
Rethinking rent: Maybe we should stop trying to be a nation of homeowners - robg
http://www.boston.com/bostonglobe/ideas/articles/2009/03/22/rethinking_rent/?page=full
======
azanar
Home ownership strikes me as just a symptom of another more fundamental
sacrosanct value in society, that of stability and security.

The author alludes to that in the article, but I think he needs to play it up
more. For many people, _this_ seems the real default, and buying a home is
just outward evidence of that. Buying a home is a statement of commitment,
that you will be there for at least as long as needed to make up the closing
costs and what-have-you. Whether the house is just a byproduct of that
attitude, or meant to directly project it, I don't know. But I don't think
that everyone should make that sort of commitment, or that we should
disproportionately laud those that do.

This is not a critique against people who desire security and stability, this
is a critique against the attitude that you _must_ be secure and stable to be
worthy. I've seen it make a lot of people around me become depressed, because
they simultaneously desire a more interesting life but fear being branded as
flighty and irresponsible. Maybe this is their own problem, for being unable
to reason their way out of this internal battle, but it is ubiquitous enough
that it indicates a more fundamental brokenness.

I also wonder about the reported psychological benefits the author mentions. I
wonder how much of this is induced by the belief that home ownership is meant
to make you happy. If it doesn't then there is something wrong with you, not
with your decision to buy. Not that there aren't happy homeowners, but that
there _are_ unhappy ones. It's the same with a lot of defaults; everyone else
seems happy enough with them, why aren't you? Perhaps one of the biggest
defaults, and the one that drives a lot of this, is the belief that those who
follow the defaults are happier deeper than the image they project.

~~~
jacoblyles
There's something to be said for stability too. I'm getting tired of losing
all my friends every two years.

Also, if you ever try to get involved in your local community, you will find
that nobody really cares about you if they know you're going to be gone in a
year. The people that have influence in the community are the folks that stick
around.

We live in a very young-thinking age, anxious to throw out established wisdom
and forge our own way. However, I fear that we are too eager to discount the
_wisdom_ in established wisdom. I'm not saying that we have to swallow it
wholesale. But there's a reason it came into existence in the first place.

My peer group has no concept of "community". We don't belong to one. Or
rather, we belong to a new one every two years, which amounts to the same
thing.

We pay lip service to the ideas of helping our neighbors and building strong
communities, but we have no idea what those words actually mean. We try to
fulfill these ideals through national politics, but it's not the same thing as
actually helping your neighbor, personally, in real life.

So sure, people need to rent and move around when they are young and finding
their way. But eventually it's good to settle down and belong to a place. In
the aggregate, it builds a stronger society.

I went to a church around here on Christmas (I'm an atheist, but I like the
carols), and it was startling to interact with people outside my peer group.
Some of the parishioners had lived in San Diego for decades. They had known
each other for decades. They knew who had children, and who was elderly, and
who was sick and needed help. They knew who was widowed and who had children
overseas in Iraq and could use a nice meal with friends. When someone moved
away, it was a big event, and everybody was sad to see them leave.

When I'm sick or need help, my facebook friends send me nice messages. It's
not the same.

Damn, I sound old for a guy that's 26.

~~~
Rod
What's so great about helping the "community"? This is an honest question.

I am European and I moved to California some months ago. I find it both
amusing and mysterious that people here in the U.S. talk about "community" so
much. I really don't get it.

~~~
bmelton
There have already been some good answers to this question, but to answer from
the asshole's perspective (read: mine,) helping your community is really about
helping yourself.

Helping a sick neighbor hopefully helps to keep them from dying, which helps
keep their house off the market, which helps to preserve your ability to sell
-- nobody wants to buy on a street everybody's selling on.

Keeping the neighborhood clean preserves your property values, which is easier
to see.

Looking out for your neighbors, or at least giving them the impression you
are, means it's more likely they'll look out for you, which means they're more
likely to investigate or call the cops when they see a prowler outside your
home.

~~~
gaius
There's nothing wrong with enlightened self-interest. History shows that the
systems that work work by aligning the interests of the individual with the
community, economics, politics, society, it's all the same.

------
bprater
I've always rented.

While I've "tossed my money down the drain", I've been able to live on the
coast, in a mountain town (wanted to learn snowboarding) and in Amsterdam, to
name 3 places.

