This Space for Rent

August 15, 2009 7:01 PM

The New American Dream: Renting
The Wall Street Journal goes into the history of homeownership in the US and discusses why it just may not be for everyone.
posted by educatedslacker (89 comments total)

Wait...what happened to that ownership society conservatives were talking about?
posted by furiousxgeorge at 7:06 PM on August 15, 2009 [1 favorite]

The New York Times thinks it's cool to have a potbelly, and the Wall Street Journal thinks it's cool for middle class people to give up on home ownership.

But wait!

Something tells me that the Wall Street Journal and its target demographic really just think it's ok for other people to rent and not own.

Whenever someone says that something desired is "not for everyone," I suspect they really mean "I don't want you to have it. But it is for me to have. Just not you." And it's easiest for me to imagine them saying that if I imagine a copy of the Wall Street Journal folded under their arm.

Wait...what happened to that ownership society conservatives were talking about?

They still want to own society. But they're trying to find a way to convince themselves and the rest of the world that a rapidly growing wealth disparity in the U.S. is "OK."
posted by The World Famous at 7:15 PM on August 15, 2009 [21 favorites]

I love renting! I often hear people complaing that renting is "throwing away money," but in my opinion, it's spending money to A. pay for a place to live and B. to deal with stuff that I don't want to deal with, like broken water heaters and the like. I also like the fact that I'm not tied down to a location- let's say I get a fantastic job offer across the country. I can pick up and move with relatively little hassle.
posted by emd3737 at 7:19 PM on August 15, 2009 [20 favorites]

I was looking at buying a house two years ago. Boy am I glad that I ended up paying off all my debt with some of the money I was saving for a down payment. Now I rent, and when my lease is up, the housing market will look much better in my favor. I'll still buy a house, but I would have started out my mortgage underwater, and now I can shop for much more house than I would have been able to get before. Until then, I'm perfectly fine renting.
posted by Balisong at 7:21 PM on August 15, 2009

Same here. I understand there are pros and cons, but for Mrs. Verb and I the renting experience has been much better than trying to kill ourselves to pay for a cracker box just so we can call it ours.

We're moving into a single-family home this week -- rented from the same landlord we've had for a few years, and the existing relationship has been a real help.
posted by verb at 7:23 PM on August 15, 2009

Oh good, another rent -vs- buy housing conversation. Fantastic. Can't wait.
posted by lalochezia at 7:41 PM on August 15, 2009 [3 favorites]

Oh good, another rent -vs- buy housing conversation. Fantastic. Can't wait.


Well, it came up in the rotation. We just finished the "High Fructose Corny Syrup" debate thread and "Rent-vs-Buy" was next on the circuit.

I think "Omnivore vs. Vegetarian" is after this, but I may be wrong. It may be time for another Sarah Palin thread.
posted by darkstar at 7:46 PM on August 15, 2009 [15 favorites]

*Corny ---> Corn


wtf, brain?
posted by darkstar at 7:47 PM on August 15, 2009

As practiced these days, homeownership seems to me like a marriage that's supposed to end in divorce, wherein people openly encourage you to take the plunge so that you can take advantage of your spouse's increasing net worth and end up several thousand dollars to the better when it's all over.

I've always felt very vulnerable to job markets, which makes me a natural renter in any case. I like the idea that I could light out for the territory, if need be -- although this, too, comes with costs, and I'll see them when I'm old.
posted by Countess Elena at 7:49 PM on August 15, 2009 [1 favorite]

That was a real thumbsucker. It's funny how basically nobody can figure out (or wants to spill the beans about) the central importance of land in the economy.

It was less than a decade ago that I first started figuring it out; land is an amazing form of capital -- never created, never destroyed, of timeless demand and infinite uses.

I love renting!

I don't, since I know home ownership is a great inflation hedge, and there's every indication that we'll be seeing rip-roaring inflation next decade, making today's home prices look something like the ridiculously low prices of the early 1970s.
posted by @troy at 7:51 PM on August 15, 2009 [1 favorite]

They still want to own society. But they're trying to find a way to convince themselves and the rest of the world that a rapidly growing wealth disparity in the U.S. is "OK."

I'm not sure encouraging everyone to shovel money at bankers through the bulk of their working lives is really the best way to reduce wealth disparity.
posted by enn at 7:52 PM on August 15, 2009 [3 favorites]

I'm not sure encouraging everyone to shovel money at bankers through the bulk of their working lives is really the best way to reduce wealth disparity.

Bankers are willing to take a fixed slice of your wages. Landlords will take every penny they are able, and in most places the law is completely slanted towards their protection, not their renter's.
posted by @troy at 7:58 PM on August 15, 2009 [1 favorite]

We paid our house off two years ago, so we get to be all smug and annoying about home ownership now. Money was tight the first few years, but it was something we really wanted. The house isn't worth shit, but the land is, we love where we live, and our upkeep will never be more than the mortgage would be on a new place. FHA loans FTW!
posted by zinfandel at 7:59 PM on August 15, 2009 [2 favorites]

I'm all full of my own personal American Dream: law school debt. And that was all it took for me to see that the rest of the dreams in that category are probably just as empty and meaningless.

I do not want to own a home. I want the freedom to move around, and to keep moving. I want the freedom to call someone else when the plumbing breaks and have them worry about fixing it. And I want freedom from becoming a whining old white dude who complains that my property taxes are too goddamned high and that those damn college kids down the street are bringing my propety value down with their rock and their roll.

If home ownership is twice the dream that my educational "investment" Is, then that's a fucking nightmare and I want no part. It's been a fascinating ride, but I'm quite ready to hop off this Carousel of Capitalist Sadomasochism.
posted by greekphilosophy at 8:00 PM on August 15, 2009 [13 favorites]

I think "Omnivore vs. Vegetarian" is after this, but I may be wrong. It may be time for another Sarah Palin thread.

No, we did Omnivore vs. Vegetarian in the Vick thread.
posted by furiousxgeorge at 8:01 PM on August 15, 2009 [3 favorites]

The New American Dream: Renting

Pffft. Make my rent tax-deductible, with no cap, and we'll talk.
posted by rkent at 8:05 PM on August 15, 2009 [2 favorites]

No, we did Omnivore vs. Vegetarian in the Vick thread.

