Rent or own?
If home ownership is going to take up all your extra cash, maybe renting is better
By Joanna Dehn Beresford 04/08/2010
Less than six years ago I sat in the lofty family room of my friend J’s new home. He and his wife had repainted, retiled and refurnished the roughly 2,000 square-foot house and they were delighted to offer both of their school-aged children separate bedrooms, and to share an office space for their own personal and business needs. Ceiling fans turned slowly throughout the house that day and sunlight shone through linen blinds, casting magical silhouettes along the walls. What a heavenly home, I thought.
Last weekend my friend and his family fled the place. After losing his job as an executive with a collapsing, medium-sized business in 2008, he was unable to make mortgage payments. Meanwhile, due to real estate and economic madness, their property value veered wildly, finally flipping upside down during the same time period. By late March of this year, J and his family had been asked to evacuate or pay up. So last weekend they loaded what they could into his brother’s pickup and made countless cross-town jaunts from old to new homestead. Ironically, they’ve moved into an even bigger residence — which they rent for less than they were not-paying on their “own” home.
I have yet to discover the omniscient real estate or financial guru who can convince me that there’s a definitive answer to the age-old question: Is it better to rent or to own a home? Traditionally, financial advisors encourage home ownership as a rock-solid, long-term investment, and lots of numbers corroborate their advice. Real estate agents typically echo that conventional American wisdom. Some experts disagree.
“If the costs of home ownership engulf all of your savings and income, then you won’t be in a position to save for your future or to handle life’s unexpected financial emergencies. Thinking about your long-term financial needs in conjunction with the short-term financial implications of home ownership will ensure that you’ve considered the complete financial picture.”
These words of caution can be found on a Web site that advertises reputable rental properties, so maybe they’re more profit-driven than prophet-driven, but they reflect a gravitational pull toward the flexible and short-term commitments that renters enjoy.
As recently as June 2008, The New York Times, drawing from research at Moody’s Economy.com, estimated that home ownership only begins to pay off after 16 years of residence. And then the climb to riches is long, gradual and fairly modest. I don’t know what that means about the American dream of home ownership. I do know that my kids want a house, by which I think they mean they want a yard, space, privacy,
neighbors and pets. Probably, most urgently, they long for the vague sense of continuity that a conventional, single-family detached home seems to inspire. Like them, I feel entitled to these amenities and more; I want a fully stocked liquor cabinet, a personal trainer, a chef, chauffeur, masseuse, etc.
The urban-design, mixed-use kind of living arrangement attempts to blend all that stuff in an efficient, communal system. The recently opened Westgate Apartments, for example, on the edge of Old Pasadena seems to provide the comforts of home in a compact and convenient manner.
Westgate offers renters a variety of floor plans, lots of lush, themed courtyards, a fitness center, screening room, business center, clubhouse, pool and the practice and philosophy of green living. You may not see kids dangling from the trees, but you can sit quietly underneath them and read a book, or stroll through the sculpture garden, or dash up the street to a million interesting shops, restaurants, parks and so forth.
Westgate apartments and communities like them provide a pretty good alternative to traditional home ownership. I don’t think they supply the butler and chef, but the leasing agents are friendly, and who wants to eat at home anyway?
Contact Joanna Dehn Beresford at truewrite@yahoo.com.
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