Downsizing? Renting may be best

At first glance this appeared to be an interesting article, but I do see some real problems.

 

1.  There is an assumption that you can make 6% on your investments consistently.  I wonder how many people have been able to do this in the past 10 or so years (I know I haven't).  Without this consistent return, the whole article becomes bunk.

 

2.  This statement also needs some serious consideration " the ratio compares the median price of a single-family home with the annual rental cost of a typical apartment."  This is a stupid comparison, because it is apples to oranges.  You should be comparing the price of a single family home to the rent of a single family home, not to renting an apartment.  They are likely comparing an average house that is1800 sq ft to an average apartment that is probably less than 1000 sq ft.

 

I also like a house as being a real, tangible asset that provides a direct benefit (i.e. a place to live).  Stocks can easily go away, but even if the value of your house goes down it still provides shelter.  Furthermore, I like houses because they add diversity to your investments.  Of course, neither stocks nor houses have been good performers lately.

My husband and I were told if he transferred from Charleston to Atlanta he would be protected from lay-offs. We believed his company because 1. it was GM and 2. he had an excellent record of generating income for the company 3. we had never been led astray before. So, saying that we had a home in Charleston and purchased a home in Atlanta by "bridge loan". So, he gets layed off anyway. We not only have lost our home in Atlanta (we didn't finish the mortgage but still was sued by the builder) and also lost our home in Charleston (which we bought when housing was at a premium). We both moved to Texas (looked for jobs after we got here--lived on our daughter's couch for a month). We now rent (2k month) a townhome. Because of the 115 degree heat, everyone's air conditioning unit is going out.....but if mine does, it's someone else's problem. If my garage door doesn't go up then it gets fixed...if my toilet sticks then it gets fixed ...sorry, I am not a bigger proponent of the "american dream" right now. I am going to rent for awhile and sleep like a baby!

"Set aside another $5,000 for annual home maintenance expenditures. Utilities -- heating, cooling, water and sewage, cable, Internet and phone expenses -- would generally be higher for homeowners than renters. To make the comparison easy, tack on $2,000 a year for those higher homeowner utilities."

 

These are very generous estimates. 400 per month for repairs on a house. This assumes the house is very very old. Homeowners pay more in utilities. How is that? This assumes that the homeowner has a house from 1950 that is 4000 square feet and the renter lives in a 600 square foot apartment?

Renting is the way to go for me at the moment.  Being that I'm not wealthy (not poor either)  I do enjoy the flexibility renting gives me to pursue life/work opportunities anywhere in the country/world.  Much easier to terminate a lease when its up than it is to sell a home.  At least this is generally true for the majority of the country at the moment.

 

I also enjoy not having to worry about expenses like water pipes bursting, air conditioner's going out etc.  I just pick up the phone and put in a maintenance request.  Emergencies are generally addressed within hours; routine stuff within a day or two. (my experience).  Plus there are gorgeous women in my apartment complex.  I enjoy sitting on the balcony drinking a beer as they cool off in the swimming pool below. (don't tell my girlfriend...awe who am I foolin...she already knows...)

 

My utilities are pretty cheap, its just me in a 1000 sq ft Apt.  don't have to pay to heat/cool 2000+ sq ft.  Liberals would probably appreciate the fact its a little more efficient and easier on the earth, but I don't care about all that tree hugging crap.

 

When I finally get tired of running around and find a community I want to plant roots, grow old and die in, hopefully I'll have squirrled away enough cash to pay 75% or more of the home value... dread dealing with banks...