The glorifcation of homeownership (salary, compared, rating, programs)

[K-Luv]

Originally Posted by Just_the_facts

American society has long prized home ownership (ie: the "American Dream") and looked down upon renting. Do you agree with this element of American culture?

Personally, I do not and believe the decision to own or rent is a matter of personal choice. Home ownership should not be subsidized like it currently is by the government (Fannie, Freddie, mortgage interest deduction, bankruptcy protections, etc.,), especially considering that renting is in many ways better for society (better for the environment and allows for more labor market flexibility).

People rent for various reasons. I for one choose to rent primarily for two reasons: I have the flexibility to move if I need or want to. Outside of my lease, nothing is "tying" me down. And, I do not have to worry about any associated costs with owning. If the plumbing busts, the landlord pays for it. If the place needs a new paint job, the landlord pays for it. If the roof is leaking, the landlord pays for it. Sometimes these costs are passed along to the renter, but usually not until the next tenants move in or you renew your lease. Also, depending on the particular market, the renter has the power to negotiate the rent. On top of that, I have rented places where I received a discount for being the "care taker".

On top of that, I also rent because some properties include heat and/or hot water and most, if not all, do not charge for municipalities. I have not paid for heat in over seven years and I have never paid for sewage, water, trash pick-up, etc. Some States also allow you to file a return on the property tax the landlord pays.

And until you pay off your mortgage, you don't own your home anyways; the bank does. So yeah, my landlord might be getting "rich" off me (actually, unless the landlord owns multiple properties, they make very little money), but so is your bank.

Originally Posted by tonylu

With renting it seems like you're indebted to the person you're renting from. If you own yourself you get to do whatever you want with it. You are pretty much free.

Well, no you do not get to do what-ever you want to your property. For one, if you decide to knock down a wall you need to have it assessed, in particular if it is load bearing. So you can be denied that "freedom". Also, you cannot really increase the value of your home too far above the average price in your neighborhood without taking a loss and/or upsetting others in the neighborhood who know they cannot sell their homes for the same price. If you do get away with it, the increased value will also increase your property tax. With that, there are also HOAs and/or neighborhood associations that can tell you what to do with your property or put pressure on you to leave if you do not comply. Unless you live in a market such as NYC, Boston, LA, SF, Chicago, and the like, the reality is that you more-or-less have to conform to the rest of the neighborhood.

Originally Posted by Charles

Really? What if that person was incapable of getting a loan but was capable of paying cash?

People often seem to forget that you can eliminate banks and the "middle man".

Originally Posted by Charles

Personally I think it should be subsidized. If it wasn't I would be paying more out of pocket and wouldn't be able to write off the interest on my 2.75% fixed mortgage which saves me a ton of money that I invest in the stock market. [Does your landlord write off the interest on the property he rents to you and pass the savings on to you the renter?]

Depending on the State, some renters can write off a portion of the property tax the landlord pays on the property since a portion of your rent goes towards paying that tax.

Originally Posted by Charles

Owning a home is better for the environment because renters don't care about the environment.

BS! What is this opinion based on?

Originally Posted by Ghostly1

And there's the rub about renting. A vast number of renters don't feel invested either in the community in which they live or the house or apartment they occupy. As a consequence, overtime, abodes usually get run down and entire neighborhoods go to the dogs. Crime rises and eventually the area becomes nothing more than a slum.

I agree entirely in your last sentence and wish you all possible luck in your quest to ecome a home-owner.

Once again, BS. My mom has rented the same place for nearly 15 years, and she is definitely invested in her community. When I lived in Minneapolis, I was in the same place for nearly 7 years. Many newer complexes have community rooms and/or meeting rooms, gyms, playrooms for children, etc. Rentals tend to go downhill because of lazy landlords, not necessarily because of tenants.

Originally Posted by Hollytree

I'd rather see the federal government encourage home-ownership and since somebody has to own it does stabilize and promote civic involvement in communities since people have a financial stake.