Can we do "self-satisfied moralists vs. fatties" next? My pants are feeling tight after a trip to the junk food capital of the Northeast (Philadelphia) and I need some shame.
posted by Mayor Curley at 8:09 PM on August 15, 2009 [5 favorites]

The home ownership focus has always seemed to me like one of those things you're expected to reach as a rite of passage, just like having a car. And like having a car, I think it's one of those things that, once it becomes a requirement, causes us to start planning our living spaces around it in a way that has a ripple effect on everyone else. Look at all the places in the US built around houses and cars rather than mixed-use development built around walking and public transportation... the cities in the US where walking and public transportation are fully viable are largely anomalies: most of them only exist as they are because they're old enough to pre-date the kind of planning that's dominated in recent decades.

Right now I live in a part of Columbus, Ohio where all I have to do is go a little bit west and I'm in an area where it's just row after row after row of houses, as far as the eye can see. The further you get out from the old city core, the more it looks like this (especially in central Ohio and much of the Midwest outside of the lakeshore areas, where when things want to expand, they just expand outward.) A lot of the houses are very nice, too, as long as you ignore the absence of sidewalks and the fact that a lot of it is underserved by public transportation and outside walking distance of work, school, or shopping. But it seems like all these houses were constructed solely to fulfill the part of the American dream that mandates home ownership as a sort of terminal rite of passage in life without thinking through the effect that has on society as a whole.

I can easily understand why people like home ownership beyond simple cultural pressure, and that not everyone is like me or some of the other people in this thread who don't mind renting long-term. You don't have to deal with the person next door playing loud music or the person upstairs stomping around at all hours of the night, you have full creative control of your space... etc. And it's not like there aren't problems with renting as it exists right now, either. But I don't think that the destigmatization of renting would be a bad thing. (That's not to say that house-centered development and smart planning that allows for more walkable, sustainable communities are mutually exclusive, either, because they're not, but I think some more diversity in our community building could be a good thing.) I can certainly see a shift from the idea of home ownership as the universal ultimate goal being a positive thing on a larger scale, because it has the power to change the way this society thinks of what viable communities look like.
posted by Kosh at 8:15 PM on August 15, 2009 [10 favorites]

Make my rent tax-deductible,

Thought experiment: if rents were fully deductible, wouldn't they tend to go up, up to the amount of the benefit?

This part of the economic of rents and land values was something the article did not find the space to address. Which makes sense, since the WSJ is more about politics than economics these days.
posted by @troy at 8:17 PM on August 15, 2009 [3 favorites]

furiousxgeorge : No, we did Omnivore vs. Vegetarian in the Vick thread.

No, we did Omnivore vs. Vegetarian in your Vick thread.
posted by gman at 8:18 PM on August 15, 2009

I've owned my houses since I was 26 but I live in a very cheap quasi-midwestern city and have never bought a house for more than twice my income. If I lived in a coastal city where houses are 3 or 4 times more expensive, I'd definitely just rent. I love owning my own house but I'd never take a mortgage on a half million dollar house. I don't think that I could sleep knowing that I owed that much.
posted by octothorpe at 8:37 PM on August 15, 2009 [2 favorites]

Can we do "self-satisfied moralists vs. fatties" next? My pants are feeling tight after a trip to the junk food capital of the Northeast (Philadelphia) and I need some shame.

Already on it, look one thread down.


No, we did Omnivore vs. Vegetarian in your Vick thread.

Sorry to have interupted the Vick hatefest.
posted by furiousxgeorge at 8:40 PM on August 15, 2009

Mayor Curley: I think you're wanting THIS thread.
posted by hippybear at 8:40 PM on August 15, 2009

From the article: "Some countries—such as Spain and Italy—have higher rates of home ownership than the U.S., but there, homes are often purchased with the support of extended families and are places to settle for the long term, not to flip to eager buyers or trade up for a McMansion."

Mr Sugrue, let me introduce you to the modern Spain, by way of the scandal a few years back in Marbella. There were more signs of 'hipoteca' and 'inmobiliario' in Madrid back then, advertising real estate and mortgage agents, than any major city I've ever seen, and there were as many annoying people speaking of 'flipping' in Spain as there were in say, Los Angeles.
posted by librarylis at 8:40 PM on August 15, 2009

Given that there has been a veritable cascade of things going wrong in my house, a rental looks really appealing right about now. With that in mind, I walked into my library to ask my books if they would mind going back to an apartment. You should have heard the hysterical laughter. "Sure, we can rent another two-bedroom apartment. Where the hell are you going to live?"
posted by thomas j wise at 8:42 PM on August 15, 2009 [8 favorites]

I've always been a renter. Owning a place where I choose to live just hasn't been an option ... which leads to something I remember hearing about some European country where, the moment you sign a lease, you are essentially buying equity in the property in question. That is, a percentage of every rent check is actually an investment that must be paid back by the landlord when you move out ... or, if you're still living in the place 20-30 years later, you own it.

f***ing communists. they've got some of the best ideas.
posted by philip-random at 8:56 PM on August 15, 2009 [1 favorite]

I wonder how old the folks in this thread who are pro-renting are, and if they have kids.

I rent, and I don't like it. I returned to Canada in 2004 after living overseas for ten years. In 2004 the housing bubble was already well underway in the part of Canada where I relocated. The money I could have spent on a down payment I instead spent on the relocation. A few years later, when my career in Canada was firing on all cylinders, housing prices had literally doubled since about 2003. It will be challenging for us to purchase a house in this market, it would also be challenging to pay a mortgage (probably $2500 a month) and cover the other costs of owning and maintaining a home.

But I definitely want to buy a house. Renting in Canada has been a mixed experience, to say the least. Due to revamped tax laws that make it difficult for developers to build rental housing, no new apartments have been built in my region since the 1970s. Instead, condominiums have been the main investment vehicle - and they all were constructed so shoddily that they leak. Besides that, there is an "underground" rental market of illegal suites. Houses are carved up into different rental units. It really sucks, because there is no privacy - you can hear every cough or laugh or whatever.

We have been renting from a city-owned housing corporation for the last couple of years. It has been great - great soundproofing, the units are well-maintained, and if the superintendent cuts any corners there is an entire bureaucracy to escalate disputes to. Plus, we live right downtown, close to parks, the ocean, shopping and public transit.

Some of the units are so-called "social housing", so there is a definite stigma associated with renting from the city, even though we pay "market" rates. Plus, in professional circles, nobody I know rents, so it is a little embarrassing, but I try not to get hung up on concerns about status, because you never can win.

