Do any of you rent, even though you could buy?

[G5052]

http://sanfrancisco.cbslocal.com/2017/08/30/homeless-san-jose-state-professor-struggles-living-out-of-her-car/

 

The Bay Area is insane that way, but we also have relatives in Miami who live in a 1-bedroom apartment with kids. They can't afford to move because rent is most of their income, and they're deeply in debt.

Edited August 31, 2017 by G5052

[KungFuPanda]

I see no downside to your plan at all.

[DawnM]

The Bay Area is insane that way, but we also have relatives in Miami who live in a 1-bedroom apartment with kids. They can't afford to move because rent is most of their income, and they're deeply in debt.

 

 

I think in this case, she is the insane one.  $2000 for rent is not astronomical, but had she done her research, she would have known that having a $140,000 loan on a $30k future income and taking a job in an area where that wouldn't cut it, would not work.  Period.

 

In fact, no tenured professor should have that kind of loan, much less a part time adjunct professor with only a master's degree.

[Carol in Cal.]

HUH?  I have no idea why you posted this.  The woman is $140,000 in debt for a student loan, has a husband who doesn't work, and only brings home $2,500/mo.  Her choices were very poor and she is now suffering the consequences of those choices.

 

We have a little more sense than that.....no, we have a hell of a lot more sense than that.

 

She has a husband who is UNEMPLOYED.  That is not 'doesn't work'.

 

The reason I posted it is that unanticipated stuff happens, and sometimes that unanticipated stuff includes 1 bedroom apartments shooting up to $2000/month in a hot market, and becoming unaffordable.  Rents have been skyrocketing here right along with the insane home purchase prices, and that's a risk of not getting into the real estate market and having it go off on you.

 

Of course, this was a TV story, and I'm sure it's very truncated.  I wondered whether they are living out of the area but she can't commute there daily so she comes into town only during the week, since it doesn't sound like her husband and two dogs are living the car with her.  I also wondered whether she would be eligible for income based repayment, which would lower her student loan payments.  I don't know all the ins and outs of that program, so maybe there are unfavorable aspects to it that make it intolerable in the long run.

 

It sounds to me like her husband was working when she got let go, and she started her education then and then finished it on student loans once he lost his job.  I can easily imagine that happening, and the student debt would look like a stop gap until she would get paid more down the road.  I'm not saying that this was wise, just that I can imagine it plausibly happening to someone who is basically pretty smart, hardworking, and capable. 

 

 

 

 

[DawnM]

She has a husband who is UNEMPLOYED.  That is not 'doesn't work'.

 

The reason I posted it is that unanticipated stuff happens, and sometimes that unanticipated stuff includes 1 bedroom apartments shooting up to $2000/month in a hot market, and becoming unaffordable.  Rents have been skyrocketing here right along with the insane home purchase prices, and that's a risk of not getting into the real estate market and having it go off on you.

 

Of course, this was a TV story, and I'm sure it's very truncated.  I wondered whether they are living out of the area but she can't commute there daily so she comes into town only during the week, since it doesn't sound like her husband and two dogs are living the car with her.  I also wondered whether she would be eligible for income based repayment, which would lower her student loan payments.  I don't know all the ins and outs of that program, so maybe there are unfavorable aspects to it that make it intolerable in the long run.

 

It sounds to me like her husband was working when she got let go, and she started her education then and then finished it on student loans once he lost his job.  I can easily imagine that happening, and the student debt would look like a stop gap until she would get paid more down the road.  I'm not saying that this was wise, just that I can imagine it plausibly happening to someone who is basically pretty smart, hardworking, and capable. 

 

 

And?  What is your point?  Anything can happen anywhere at anytime......so we should all buy tiny homes with cash and live in Montana?  And if he lost his job while she was in school and she racked up $143,000 in debt for a $30K job, then shame on her anyway.....that wasn't wise.

And yes, I listened to the entire news interview where the newscaster explained how she AND her husband AND her dogs all slept in the car.