And again, BS. People buy homes because they want something of their "own". Outside of a few gated communities, arts districts, and a few others, most people do not buy in order to become a part of a community unless there is some sort of prestige associated with the neighborhood and/or zip code. Most homeowners seem to suffer tremendously from NIMBYism, even if the improvement improves the neighborhood. An improved neighborhood raises property value, which in turn increases property taxes.

[ohio_peasant]

When making my own rent-vs.-buy decision, my concerns were similar to Sponger42’s. I wanted privacy, autonomy, a sense of personal space, something lasting and hopefully valuable. What I completely failed to realize was that house-ownership suffers from tremendous overhead that’s absent in renting.

I work long hours and travel frequently. I spend maybe 2-3 hours a day at home, other than being asleep. Whether my house is beautiful or grotesque, spit-shined or a cesspool, really doesn’t affect my quality of life. What does affect my quality of life is worrying about a leaky roof or rodent-infestation; and worrying about resale value. If and when I ever successfully sell this place, indeed I’m going to celebrate.

In our area, and probably nationwide, the current property-tax bill is one of the reportable items from seller to buyer. I made my purchase decision in part from desire to minimize property tax. Some months after I purchased my house, I received my first property tax bill – double what it used to be! The reason is that the county was in arrears in reassessing the house’s value, but updated the value based on sales price. So there I was, sitting with a 100% increase in taxes, with no recourse.

But there is a silver lining to living in a market with high taxes and low real-estate appreciation. Eventually your income and investment portfolio rise, relative to the house value, to the point where the house becomes a small portion. That goes far in assuaging feeling of guilt at neglecting one’s house and watching its value erode further.

[soanchorless]

There are plenty of instances where renting is better than buying, but I just don't like the idea of landlords making a profit off of me for my entire life.

Sure, if you take out a mortgage, the bank is making a profit too, but if you play your cards right, it should be much less than if you rent for the same amount of time plus, in 15-30 years or less, that will stop completely.

All landlords pay property taxes (without homestead exemptions), provide maintenance and repairs, pay HOA fees, and many have mortgages on top of that, and still make a profit. There are exceptions of course, but if it wasn't profitable, people wouldn't be doing it. So basically, if you are renting, you are paying for all the costs of home ownership plus a profit for the landlord, and not getting any of benefits of home ownership: no equity, no tax exemptions, not as many legal protections usually, and little autonomy to do with it as you please.

Besides that fact, if you get a fixed rate mortgage, your payment will remain the same. What landlord keeps the rent the same price for 30 years straight?

Unless you like the idea of paying extra for the convenience of being more mobile and have someone take care of repairs for you (if you are lucky!), it doesn't make much financial sense to me.

I guess once exception would be areas were you can't find a small house or condo that is fairly energy efficient, though...and that's what you want to live in. In that case, renting an apartment is possibly a better financial situation.

[EHCT]

Originally Posted by jerseygal4u

As some pointed out,you can't do what you want to do with your home

My sister can't even knock down her walls in her bedroom to expand unless she gets a permit from the town.

Having to get a permit to alter one's home doesn't necessarily back up the point that you can't do what you want to do with your own home. There are many reasons a particular municipality would require a permit to knock down an interior wall. One reason is for safety. There are tons of people who take on home improvement projects that don't know what the heck they are doing. Knocking down a load bearing wall can have serious consequences. I'm not in any way accusing your sister of not knowing what she is doing. What I am saying is that having to get a permit in some ways ensures that the job will be done with a certain level of quality. I would see your point if the town told your sister no walls could be knocked down permit or no permit. But I wouldn't say that having to get a permit is the same as not being able to do what you want to your own home. Just my 2 cents.

[ohio_peasant]

To be fair, the comparison here isn't between owning a single-family detached house, and renting one. It's between owning such a house, and renting maybe a 2-bedroom apartment in a multi-unit building.

In my area, there are plenty of lower-end detached single-family houses owned by investors and rented out to tenants. The investor is generally a small-businessman, with a regular day-job and the landlord gig as a moonlighting venture. The investor pays property tax, a mortgage, insurance, and so forth; and he/she does the maintenance too. Rent has to cover all of that, plus profit. In that case, if the tenant has steady income and will remain in the community for some time, it makes more sense to own than to rent.

