Poll:Rent vs Own

[brett]

We are only three years or so into retirement with the same amount of time as renters.

We have been travelling quite a bit. Two things have changed for us. The first is we require less space than we thought we did prior to retirement.

The second is that it seems experiences are beginning to trump possessions as we age. We do not care so much about owning a big house, two cars, whatever. It is not that we do not want a home. We do. However it is not something we dote over. I think the most liberating thing for us about downsizing and selling our home is that is opened an entirely new world of possibilities for us.

We travelled for six plus months after we retired and sold our home. So glad we did as it changed our perspective on many things beside home ownership, home location, size etc. It is as though now we are really free to do anything we want and travel where we want. We may buy where we live in Canada, we may rent, we may buy something in a warm climate...who knows. But we have much more of an open mind and a true understanding of our needs and wants than we did prior to retirement and when we were home owners.

 

[Meadbh]

There is an attachment bias for owners, as illustrated by the previous two posts.

 

[utrecht]

Most people hate change. If they own a house when they retire they will stay in that house. So I think the results of this poll are biased. A better poll, IMHO, would be a poll that asks only people who have moved since retirement have they bought another house or started renting. This would be a better gauge of who got tired of owning. Lots of people who retired and still own their house may want to start renting for the convenience of it but just dont want to move.

 

[rodi]

My property taxes are 1800$/ year in North San Diego County. But having bought in the 1982 is why they are so low. However, in our future retirement home, which we bought 3 years ago in Washington St, the property taxes are 3k$ per year. I can't fathom $1k/month property taxes.

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But - as you posted previously, your home value has gone up - and if you were to buy your home now it would be over $5k/year. Your tax rate is lower because you've lived there a long time and Prop 13 keeps it down. I am in the same region and also have a significant tax advantage from prop 13. My next door neighbors, with the exact same house, pay over $8k/year compared to my $3k/year.


The rent vs own is both a financial question and a personal/lifestyle question. I think some people are of such a mindset that homeownership is the only way to go - but people who live in a "hot" market (like Southern California) might find it cheaper to rent than to own. I know that it's cheaper to rent than to buy in my neighborhood. And the personal issue comes into play if you want to modify the purchased home - you can't move walls, redo kitchens, make major changes in the garden, etc, if you're a renter. So there is no "one size fits all" answer to rent vs buy.

 

[Danmar]

There is an attachment bias for owners, as illustrated by the previous two posts.

Not sure what you mean by this?

 

[brett]

I absolutely agree that there is a bias. We probably had that bias prior to downsizing/selling.

We were brought up in an environment where you got married, had kids, owned your own home. Home ownership was a huge goal, and an indicator of where you were in life.

I also believe that the bias, and extent of it, is based on where you live. My spouses family live in a sub 75K population city or less. They all own their own homes, have lived in them for years. Renting is something that people when they simply cannot afford to buy. I do not think that this attitude is as pervasive in large urban areas or with those who closely follow the economic trends.

 

[Meadbh]

Not sure what you mean by this?

Attachment bias is a tendency to make decisions influenced by possessions we already have. We are attached to homes that we already own. Therefore we may be more likely to believe that owning one's home is preferable.

Bias Definition | Investopedia

Your post illustrates this, while brett's post illustrates the opposite point of view. Neither is incorrect.

 

[tmm99]

I think owning a home is preferable if you could stay in one place for a long time because inflation would probably raise the rent much more quickly than the cost of maintenance (and property taxes etc) of a home but that only applies if you live in an area where value of real estate appreciates. I used to live in an apartment in Tucson about 30 years ago and paid $420 for it. The rent at the same place now (30 years later) is only $550/mo. I don't know how that is possible...


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[Olbidness]

In my case FIRE means not only financial independence but also location independence. I want to be as mobile as possible while I have the health, finances, and desire to travel and I don't want possessions to weigh me down. At some point I may buy something when I know I want to stay in one place. The way I see it, eventually I'll be stationary.Forever.

 

[Danmar]

Attachment bias is a tendency to make decisions influenced by possessions we already have. We are attached to homes that we already own. Therefore we may be more likely to believe that owning one's home is preferable.

Bias Definition | Investopedia

Your post illustrates this, while brett's post illustrates the opposite point of view. Neither is incorrect.

Thanks. I understand. Also about
85% of the people who responded are currently owners and something like 60% of Americans are home owners, higher in Canada. I agree I have a bias towards home ownership for the reasons I discussed. I don't think this is an opinion caused by my current possessions, rather the possessions are based on my consistent desire for control.
Retirement can certainly change you view in this regard. But it only reinforced mine for the reasons discussed.

