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Old 04-30-2013, 11:46 PM   #61
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I don't think that the dream of home ownership is particularly American. For me, the American dream has to do with the freedom and opportunities granted to those living in America to achieve prosperity through hard work and ingenuity.
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Old 05-01-2013, 01:23 AM   #62
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This myth of the "American Dream" thru home-ownership--"an invention" of those who financially benefit by it, as you say--reminds me of what I consider another myth created by those who financially benefit most: the diamond engagement ring.

Didn't folks in the good ol' days just buy gold wedding rings? That was it. My grandparents, now deceased since the early 1990s, had only gold wedding rings. (I still have my grandpa's gold wedding ring.)

There was never an engagement ring (let alone a now-suggested "promise ring") up until the mid-20th Century, as far as I know, was there? When did the diamond engagement ring come to be? (I once heard it was circa 1941, suggested by the highly-monopolized diamond industry.) And why should the diamond engagement ring cost at least two months salary of the man? Who came up with that?

But tell that to the girl you'd like to marry--that an expensive diamond engagement ring is mostly a money-making gimmick by the diamond-industry monopoly--and that a simple golden ring should suffice to express your love and commitment of forever.
I agree with your analysis, but I am not sure of the history. My great-grandmother married in 1880, and got a diamond ring. I know because I had it reset and I wear it now, on my pinky.

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Old 05-01-2013, 10:59 PM   #63
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I don't think that the dream of home ownership is particularly American. For me, the American dream has to do with the freedom and opportunities granted to those living in America to achieve prosperity through hard work and ingenuity.
I agree. The American Dream is the opportunity of people to live their lives to their fullest potential. Be able to reach whatever goal they wish, based upon each decision they make every day--despite their circumstances of birth. Guaranteed by the highest law of the land: Our Precious Constitution.
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Old 05-01-2013, 11:22 PM   #64
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My former wife and I felt that we needed house and yard to raise kids, but I see lots of families growing in the townhouses to one side of me, and in the apartments down the street. No yards don't seem to be a problem, there are parks all over easily walked to, and fewer families today will let their young kids play out in the yard alone anyway, due to crime concerns. Parents are likely very close to their work, and some of the women seem to be home all day so there must be some cash freed up this way. I thought when the kids got a little older they would likely leave, but I have not noticed that yet.

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Different generations. There's no need to have a yard anymore since if you let your kids go out into it to play some neighbor will call CPS and they'll take the kids away from you.

In my particular case, renting is never cheaper than owning. When you've got 4 dogs either no one will rent to you or the additional fees and deposits will eat you alive. And I don't blame them. I wouldn't rent to me either.
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Old 05-02-2013, 05:53 AM   #65
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I would just say that I suspect all else being equal, they would rather have an employee who is more desperate to get (and keep) the job. You can more easily make them work longer hours, slash their pay and benefits, make them accept lousy working conditions -- and their "BS bucket" is a lot larger.
At my first job (1972) the exact opposite was almost a requirement. This was a fairly large engineering/consulting firm that paid very well but if you had an 'independent income' you were favored somewhat. The thinking was if you were well connected and help bring in contracts(?)

It was more a matter of being 'in the club' and hiring 'the right kind of people' than anything else.
After one guy left, they found two years of uncashed paychecks in his draw...everyone thought that was so cool and then they started doing it.

This company was very big on high-end business travel (they were one airlines single biggest customer) and I think a lot of folks were in it for the free trips to exotic places.
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Old 05-02-2013, 08:40 PM   #66
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There was never an engagement ring (let alone a now-suggested "promise ring") up until the mid-20th Century, as far as I know, was there?
Traditionally, it's probably appropriate to think of the engagement ring for the bride-to-be as an escrow. Probably a bit out of date with the modern hook-up culture.

From Wikipedia, which matches what I've heard elsewhere:
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One reason for the increased popularity of expensive engagement rings is its relationship to human sexuality and the woman's marriage prospects.[10] Until the Great Depression, a man who broke off a marriage engagement could be sued for breach of promise. Monetary damages included actual expenses incurred in preparing for the wedding, plus damages for emotional distress and loss of other marriage prospects. Damages were greatly increased if the woman had engaged in sexual intercourse with her fiancé.[10] Beginning in 1935, these laws were repealed or limited. However, the social and financial cost of a broken engagement was no less: marriage was the only financially sound option for most women, and if she was no longer a virgin, her prospects for a suitable future marriage were greatly decreased. The diamond engagement ring thus became a source of financial security for the woman.[10]
Based on the interests of all parties involved, it made a lot of sense.
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Old 08-11-2013, 06:56 PM   #67
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I rented half my adult life. I wish I could have used the rent money to pay off 20 years of my current 30 year mortgage. Those apartments were crappy as hell here in the Bay Area.
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Old 08-12-2013, 10:48 AM   #68
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I owned from 68 to 95 and have been renting since. I enjoy the flexibility that I get from renting. Plus I am totally debt-free.

