part 5 of 5 in our American Dream series
This is the last post in our series on the American Dream. We’ve posed the question, “Is owning a home your American Dream?” and we’ve given you some food for thought to help answer that question:
- Will homeownership be too expensive? If homeownership will absorb all of your savings or income, think twice before trading your future financial stability for a home.
- Will homeownership give you less freedom and mobility than you need? If you want the option to move for better employment or to explore a new city, then renting will give you that flexibility.
- Will homeownership be a bigger responsibility than you’d like? If you don’t have the time or energy to properly care for your home or don’t have the finances to outsource maintenance, then renting may suit you better.
- Will homeownership compromise your lifestyle? If you are committed to a lifestyle that requires disposable income or anchors you to a community in which you cannot afford to buy, then renting may be your best option.
Home ownership can be wonderful when it allows you to meet you short-term and long-term financial goals, while still celebrating your most important lifestyle choices. If the answers to the above questions don’t add up to buying a home, but you still have the urge to own your abode, consider why that might be.
As Americans, it’s been drilled into our collective unconscious that renting makes you a second-class citizen, that renting is a temporary state until you can “move up” in the world by buying a home, that you are not really a grown-up if you rent. Maybe it’s time to realize that pursuing your personal dreams is more sacred than the structure in which you pursue them.
If you have determined that renting makes more sense for you than homeownership, we hope you will embrace the freedom and flexibility that comes along with renting. In the end, renting just might be as much a part of your American Dream as homeownership.
“As Americans, it’s been drilled into our collective unconscious that renting makes you a second-class citizen, that renting is a temporary state until you can “move up” in the world by buying a home, that you are not really a grown-up if you rent.”
Um….ya…. because renting – for all intents an purposes – DOES make you a second class citizen!
In part two of this series you outlined the expenses involved in renting vs buying. You failed to mention that tenants pay for every single cost of ownership for the landlords through the rent they pay. They pay the mortgage, the taxes, the insurance, the maintenance, etc. etc.. They also pay 10-20% over and above the cost of all those things so the landlord can make a profit. And when it is all said and done – the landlord will have an asset and the tenants who paid for it will not. So – the landlord collects a profit along the way AND has something tangible to show for it at the end. Tenants use their housing dollars to create wealth for the landlord, and usually walk away with nothing except the comfort of knowing they weren’t homeless.
I am baffled by the claim that I read so often that renting costs so much less than owning that the renter can invest the difference and come out ahead in the end. Although I have heard of quality units renting for a fraction of what they would cost to own in some parts of the country, that is simply not the reality that I know. It may be true if you are a childless single or couple and you rent a very modest one or two bedroom apartment instead of buying a one/two bedroom home. But what if you are trying to raise a family? What if, heaven forbid, you need a three or even four bedroom apartment? In my part of the country they are very hard to find and if you do find one, even in old run down buildings they are going for $800-1200/month plus utilities – but even those are few and far between. That leaves you with homes that are renting for the cost of their pre-bubble-burst mortgages plus insurance/taxes and utilities. Those same homes would have much lower monthly mortgage payments if they were sold on the market now. These “accidental landlords” as you call them are relying on the tenants to protect their asset for them until the market turns around. How nice for them.
And what do tenants get for their contribution to the economy and wealth creation? If you live in a multi-unit building you get to live in intimate proximity to strangers. You have very little recourse if they are not good neighbors. It is one thing to live in your own home across a fence from someone unsavory. It is quite another to have to breathe in the second-hand smoke of the chain-smoker living below you (my family – including three young children had to live with this) – or to live with loud parties and drinking – maybe drugs – police calls – etc.
If you are lucky your landlord might properly maintain his/her property. If you are a low income renter, chances are pretty good that they won’t. As an example, although we pay on the high end for a two bedroom in our community, and we are very good tenants (we are consistently one month AHEAD on our rent, we don’t smoke, drink and we take care of the yard) our landlord has failed to paint or replace the carpet for several years (we have lived here for 18 months and it was not done for many years before we moved in). The shower surround is rotting. The bathroom floor is too – and is giving off a very foul smell – no matter how much I clean. Our landlord refuses to do anything. He doesn’t have to. If we move out he will have someone else living here within a week. As a matter of fact, he likely won’t even look at the apartment before renting it again. There are no licensing rules in our community. NO ONE is holding him accountable – the market doesn’t have the power to do it. And, sadly, he knows we probably won’t leave because we can’t find anything better at an affordable price.
And then of course there are the many other annoying indignities of renting. You can’t decide to have a pet without asking permission – and chances are very good the answer will be no. You can’t paint to suit your style. You have to live with cheap inefficient appliances. You can’t decide that the shabby old bathroom sink should be replaced, or that the disgusting carpet must go. You are always and forever beholden to the whim of someone else. If all of this doesn’t add up to second-class status – I’m not sure what does.
So if it is so bad why don’t my husband and I just go and buy a house? Well, we were home owners – and then sh&t happened – and then we weren’t anymore. But we still are and always will be hard working contributing members of society. We still earn money to pay for our housing. Is it so much to ask to be able to raise our children with the dignity of decent housing?
I keep hearing things along the lines of – “this recession has taught us that not everyone can be home owners”. What I hear in this is that in the post-Great Recession economy some people get to use their housing dollars to create wealth for themselves and other people get to use their housing dollars to create wealth for others. Even this wouldn’t be so bad if those creating wealth for others were given, in exchange for their contribution, the dignity of living in clean, quality, well-maintained housing that is adequate for the needs of their family. That, in my experience, is not what is happening. This is what makes renters second-class. It is an injustice that must change before we can learn any lasting lessons from this recession.