There's No Shame in Renting, Home Prices Will Fall

Whoever wrote this article is making some hard to prove assumptions. The biggest
being that home prices are going to fall to 1997 levels. I see nothing to support
this, especially demographics.

If I didn't own my house, which I purchased in 2004, I would sit on the sidelines
for a while. If one of my neighbors were selling there house for what I paid for mine
in 04 I would buy it and rent it out or flip it for a nice profit. Foreclosures are up dramatically,
building is down, and interest rates have risen slightly. Home prices in
New England have only dropped slightly but the time it takes to sell has gone up a lot.

As for the people who bought in poorly made homes, ridiculous prices, in 2006, well I have
a bridge in Brooklyn I'd like to sell them. For a while it was the "In Style" thing for
financial advisors to tell people to put money into real estate instead of the stock
market. That is proving to be a BIG MISTAKE.

There is no shame in renting and sometimes it's just better. It may be a financial
reason or maybe the person just doesn't want the hassles of home ownership.
People should never buy a home because of "peer pressure" or any other shallow
reason.

 

Interesting. However I don't think the prices will drop as low as they were in 97.

 

I rented for a long time before I bought my place in 1999 – no shame in that, but I always longed for my own place, and I bought what I knew I could afford.

 

Congrats.. You bought in 99... Your are just fine... Have a glass of wine...

We lived at my Mom's house for a few years before buying our house. It
was the only way we could afford it.

I laugh at people who think there is shame in renting. Try being 32 and telling
people you live with Mom.

For the record I moved to Georgia when I was 19 and bought my first condo
at 20. I'm only saying this so people don't think I lived in my Mom's basement
until I was 34 and bought a house. Talk about a stereotype.

 

There is of course no shame whatsoever in renting (I know many people for whom it truly is the best choice including those who would stress too much with homeowner responsibilities and worries)but for those who are able - both mentally and financially - real estate is still a much better investment.

While there are swings in the market, by and large over time real estate prices go up (like the stock market trends up). I know so many people who have rented their whole lives thus far mostly because they couldn't make the decision to take the plunge and now they're in their 50s and have absolutely no investment toward their future. Had they purchased even 10 years ago their house values would have at least doubled, even with the drop in real estate prices. That said, it is very painful paying high property taxes in some places, including my neck of the woods! I now pay 10 grand annually and it's always rising, for a little humble house - ouch - this is something renters can avoid. Even those with a mortgage paid off still have that monthly tax noose around their necks.

There is a lot of speculation in the article, and it could do a disservice to those who buy it lock, stock and barrel. Having been a student of the real estate market for a long time, a realtor on the side to raise funds for my animal rescue habit (main job is environmental nonprofit) and a former renter turned homeowner....that's just my 2 cents.....
JJ

 

Quote:Well said. You covered a lot of points I wanted to in my first post but didn't want to
write a book.

Taxes are outrageous, especially due to the crazy valuations.

A comment on the 50 somethings. If a 50 something rented but put the extra money
he/she may have saved into an average mutual fund they would be better off than
owning(on average, not the rule). Trouble is most people that don't own a home
in their 50's don't have investments either. I have many freinds and family, in
their 50's, with homes that are paid off or have tiny mortgages. Even without 6
figure portfolios they will survive at retirement.

 

I do agree with all of what everyone is saying, but I think the prices are ridiculous in some areas. My friend bought a house three years ago for 145,000 and they just put it on the market for 260,000. That much jump in price is really unacceptable IMO. I know prices should go up, but 100.000 +? The house is dinky and there is no way I would ever spend that. There's not any reason either why it should of jump so much. That is one of the main reasons why my family and I will move out of Washington unless the prices do become somewhat reasonable. I live in Cle Elum and there is a new resort built about 10 miles down the road. The prices around here have jumped a lot. I rent so that's ok. Mostly retired people live in these parts and cant afford the jump in taxes. Most of my father in-laws friends are selling there homes and moving to Arizona and other places where it is more affordable. Its just sad to see all the people who are pretty much forced to move out of property owned by there family for over a hundred years.

 

We bought a townhouse in East Central Florida in 2003. We paid 75k for a 3 bedroom, 1200 SF home with almost no yard. We sold that same house just 2 1/2 years later for $175K. Nice 75K profit.

Anyway, we didn't think that house was worth 75K when we bought it but it was what we could afford at the time. We never thought in a million years we would ever make any money off of it.

Circumstances changed and we had to sell it so we could move in with my parents to help them out during their cancer treatments.

We used some of the money for a down payment on a farm in Ohio. That was going to be our retirement property.

We had planned on buying my parents house from them and living there. Things changed, my Dad died from his cancer and my Mom went nuts. She decided to move to Tennessee with my brother. She decided she didn't want to sell the house to us for what we thought the house was worth. (it needed a lot of work) So, now we were houseless. We had too many animals to rent and I wasn't willing to give up my dogs. With the house prices in Florida sky high (not to mention the property takes and insurance) we could not afford to buy another house down there.

We looked into building a house on our Ohio property and moving there but decided against it. We couldn't afford a $180K house on top of the mortgage payment on what we still owed on the farm. We opted to buy an existing house just down the road from our Ohio farm property. We found a nice house that we could afford.

So, we moved out of Florida and for the most part, haven't looked back.

Here is a followup on my Mom's house. After we bought our Ohio house she decided to sell to a "we buy ugly houses" company for $136K. We could have easily afforded that amount and would have gladly bought the house from her for that amount. The "ugly houses" place remodeled a bit and placed the house on the market for $265K. The price has now dropped down to $179K and is still on the market. (over a year later)

http://www.bobbymutterrealty.com/listings/res/61698/index.html?sort=&group_id=12724

One day, we will build a house on our farm property, but not any time soon.

This is just my house buying experience.

Take care,

Tami