I would never tell someone to buy a house to "make money." The problem with this article is that he totally skirts the quality of life issue with renting. That's what 90% of people want when they buy. The security of owning your own home. When you have a family you don't want to have to move every 2-3 years when the landlord raises the rent, evicts you, or decides to sell the house. Plus all the other advantages of being able to personalize and modify your living space at will. A great financial investment, no. But neither is buying a BMW, but people do just the same. Just like with renting, you'd save a huge amount of money if you walked, biked, or took the bus everywhere. But most don't, because they want the freedom, security, and convenience of having their own transportation. Transport, just like housing, isn't so much about $ as quality of life. If all you care about is saving $, then live in a tent and walk everywhere. You'll be rolling in it!
For these reasons, these sort of articles miss the point. Some people do mistakenly think they're going to get rich owning a house....but most just want a nice secure place to live. Renting can work out that way...but is much more risky because the landlord can evict you at anytime. So that's really the bottom line. For most people it's really not about money anyway.
Of course, the irony of this is that because of skyrocketing housing values, owning has been a much better financial invenstment over the last few years. Very few renters woud have saved the 100s of thousdands in equity that owners gained. But I agree that over the long term owning is not a stellar investment.
Why do you believe that landlords can evict tenants at any time? Landlords have to adhere to their signed leases, legal documents, just like the tenants must. They aren't able to capriciously evict tenants.
Real estate prices have increased at unsubstantial rates. The big money that was made in the recent past is unlikely to continue in the future.
Who has a 10, 20, or 30 year lease? I rented for over ten years and had to move every 1-3 years for some reason or another. Higher rents, place got sold, etc. Most of my friends who rent have the same problem....very rare that people rent the same place for 5 years...very few make it to 10 years.
The difference is equity...and in the case of Seattle over the last few years, lots of it!
Also, as an owner you get to choose when are were you move. As a renter you're at the mercy of your landlord. Big difference....I don't think you'll convince anyone that renting is more secure then owning. You may save money, but you'll most likely waste a lot of time and energy dealing with crotchety landlords, searching for new places, and breaking your back moving every 2-3 years.
I didn't mind when I was 25 and single. But 36, married, two kids....now way.
Meshugy: You're saying you don't buy a house right now to "make money" in Seattle? You're saying people buy mostly for psychological reasons? Then we all agree...what fun is that?
I'll take you one further though: looking at these MLS numbers seems like an excellent time to sell and start renting. It's happening all over the country. Chances are good you won't miss out on gains bigger than you can make in the stock market over the same period. You may even avoid losing 20 percent, and penny saved is a penny earned.
Also, tons of landlords out there looking for long-term stable tenants. Just ask for a long lease. Costs them money for a place to sit vacant. Make sure you shop carefully for the right landlord and not just the right house.
But Shug, you can't claim any of that equity unless you either sell the house take out a loan. Puts you in a quandary, doesn't it? If you decide to take out the home equity loan, you have to put money into fees, etc.
You may feel richer with your recent home equity and Zillow listing, but it will cost you either way to get your hands on it.
I sure enjoyed the 5 years I rented on Mercer Island, on the water, with my own dock and beach. I could choose to go wakeboarding, or choose to crack a Tecate on the deck.
When I did own a SFH, I sure as hell did not choose to be up to my elbows in sewage when my cast iron sewer line resigned.
Cut the crap about renters living in some dank basement with a landlord beating them down every day. It's just not the case. My current one even sends me a $100 Trader Joes gift card every Christmas.
BTW, I have never had a landlord ask to me to leave. It was always on my own. What kind of places were you renting where you got kicked out every 1-3 years? Or perhaps I should ask what kind of tenant you were.
Cut the crap about renters living in some dank basement with a landlord beating them down every day. It's just not the case.
Amen. I just sold our house and moved into a nice rental. It's a lifestyle upgrade (shorter commute, more light, better space, and lower carrying and utility costs). I've got a pile of cash earning a risk-free 6%, and don't have to paint and do yardwork every damn weekend.
sourmash, your point about short commute struck home with me. I rented a house recently in Ravenna because I could literally walk to UW from there (where I'll be in grad school). It's incredibly liberating knowing you can do that. Post grad school, my job might take me outside the area, so it's nice to know that I won't be saddled with an insane commute if I choose to move.