Coming from the situation where Canada is much different than the States (no subprime mess, housing prices barely declined here), I definitely am going to buy a house. It's a dependable investment that really does help generate wealth.
posted by KokuRyu at 8:59 PM on August 15, 2009

No, we did Omnivore vs. Vegetarian in your Vick thread.

Vick threads aren't for everyone.
posted by rokusan at 9:08 PM on August 15, 2009

Instead, condominiums have been the main investment vehicle - and they all were constructed so shoddily that they leak.

That would be... Vancouver, mold capital of the world thanks to all that wall-rot?

In the current economy, the best argument for home ownership vs renting might be that when you lose your job, it takes a lot longer for a bank to foreclose than it does a landlord to evict.
posted by rokusan at 9:10 PM on August 15, 2009 [1 favorite]

[Buying a house]'s a dependable investment that really does help generate wealth.

Well, it's not generating wealth so much as offering a service with dependable inflation-proof value, given the supply-demand imbalance and the non-negotiable human need to have a roof overhead and four walls to protect you & yours.

Vancouver is an interesting case; I've half a mind to move up there, or at least to Bellingham, but when I saw Google's terrain map of the area I took pause. There is NOT much buildable land for such an immense economic footprint that Vancouver enjoys. A bit better than SF perhaps, but not by a whole lot.
posted by @troy at 9:22 PM on August 15, 2009

I'm in Australia. I don't have kids. Renting works for me. It would cost me about twice as much to buy something. I LOVE the place I am in now, my landlords are great people, and I can afford to live in an area close to the city, close to my work, which I could not do if I were to buy. I am happy. Even though I WOULD love to own some dirt, I can't bring myself to live in poverty for the rest of my life for it. Why would I want to double my rent/loan payments, add 2 hours daily to my commute, completely kill my social life, just to own a piece of dirt?
posted by Diag at 9:22 PM on August 15, 2009 [3 favorites]

Why would I want to double my rent/loan payments, add 2 hours daily to my commute, completely kill my social life, just to own a piece of dirt?

cuz when you finally pay the loan off, you don't have to pay the loan anymore, or something. When evaluating buying vs. renting, DO NOT look at the principal repayment. That is a form of forced savings.

So here in the states, with our deductible interest costs and 1.234% property taxes (also deductible), a $400,000 house @ 5.25% interest is about $1500/mo in interest costs, and this cost will decline as the principal is being repaid. 20-odd years later, when the loan is paid off, the housing cost will be under $300 per month.

My mom paid off her house, purchased in 1980, last year. Thanks to that, and Prop 13, her Social Security check makes her self-sufficient, modulo the Medicaid benefits that she needs.

Australia is perhaps something of a different beast though. Tons and tons of land and as long as the population doesn't take off there won't be pressures on rents in the cities. But even so chances are there still will be inflation and with inflation home buying is always a big, big win over the long run.
posted by @troy at 9:38 PM on August 15, 2009

No one has mentioned this, but I have access to an awesome pool because I rent. I would certainly not be able to afford that in a house on this income. At best I could get a shitty condo that I could barely afford and be on the hook for all repairs, major and minor.

Houses are nice but the upkeep can be a killer, especially on an older one. This neighborhood is ideal for me (7 minute commute, within walking distance of my daughter), and I can't afford to buy. Also not everyone wants to do yardwork, frankly.
posted by marble at 9:39 PM on August 15, 2009

Something tells me that the Wall Street Journal and its target demographic really just think it's ok for other people to rent and not own.

Whenever someone says that something desired is "not for everyone," I suspect they really mean "I don't want you to have it. But it is for me to have. Just not you."

Eh, it's not exactly something I want for myself.

I don't, since I know home ownership is a great inflation hedge,

It's not an inflation hedge (which would be something that would go up in value faster then inflation) and people who bought homes in the past few years lost more wealth then they would have if they'd kept their money in cash. Wallstreet sold a lie to people that home values would rise forever, monotonically. And they made a ton of money doing it for a while. But in fact, buying a home is a speculative investment, and one that has much higher fees then a normal one.

It was less than a decade ago that I first started figuring it out; land is an amazing form of capital -- never created, never destroyed, of timeless demand and infinite uses.

Yeah, but a mortgage isn't really ownership. If you've got some cash saved up and you want to put it towards some land, go for it. But buying a house and then paying the bank for the privilege isn't the same thing.
posted by delmoi at 9:43 PM on August 15, 2009 [2 favorites]

^ reminds me of the parable of the ant & grasshopper
posted by @troy at 9:44 PM on August 15, 2009

Wait...what happened to that ownership society conservatives were talking about?

Same place where they always thought it was: Somebody owns that apartment that you're renting.
posted by Flunkie at 9:51 PM on August 15, 2009 [1 favorite]

But in fact, buying a home is a speculative investment, and one that has much higher fees then a normal one.

But of course, because it is a horrendously crowded trade. One must choose their entry point wisely. Being able to buy when there's blood in the streets like now is generally a good thing wrt the timing, but of course looking at the historic patterns, prices declined for a good while in the 1930s and also in the early 1990s, until wages starting heating up in the mid-late 90s. And Japan's prices are still well under what they were in the bubble blow-off of 1990, and our recent bubble is closely reminiscent of theirs.

But buying a house and then paying the bank for the privilege isn't the same thing.

The details aren't that signficant. A mortgage is something of an expensive call option, yes.

I've developed a speadsheet that does the rent vs own calculation to the penny. It tells me for the rent I'm paying now is equivalent to the first years of ownership in a $350,000 property. There's nothing where I am now that I would buy for $350K, but certainly there is better stuff in eg. Bellingham for that.

There are actually good reasons NOT to buy now, even if the mortgage is cheaper than renting. Interest rates going to 7-8% will cut another 10% or so off of prices, and any prolonged recession into the next decade will absolutely murder home prices.
posted by @troy at 9:54 PM on August 15, 2009

The problem with renting is Landlords. It's much nicer to have no one to answer to about your home other than yourself.
posted by Edward L at 10:00 PM on August 15, 2009 [2 favorites]

I'm a homeowner (perhaps "mortgage-payer" would be a more precise term) in Missouri. I don't have kids, if that makes a difference. Due to the fact that I bought in a rising-star sort of neighborhood (just outside the city limits, walkable, served by bus and light rail, culturally diverse) I haven't seen a dramatic fall in house value.

