Much Ado About Renting

Submitted by Rich Toscano on August 17, 2006 - 8:25pm

I was just re-reading Catherine MacRae Hockmuth's excellent piece on her personal decision to become a renter. And I was pretty blown away by the volume (lots) and tenor (highly emotional) of user comments.

Catherine has already addressed some of the comments in a followup article. My purpose today is not to address any specific point, but rather to take note of the fact that her article created such a firestorm.

Let's try a little thought experiment. Imagine if Catherine had written that article in the year 2000. Would anyone have gotten lathered up enough to accuse the author (and, in one case, the entire Voice staff) of immaturity and ignorance? Would they have scornfully written off the author as a new and well-deserving member of the permanent renter underclass?

read more at voiceofsandiego.org

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Submitted by Bugs on August 17, 2006 - 10:44pm.

Wow, there's lots of anger in some of those posts, and it isn't the renters who are mad. I just know that at least a couple of the bulls who are responding are either in the business or are sitting on properties that aren't moving.

Submitted by privatebanker on August 18, 2006 - 7:14am.

Wow, the comments on these articles were amazing! I really can't believe how naive the general public is about real estate. They seem to forget the past and just think that real estate it is a guaranteed appreciating return every year. No wonder the market is so out of control. I think the best post on their was the realtor claiming that real estate will continue to appreciate at a rate of 30%/year for the next 15 years and at that point, starter homes will be going for $10,000,000! Apparently things are different this time. Ha! I nearly fell out of my chair on that one. I hope that was someone just joking around because they will have a sobering surprise in store soon if they were serious.

Submitted by no_such_reality on August 18, 2006 - 8:54am.

$10,000,000 starter home.

It could happen, of course, Jack In the Box will be selling two monster tacos for the low-low price of just $99 whens it does.

Interesting concept actually, what happens when the combined fiscal debt, baby boomer SSA meltdown and overextended debt ridden americans finally result in an abandoning of the US dollar and it subsequent devaluation like Argentina.

Submitted by barnaby33 on August 18, 2006 - 10:13am.

Tengo que movar a Mexico.

Josh

Submitted by drtomaso on August 21, 2006 - 11:09am.

Almost all of these comments seem to fail my sniff test. That is, is the arguer setting up a false dichotomy between renting and owning? ie: is the choice between renting *forever* and buying?

Logic says when the market is poised to take a hit, rents are lower than the mortgage on an equivalent property, you sit tight, rent and wait it out. That doesnt say *never* buy. Purchasing a home is the single biggest investment most people will ever make in their lives, with 0 chance to diversify and otherwise mitigate risk. It strikes me as pathetic that most (or so it seems) Americans are willing to jump into such a risky venture without working through the logic.

Even if the fabled 'soft landing' materializes, that just means renters have time to wait, not gaining or losing anything, while they wait for the market to give a 'buy' signal. Even if rents are equivalent to the mortgage, I'd still rent. Let the landlord eat the maintenance costs.

Then theres the enfuriating claim that real estate always goes up. I believe the long term historical average is around 6% folks. Thats no better, and quite possibly worse, than a cheap-fee index fund. We need look only as far as the world's second largest economy to see that real estate doesnt 'always go up': Japan has seen over a decade of real estate price depreciation outside of Tokyo. In fact, that might be a good investment opportunity now- but not the states.

People who argue for owning vs renting do so for illogical, emotional reasons.

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