----- Original Message ---- From: Jordan Hayes <jmhayes at j-o-r-d-a-n.com> To: lbo-talk at lbo-talk.org Sent: Thursday, December 11, 2008 5:46:00 PM Subject: Re: [lbo-talk] Homeownership Makes You Fat and Unhappy
>> Can't you say that about any financial transaction that plays out over time?
Ok, this time with a little less snark. The problem with comparing a house to, say, a bond, is that a house/transaction is unique: there is literally no house like any other. Even if you squint, and even in a neighborhood governed by CC&Rs that state that everyone has to use the same color paint, you can find all kinds of differences that can lead to an impact on the price. Is it on the corner? Does it have a nice tree in the back? Does it have a jackass who lives next door? Did someone's uncle "renovate" in the past without a permit? Does the soil make for a patchy lawn? And on. The next thing that makes it hard to compare is the very first thing that happens in the transaction: how much did you pay? Was the seller motivated? Was your broker a good negotiator? Did you shop for (and are qualified for) a good mortgage? Did you have a down payment, or did you have to borrow it and pay PMI? Along the way there's lots of random
variables: did you sell before the roof needed replacing? Did you sell before the bottom dropped out of the market?
Show me someone who can prove that "buying is a waste of money" and I'll show you someone who "made a killing by getting in early" ... can you adjust your expectations/happiness/lifestyle to {rent, buy} and make it work better than the alternative? Most likely.
----- [WS:] You are definitely right about the uniquness of real estate transactions. However, differences in happiness between homeowners and renters may not necessarily be related to th eprofitablity (or lack thereof) of the transaction itself, but rater factors that are correlated with it. For example - mobility. Ceteris paribus - if you rent you are not as tied down to the place as if you own it, so it is easier to move out when you do not like the neighborhood for whatever reason. And the awareness of being stuck is a major source of frustration, believe me, I experienced that myself.
Another possible factor - responsibility. If you rent and your roof leaks, you pick up the phone and ask the landlord to do something about it, and if he/she does not, you put your rent in escrow or move out. Either way, it is not really your problem. If you own, otoh, this is very much your problem: you have to have find money and a contractor (which is not easy) then deal with the contractor. Ditto for snow or leaves removal, weed abatement, and being in compliance with building code and a myraid of local regulations.
So while as you say - owning vs renting is an individual thing that depends on the particulars of any given piece of real estate - ownership often entails additional problems anw worries that may cause one to loose sleep.
Wojtek