Is Home Ownership Essential to the American Dream?

[Fishingmn]

Quote:

Originally Posted by kmt1972 See http://www.nytimes.com/2013/04/14/bu...dont.html?_r=0 Where it is pointed out "Home prices look remarkably stable when corrected for inflation. Over the 100 years ending in 1990 — before the recent housing boom — real home prices rose only 0.2 percent a year, on average. The smallness of that increase seems best explained by rising productivity in construction, which offset increasing costs of land and labor." From a pure investment point of view real estate is not really that good of an investment. Perhaps good as an inflation hedge.

You really don't understand real estate investing if you think it's all about home value appreciation.

Tax advantages in the form of depreciation, tenants paying off your mortgage using leverage and pure cash flow of 8-20% are the true money making power areas that a real estate investor is counting on. Appreciation is just a potential nice add on.

[omni550]

Quote:

Originally Posted by ronocnikral We got a vague email last night that they were prepping the offer and would offer a relocation package that included "packing, moving, 30-days living expenses in new location and they use a 3rd party to administer the rest." Question is, what is the rest? Hopefully I'll know in a day or two.

When I was first hired by megacorp (which necessitated a relocation), they contracted with a 3rd party to drive me around town and show me various neighborhoods I might be interested in, they also had a detailed booklet with all sorts of info on the various suburbs, their school systems, etc., they showed me several month-to-month fully-furnished executive rentals, and the like. I think one benefit to using a company like this rather than counting on realtors to show you around...the relocation company had no dog in the fight as they were being paid by megacorp.

omni

[donheff]

Buy or rent - interesting dilemma. If I moved at this age (65) I would definitely rent. I would not want to be tied to any new places I tried. On the other hand, staying put for 30 years while DW and I worked home ownership paid off big time. The mortgage was quickly down to a level that was far less than rent for the same type of property even with a cash out refinance ten years in. It was nice looking at the monthly mortgage amount realizing it had not gone up over the years while rents skyrocketed. Couple that with the tax break and we did far better than we could have renting equivalent properties and that is before considering the equity we now hold and will pass on to the kids.

[Andre1969]

I can see the advantages to either, depending on what your priorities are. Right now, at the age of 43, I prefer home ownership. I play around with old cars, like nature, etc, so my 4 1/4 acres with its big driveway, 4 car garage, etc, is just about perfect. And, it's mostly woods and wetlands, so it's not as much to maintain as you might think.

But, as I get older, I can see my interests change. Heck, even now, it's gotten to the point that I don't like to change my own oil anymore! I don't know if I'd ever want to go to renting, though. Maybe if I downsized in a major way (I'm a huge packrat), and did a lot of traveling. Maybe rent in one spot for awhile, then move on, rinse, lather, repeat.

[gauss]

Quote:

Originally Posted by FIREd Interestingly, I have never worked for an employer who did not openly encourage homeownership as a way to keep employees servile and docile. The bigger the mortgage, the more you depend on that paycheck.

Fired,

Have you seen the following paper by Todd Henderson? "Corporate Heroin: A Defense of Perks, Executive Loans, and Conspicuous Consumption"

It was quite an eye-opener for me. Confirmed my feeling about not feeling bad for not being offered the company car.

-gauss

[haha]

Quote:

Originally Posted by gauss Fired, Have you seen the following paper by Todd Henderson? "Corporate Heroin: A Defense of Perks, Executive Loans, and Conspicuous Consumption" It was quite an eye-opener for me. Confirmed my feeling about not feeling bad for not being offered the company car. -gauss

This is the same reason that while governments may preach all day about savings, what they really want is for everyone to be in hock and beholden to government for their daily bread. How many people who need government kickbacks of one kind or another would vote against the expansion of government?

Ha

[FIREd]

Quote:

Originally Posted by gauss Fired, Have you seen the following paper by Todd Henderson? "Corporate Heroin: A Defense of Perks, Executive Loans, and Conspicuous Consumption" It was quite an eye-opener for me. Confirmed my feeling about not feeling bad for not being offered the company car. -gauss

I had not seen this paper. Thanks for posting. Yep, it pretty much supports my own experience.

[ziggy29]

Quote:

Originally Posted by FIREd Interestingly, I have never worked for an employer who did not openly encourage homeownership as a way to keep employees servile and docile. The bigger the mortgage, the more you depend on that paycheck.

Employers don't like having employees who aren't desperate and hopelessly dependent on keeping their job. They don't have as much leverage to screw around employees who are FI and who can freely walk away when their BS bucket is full.

[ronocnikral]

Quote:

Originally Posted by omni550 When I was first hired by megacorp (which necessitated a relocation), they contracted with a 3rd party to drive me around town and show me various neighborhoods I might be interested in, they also had a detailed booklet with all sorts of info on the various suburbs, their school systems, etc., they showed me several month-to-month fully-furnished executive rentals, and the like. I think one benefit to using a company like this rather than counting on realtors to show you around...the relocation company had no dog in the fight as they were being paid by megacorp. omni

Well...just got the offer. They are capping at $35k. Which barely covers realtor fees for selling my house. A mighty large pill to swallow indeed. Everything is negotiable, so I'll be trying to crank that up as well.

I'll have to convince DW to rent on the other side if we do this deal.