 

[panacea]

We "own" with about 8 years left on the mortgage. Maturity in line with our retirement date. We'll probably move shortly after the loan is paid off anyway though. Can't imagine renting but that's mostly because we like our space I think. We currently have 1/2 acre in a subdivision but my neighbors are still too close... thinking of downsizing the house and upsizing the land... maybe 1-3 acres.

 

[pullmyfinger]

I own a home that was built in 1950 in a nice suburb of Seattle. Lots of building going on around me with prices starting in the 900's. Paying off the house 17 years ago when I turned 30 really allowed me to start saving in a big way.

DH and I think it would be fun to live in an apartment in downtown Bellevue or maybe Fremont, but it would be so much more expensive than how we live now. With no mortgage, property taxes of about $4k annually and not very expensive utilities, it is much cheaper for us to stay put.

 

[OrcasIslandBound]

There are plenty of houses for sale in Poway, CA where you don't have to pay $12k a year in property taxes. On the order of half that. They are $500 - $600k. Sounds too pricey? You have to realize that these same houses will rent for $2.7k per month. That is the starting rate for your first year. This rate will double every 10 years or so. So, renting becomes a losing proposition if you intend to stay a really long time.

I rented out my house in Poway when I first bought it in 1982 for $650 a month because at that time I couldn't afford to live in my own house. Later, in 1988 I rented it out for a year for $1050 a month when I went to get a masters degree. Today, this same 46 year old house will rent for between $2.5 & $2.8k/month. You can see the trend and do the math.

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[emerytura]

We own side by side duplex, on 1 acre land in NJ. We purchased this house 10 years ago. Six years ago we downsized, sold over 3000sq. ft. house and moved in to one side of the duplex. We did extensive renovation inside and outside on this home as we plan to keep this as our primary residence.
House is paid off. We live on one side, and rent another side. We have the same tenants for the past of 10 years. Each side is 1000sq. ft. We love our big yard and gardens. Our taxes are little over $8000 per year. We collect $18600 per year rent. We keep our rent little lower for the area, because we like our tenants. It works for us.

 

[utrecht]

There are plenty of houses for sale in Poway, CA where you don't have to pay $12k a year in property taxes. On the order of half that. They are $500 - $600k. Sounds too pricey? You have to realize that these same houses will rent for $2.7k per month. That is the starting rate for your first year. This rate will double every 10 years or so. So, renting becomes a losing proposition if you intend to stay a really long time.

I rented out my house in Poway when I first bought it in 1982 for $650 a month because at that time I couldn't afford to live in my own house. Later, in 1988 I rented it out for a year for $1050 a month when I went to get a masters degree. Today, this same 46 year old house will rent for between $2.5 & $2.8k/month. You can see the trend and do the math.

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The whole point of renting is because you dont want to stay in the same place a really long time. Renting costs more long term but gives you much more flexibility.

 

[CaliforniaMan]

? Why? serious question. what do you mean "living too close to the edge"?

If something catastrophic happens, what will owning do?? I owned my home in NJ, lol. My property taxes were still 1000 a month so if I was living close to the edge and lost my job, I would still have been SOL.

I do hear your sentiment often, and always try to understand. I'm retiring early next year (hopefully), I'll still have a mortgage, I don't feel any less secure, I guess than if it was paid off.

Just curious

I am thinking a lot about my mom. After my father died unexpectedly in his 50s, she was left alone, with two kids and no savings, tried to go to work, after being a housewife and homemaker while we were kids, but collapsed due to a medical condition and couldn't continue. She was left with a really small amount from VA and SS for her being disabled and having dependent kids, My sister was still in high school, I was in community college. There was no savings, but when they bought the house, they had purchased mortgage insurance, so when my dad died, the house was paid off. In our state, property taxes are reduced (I don't remember the exact laws now) for those in certain situations and being a home owner she was eligible for various home improvement grants that came up. She got her windows replaced for no cost for example.

Later I applied for and got a scholarship and worked for part of my way to finish my college, my sister worked and went to school and soon got married. I think of what our life would have been life on that meager income without owning our home. We were still able to be middle class, still live in the same area with our friends and neighbors. We didn't have a lot extra to spend, but it was enough and we never had to worry about being homeless. It was a tough period, but not as tough as if we had to pay rent, or were at the mercy of landlords.

My parents, working class, were never able, for whatever reason, to save anything. My father was so generous that if he had anything extra he would give it to someone less fortunate. He never sold anything he didn't need he would give it away to someone.

Of course other situations could be much different, probably most of those on this forum who have saved and have sufficient assets. But this was my thinking with the "living too close to the edge" comment. It was the difference between maintaining a middle class existence, with kids still able to to to college, and maybe something much darker.