[Renthead Mommy]

We have rented sinced coming into the AF.  We move every 2-3 years.  We never wanted the hassel of selling so often or renting while living who knows where.  Works out great.  In theory, we could have made money by buying and selling, especially since we are in a military, heavy turn over areas.    But we pay no property tax, no mortgage, no upkeep, no maintenance.  AC and hot water went (in different houses).  Called the landlord and they dealt with it. Not our problem, not our worry.  Which is good as my husband is not a fix it guy.  And he can't handle me fixing it.  Once he retires, we'll buy.  At that point his plan is just to buy for cash, skip the mortgage.  I'm not sure about that as we could probably use the debt for a bit.  We don't carry any debt and our credit score drops a few points a year.  

 

Plus with renting, you pick a house your are comfortable with. You aren't buying and then re doing kitchens and baths.  Redecorating and landscaping.  So you save a ton of money there. Granted it helps knowing you are only their for a short period of time so it is easier to live with what the kitchen or bathroom. 

[Carol in Cal.]

And?  What is your point?  Anything can happen anywhere at anytime......so we should all buy tiny homes with cash and live in Montana?  And if he lost his job while she was in school and she racked up $143,000 in debt for a $30K job, then shame on her anyway.....that wasn't wise.

And yes, I listened to the entire news interview where the newscaster explained how she AND her husband AND her dogs all slept in the car.

 

I did not listen to the link, just read the article, which didn't say that.

 

My point was that in CA housing markets that seem to only fluctuate between hot, very hot, and just a bit warm, never really cold, it's risky to postpone a home purchase.

I could not afford my present home, and many of my friends are in the same boat.

I don't know where you are headed, but around here and in some parts of SoCal that's the reality.

 

Anyway, you know, maybe this was originally a JAWM post in which case I'm out of line for sure. 

 

 

[DawnM]

I did not listen to the link, just read the article, which didn't say that.

 

My point was that in CA housing markets that seem to only fluctuate between hot, very hot, and just a bit warm, never really cold, it's risky to postpone a home purchase.

I could not afford my present home, and many of my friends are in the same boat.

I don't know where you are headed, but around here and in some parts of SoCal that's the reality.

 

Anyway, you know, maybe this was originally a JAWM post in which case I'm out of line for sure. 

 

 

 

You do know I lived in SoCal for 20 years?  You do know we are smart people who research and know our salaries, what our rents or mortgages will be, and plan accordingly?

 

This is NOT a JAWM, but it would be nice if the actual question was addressed. 

 

I feel l like you just threw out this random story that you didn't even fully investigate and somehow applied it to me?  I honestly have no idea how this has anything to do with me.

 

I never once said, "Oh my gosh, we can't afford it but we are moving, do you think we can all fit in the car?"

Edited September 1, 2017 by DawnM

[Catwoman]

http://sanfrancisco.cbslocal.com/2017/08/30/homeless-san-jose-state-professor-struggles-living-out-of-her-car/

I'm sorry, but that woman sounds like a complete and utter moron.

 

She racked up over $140k in student loan debt when she was already in her 50s so she could get a master's degree. Then she got a low-paying, entry level adjunct teaching position at a college in an area with a high cost of living. What was she thinking??? Her dh is unemployed -- what's he doing all day, sitting around in the car? There was no mention of him having any kind of disability, so why isn't he working at any job, even if it doesn't pay much more than minimum wage, while he looks for something better? They obviously need the money and every little bit helps.

 

Most importantly, they don't even have kids in school. They could live anywhere. So why in the world didn't she and her dh apply for jobs in lower cost of living areas? And why would she choose to start a new career as a college professor at her age when she needs a higher income than $30k a year? It's not like she didn't know approximately how much money she would be making when she borrowed $143k -- didn't she do the math and realize that it would take her years and years to pay that money back, and that a salary of $30k wasn't going to be anywhere near enough to make that kind of loan a good idea?

 

It's hard to feel sorry for her when she has made one bad decision after another. She may be a lovely person, but common sense doesn't seem to be her strong point. And she talked about having to sit in a variety of parking lots, grading papers in her car. Really? :glare: Why wouldn't she go to the school library or a public library? She seems like a bit of a drama queen.