Is having the unique experiences worth it? To me, they were.

~~~
cubicle67
I've done both, and I like owning my own home.

Biggest advantage of home ownership? Freedom to do what you like with it; I
can hack my own home.

But - I'm outside the US and I pay far less (half) in mortgage payments than I
would in rent.

------
ShabbyDoo
"Others favor greater security for renters - such as laws making eviction more
difficult"

This is nothing more than a government-mandated insurance policy. Landlords
require higher margins due to the risk of freeloaders. Also, landlords may
avoid renting to those most likely to be "helped" by such policies.

It is ironic that today's laws make home ownership a safer choice if one
defaults on payments -- In most states, foreclosure takes much longer than
eviction. So, given the choice between renting and taking on an interest-only,
no money down home loan, the less risky choice for a family is ownership. Of
course, those families couldn't get such a loan today.

~~~
3pt14159
Totally agree with your sentiments, but the obvious objection to your argument
is that ones credit rating would take a massive hit on default, affecting
everything from car insurance, to rental agreements.

------
ShabbyDoo
In pursuit of my hobby of photographing abandoned buildings, I drive through
the parts of Cleveland recognized Nationally as the "epicenter of the
foreclosure crisis." On almost every block in the ghetto is a home with part
of the roof covered by a blue plastic tarp. The owner doesn't have the money
to repair the roof (or doesn't believe doing so to be a good investment?).
There is much other evidence of short-term choice rather than long-term
economically optimal decision-making when it comes to property upkeep.
Perhaps, if these homes were owned by professional landlords, repairs would be
made.

~~~
alecco
Funny, from personal experience landlords need to get pushed by tenants
constantly to make repairs.

~~~
neilk
They have an incentive to keep repair costs under control, not to avoid
repairs entirely. But, that said, not everyone is economically rational. Some
landlords do perceive fixing stuff just as an expense rather than a way to
ensure repeat business.

I'm either lucky or super picky because my landlords have usually been great
about fixing stuff.

------
trjordan
Homeownership by itself is not useful, but it does promote saving. For the
average family, a home is the most expensive thing they will ever save for.
After 10 years in that mortgage, they'll have significant equity that they
probably wouldn't have otherwise had.

Is it a risk and possibly a poor choice to own a house? Versus other
investments, possibly. Versus consumption and other disposable income
spending, absolutely not. There a lot of people that could do better if there
were more knowledgeable about ways to save capital, but it the absence of the
knowledge, owning a home is not a bad default.

~~~
brc
This is one of the most important points : the enforced savings plan and
relatively illiquid asset. For many people, the enforced discipline of putting
money away by paying down their principal pays off for them. Of course you can
refinance or trade homes every 5 years and get nowhere. But if you stay put
for a long period of time, buy wisely in the first place, and maintain the
property, it will pay off. Well placed property is uniquely inflation proof
because it normally contains intrinsic value.

You can achieve the same thing by renting and regularly putting a portion of
your income away into quality assets : but the temptation to liquidate part of
your portfolio always will remain strong. This is where people come unstuck.

The danger is in this advice/thought process being taken to apply to all
property, regardless of location. I can foresee far-flung suburbs with long
commutes continually falling in value as people factor in the cost of
transport to their overall living costs.

The government should exit the property incentive market. No tax deductibility
for renting or buying. No incentives or guarantees for high-risk mortgages.
Let the free will of the people decide what is the best for them. The only
laws in place should govern the quality of the property, and against unfair
eviction/foreclosure. And there should be laws in place to allow for longer
term tenancies. On any commercial property, it's easy to get 10-12 year leases
on a property. It's rare to get more than a 12 month lease on a rental
property : probably precisely because it's easier to evict a commercial tenant
than a residential tenant. The more government controls are put on tenancies,
the worse the overall effect for tenants (like rent control, which results in
a good deal for a few tenants, and a bad deal for most)

If you could sign a 10-year lease on a house and be allowed to modify the
interior (paint, floorcoverings, etc) then the merits of onwnership vs renting
could be more equally compared.

------
falsestprophet
Owning a home is lovely. But being overexposed to real estate, like any other
asset class, is imprudent.

------
hardik
_Someone_ must own those homes. Then, is the article suggesting more
corporates/govt/funds become homeowners and gen. public pay them rent? When
too many gen. public rely on rentals would it not lead to oligopoly of few who
own the homes?

~~~
sethg
It's not uncommon for a middle-class family to buy a multi-family house, live
in one unit, and rent out the others.

------
ShabbyDoo
I'm glad the article points out the cruel government incentive to buy rather
than rent. It's one of the few regressive taxes (other than the lottery, some
might say) that we have in the US.

~~~
colins_pride
Don't forget cigarette & alcohol taxes

~~~
ShabbyDoo
Good point. When Cleveland levied a new sin tax to finance its stadium, the
local labor unions opposed it citing the unfair burden such taxes place on
their members!

