
Originally Posted by freemkt
I once subsidized homeowners' property taxes to the tune of $1,200 per year because I lived in a higher-tax-rate rental. It's my responsibility as a renter to subsidize homeowners?
How in the world do you think renting is subsidizing anything? The owner has the responsibility to pay the tax, regardless if he is renting the space out or not. The owner has the responsibility to pay the tax regardless the rent amount he can get from the rental. The owner has the responsibility for all obligations on the property, even if he cannot find a renter, or if the rental market rate drops below the costs of owning the property.
You as a renter have none of these obligations; if you do not like the price you can simply move, no need to sell or anything, just pack your bags and leave. An owner has to be concerned about market values, taxes, improvements, maintenance, etc.
Market value - renter has no concern over this and does not impact them. An owner has risk in this, what he bought today could be worth less, his payment could be more than what the rental market rate is.
Taxes - the owner has to pay this no matter if he has found a renter or not. Some properties can go months being vacant, yet the owner still has to pay taxes on this.
Maintenance - if something breaks in the house the owner lives in, he can choose to fix it or not depending on funds, however, if something breaks in the rental he owns, he has to fix it no matter what funds he has.
You seem to totally dismiss all the risks involved with being an owner, and put yourself as a renter in the same category as an owner, sorry, it is two different worlds, two different obligations.
I rent, I have always rented, I rent a very nice, ocean view condo here in Miami in a luxury condo building. Also, I am an owner, I own a place up further north in Florida that I rent out. I know and experience both sides of this game.
Almost... you either need to have money OR the ability to secure a mortgage.
I paid cash for the first home I bought... it was two blocks below East 14th in East Oakland... the home was advertised and listed... it was scheduled for a condemnation hearing... at first I wanted no part of it... the agent kept pestering me and finally I gave her a figure about 1/3 of asking... to my dismay, she wrote it up and I gave her a $100 deposit... the next day she called to congratulate me...
I was 22... just became a homeowner... I had been working and paying into social security since age 12 so I had savings and I sold my classic car that took me two years to restore....
My family was devastated at hearing the news... they were really speechless... my Step Grandfather said he didn't have the heart to tell me just how bad I had screwed up because my enthusiasm was infectious....
So... at age 22 I bought and moved into my own home with no mortgage... it was all mine and I started cleaning it up the day escrow closed... In two weeks it was good enough for the hearing to be cancelled...
It was the single best financial move I have ever made...
Here is a link to the pictures of my SF Bay Area home on the day escrow closed... CAUTION the pictures are graphic...
Later I bought other homes... some with conventional down payments and some with no down payment... when the market was in full foreclosure mode.
I bought a nice older home in Pittsburg California for simply taking over the payments.... the payments were equal to rent.
I bought my current home and asked the sellers, an older couple moving to a retirement home to let me make my payments to them... they would not have to fix up the place, I would not have to go to a bank and I would be paying them 5% interest which later has dropped to 4%....
Sometimes you have to think outside the box...
I also found buying property needing work meant I get the savings...
Congratulations on your first fixer - you deserve a Mike Rowe award for that.
Did you buy your current home before "due on sale" became the norm or was this some sort of informal off-the-books mortgage assumption? (Isn't that risky?)
One 'problem' in Portland is that there are no ghettos i.e. no neighborhoods bad enough to offer extreme buying opportunities. Other than a few low-end condos, I haven't seen any homes under $100K in more than ten years, with the median now pushing $300K.
Rents get out of whack when renters are not able to buy, regardless of cheaper cost to buy. (Another one of my supreme pet peeves!)
e.g. when credit is constrained as it was after the housing bubble popped.
I think ownership and renting will largely be multigenerational for the foreseeable future, i.e. if your parents did not own a home, you probably won't own a home either.
Hm, I lived through that housing bubble, and I have excellent credit.
Congratulations on your first fixer - you deserve a Mike Rowe award for that.