 

I'm pretty sure Dawn and her dh are a lot smarter than the woman in that news story, and Dawn has the money to buy a house, so the possibility of living in her car is probably not a huge concern for her. My impression was that Dawn was asking about renting because she might not be interested in buying a permanent home just yet. Based on what she has posted in this thread, I think she may have a good idea, although I know the idea of renting can seem odd after years of homeownership. But if she buys a house now and in a few years she wants to relocate to a more permanent home, she will have to deal with the nuisance of selling a house while she shops for a new one, and even if the value of that house goes up, she may have to make repairs or improvements and then she will have to pay the realtor when it sells, so she might not make any money on the sale in the end, anyway.

 

If Dawn was looking for a long term home, I would advise her to buy, but in this case, renting may end up being the best and less-stressful option. Also, she can invest the money from the sale of her current home while she is renting her temporary house, so that will be good, too.

 

(Edited for particularly dopey typo!)

Edited September 1, 2017 by Catwoman

[kiwik]

I am glad I bought when I did as there is no way I could afford it now. But since later you will have more freedom about where to live and renting would make life so much easier it is likely worth the risk. You can watch the market anyway.

 

Eta. I have known a lot of people who owned a house but lived in a rental and rented their own out. What they could afford to buy didn't meet their needs but they wanted to get a foot on the property ladder.

Edited September 1, 2017 by kiwik

[creekland]

We have rented sinced coming into the AF.  We move every 2-3 years.  We never wanted the hassel of selling so often or renting while living who knows where.  Works out great.  In theory, we could have made money by buying and selling, especially since we are in a military, heavy turn over areas.    But we pay no property tax, no mortgage, no upkeep, no maintenance.  AC and hot water went (in different houses).  Called the landlord and they dealt with it. Not our problem, not our worry.   

 

Just wanting to correct the underlined as it's a common fallacy.  We own rental properties.  We pay no property tax, no mortgage, no insurance, no upkeep/maintenance... our tenants do - via their rent.  It's all worked into the cost.  Above and beyond that, unless it's a bad year, there's a little profit for us along with building equity.  Other than the down payment and a little bit of time plus the rare bad tenant (and we've learned to screen well!), owning rentals is pretty darn cost free on our end.  ;)

 

This is NOT saying the OP shouldn't rent in her case (or yours).  If one moves every 2-3 years, unless one is in a rapidly appreciating area, the taxes and other expenses involved with buying/selling would outweigh any gain in equity.  But the costs I underlined really shouldn't factor in as they're there either way.  It's all a matter of who sends it to the final recipient.

[Carol in Cal.]

You do know I lived in SoCal for 20 years?  You do know we are smart people who research and know our salaries, what our rents or mortgages will be, and plan accordingly?

 

This is NOT a JAWM, but it would be nice if the actual question was addressed. 

 

I feel l like you just threw out this random story that you didn't even fully investigate and somehow applied it to me?  I honestly have no idea how this has anything to do with me.

 

I never once said, "Oh my gosh, we can't afford it but we are moving, do you think we can all fit in the car?"

 

 I feel like I have totally offended you, for which I am sorry.

 

The point is that even if you're really smart  you can't necessarily predict what the housing market will be like.  In particular, home purchase prices can go up too fast to keep up with, for various reasons, and so can rents.  The increases around here can be very sharp.   I posted the article because after talking about home purchase prices going up faster than one can keep up with earlier in the thread, it made the point that rent can go up that way, too.  It's happening like that up here, and I have heard of it happening in SoCal now and then as well.  The only way that I have seen to control housing prices is to purchase something, and not with an adjustable rate mortgage either.  Otherwise it's a crapshoot and sometimes it gets away from people.  That's all.

 

That's why I have not chosen to rent even though I could buy, for any length of time.  Because I'm afraid that that strategy would leave me unable to buy, and worst case, maybe even unable to rent.

Edited September 2, 2017 by Carol in Cal.

[KungFuPanda]

I feel like I have totally offended you, for which I am sorry.