I like being a homeowner here. I've done a lot of renovations to my 80-odd-year-old house. Being able to change out hardware and paint as I liked has been nice, as has the absence of noisy through-the-wall neighbors and unreasonable landlords.

But then, as the old saw goes, it's all about location. Which is why, when i move to NYC next year, I'll be renting. The full value of my house here would barely make for a down payment on a smaller place out east.
posted by Monsters at 10:24 PM on August 15, 2009

Unless you have HOA vermin to deal with.

Oh, sorry, is my bitter showing?
posted by darkstar at 10:27 PM on August 15, 2009 [4 favorites]

My impression is that buying a house built in the US in the last ten years is kind of like paying twenty bucks for one of those drink umbrellas that go in your margarita and then expecting it to keep your laptop dry as you walk home through a torrential fucking downpour.

Which is to say, that the contractors building the houses and the banks funding the mortgages were all shady as hell. Even if you make it through the fifty years of debt, the house is going to be a mess requiring massive investment to maintain, probably to be executed by the descendants of the same slimy fucks who built the place to begin with.
posted by kaibutsu at 10:39 PM on August 15, 2009 [3 favorites]

reminds me of the parable of the ant & grasshopper

Right, that's the one where the ants are all soulless working drones and the grasshoppers are sensualists, getting high, dancing, creating art, having fun. And then winter comes and the ants won't help the grasshoppers out with food, shelter etc ... so the grasshoppers all die horribly of hunger, exposure etc ...

And then, after a few months of isolation with plenty of food and warmth but no art, no entertainment, no culture, the ants all turn on themselves in an apocalypse of angst and despair.

Only the silverfish survive.
posted by philip-random at 10:54 PM on August 15, 2009 [15 favorites]

Whenever someone says that something desired is "not for everyone," I suspect they really mean "I don't want you to have it. But it is for me to have. Just not you." And it's easiest for me to imagine them saying that if I imagine a copy of the Wall Street Journal folded under their arm.

Wait...what happened to that ownership society conservatives were talking about?

They still want to own society. But they're trying to find a way to convince themselves and the rest of the world that a rapidly growing wealth disparity in the U.S. is "OK."

My perception is that being in the tax bracket I am in California I'd have to be absolutely crazy to want to buy a house. It would increase my commute, force me to live in a crummier community, and in the neighborhoods that I can afford to buy, the historic return on property values barely keeps pace with inflation. Comparatively, renting plus a mix of index and mutual funds give a much better return. Meanwhile, to some extent we've been using tax dollars bailing out the bad investments of the lenders, and sub prime mortgage holders either directly, or by allowing interest deductions, and/or letting former homeowners off the hook for their forgiveness of debt income. To me it seems like the social policies encouraging homeownership even where it is an awful fit for the individuals, or where the regional market only allows entry for the wealthy are increasing our wealth disparity in the US.

My biggest beef with home ownership though, is the size of single family homes keeps increasing, while the construction materials and methods get more and more slapdash ( cue get off my lawn patriotic music for this part of my rant ). My wife and I don't need a five bedroom house that is built to fall apart in 15-20 years. We need an apartment, or maybe a 1000 sq. ft. house with nice wide eaves and good insulation so that it stays cool enough in the summer to not need AC most days. We don't need anything to encourage us to collect a mountain of crap to pile up in our house. To encourage overconsumption, and lock us on a treadmill of working ourselves like dogs so that we can hedge against a day when we might not be able to afford a ridiculous mortgage payment. Your "forced savings plan" looks like the ticket to wage slavery, vacation shrinkage, not being able to stand up to unrealistic demands from our employers because we have no financial cushion when we need it.
posted by BrotherCaine at 11:01 PM on August 15, 2009 [6 favorites]

Only the silverfish survive.

In Thomas J Wise's library?
posted by BrotherCaine at 11:02 PM on August 15, 2009

Actually, let me back up and put it this way.

The main purpose of capitalism is to find fools and part them from their money, and then require soul-breaking work of these fools to earn new money from which they can subsequently be divorced. Capital concentrates in the hands of massive corporations - non-human entities, mind you - which keep the vast majority of the population enslaved. Those who are best at accumulating capital for the corporations are gifted with access to untold material wealth, it is true, but even this is just a piece of the game.

There are two kinds of good slave. The first accepts the terms of their slavery and tries to quietly make the best of it. These we can call 'renters.' The second, even better, type of slave is the kind which thinks that they can become slave masters themselves. We can call these slaves 'buyers.' These slaves are most excellent because, unlike the first type of slave, you don't even have to provide goods and services in order to part them from their cash. You can sell them stocks and mortgages! They get all hard and/or wet at the notion of making three thousand dollars over the course of thirty years and check their free will at the door. They build (or rather borrow) their own prisons and sing the praises of the bars on the windows.

If it is your goal to be independently wealthy, then you should not salivate over the empty promises of the house or the investment portfolio. If you do, then you are just another rube. Instead, you should acknowledge the existence of the game, and go directly to work for the entities that are winning it. Sell your soul directly and make a killing doing specialized work that no sane human being would do. I'm sure there's a killing to be made if you're willing to buck up and kill.

Ultimately a house is a shelter, nothing more, nothing less. Unless you are in the business of shelter, I don't feel it is worthwhile to waste my mind on considering the general worth of one method of handing my money over to capitalists as opposed to another. Instead, I look for vibrant communities to coexist with and go from there. A house is not a home without its inhabitants, nor is a collection of houses a neighborhood. Instead of griping about an inevitably losing game, let's instead think about better ways to live.
posted by kaibutsu at 11:13 PM on August 15, 2009 [11 favorites]

Snort.
posted by Burhanistan at 11:20 PM on August 15, 2009 [1 favorite]

My experiences renting involved rapacious landlords, non-returned deposits, ignoring of maintenance issues, and being locked into year-long leases that could only be ended by paying many months' rent as penalty. Oh, and noisy neighbors above and below. And no pets.

So for me, buying has been fantastically better, even though financially it's probably close to a wash, or maybe slightly worse than renting. I am free to make changes with long-term benefits, like energy efficiency improvements. I can make my own choices about paint and other physical changes to the place. And if I had to sell it immediately, I have enough equity in the property that (if I truly had to) I could lower the price to a point where it would sell, even in a terrible market, so I don't feel trapped.