Did you buy your current home before "due on sale" became the norm or was this some sort of informal off-the-books mortgage assumption? (Isn't that risky?)
One 'problem' in Portland is that there are no ghettos i.e. no neighborhoods bad enough to offer extreme buying opportunities. Other than a few low-end condos, I haven't seen any homes under $100K in more than ten years, with the median now pushing $300K.
Freemkt... I'm really glad you looked at the pictures as it provides insight to where I'm coming from when I comment... in effect, having walked the talk by finding my own path to ownership and going against conventional wisdom.
Home number 1 is the one I posted... really the best learning experience ever... met a lot of great people willing to offer advice and others that tried to rob me blind.
Sad I don't have many pictures... here is one showing some the before/after for kitchen/bath... and yes it is graphic.
If you fix up the worst eyesore in the area you get the admiration and respect of the neighborhood... not to get too far off... even the local drug pushers left me alone... of course moving in made a statement I was here for the duration.
A little later the home I bought has an assumable loan... still had to qualify... it was some type of government program... I bought without a single dollar down... simply took over the payments and about a $1000 in my share of closing costs...
The home I live in now was advertised on the MLS and had big fore sale sign in the yard... I was surprised the elderly retired Nave vet was moving.... as a kid he had loaned me tools on a few occasions...
We got to talking and I said I might be interested... that night I wrote up my own offer and he had the Real Estate Lady meet me at the house... we sat down... she was not use to seeing a simple offer without all the pages of legal stuff in part meant to protect the Realtors...
My offer hinged on the seller carry-back 80% with my 20% down... the Realtor gave him a big break since she did not put us together or even write the contract.
On the first of each month I stop by the retirement home and hand deliver the check... A lot of their friends were skeptical and now they all wish they would have found someone like me...
You see... they all sold conventional and most have to deal with 1% Bank Interest... my sellers receive 5% interest and when I offered to pay them off... they were sad... said would I keep paying them if it was 4% and that is where we are...
The 5 and current 4% is the money they used to live on... a real win/win cutting out the money changers...
As a side note... I have never raised the rent on either tenant... they are good people and really make my life easier... I do go to market whenever it is vacant.
I was only able to listen to half this podcast before changing the station in disgust.
All this talk about "rents thru the roof", "affordable housing" sounds like people have a major sense of entitlement. The "callers" on this podcast and that bleeding heart Mayor in Seattle think that people should have the right to live "close" to their jobs in the city. The take away from listening to this (and hearing all this bleeding heart talk about affordable housing) is not that people are really struggling to pay rent and on the verge of getting evicted But that they can't live in the part of the city of their choosing.
And this question is never answered. If "no one" could afford high rents then how are rents so high in the first place with close to record low vacancy rates?? Obviously someone is able to pay the asking rent and from what I see in the greater Boston area most of the new rental properties being constructed are fully rented by the time tenants can start moving in. So some people should be subsidized and allowed below market rents but others are supposed to pay higher rents to compensate.
And these 20 somethings are complaining that they may have to move to another city or have to commute a longer distance not that they are struggling to pay rent and about to be living on the street. More than 50% of people in who work in NYC commute by public transportation to work in some cases 60-90 minutes each way
See NYC in the 1970s & 1980s on the result of all the federal monies allocated toward low income housing as well as rent regulations.
And the suburbs do have a right to mandate strict zoning rules. Homeowners are paying in some cases five figure annual property taxes.
I live in Florida and since the foreclosure mess, the rents have gone from reasonable to ridiculous. People that lost their homes are now renting so vacancies are low. A 3 bedroom apartment that went for $900 just two years ago is now $1342 a month! I don't think people complaining about that are "entitled". When your rent payment is eating 50% of your income it's not necessarily an income problem as it is price gouging by landlords and apartment complexes. In many cases, a person is better off buying their own place if they have the income and credit.
Years ago people could live on much less than they do now. But then we didn't have all the trappings of modern life then either.
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