------
vaksel
I disagree with that article...home ownership is something everyone should
strive for. The home equity line is a huge security blanket for living in
today's economy. Thats an additional $100-200K line of credit that you'll
always have access to.

~~~
ShabbyDoo
I couple hundred grand in insured CDs would be a much better security blanket.

~~~
vaksel
obviously...but what makes you think you'll be able to get that much, when
most of your money is going towards rent? At least with home ownership, most
of the money you pay, will go back in your pocket when you sell the house

~~~
redrobot5050
If you can sell the house. In a down market, you might lose money, or like the
article says: get stuck in a bad local job market.

The potential payoff from selling your home isn't "security", its counting
your chickens before they've hatched.

------
pasbesoin
I only finally purchased a house in an attempt to get away from a series of
noisy apartment neighbors. I'd had enough trouble with noise in apartments
that I was unwilling to make a purchase commitment in a similar environment
(shared building).

If apartments and condos were quieter, I would probably have continued to
rent. Being not "settled down" at this point in time, the flexibility and lack
of hassle dealing with ownership issues (especially maintenance) are definite
pluses. Or I might have purchased a condo or coop unit.

As people natter on about more efficient living, I continue to wonder whether
there is a model that could incentivise the construction of apartment units
that make a serious attempt at soundproofing. I guestimate 10% - 25%
additional construction cost, depending on degree of soundproofing and on
economies of scale. Hopefully toward the lower end, even with good
soundproofing, particularly if there were a significant amount of such
construction occurring.

(I don't know about retrofitting, although I am skeptical as to its being
effective in many situations.)

~~~
3pt14159
Dude. Sound proofing is exceedingly cheap. I was trained as a structural
engineer and met many building engineers and architects throughout my time.
There are materials that cost less than a dollar per square foot that can
reduce sound to nearly zero. Think 1% not %10 to %25. Thing is, sound proofing
isn't even on the constructors radar half the time because it doesn't sell
units. That is the problem.

~~~
jraines
I would probably buy the _How to Soundproof Your Apartment or House for Cheap,
Guaranteed_ ebook. You could probably find some not too competitive keywords
for this, or find people bitching about noisy neighbors on Twitter.

How hard/expensive would it be to do as a retrofit?

~~~
3pt14159
Retrofit would be more pricey, but not because of the materials, mostly
because of the electrical appliances you have to move.

There is an online magazine called "Design Build Magazine" that had an article
on soundproofing/fireproofing. You are right though. Maybe I should do some
research into soundproofing and write a "How to Soundproof Your Apartment or
House for Cheap, Guaranteed ebook" I'll even give you a free copy as your cut.

~~~
throw_away
you don't have to get it down to perfect. any noise reduction technique that
doesn't look completely goofy would have me as a buyer. for example, the only
noise that really gets me is low-frequency foot-sounds from people walking
around in the unit above me, and even then, only in my bedroom. I never hear
my adjacent neighbors. I imagine each renter's situation would be different.
also, it seems that most documentation on sound-proofing is written by the
same audiophiles that can tell if you're using gold or copper connectors. I'm
not that picky, I just want to sleep a little better.

------
Gibbon
On the one hand, a house is one of the only forms of leveraged investments the
majority of the population will ever have access to.

On the other hand, it's a massive liability. Reduced mobility, little to no
protection against disasters(fire, flood, tornado), property taxes,
maintenance and repairs, unpredictable market forces, and so on.

I rent a house.. it's the best of both worlds.

------
steveplace
A couple more articles like this and I'll start looking to buy a home.

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dinkumthinkum
I agree. Actually, this is not a new idea. I remember hearing this view
expressed around 1999 or 2000 on Online Tonight on CNET's Radio if you can
believe it. That view has stuck with me ever since.

------
rokhayakebe
What we need is lower home prices across the board, along with smaller homes
instead of 4000 sqf for a family of 3. See the Rocio Romoro homes.

~~~
jmtulloss
How does this address the problems raised in the article?

~~~
rokhayakebe
The article states that "owning" is not the right solution for everyone, but
what it omits to state is that in most of those countries where the majority
of the population can afford to not own a home, their social security takes
care of individuals once they reach the age at which working to fork that rent
out is not possible anymore.

In the US, that is not currently possible. So the solution indeed is to buy a
house and hope that by the time you reach retirement and cannot work anymore,
you at least have a home and maybe the tiny bit of money you were able to save
will suffice to pay your bills and food.

The solution in the US is not to fix social security and ensure those who rent
today will have enough to rent when they retire, it is to reduce the cost of
home ownership, so by the time you are 65 you already own a home you can
afford to live in because you own it after only 15 years of hard work, not
30+.