That doesn't mean that owning is the right choice for everyone, or even for everyone who desires it. But in my personal situation, owning has been far more satisfying than renting ever was. And when the mortgage is paid off, that will be a huge difference in my monthly budget.
posted by Forktine at 11:25 PM on August 15, 2009 [1 favorite]

kaibutsu: did you perhaps mean to link to the housing cooperative link? Your co-housing link seems to speak to home ownership and not to any alternative beyond sharing that space with other co-owners.

Forktine: My experiences renting involved rapacious landlords, non-returned deposits, ignoring of maintenance issues, and being locked into year-long leases that could only be ended by paying many months' rent as penalty.

Renters MUST be more familiar with local and state renter protection laws than their landlords. Always. I've spent a lot of time helping friends around the country discover what the actual regulations are in their area, and many of them are shocked to learn that, for example, landlords may be required by law to not only hold all deposits in escrow, but to inform the renter of the exact terms of that escrow. Or that any request for repairs on an apartment, once made in writing, can become a legally binding contract for the landlord to make the repairs. If you are a renter and haven't done the research, DO IT.

As one couple I was helping reported to me after they quoted a couple of paragraphs of Washington State renter law to him, "Well, exactly how much of that did you read?" I note that the property they were in (and are no longer) is now rezoned as non-residential, because the landlord was not willing to meet the terms of what the law required.

You have rights. Educate yourself; empower yourself. It's a pain in the ass, but the law is often on YOUR side, not the landlord's.
posted by hippybear at 11:55 PM on August 15, 2009 [2 favorites]

Hmm, being a student still living at home with parents, I'm not yet in a position in life where I've really had to consider this decision. But were I to contemplating buying a home, I would simply pretend as though I was renting it to myself at market value. Find the rate of return of the investment of buying, and if it's better than my other investment options given risk, flexibility, interest rates etc, then go for it. Of course, as others have mentioned there are a few other pluses and minuses - plus, no bad landlords / can do your own thing, minus you have to pay for your own thing (and broken plumbing!).

Not having looked at any numbers, I suspect that all the "buy" hype has pushed most people beyond the point where buying actually makes any sense (particularly some cities, like here in Vancouver). Like almost everything else in life, if everyone goes in one direction it's often profitable to be out of sync. So until people start lionizing renters as they do owners, I'd rather be that unsung renter.
posted by Arandia at 11:59 PM on August 15, 2009 [1 favorite]

but the law is often on YOUR side, not the landlord's

Where I've lived the law has literally been written by landlords. Some areas are great, like NYC and SF County. But really it almost seems to me where the law has flipped to the pronounced benefit of the long-term tenants (eg. Santa Monica) the housing stock suffers from lack of new investment.
posted by @troy at 12:00 AM on August 16, 2009

But really it almost seems to me where the law has flipped to the pronounced benefit of the long-term tenants (eg. Santa Monica) the housing stock suffers from lack of new investment.

Almost? Almost seems? This is one of the primary reasons why rent control is problematic. It strongly discourages new investment in rental properties which eventually leads to a shortage of housing. The people who get in early have it made (as with prop 13) at the expense of everyone else.
posted by Justinian at 4:47 AM on August 16, 2009 [1 favorite]

Apartment life is less expensive and less work. It's also less of a commitment.

Owning a house forces you to invest money in an asset (though despite what everyone says, you cannot count on getting that money back when you sell, but then if you invest your spare cash in the market you can't count on it either). You have more room, and you are much more likely to get into decorating and altering the place to suit your needs and tastes.

Frankly, I think it's a wash. It's a decision that has to be made on an individual basis, depending on what your particular needs are and what the housing market is like in your area. I'll just say that if you do buy a house, don't get in over your head with a huge mortgage, and buy for the long-term, since selling and buying are so expensive. And if you do rent an apartment, don't blow all your discretionary income.
posted by orange swan at 4:48 AM on August 16, 2009 [4 favorites]

Wow, Orange Swan...that was concise, smart, and easy to understand. You'll never get a job with the WSJ at this rate.

This is the second place I've owned...the first was purchased through a "low income homebuyers" program which was its own kind of hell that I won't get into here. Now I just want to escape the scourge of the HOA. Owning (at least in NoVA) does not mean unlimited freedom!
posted by JoanArkham at 5:21 AM on August 16, 2009 [2 favorites]

I think the problem here is that TFIA is mistitled; they're too chickenshit to call it "How The American Dream Got Fucked Up" so instead they called it "Maye It Wasn't Such A Good Idea After All."

As with any investment there are good times to buy a house and bad times. The last few years were a very, very bad time, and the bubble that made it bad was sustained by the myth that there is never a bad time to buy a house.

I bought my house in 1992 and paid it off by 1998. I bought an older, cheaper FNMA repo for under $60K while my coworkers were signing mortgages in the $120's, which I thought ridiculous then. My note was under $500, thus our ability to pay it down when things were flush. This means I have now been living rent AND mortgage free for about 10 years, in a location where both rents and mortgages are now in the $1,500 range for 2 bedrooms with no lot.

The only wrinkle is that now between Katrina and the general real estate bubble the alleged value of my property is high enough to poke its head above the state's generous homestead protection minimum, and now I'm paying over $800 a year in property taxes. But that will either pass, or I really will sell this place at a ridiculous profit.

While arguing about the property tax thing with my assessor, I said point blank that at this point I could come back from the next storm and find nothing but a slab (not too likely since I'm two miles inland north of Lake Pontchartrain and 15 feet above sea level, but never say never) and I'd still be to the good. I figure I have now saved at least 50% over my total outlay had I been renting since 1992 -- probably around $80,000 -- plus having control over my property and no shared walls with neighbors, which happens to be a big plus for me.