The calculation is different with an apartment in a multi-unit building. The landlord's costs are lower per unit because they are amortized amongst many rental units. Maintenance costs are lower per unit because there's a professional full-time maintenance subcontractor. Maybe the savings are pocketed by the landlord, or maybe at least in part they're passed on to the tenant.

The rent-vs-buy calculation is highly dependent on local conditions. In the Washington DC area, for example, rent is exorbitant and for a person with sufficient cash-flow, buying a house makes good sense, even if the extra space is unnecessary. In my local area, the calculation is reversed. Rent is cheap, and while houses are also cheap, taxes are high and appreciation is low. But oddly, in the DC area the stigma of being a renter is low, while in my local area, it's high.

[nightcrawler]

don't forget, buy a home with a HOA and you still can't do what you want. So I see no glory in that.

Oh goodie, I just bought a home for 800K, and I cant even ark my car on the driveway.


yeah, I see real glory in that.

[miu]

Originally Posted by Just_the_facts

American society has long prized home ownership (ie: the "American Dream") and looked down upon renting. Do you agree with this element of American culture?

Personally, I do not and believe the decision to own or rent is a matter of personal choice. Home ownership should not be subsidized like it currently is by the government (Fannie, Freddie, mortgage interest deduction, bankruptcy protections, etc.,), especially considering that renting is in many ways better for society (better for the environment and allows for more labor market flexibility).

I think that owning a house is a good thing. It helps the person buying one to build equity into themselves. And at the end, they have ownership of a piece of real estate that they can later sell and get a decent lump sum of money out of or to leave to their children.

What's really sad is that many people these days lack financial commonsense and live from paycheck to paycheck. They don't have the patience to save up cash to buy what they want. Instead they purchase with credit that has high interest rates.

So yes, buying a house isn't for everyone... but it should be. Or at least, if they are renters, they do need the discipline to put aside part of their income weekly towards a savings or retirement fund. What I see is that those who lack the good credit or income to buy a home are the type of people who can't manage their personal finances and will be unable to retire on savings.

[Ultrarunner]

^^^

A friend of mine has always rented... she had the desire to own.

7 months ago she realized her goal and bought a nice 1930's home in Oakland California for 330k... it was a foreclosure that investors bought and did a nice job on the improvements.

She has decided home ownership is not for her... cleaning out the roof gutters, house guest that resulted in two roto-rooter calls plus an unexpected bill to replace the central furnace... not that old... heat exchanger cracked.

Home went on the market 17 days ago and received multiple offers... she is in Escrow at $425k with a buyer putting down 200k cash.

Selling will realize an even bigger goal for her... she will be totally debt free for the first time in her adult life... student loans retired and 2 year old car paid for.

This would have never happened had she not jumped in and tried being a homeowner...

She will rent a "Room" for $600 a month in a 1.5 million Oakland Hills home owned by a childhood friend who travels a lot as an airline pilot...

[texdav]

Certainly if you can not afford homeownership it seems over sold especially if you experienced the difficulties that can mean. There is little doubt of the desire to own by many as its been demonstrated .In fact rental is the aim to return to for 35% historial level. That was made clear by Geithner long ago in reforms on credit.lookig today and recent increases i rental cost by demnd and the new bubildig being largely rea ntal multi fmily its clear the markets see that also. The protections actaully mean that mnay will never be able again to get a mortgage.

[Ultrarunner]

Originally Posted by texdav

The protections actually mean that many will never be able again to get a mortgage.

Very profound and I agree...

For many... they had a window to make it happen and the window closed.

Funny thing...

I know two brothers... twins in the their mid 30's and both married in the same year and both bought homes about 20 miles apart...

One bought in a newer area with little down.

The other bought in an established area with 10% down.

Both were severely underwater.

The one with the 10% down decided to ride it out and it has been a rough ride... he is back to where he started and the other brother that bailed lost several years of mortgage payments 2.5 times what the rent would have been plus ruined their credit and now rents...