 

The point is that even if you're really smart  you can't necessarily predict what the housing market will be like.  In particular, home purchase prices can go up too fast to keep up with, for various reasons, and so can rents.  The increases around here can be very sharp.   I posted the article because after talking about home purchase prices going up faster than one can keep up with earlier in the thread, it made the point that rent can go up that way, too.  It's happening like that up here, and I have heard of it happening in SoCal now and then as well.  The only way that I have seen to control housing prices is to purchase something, and not with an adjustable rate mortgage either.  Otherwise it's a crapshoot and sometimes it gets away from people.  That's all.

 

That's why I have not chosen to rent even though I could buy, for any length of time.  Because I'm afraid that that strategy would leave me unable to buy, and worst case, maybe even unable to rent.

The flip side to this is the housing or job markets can tank and renters have a much easier time relocating.

[Liz CA]

 

 

That's why I have not chosen to rent even though I could buy, for any length of time.  Because I'm afraid that that strategy would leave me unable to buy, and worst case, maybe even unable to rent.

 

Many people who have not lived recently in CA (especially during the recession) don't understand how wildly and fast RE goes up and down here. But I can totally see that renting too long and inadvertently slipping into a time period where prices shoot up again would leave somebody unable to buy - at least not until it crashes or goes down again. This is why I agreed with you in a previous post that I would likely buy if I have 1/2 or 3/4 in down payment as Dawn indicated.

 

 

The flip side to this is the housing or job markets can tank and renters have a much easier time relocating.

 

True as well. If we only had that crystal ball...

Edited September 2, 2017 by Liz CA

[DawnM]

 I feel like I have totally offended you, for which I am sorry.

 

The point is that even if you're really smart  you can't necessarily predict what the housing market will be like.  In particular, home purchase prices can go up too fast to keep up with, for various reasons, and so can rents.  The increases around here can be very sharp.   I posted the article because after talking about home purchase prices going up faster than one can keep up with earlier in the thread, it made the point that rent can go up that way, too.  It's happening like that up here, and I have heard of it happening in SoCal now and then as well.  The only way that I have seen to control housing prices is to purchase something, and not with an adjustable rate mortgage either.  Otherwise it's a crapshoot and sometimes it gets away from people.  That's all.

 

That's why I have not chosen to rent even though I could buy, for any length of time.  Because I'm afraid that that strategy would leave me unable to buy, and worst case, maybe even unable to rent.

 

 

Right, this.  Exactly.  We sold our house in CA for a large amount in 2005.  The market was high.  When it tanked in 2008, it took the current owners 8 solid years to regain the equity they had paid.  It is only now worth about 10-15% more than what they bought it for in 2005.  

 

There is no grand prediction of what the market will be like in 2022.  I could buy now, pay $800K for a house, and have it worth $600K in 2022.  All  it takes is one big earthquake or bombs from North Korea.  

 

It is a highly volatile market.  If you buy, you better hope to keep the same house for decades unless you are lucky enough to hit a huge upswing.  But you pay $800K for a house that is soon worth $600K, you are either going to lose $200K or be stuck.

 

No one could have predicted the HUGE upswing in housing from 2000 to 2004.  Houses went from 200K in 2000 and then were worth $600K in 2004.  It was wild and crazy.  But those $600K houses went back down to $400K from 2007-2014 and finally came back up and surpassed just a bit (around $700K) by 2017.  

 

There are pockets of areas that have gone up higher than that, but that is what we saw when we were out this summer and already pricing out homes.

 

We are not moving on a wish and a prayer.

 

And we may end up buying after all.  We just don't know.....but oldest son needs to get around and we don't really want to live permanently in the area near the public transportation/Metrolink.  but we are looking into options for that.  I am *hoping* DH can get a job to work from home, but that may not be possible.  

 

What I didn't understand was the random link to some idiot who didn't plan at all.  That is not us.  Not by a long stretch.  It struck me as incredibly odd.

Edited September 2, 2017 by DawnM

[prairiewindmomma]

Dawn, in your shoes, I would totally rent.

 

There are certain markets that, had we relocated to, we would've rented.  They are either simply too volatile or too expensive, and I think our economy is due for another cycle of recession.

 

We bought because it made sense for us to buy. We knew what part of town we wanted to be in, hands down, and the cost differential between owning and renting pushed us to buy.  Our break even point is 2 years (which we are approaching now).