It' always a bad move to say "X is better than Y" without some conditions. For some people renting makes a lot more sense for lifestyle as well as economic reasons; constantly moving into newly mortgaged homes just about killed my in-laws when my wife was a kid, and there are good arguments for walkable mixed-use communities. (I'm still bitter that the grocery store and convenience store I could walk to when I moved here, despite its suburban layout, have closed.) But it's also true that sometimes the stars line up. If you're in a stable job, prices have ditched, you like privacy, and you're handy with tools, ownership can still be a wonderful thing.
posted by localroger at 5:36 AM on August 16, 2009

P.S. I would never, ever buy a house subject to a HOA, and I told the people thinking of starting one here I would burn the motherfucker down before letting them annex me.
posted by localroger at 5:38 AM on August 16, 2009 [1 favorite]

The argument that "buying is better than renting if you have a really bad landlord while you're renting" does not seem germane to the economic discussion here. Just as my excellent landlord (appliances fixed or replaced within days, generous with rent payment deadlines, etc) doesn't make an economic case in favor of renting.

Taking regular exercise is worse than sitting on the couch all day, if you trip on a pothole and fracture your skull every time you take regular exercise.
posted by game warden to the events rhino at 5:48 AM on August 16, 2009 [2 favorites]

The argument that "buying is better than renting if you have a really bad landlord while you're renting" does not seem germane to the economic discussion here.

It absolutely is in my case, where the cost is really close between buying and renting. When I was making the choice to buy, I ran all the numbers I could, and the economics worked out fairly close, with the difference in the assumptions on appreciation, maintenance costs, and so on. In other parts of the country, or perhaps for people buying much larger/newer/fancier houses, the costs of renting and buying may not be so close at all, of course. But even when the costs are far apart, buying vs renting isn't purely an economic decision; there are pluses and minuses to each that are hard to quantify but are important to your life.

So with the economic costs close, my decision was all about the intangibles -- accepting the risk of big maintenance costs against having complete control of my physical space, for example. So for me, my almost uniformly negative experiences with landlords was a major factor in the decision -- I would have accepted significantly higher costs to never, ever have to deal with a landlord again. To be able to own for the same cost as renting was to me kind of like winning the lottery.

Don't get me wrong -- owning a house isn't all unicorns and rainbows. It has been expensive and stressful sometimes. But for me, on the whole, it is completely and totally better than renting in pretty much every respect I can think of. When I was renting, that was the right choice at that time -- but now that I have other options, I don't second guess buying for a moment.
posted by Forktine at 6:18 AM on August 16, 2009

Wait...what happened to that ownership society conservatives were talking about?

The ownership is the monied interests.

It's funny how basically nobody can figure out (or wants to spill the beans about) the central importance of land in the economy.

The founding fathers wrote a whole lot about that topic.

Others have written on the topic of rent/the renting class. An active renting class is a fine thing - for owners.

. At best I could get a shitty condo that I could barely afford and be on the hook for all repairs, major and minor.

And don't forget that you could not do those repairs yourself - you'd have to hire 'em out to a certified contractor.

Which is to say, that the contractors building the houses and the banks funding the mortgages were all shady as hell.

Don't forget the changes in standards WRT building materials. The bad old days used actual lumber. These days its glue+wood and if it gets moist, it goes to hell faster than the old lumber.
posted by rough ashlar at 6:36 AM on August 16, 2009

I would have accepted significantly higher costs to never, ever have to deal with a landlord again

Yes, I guess you're right that the risk of getting a bad landlord is absolutely a factor in considering whether to rent or buy. (And I totally agree that renting vs buying is about more than economics when it comes down to the personal level.) And maybe in some parts of the world bad landlords are so common that it really doesn't pay to gamble on your ability to find a good one. I guess I just tend to think that if bad landlords is the main reason someone is planning to stop renting, they should consider finding a good landlord as another option. Perhaps I've just been very lucky with landlords.
posted by game warden to the events rhino at 6:42 AM on August 16, 2009

Property taxes. Why does this rarely get mentioned in the context of "owning" a home?

You "own" a house, it's paid off for many years, you're on a fixed income, and you find that you simply can't afford to pay your $18,000 a year property tax. You have to sell the home, or lose it to the government. This is the reality for many, many folks who worked hard to "own" their homes in the U.S. Every day, in Westchester county, New York, this is a reality for people who bought into the "ownership" myth. In New Jersey, there are normal folks, with unpretentious homes, who are staring down $30,000 a year property tax bills, on top of whatever mortgages they're carrying. They are screwed.

So much for "ownership". It's a fantasy.
posted by dbiedny at 6:55 AM on August 16, 2009 [1 favorite]

now I'm paying over $800 a year in property taxes.

My heart aches for you. I'm paying over $2,000 in annual taxes (this is for a three-bedroom semi). Eight hundred really isn't much.
posted by orange swan at 6:58 AM on August 16, 2009

Effective Property Tax Rate comparison (pdf - Canada pg. 6, US pg. 8).
posted by gman at 7:12 AM on August 16, 2009

We bought less house than we could afford in a neighborhood that's slowly revitalizing despite the recession, with the intent of living in that house for many years and making it a home.

WHERE'S YOUR BALANCE SHEET NOW?!
posted by Brandon Blatcher at 7:16 AM on August 16, 2009 [2 favorites]

Thanks for that link, gman. I'm really surprised that Winnipeg has the highest property taxes of the Canadian cities listed. From what I've heard, it's a pretty rough town to live in.
posted by orange swan at 7:35 AM on August 16, 2009

Man, there's a lot of words in that article that boil down to: Don't be stupid.

I can speak from up on the high horse of authority, since I was stupid. I bought an almost 30-year-old cookie-cutter house that wound up being one of the worst fits for my family ever. Why? Because I had no idea what we actually wanted or needed. I even remember the exact moment I was the stupidest I've ever been: The morning I signed the papers to put in an offer on that house--one we hadn't even really considered just a week ago--I said to my future spouse: "I don't care what it takes, we're buying a house today!"

After moving from that house we've spent the last few years renting and understanding exactly what we want from a residence. Our kid is home-schooled, so that helps, and there's a chance we won't even live in this country once other stuff is done. Renting is perfect for us because buying comes with too many costs and we're still figuring out how we want to live.
posted by fireoyster at 7:57 AM on August 16, 2009 [1 favorite]

orange swan -- you're right, and that was one thing that factored into my decision to buy here. Louisiana completely exempts the first $75,000 of your primary residence from any property taxes at all. This was intended to prevent the kind of scenario dbiedny describes, but inflation and reassessment have suddenly caused a lot of fixed-income folks to be confronted with the first property tax bills they have ever seen.

That $800 is up from $200 last year, which was up from zero two years before that.