(I think owning as a part of the American Dream has been dealt a death blow that will take about another ten years to recover from. This will accompany a fundamental distrust of banks. I suspect the McMansions have been permanently disabled.)
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Old 08-12-2013, 11:11 AM   #69
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Given that careers of 30 years seem mostly a thing of the past, perhaps renting will be even more prevalent in the future. Thus, flexibility may be a key part of the new "American Dream"...
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Old 08-12-2013, 11:36 AM   #70
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Given that careers of 30 years seem mostly a thing of the past, perhaps renting will be even more prevalent in the future. Thus, flexibility may be a key part of the new "American Dream"...
I wouldn't dispute your thought. I am about neutral on the subject, but I do believe that owning my home will payoff in the long run. However, the one thing I would NOT do is what a friend of mine recently did a few months ago. He purchased a home with very little money down. Total monthly payment is $1100 a month. However $200 a month of it is PMI. That is more than the principal paydown. Plus he said he would have to get 20% down AND refinance again to get rid of it. Thus incurring more costs and fees and possibly at a higher interest rate since he got in at under 4%. I don't see how he can come ahead on this transaction.
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Old 08-12-2013, 12:13 PM   #71
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(..... I suspect the McMansions have been permanently disabled.)

This thought of excess McMansions sitting around brings to my mind my first experience as a child with shady property disposal practices. When I was in 8th grade in 1967, my oldest brother got married in Asbury Park, NJ. At the time, there were several burned out resort/beach hotels. The explanation from the locals was that local Mafia had torched them for the insurance money.

And during the recent downturn, nearby my neighborhood, we did have a rather large McMansion get torched by the somebody (neighborhood rumors are the owner/builder).
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Old 08-12-2013, 12:59 PM   #72
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Is Home Ownership Essential to the American Dream?

Simplifying a previous post:
For a married couple, it depends on your financial situation.

If one partner has to go into a nursing home, payment will come from the couple's assets, until those assets are depleted to a certain level (depending on the state) perhaps $50,000. At that point Medicaid may pay for the care.

The exception to depleting the assets is that if the non-nursing home member is living in the "owned" house, he or she can maintain ownership. (as well as an automobile). When the nursing home patient dies, the remaining member will retain the house, and its' value.

I do not beleve that ongoing payments from SS, annuities or pensions are included in the asset depletion requirement.

It is important to understand the "lookback" law.
Some Q&A here: ElderLaw Answers
.................................................. ....................................

In short, the value of the "owned" home would be preserved.
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Old 08-12-2013, 01:39 PM   #73
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"Is Home Ownership Essential to the American Dream?"

Sure, it's nice to have your own place. I may be old-fashioned, so I have always liked to be an owner.

Ah, but all posters here are thinking about stick homes. I myself have two, but as I have spent time reading RV'er blogs, I have realized that there are people who are happy with their home on wheels. It's not for me, but that works for some people, and may be more affordable to them, and can be comfortable too.
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Old 08-12-2013, 01:58 PM   #74
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This thought of excess McMansions sitting around brings to my mind my first experience as a child with shady property disposal practices.
You were a child with shady property disposal practices? I was in my 30's before I developed any kind of real estate savvy
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Old 08-12-2013, 03:09 PM   #75
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I really think market conditions in your area and timing can influence which is better for short periods of time. For long term, I personally fall into the own something (house, condo, etc) vs renting. I have reached FI, so I can't easily be pushed around the country by a job. And I have never lived in an area where the housing market was out of control. I'm in Ohio not California or any other expensive area of the country. But hey, Money Mag just rated my hood #7 in best places to live in the US.

When I bought my first house in 1988, the mortgage payment (p + i + escrow + pmi) was only about $130 higher than my rent + renters insurance. $650 vs $520. 2 years later I refinanced which dropped the PMI and lowered my interest. My payments dropped to about $500. In that same time my old town home had gone up to $590. Today those town homes are $1200 a month.