[KungFuPanda]

Every August. :willy_nilly:

 

Looking positive, we did eventually get used to it and the wolf spiders and just gently shooed them out - except for Hairy Houdini who flattened himself to fit into the fireplace crack and wouldn't leave for 3 weeks. The scorpions got a thousand deaths, though. I wasn't playing nice with them.

 

Have I mentioned how glad I am to have moved? :D

Why did you own real estate in Hell???

[Liz CA]

Right, this.  Exactly.  We sold our house in CA for a large amount in 2005.  The market was high.  When it tanked in 2008, it took the current owners 8 solid years to regain the equity they had paid.  It is only now worth about 10-15% more than what they bought it for in 2005.  

 

There is no grand prediction of what the market will be like in 2022.  I could buy now, pay $800K for a house, and have it worth $600K in 2022.  All  it takes is one big earthquake or bombs from North Korea.  

 

It is a highly volatile market.  If you buy, you better hope to keep the same house for decades unless you are lucky enough to hit a huge upswing.  But you pay $800K for a house that is soon worth $600K, you are either going to lose $200K or be stuck.

 

No one could have predicted the HUGE upswing in housing from 2000 to 2004.  Houses went from 200K in 2000 and then were worth $600K in 2004.  It was wild and crazy.  But those $600K houses went back down to $400K from 2007-2014 and finally came back up and surpassed just a bit (around $700K) by 2017.  

 

There are pockets of areas that have gone up higher than that, but that is what we saw when we were out this summer and already pricing out homes.

 

We are not moving on a wish and a prayer.

 

And we may end up buying after all.  We just don't know.....but oldest son needs to get around and we don't really want to live permanently in the area near the public transportation/Metrolink.  but we are looking into options for that.  I am *hoping* DH can get a job to work from home, but that may not be possible.  

 

What I didn't understand was the random link to some idiot who didn't plan at all.  That is not us.  Not by a long stretch.  It struck me as incredibly odd.

 

A lot of this is perspective though. If you buy for $800K and can pay most of it down quickly and it is the house you will live in for a long time, the dip to $600K is not that significant. Like the stock market, you may be able to ride it out. Or it may not matter in the long run.

Some people in the Bay Area for example, had lost a lot more equity and have said their kids will just have to sell it for what it's worth when the time comes. Meanwhile they are not devastated because they have no plans on moving and they live comfortably in their much depreciated home.

It seems it's always a gamble. Long-term plans and goals do play a role IMHO.

 

 

[HomeAgain]

Why did you own real estate in Hell???

 

Through a series of almost comedic errors.  :glare: But long story short: in a rush to find a place, ANY place, we were hit hard by the housing market there.  Rentals were nearly non-existent, and houses were being snapped up within a day or two of being on the market.  We bought, mostly sight-unseen (we Skyped a walkthrough), just to have a place to live.  At the first chance we had we sold and broke just about even (within $1000).  It's not a process I recommend. :lol: So now we rent. :D

[unsinkable]

Did Faith ever come back and say if her acquaintances were the same people in the article Dawn linked?

 

It is really such a Small WTM World.

 

After all.

[DawnM]

Through a series of almost comedic errors.  :glare: But long story short: in a rush to find a place, ANY place, we were hit hard by the housing market there.  Rentals were nearly non-existent, and houses were being snapped up within a day or two of being on the market.  We bought, mostly sight-unseen (we Skyped a walkthrough), just to have a place to live.  At the first chance we had we sold and broke just about even (within $1000).  It's not a process I recommend. :lol: So now we rent. :D

 

Ok, so this solidifies my belief that you need to take your time in looking for a house......back to my other thread...... :laugh:

[luuknam]

Yes, we rent, even though prior to moving here we owned a place (which admittedly cost less than many people spend on a car). We thought there was a good chance that we'd be here for less than 5 years (we'll soon hit the 5 year mark). At this point, DW may start looking for a different job, which would mean elsewhere (not many jobs for her here), since it seems her company is not going to give her a promotion/raise, so, we'll see. Since we're overdue for a recession, I don't think it'd make sense to buy now anyway. Plus, at this point, I'd like more political stability before buying.

