There are renters and home owners. I am currently a renter. Why? Because –
1) Market prices are way over and above the fundamentals
2) It’s cheaper to rent than to buy a home of similar caliber
3) No strings attached
I am a renter and I’m not ashamed to declare it. In the olden days, homeowners were well respected and held in high regard because it meant they were responsible enough to save for a down payment and have a stable income to purchase a home. In a sense, they’ve “made it.” Renters on the other hand were often deemed the lower class of society because they did not, or could not, own their residence. This notion was thrown entirely out of the window during the bubble when anyone and everyone could get a home loan if they so desired.
As a renter I’m often subjected to condescending remarks from homeowners who think they are somehow superior to me simply because I am a renter. Their smirk remarks around the cocktail table about how they’ve built a “mountain of equity” or that smug look on their face as they show off their new Hummer which was bought with a HELOC just makes my blood boil. It’s as if I’m being incredibly stupid for not indulging in their financially unsustainable lifestyle when in fact I’m just being the fiscally responsible person they’re not.
Being a real estate Scrooge the last few years, I understand how some folks might label me as a bitter renter, but I disagree. Sure I’d love to purchase my own home – for the right price. I rent because it makes sense to rent. I simply ran the numbers and decided that the money I was saving from renting versus buying a similar place is better off being invested in something other than real estate. Not only that, I enjoy the piece of mind from not having to worry about how my neighbor’s asking price is undermining my paper equity or how foreclosures on the block will affect the neighborhood. I don’t have to worry about the mortgage rate reset because I would only buy on a fixed rate mortgage. Anything else is too unstable and risky.
There is also a misconceived notion that renters live in sub-optimal conditions. That’s not true. Many renters live in apartments or townhomes because they want to maximize their savings to minimize the mortgage payment when/if they buy a home. With the market as inflated as it was during the boom, you can rent a nice luxury 3000 sqft home for half the price it costs to own. Even now, it’s still cheaper to rent.
Lastly, I do feel bad for a handful of families that will lose their home due to mortgage fraud or scams, but the majority of the at-risk borrowers are just victims of their own greed and ignorance. The market needs to purge these homeowners squatters so they can go back to renting while people who can afford the mortgages move in to stabilize the fields.
I am a renter – hear me roar.
Excellent post and well said! My wife and I are on the same boat. Currently renting a very nice apartment in Pasadena for half the price of owning the same unit. We are able to save quite a bit each month for a future down payment. We are also able to live a very comfortable lifestyle without worrying about factors such as the falling housing market, mortgage payments, high property taxes, hoas, etc. I look forward to the day when we can comfortably purchase a house to call home again at a price that will not affect our current lifestyle. I too have faced many folks that have literally cringed when my wife and I told them that we currently rent. Unfortunately, when most people hear the word “rent”, it implies a sub-par hellhole with screaming neighbors, roaches and drunks. In addition, we hear the comment “renting is just throwing your money away” or “why pay for someone else’s mortgage payment?”. Three years ago (when we old our home in arcadia), I tried hard in making an effort to explain to friends and family members the advantages of renting in this market vs. owning. Most simply nodded with a fake smile and a blank look on their faces. Today, I simply keep to myself and say that we are still happily renting.
My ass, you sold your home like everyone else! You just cashed in, so admit it.
This guy is the smartest of them all. He cashed out when the “getting was good” and took his bag of money to the sidelines. When the market hits bottom, he can take his savings and buy a better home. Capitalism at its best: he’s an example for us all.
The other day it struck me, “Why do I have to own a house?” I have lots a friends of simliar economic means who bought at the top of the market and ended up in Altadena or Temple City. They are home owners but are underwater in their mortgages. When they bought, they looked at me like I have nothing. But you know what: I have cash money. There is nothing like cash in the bank! As property values drop, my nest egg grows. In a couple years I’ll be in the village listening to Peacocks and they will be in Altadena listening to gunshots.