As to the remarks about being a tenant above, the last place I rented was for six years, and the choice was mine to leave. Landlords love good, stable tenants. My mom's owned an apartment building in LA for nearly thirty years, and she has a pair of tenants who were there when she bought the place.
I rented in Lake City for three years when I was in grad school. When I graduated and my wife and I both started working in Tukwila, we moved. Not at the request / insistance of the landlord, but because living less than 10 minutes from work was far better than living an hour away.
I plan to buy a home eventually. Not in Seattle, and certainly not at the current prices of Seattle homes. When I do buy a home, it'll be because I want to be in a particular area for the rest of my life, not because I want to get rich. If shugy bought his house for the same reason, and did so without taking out a bad loan/mortgage, more power to him.
Comments
For these reasons, these sort of articles miss the point. Some people do mistakenly think they're going to get rich owning a house....but most just want a nice secure place to live. Renting can work out that way...but is much more risky because the landlord can evict you at anytime. So that's really the bottom line. For most people it's really not about money anyway.
Of course, the irony of this is that because of skyrocketing housing values, owning has been a much better financial invenstment over the last few years. Very few renters woud have saved the 100s of thousdands in equity that owners gained. But I agree that over the long term owning is not a stellar investment.
Why do you believe that landlords can evict tenants at any time? Landlords have to adhere to their signed leases, legal documents, just like the tenants must. They aren't able to capriciously evict tenants.
Real estate prices have increased at unsubstantial rates. The big money that was made in the recent past is unlikely to continue in the future.
I believe that most homeowners typically sell over the same time frame (5-10 years), so what's the difference?
The difference is that if people buy now, they're likely to lose money whereas if they chose to rent, they'll be able to earn money on investments.
Also, as an owner you get to choose when are were you move. As a renter you're at the mercy of your landlord. Big difference....I don't think you'll convince anyone that renting is more secure then owning. You may save money, but you'll most likely waste a lot of time and energy dealing with crotchety landlords, searching for new places, and breaking your back moving every 2-3 years.
I didn't mind when I was 25 and single. But 36, married, two kids....now way.
I'll take you one further though: looking at these MLS numbers seems like an excellent time to sell and start renting. It's happening all over the country. Chances are good you won't miss out on gains bigger than you can make in the stock market over the same period. You may even avoid losing 20 percent, and penny saved is a penny earned.
Also, tons of landlords out there looking for long-term stable tenants. Just ask for a long lease. Costs them money for a place to sit vacant. Make sure you shop carefully for the right landlord and not just the right house.
You may feel richer with your recent home equity and Zillow listing, but it will cost you either way to get your hands on it.
When I did own a SFH, I sure as hell did not choose to be up to my elbows in sewage when my cast iron sewer line resigned.
Cut the crap about renters living in some dank basement with a landlord beating them down every day. It's just not the case. My current one even sends me a $100 Trader Joes gift card every Christmas.
BTW, I have never had a landlord ask to me to leave. It was always on my own. What kind of places were you renting where you got kicked out every 1-3 years? Or perhaps I should ask what kind of tenant you were.
Amen. I just sold our house and moved into a nice rental. It's a lifestyle upgrade (shorter commute, more light, better space, and lower carrying and utility costs). I've got a pile of cash earning a risk-free 6%, and don't have to paint and do yardwork every damn weekend.
Best decision I've made in a long time.
As to the remarks about being a tenant above, the last place I rented was for six years, and the choice was mine to leave. Landlords love good, stable tenants. My mom's owned an apartment building in LA for nearly thirty years, and she has a pair of tenants who were there when she bought the place.
I plan to buy a home eventually. Not in Seattle, and certainly not at the current prices of Seattle homes. When I do buy a home, it'll be because I want to be in a particular area for the rest of my life, not because I want to get rich. If shugy bought his house for the same reason, and did so without taking out a bad loan/mortgage, more power to him.
How much longer do you think housing will be a stellar investment?
Maybe you could clarify what "stellar investment" means while you are at it.