[luuknam]

Just wanting to correct the underlined as it's a common fallacy.  We own rental properties.  We pay no property tax, no mortgage, no insurance, no upkeep/maintenance... our tenants do - via their rent.  It's all worked into the cost.  Above and beyond that, unless it's a bad year, there's a little profit for us along with building equity.  Other than the down payment and a little bit of time plus the rare bad tenant (and we've learned to screen well!), owning rentals is pretty darn cost free on our end.   ;)

 

This is NOT saying the OP shouldn't rent in her case (or yours).  If one moves every 2-3 years, unless one is in a rapidly appreciating area, the taxes and other expenses involved with buying/selling would outweigh any gain in equity.  But the costs I underlined really shouldn't factor in as they're there either way.  It's all a matter of who sends it to the final recipient.

 

 

The thing is, if you buy a house and then need to sell it after 2-3 years, if every major item happens to need to be repaired during that time period, that's a major financial cost, that's practically guaranteed to be a major financial loss. While if you rent a place and every major thing needs to be repaired during that time period, you're not out tens of thousands of dollars in those 2-3 years... yes, your landlord includes the cost of repairs etc in the rent, but they spread that out over decades (good luck making your tenant pay for a new roof, new central heating & A/C, and some plumbing repairs in 2-3 years... that's just tough luck, that you make up over time... if you own the place long-term). 

[creekland]

The thing is, if you buy a house and then need to sell it after 2-3 years, if every major item happens to need to be repaired during that time period, that's a major financial cost, that's practically guaranteed to be a major financial loss. While if you rent a place and every major thing needs to be repaired during that time period, you're not out tens of thousands of dollars in those 2-3 years... yes, your landlord includes the cost of repairs etc in the rent, but they spread that out over decades (good luck making your tenant pay for a new roof, new central heating & A/C, and some plumbing repairs in 2-3 years... that's just tough luck, that you make up over time... if you own the place long-term). 

 

That's a big "if" TBH, but truthfully, as I mentioned, if one is only going to be in a house for 2-3 years it's rarely better to buy due to closing costs associated with buying/selling - a given for all rather than a big "if."  It's only a smart thing to do in a really hot, appreciating quickly, market.

 

If one is smart with their buying, they won't unexpectedly need a new roof right away anyway, unless it's covered by insurance - which they should have.

[happypamama]

MIGRATING TARANTULAS AND SNAKE PITS why did I open this thread what is wrong with you people who felt the need to share this info brb going to go scrub my brain now.

 

In all seriousness, there are perfectly good reasons to rent. We couldn't rent for the price we pay for a mortgage due to the size of our family, but owning is not the end-all be-all especially for short term living.

[DawnM]

The thing is, if you buy a house and then need to sell it after 2-3 years, if every major item happens to need to be repaired during that time period, that's a major financial cost, that's practically guaranteed to be a major financial loss. While if you rent a place and every major thing needs to be repaired during that time period, you're not out tens of thousands of dollars in those 2-3 years... yes, your landlord includes the cost of repairs etc in the rent, but they spread that out over decades (good luck making your tenant pay for a new roof, new central heating & A/C, and some plumbing repairs in 2-3 years... that's just tough luck, that you make up over time... if you own the place long-term). 

 

 

I have known people who rented out their houses and had them trashed.  I actually was just talking to someone the other day to whom this happened.

 

That said, I *do* wish I had kept our first house in CA that we bought for $142,000.  Even if they had trashed it, we would have done ok selling.

[unsinkable]

MIGRATING TARANTULAS AND SNAKE PITS why did I open this thread what is wrong with you people who felt the need to share this info brb going to go scrub my brain now.

 

In all seriousness, there are perfectly good reasons to rent. We couldn't rent for the price we pay for a mortgage due to the size of our family, but owning is not the end-all be-all especially for short term living.

I just saw a floating mini "island" of fire ants in the news from a flooded area in TX. The reporter said the island bumped up to dry ground and the fire ants "disembarked" and some of the nearby people were bit.

 

Argh!!!!

Edited September 4, 2017 by unsinkable