We have been laying plans to possibly move out of hurricane alley before we're too old to recover from a total disaster. Should these plans materialize (there are other factors keeping us on hold for now) they will involve non-code construction in a rural county where that's legal (there are still a couple of non-statewide UBC states), and if anyone tries to assess what I build at more than the value of an equivalent square foot storage shed they will have a lawsuit on their hands.
posted by localroger at 8:09 AM on August 16, 2009

now I'm paying over $800 a year in property taxes.

My heart aches for you. I'm paying over $2,000 in annual taxes

My heart bleeds for you both. This year we'll probably pay just under $4K. On about $125K assessed.

(I don't actually complain. We get good services here and the public schools are really good if inefficient. It's much better than TX, which has (among?) the highest property tax rates in the country and gives you back Texas public services and Texas public schools, whose products I used to deal with.)
posted by ROU_Xenophobe at 8:27 AM on August 16, 2009

you simply can't afford to pay your $18,000 a year property tax. You have to sell the home, or lose it to the government. This is the reality for many, many folks who worked hard to "own" their homes in the U.S.

Only because the US is large enough that even small proportions of people can work out to an absolute number that seems large. Looking at it at a statewide level, even in the state with the highest property tax rates, taxes of $18K implies an assessed value of $989K.

In New Jersey, there are normal folks, with unpretentious homes, who are staring down $30,000 a year property tax bills

At New Jersey average tax rates, that corresponds to an assessed value of $1.9 million.
posted by ROU_Xenophobe at 8:42 AM on August 16, 2009

We pay around $4500 a year in property taxes on a house assessed at $160K but that's less than the ~$5000 we pay in local city income taxes which we'd have to pay if we owned a house or not.
posted by octothorpe at 8:50 AM on August 16, 2009

Only because the US is large enough that even small proportions of people can work out to an absolute number that seems large. Looking at it at a statewide level, even in the state with the highest property tax rates, taxes of $18K implies an assessed value of $989K.

Well, the person I'm thinking of has a house assessed at around $680,000, and their actual property tax is a little north of $19K. In Westchester county. And the value of a home is what someone's willing to pay for it - my buddy in Marin has a house assessed at $1.6 million, he's been trying to sell it for $990,000 for a year now, no takers, he's underwater on it and will likely lose it before the end of the year. My cousin in Great Neck has a totally unpretentious house, not very big, with a valuation of over $1.2 million. They're also seriously having problems with their property taxes, her husband lost his job and she's working like a horse. "Implications" seem to have precious little to do with reality in this situation.
posted by dbiedny at 8:57 AM on August 16, 2009

but the law is often on YOUR side, not the landlord's*

* Does not apply to the UK.
posted by srboisvert at 9:01 AM on August 16, 2009

In Westchester county.

Why do you keep saying that as if I'd expect something other than expensive houses and high taxes?

In any case:

The point you raise has nothing to do with buying versus renting. If property values and taxes are very high, rent will be high enough to recoup those costs for the owner.

As well, the problem, as you expressed it earlier, was that you could pay into a house for thirty years, and then find to your horror after you retire that it's become so valuable that the taxes on it are unaffordable. "How will I cope with this massive asset I'm being taxed on?" is, frankly, pretty far down any reasonable list of problems a person can have, down there with "How do I cope with being amazingly beautiful?" The answer is, as well, obvious: sell the fucking thing, move to some other city where you can buy an "unpretentious" house for far less than $680K or $989K or $990K or $1.2M or $1.6M, and live very well on the difference.

"Implications" seem to have precious little to do with reality in this situation.

No, the implication that I made seems entirely borne out even by your examples: people with outrageously high property taxes have them because their homes have very high valuations.
posted by ROU_Xenophobe at 10:29 AM on August 16, 2009 [1 favorite]

ROU_Xenophobe: If property values and taxes are very high, rent will be high enough to recoup those costs for the owner.

This is true, and the fact that Louisiana's once-generous homestead exemption does not apply to rental properties has generally meant that it is more expensive to rent equivalent property than to buy it, because you must cover the landlord's mortgage and unexempt property taxes. The practical effect of this is that it is all but impossible to rent a single family residence in the NOLA area; just about all rental properties at minimum doubles so the landlord or another renter lives on the other side of the wall so that the extra expenses can be split up.

(In separate news, since Katrina it's pretty much been impossible to rent at all in NOLA because so many of those properties are caught in a catch-22 between landlords who can't afford to renovate without tenants and tenants who can't afford to come back if there aren't properties to rent, but that's a different problem.)
posted by localroger at 10:38 AM on August 16, 2009

ROU, I agree with much of what you've said, but I think the other point is that these houses are actually not worth what they're being evaluated at. The one guy is paying taxes on a "$1.6 million" house, which no one will buy for even 990K. These numbers are as far out of my ken as they are for most Americans, but holy shit, the guy is paying for 600K that actually isn't there! That could buy my house 5x over.

It seems like the banks are trying to keep their balance sheets stuffed with mortgages that aren't underwater, when the reality is quite different. And of course, the various townships or municipalities or whatnot don't want their tax revenue to decrease when they are already in a tight spot these days.
posted by synaesthetichaze at 10:39 AM on August 16, 2009

I really don't think this is a question of renting versus buying. There are pros and cons to each that have been thoroughly documented in this thread and others. What gets my goad is the lead line for the article: It's time to accept that home ownership is not a realistic goal for many people and to curtail the enormous government programs fueling this ambition.

That is simple, unmitigated horseshit. There are enough houses in the United States for everyone to own their own house. The problem is a combination of greed and wealth: those who have ten or twenty single-family units sitting vacant because they don't want to sell for half the assessed worth on their balance sheet. And the kind of person who can own ten or twenty (or a hundred or a thousand) empty houses... they can afford to simply wait.

So those properties rot and there's no punishment to the owners, no incentive for them to drop their prices save for property taxes, which is great for them because property taxes are the one thing the poor, one-family home owner will rail against.

There need to be direct financial disincentives to owning property which is under- or un-utilized. 50% property taxes on the value of the home, for example.
posted by Civil_Disobedient at 10:48 AM on August 16, 2009 [6 favorites]

For instance, here's an article from last year documenting nearly 18 million vacant homes and another 4 million vacant rentals. Those numbers have probably doubled by now.

