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Friday, November 21, 2008

Hmmmm. . . . .

As I continue to contemplate my status as a homeowner (and I don't mean 'status' in the "I'm superior to renters" way), I often wonder about the real benefit---especially as home values (including my own, I fear) plummet. I know that I've grown up thinking that I was "supposed" to own a home. That I wouldn't truly be successful until I stopped throwing my money down the drain by renting. And, granted, when I sold my first house in California, I did make some money---primarily because values were so incredibly inflated at that time (mid 2006).

As much as I love my cozy house, at this point, I would sell it if I thought I could and not lose money. Even breaking even would create some stress and anxiety that I'm not willing to undertake, since in Portland homes are taking an average of around 90 days to sell. In the whole scheme of things, owning a home right now just doesn't seem so wonderful. If I were a renter, I could stop working like a maniac at two jobs and put some more money in savings and retirement vehicles.

I came across an article that discusses the compulsion Americans feel towards purchasing, owning, a home. This column is written by Mark Morford, one of my all-time favorite newspaper writers. Full disclosure: Mark (since I'm one of the thousands of 'friends' on his Facebook page, I feel that I can call him by his first name) has a writing style that could be termed 'irreverent'. He puts it all out there without shame, nor does he mince words. And the words he uses! Well, let's just say he's not exactly your prim and proper newspaper columnist. Which is probably why I find his columns so delightful.

Anyway, I thought his topic was interesting today; and I loved the inference that anyone---especially an economist---who claims that remaining a renter could possibly be more beneficial than owning is the antichrist of American capitalism. This truly made me think about where my notions of homeownership came from---why I was so driven to buy when I could have simply rented happily for years. This is not to say that once I sell my house I'll never buy again. Only that I'll scrutinize the decision a tad more than I did this time, to make sure that I'm not simply buying a house to prove that I can or to feel successful or to add to my net worth in some way.


momstheword said...

I think what led me to want to buy is watching my parents rent homes over the years. When it came time for them to retire they did not have any equity built up in anything.

I do agree that homeowning can be a headache, but apparently so can renting (at least, when the landlord won't fix anything).

I do admit to ever so often wanting to sell our home, get a smaller place to rent and socking the extra money away in savings...but I think that the money would someone just disappear instead of being saved.

Finally Frugal said...

My paternal grandparents never purchased a home, either. When my mom and dad got married, and she started talking about buying a house, my dad was sort of like: "What??? Why???" They did eventually buy an extreme fixer, which they still live in 30+ years later.

These same grandparents also had the opportunity (in the 1940's or 50's, I think) to get an interest free 'loan' from a wealthy relative, who wanted another relative to design and build a house overlooking the SF Bay in California. They turned it down. The thought of what that house would be worth today sort of makes me sick.

I agree with you: if I were to sell, and then rent or downsize to a smaller mortgage, I would want some way of forcing myself to put that extra savings to good use.

marci357 said...

You said: "If I were a renter, I could stop working like a maniac at two jobs and put some more money in savings and retirement vehicles."

For me, that would be just the opposite.... If I were to rent, I'd have to get another job and work like a maniac at 2 jobs etc..... My little house is paid for - Mortgage free and so I can afford to only work 4 days a week, at an easy job that I enjoy, not have to worry about the money, and save my extra for the retirement and savings. It's a small 1010 sq ft house, one I fixed up, cash as I went, and a lot of my elbow grease, and the taxes and insurance run less than $100/month - actually $1000 /yr.... Who could rent for $1000/yr????

My yard is in edible landscaping - I have a large garden - I get most of that $1000/yr back in the food the yard produces :)

I do not worry about the market swings - the value of the house does not matter - all that matters is that the roof over my head is paid for, in good repair, and I will be able to continue to live here thru my retirement years as I have planned ahead for that :) I have remodeled during the past 2 years and everything is structurally sound for the next 50 years or so :) It should make it longer than I will without major repairs, baring storm damage which insurance would cover.

No way I could get such a good deal by renting! That's my piece of mind :) That's my sleeping pill at night and into my old age :) I could not afford to retire if I had to pay rent in retirement!!!

marci357 said...

2nd thought - I think the trick is to buy a small cozy house with a very tiny mortgage. My house before this one had a mortgage of $512/month including taxes and insurance... I could not rent in this area for that!

This house I paid cash for - from the sale of the previous house, and paid cash for the remodeling, which was a must for me as this house was only 560 sq ft (no room for grandkids to stay over) and is now a modest 1010 sq ft.

I think the secret is to buy only what you need, or less than you need, and make do! No wasted money that way. In this area, the rents are more than the mortgages on small houses.

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