Why Renters are Not Buying Into the “American Dream” of Homeownership

The Bryan Ellis Investing Letter ^ | September 11, 2014 | Carole VanSickle Ellis

[umgud]

The generation replacing us boomers is not going to be as prosperous as we were.

[CivilWarBrewing]

Feminism caused dual incomes thus raising housing prices to that which only couples with dual incomes can afford. If there’s not a lot of married couples, there’s less home buying. There you have it in a nut shell.

[cherry]

in the title "American dream" should not be the words in quotation marks....it should be Home"OWNERSHIP"....

we don't ever own anything in realestate when you think about it...the govt does.

[SkyPilot]

While real estate is still a big problem, throwing your money into a hole in the ground (landlord) every month gets you nothing.

[kaila]

I own, and have paid off my mortgage. I am happy with my decision. Renting has its pitfalls. You have crazy landlords, you are subject to inspection, you cannot have pets, you may be told to move with only 30 days notice.
If you pay off your mortgage, you only have to worry about property tax. If you rent, the cost of living will increase to a point that you may not be able to afford the rent in your retirement years.
I have seen this with a sibling. He never bought, his landlord is a very nice elderly woman, but once she passes the property will go to her daughter, who may sell it or yank up the rental price. He is living in abject fear of this, because the cost of rentals in his area has risen dramatically. If he owned, his life would be more stable.
The trick is to buy a modest home, and not buy more than you can afford. Fix up your modest home, and it will be worth more as time passes.

[Alberta's Child]

That's a very good point. I'd also suggest that home ownership is pretty pointless for most people who don't have families.

A home can be a great place to live, but it can also be an enormous burden that ain't worth the hassle and eliminates a lot of flexibility for the people living in it.

[piytar]

I will never own a home again. Had a nice one. My developer put in section 8 housing about 1 mile away. My property value dropped by 2/3s. I also took a huge economic hit at the same time.

Never again.

[cherry]

WW2 caused duel incomes, when mothers and wives went to work in the factories....

[Alberta's Child]

If you pay off your mortgage, you only have to worry about property tax. If you rent, the cost of living will increase to a point that you may not be able to afford the rent in your retirement years.

In some parts of the country there is a whole different factor at work, where seniors can't afford to stay in their homes because they can't pay the property taxes.

[kaila]

Rentals include the price of the property tax, so you are paying it anyway. When I rented, the property taxes went up, and the landlord increased my rent to cover it. No landlord is going to give away the cost of the property tax, they will include it in the rent.

[precisionshootist]

First we have to stop living in denial about the definition of “ownership”. As long as we continue to fund government through perpetual property taxes the decline will continue. You can’t own reestate in the US, so you will never own your home. Homeowners are nothing but glorified renters.

[Alberta's Child]

The difference with a rental is that the landlord doesn't have to charge rent that covers a huge mortgage based on an inflated purchase price.

I've gone through this exercise on FreeRepublic before. Check out the real estate listings in your town and find a home that you might consider buying. Sit down and figure out your monthly cost of owning the home. Then contact a realtor and see if there are any listings for rentals in the same neighborhood. Sit down and figure out the monthly cost of renting the same home. You'd be shocked at the difference between the two numbers.

[discostu]

It gets you a roof over your head and free repairs when something breaks. Also it frees you from any of that “maintenance” stuff. It’s all about priorities and what you want to do with your time and money.

[kaila]

I may be a glorified renter, but when I sell my property is worth twice more than what I paid for it. With that money, I can move to a place with lower property taxes, and pay for it in full with my equity. As a renter, you do not have that luxury.
If you have a job that is not stable, and you want mobility, then rent. if you have a family, with a stable job, and plan to live in the area for a long time, then buy.

[kaila]

I live in a desirable neighborhood. To rent would cost me at least $5000 a month.I only pay property tax now. I bought a modest home in a wealthy neighborhood, fixed it up, and my value has doubled.

[Alberta's Child]

Don't compare the rental cost to your cost of ownership under your circumstances. Compare the rental cost to the cost of ownership if you were to buy the home today.

[MichaelCorleone]

I guess you’re right. That’s the long and short of it.

[Dr. Pritchett]

As long as those slackers pay their rent on time, I don’t really care. :)

[morphing libertarian]

Twice in my life we sold a house, took the gain, and moved to a bigger house in a better neighborhood.

Perhaps I should have given the money to the real owner