Just do a Google search for bank walkaways to see how bad it's become. Banks are simply refusing to foreclose on homes to put them on the open market for their real value. No, the banks are so awash in cash that they would rather walk away from a property rather than sell it for what it's really worth. It's fucking insane.
posted by Civil_Disobedient at 10:55 AM on August 16, 2009 [1 favorite]

So someone at the WSJ is big into rental properties and needs tenants?
posted by dilettante at 10:58 AM on August 16, 2009

There are enough houses for everybody to own a house. Unfortunately, there isn't enough wealth for everybody to own those homes. And there aren't enough jobs near those homes to make it worthwhile for anybody to own them.
posted by borges at 11:04 AM on August 16, 2009 [1 favorite]

Cohousing and cooperative housing are different, but both have their pluses. Cooperative housing tends to entail many individuals occupying the same structure, while co-housing tends to entail many different families living in close proximity and working together as a community. People tend not to look at cooperative housing as a life-long housing plan because people with kids generally want their own roof. Thus the cohousing link.

Here in Davis we have a wildly successful cohousing collective called N St. Cohousing. It was started in the eighties, and has slowly bought up all of the houses in a particular block and knocked out all the fences, thus providing a massive semi-common area for people to garden and play in. One of the principal advantages of cohousing is being able to share parenting responsibilities amongst a larger set of parents, which carries a bunch of advantages for the kids and the parents.

N St. started as a rental house turned cooperative, and was eventually bought by one of the renters. They have a combination of individual and cooperative ownership, and run a consensus-based decision making process, with equal voting rights for owners and renters. It's a fascinating place.
posted by kaibutsu at 11:16 AM on August 16, 2009 [1 favorite]

My house is pretty cool; we can easily afford the taxes; renting kind of sucked; it's fun to be able to tear up my yard and plant whatever I please; etc.
posted by Burhanistan at 11:16 AM on August 16, 2009

I would agree that this WSJ piece isn't so much about the perils of owning a home as much as it is a road map of "How do we get policies in place that will keep the losers from owning homes in the future and destroying the dream that all of us were living before the recession hit?"
posted by blucevalo at 11:26 AM on August 16, 2009

And there aren't enough jobs near those homes to make it worthwhile for anybody to own them.

Well, "near" is relative to the price of fuel, but in general I think you're right. Of course, if those track homes out in suburbia had public transportation to the population centers this wouldn't be an issue. Except they can't afford to do that because then they'd have to increase taxes to pay for it.

To which the landed gentry would then spend millions in media campaigns scaring the poor single-family owner with tales of woe and property taxes.
posted by Civil_Disobedient at 11:36 AM on August 16, 2009 [1 favorite]

This might be another fun option, given the sheer number of abandoned properties. I can't wait to see people collecting up a bunch of friends interested in owning their own houses, picking up some shotguns, and taking over abandoned subdivisions.
posted by kaibutsu at 11:38 AM on August 16, 2009

I think the other point is that these houses are actually not worth what they're being evaluated at

Yeah, that's a legitimate problem in the areas that were really bubbly.
posted by ROU_Xenophobe at 11:44 AM on August 16, 2009 [1 favorite]

Ultimately a house is a shelter, nothing more, nothing less.

Writing from Canada, which has a much healthier banking system and housing market than the States at the moment.

Anyway, where does capital investment come in to your argument? My grandmother is now in her 90s and lives on her own - she is still nominally active and is receives some in-home car from the government. She receives a government pension, and the investments she has lived on for the past thirty years will be exhausted in about three years. At that point she will need to sell her house for funds. If she didn't have a house, her prospective quality of life would e far worse.
posted by KokuRyu at 2:15 PM on August 16, 2009

Indeed.

A total of 50,270 homes were sold last month via the Multiple Listing Service of Canadian real estate boards. This is up 18.2 per cent from the same month last year, and 3.9 per cent above the previous record for July that was set in 2007.
posted by gman at 2:20 PM on August 16, 2009

I've gotten to see this from both sides, more or less. I've rented, including from shady and shoddy landlords (although I was mostly luckier). Now I manage my family's rental property business.

My focus, and the original reason my parents bought these buildings, is neighborhood stability and improvement. My mom, particularly, put in a lot of political shoe-leather creating fair housing policies, and now, a nuisance abatement ordinance. Over the years most of the landlords in this town have been on the opposite tack from us, but there's been improvement. In any case, the supply of investment properties rises and falls with the economy, and as we lost our GM plant, the town is now in an extreme version of the conundrum faced by the country as a whole. Lots of single-family homes are being snapped up by out-of-town investors. Years of work toward maintaining homeowner/renter ratios are down the drain thanks to the slump, and it's not clear when the economy around here will recover (although it won't get as bad as Flint), let alone the housing market and home ownership ratio.

The issue of the mortgage deduction subsidizing sprawl is usually looked at in just that way. Generally there has been less attention, to my awareness, of the effect on rental markets and city cores, with the exception of economic analysis from the libertarian angle regarding the market effects of rent control. I think the mortgage deduction and the focus on ownership has had a concomitant effect on inner cities and helped to foster ghettoes and de facto segregation. At a time of concern for sustainability and the efficiency of higher urban density I wonder whether maintaining this subsidy is the right thing.

Make my rent tax-deductible, with no cap, and we'll talk.

Unfortunately the deduction is part of a grand compromise balancing tax contributions of the middle class against the rich and super-rich. I think the thing to do isn't to make rent tax deductible but mortgages less deductible.

This is part of a personal, quixotic position since the '86 tax reform that what we need is not a simpler, flatter tax a la Gingrich-Armey proposals, but a simpler tax code with fewer loopholes and deductions overall. I think the widespread use of popular deductions like mortgage interest helps to foster a sense that everybody should be able to have their own loopholes, that deductions are the natural order. If taxes were less complicated and less burdened by these balances and revenue equality-driven strategies, I think it would be perceived as more fair by more Americans. But political success is driven more by lowering taxes for more people, so good luck with my rational reforms.
posted by dhartung at 2:58 PM on August 16, 2009

Mortgage interest for landlords has always been deductible, as a cost of doing business, just like insurance and maintenance. Making it deductible for owner-occupants just levels the playing field. Otherwise you would be giving an unfair advantage to landlords through the tax code.
posted by calwatch at 10:20 PM on August 16, 2009 [1 favorite]

Making it deductible for owner-occupants just levels the playing field.

Only if you also assess the rent they aren't paying as taxable income.
posted by oaf at 7:44 AM on August 17, 2009