Of course with a house you have to cover maintenance. But I had a larger place with more privacy for a growing family, a larger yard for the munchkin to play in and a garage to keep the cars in better shape longer. Additionally some amount of that money paid on the house comes back when you sell it which further reduces the cost of the house. I sold that house after 7 years for $40,000 more than we owed, after paying the sales fees.

My total cost of ownership including maintenance was around $55,000 for the 7 years. Lots of DIY work was involved. So after deducting the $40,000 we walked away with, we have about $15,000 dollars spent for seven years of living expenses. Less than $200 per month to live there. If I had stayed at my town home and rent had never gone up, I would have spent 3X as much (~$44,000). It's cool having an accountant for a wife that tracks everything. She had to sell me on the idea of a house and took great pleasure in pointing how the decision ended up being better from a money standpoint.
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Old 08-12-2013, 04:04 PM   #76
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I find this thread very interesting. I sold my home (owned outright) over 2 years ago and have been renting since. The reason for selling was a move to a new city and job. I took the house money and spread it around into various safe, fixed income investments. The plan is (was) to sit on that money until we (DW and myself) finish our "nomadic" period of ER (starting in 2014). Once we find a place we want to stay, we would then buy a house for cash to establish some "roots" (as DW says) but to also lessen our monthly budget.

When I run the numbers in Firecalc the results come out pretty close either way (i.e., a higher budget including rent funded by a higher investment account vs. a lower budget without rent funded by a lower investment account). This is based on a $500K housing budget vs. a $1,500/mth rental budget.

Therefore, at this time, and based solely on the math, I am on the fence. However, I suspect as time goes on, the decision will likely become more of a psychological one than an analytic one.

By the way, 0 kids + 0 house = 0 commitments, thus the opportunity to indulge a "nomadic" lifestyle ... at least for a while
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Old 08-12-2013, 04:20 PM   #77
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This is based on a $500K housing budget vs. a $1,500/mth rental budget.
Since one can get $1500/month rent from a place costing half of that $500K, it seems that it would generally make amore sense to rent in this case.

I would want to be able to move out and rent my place profitably; but I know many people have different feelings about their dwellings.

Ha
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Old 08-12-2013, 04:55 PM   #78
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Ha ha! I just have to be perverse. When we got engaged, I was willing to settle for 1/2 carat, but Mr. A. insisted on buying a full carat solitaire. He thought it looked better. Who was I to argue?

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T
But tell that to the girl you'd like to marry--that an expensive diamond engagement ring is mostly a money-making gimmick by the diamond-industry monopoly--and that a simple golden ring should suffice to express your love and commitment of forever.
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Old 08-12-2013, 05:11 PM   #79
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Since one can get $1500/month rent from a place costing half of that $500K, it seems that it would generally make amore sense to rent in this case.

I would want to be able to move out and rent my place profitably; but I know many people have different feelings about their dwellings.

Ha
This rent/buy issue certainly cannot have a universal answer to it that is for sure. Where I live owning is considerably cheaper than renting. The few ranch homes that rent would be around a $1000 a month, while I pay mortgage and escrow of $693 and get a small tax deduction back, also.
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Old 08-13-2013, 08:21 AM   #80
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This is based on a $500K housing budget vs. a $1,500/mth rental budget.
The housing budget vs rent seems odd to me. Where I live, I can buy a $500,000 house with 20% down and get about 3.6% on a 15 year loan today. That would give me a monthly P+I of $2979 plus another $900 for escrow. So around $3800 a month payment. If I had less down or had a longer term loan this would be even higher.

So where I live, a $500K house and a $1,500/mth rental are apples and oranges. A 500K house is 5-6 bedrooms, 5000-6000 sq ft and a 3 car garage. According to Zillow, when renting a house near me today, $1,500/mth will get a house 1/3 that size with 3-4 bedrooms and a 2 car garage at best. Apartments at that price have 3 bedrooms and are even smaller.

An equivalent house to the rental you describe in my area would cost around $170,000 to $190,000 today. Just a couple years ago a $245,000 house on my old street became a rental. (It was the neighborhood scandal) It rented for $3000. Looks like rents have come down a lot in my area in the past two years.

Your market has much different ratios than mine if $500K is a fair comparison to $1,500 rent. Or maybe you are willing to rent a house/apartment that you would not be willing to buy since you see it as temporary.
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