[Jgot]

Someone sent this to me a couple of years ago - I found it interesting.

Quote:

First Person: Everything I Never Wanted to Know About Being a Homeowner By Shauna Zamarripa | Yahoo! Contributor Network – Mon, Oct 31, 2011 2:30 PM EDT Ah, the joys of home ownership. We get programmed that we are throwing our money away in renting. We don't get mortgage interest tax deductions. We don't get property tax deductions. In fact, according to some, we don't get much of anything. However, as a former real estate agent, and current homeowner, I can tell you what we do get: bills, and lots of them. There is a reason this is going to be my first and last house. More specifically, there are five reasons.

Full article here First Person: Everything I Never Wanted to Know About Being a Homeowner - Yahoo! Finance

[gauss]

I think the popular culture's view on home ownership as a "good investment" is distorted by the inherent leverage in the process.

-gauss

[comicbookgujy]

I'm 40 and still don't own a house. I tried to buy one last year.
Offering price was $395k. I bid $405k and was outbid at $430k...there were 30 plus offers. And this was a crappy looking house that needed about $30k to make it liveable. Now there's almost zero inventory.

I don't think I will own a house in my life here in CA.

The lack of inventory, the high cost compared to renting, and most of all...not knowing if my department will move to a different location or if I will get laid off makes not owning a house an easy decision.

[traineeinvestor]

Rent v own - the debate that never stops giving ....


We purchased when prices were low and with 30% down (the minimum deposit in HK) the P+I mortgage payments were less than the rent we would have paid on the same apartment. Eight years later, the total of the interest on the mortgage, rates, management fees and maintenance (including a sinking fund for longer term work) is less than a third of what we would have to pay to rent. The property has more than doubled in value (although I expect the market to fall from here) and we have had all the harder to measure benefits of home ownership as well. Buying was one of the best "investment" decisions we have made.

Of course, had we purchased a property at the top of a boom, experienced rising interest rates and had to sell to relocate, the experience may well have been the opposite. When it comes to real estate, it all depends on specifics.

[Mulligan]

I personally like the stability in payment it brings. My mortgage payment including all escrows is $695 a month. Renting an equivalent house would be around $900, and they are few in my area. Being single, I get over 11,000 in itemized deductions which is double what I can get by the standard deduction, as I wouldn't have enough to itemize without the property tax and interest. That being said, I am under no illusion that the only real winner from this will be my daughter when she sells it after I die and reaps the proceeds.

[GrayHare]

Quote:

Originally Posted by Jgot First Person: Everything I Never Wanted to Know About Being a Homeowner By Shauna Zamarripa | Yahoo! Contributor Network – Mon, Oct 31, 2011 2:30 PM EDT

Wow, some horrible math skills on display there. In her final paragraph, the author compares the $19,320 *additional* cost of rental vs. the $70,000 total cost of home ownership (her numbers).

The proper comparison (again, her numbers) is: $19,320 + $70,000 = $89,320 for renting vs. $70,000 for owning. GIGO.

[Onward]

I thought I owned my house, but in fact it owned me. It's renting from here on out.

[Independent]

Buy vs. Rent?

If I plan to stay in one place for a long time, I should buy.
If I value mobility, I should rent.

If I want to protect myself against rising prices, I should buy.
If I want to protect myself against falling prices, I should rent.

The percent of Americans who fall into each of the categories above will vary over time.

The only other thing I know is that gov't shouldn't put its thumb on the scale and try to push people one way other.

[samclem]

We hate moving so much that we'd never consider renting now. And, DW loves to improve the landscaping--it's just a lot more fun working on a house when you know the landlord won't use the improvements as a rationale for raising the rent.

[donheff]

Quote:

Originally Posted by GrayHare Wow, some horrible math skills on display there. In her final paragraph, the author compares the $19,320 *additional* cost of rental vs. the $70,000 total cost of home ownership (her numbers). The proper comparison (again, her numbers) is: $19,320 + $70,000 = $89,320 for renting vs. $70,000 for owning. GIGO.

I was going to go back and add the numbers but skimmed through and saw your post first. That was my reaction as well. And this was over 7 years of home ownership. If that same person stayed in the house for thirty years, and refinanced midway to reduce the payment while keeping the deductions high, and invested the difference he or she could pay of the house with the saving and be siting on a valuable asset. The danger with ownership is getting stuck. The numbers are generally pretty decent if you don't.

[ls99]

Renting from the bank, ie. mortgage payments were never a part of any dream.

Having a a house paid off up front, while could be argued as not a great finacial decision, is in fact the best thing IMHO. Now the only rent payments are to the stae/county an schoolboard.

Plus having a camp on 14 acres, paid off as well up front, life is good. Playtime.

I was born at home in a house my father built from leftover bricks hauled home from various worksites, It was over a celler wher they lived while it got built. At three rooms +outhouse was a good home. No plumbing, hauled water from a community water tap up the dirt road. Even with solid concrete floors thoroughout, it felt like a palace compared to many of the apartment hovels my schoolmates lived in.

Left it all behind when arrived itn the USA. Here, I lived in a few apartments, hated it. Had houses for the most part since I was 23. Thogh lived out of a duffle bag for much of 20 years, its was nice to have my own place to hang a hat in when got home. Often had house sitters take car of the place while away for many months at a time.