I saw an ad in the paper featuring the new housing development we almost bought in March of 2007. It brought back a flood of emotions when I saw it because while I still very much want to live there, I was glad that I didn’t jump in with both feet because it was being offered at $100,000 off the asking price + $75,000 in free upgrades. It’s just unbelievable that the same house is being offered at $175,000 less now!
I read somewhere that about 12 million mortgage holders owe more than their homes’ current value. No kidding when any down payment less than $175,000 already went down the drain! Actually, experts (if you still believe those people anymore) predicts that one third of all homes with mortgages will soon be under water. Yikes.
But then I think about all these stats and I gotta say.. “so what?” If I own a home and live happily in it, do I really care that my house is under water? Whether my house is worth more or less than my mortgage, my monthly payment is still the same. The same payment, due on the same day. While it might “seem” like I lost money, I am sure I will still enjoy living in my house everyday and seeing progress in paying off my 30 year fixed mortgage.
While the economy seems to be going up in flames and people are worried left and right, homeowners should be happy because they have a place called home. They are still living happily and taking their kids out to the park. While home ownership cost rose 37% in the last decade, rent increases were 50%.
You might not be able to tell these days with all the bad news about the housing market, but it’s still an incredible feeling to own your own home. It’s still worthwhile and it’s still the American Dream.
Don’t lose hope. Our American Dream is still alive.
Promote or Save This Article
If you like this article, please consider bookmarking or helping us promote it!
Print Post | Email Post | Del.icio.us | Stumble it! | Reddit |
Related Posts
- Best of Personal Finance Blog by Money Ning – October 2008
- Regulate the Realtors – Government Improvement Series
- Would We Really Choose to Fulfill Our Dreams Once We Reach Our Goal?
- Calculators
- Volunteer Vacations are Fun, Frugal and Rewarding
Subscribe! (and Get a Mini-Course with Free Registration)
Follow me on twitter! In addition, subscribe to grab free amazing content or take advantage of the newsletter to have content delivered to you. For starters, a 7-part mini course to help you spend less and be happy will be delivered to you when you subscribe!(Don't worry about spam, because we hate it as much as you do!)
Twitter
Facebook
Subscribe
{ 13 comments… read them below or add one }
MoneyNing,
Quick question. You wrote that homeownership cost has risen by 37% and that the cost to rent rose 50%. Where are these numbers from and does it just include rent v mortgage payment or does it include maintenance, taxes, insurance, etc..?
That statistic just doesn’t smell right. Could you provide a link to that report?
Dario: Actually I got the stat within one of the articles on the local newspaper (Sunday version of the OC Register 2 weeks ago).
For the rent side, it just sounded about right because 2%-4% per year rent increase is very reasonable (contributing to 50% increase).
The paper doesn’t say specifically but I assume 37% is based on house price + property taxes appreciation as that would sound to me as the only fair comparison.
I believe home ownership is still the American Dream only if you have a fixed mortgage. Any other mortgage that you have will simply land you in foreclosure especially during these times. It is a smart decision to get these types of mortgages because you will know how much you will have to pay month in and month out.
Cite, please. Has YOUR rent gone up 50% in 10 years?
I’ve lived in the Bay Area since 1999, and I currently pay less than I would have in 2000 to rent the place I’m living in now.
My rent has gone up a total of 6% in 4 years. That’s 1.5% per year.
It’s still much cheaper to rent than to own, and will continue to be for quite a while yet.
-Erica
Erica: Actually mine’s gone up more than 50% in 10 years but I did move. Just FYI, the reason why I moved was that the landlord increased my rent more than 10% within 1 year. He did make it sound reasonable in the letter but that didn’t help me financially at all.
We can always find people that have no rent increase just like we can find houses that have not appreciated in 10 years.
There’s no point arguing and the stat is not the point of the post (I’m not trying to argue that owning is better than renting at all).
I should have found a credible source before I put the stat up but please bear with me and consider yourself lucky to have a good landlord to only have a 6% rent increase in 4 years!
Yea, luckily I still have a home with my parents right now. We wanted to sell the house before houses rose in price, but thank god we didn’t. A lot of homeowners here in LA now live in an apartment or condo because they sold their house and couldn’t afford one back. Now that houses are dropping in price, the economy is getting worse…
-Mike
Sometimes the American Dream of owning a home seems like a far to distant dream for me.
I do agree that even if I had a mortgage where I owed more than the house is worth I would probably be happy just to have my own home. In fact right now I would be ecstatic to have my own home regardless of the mortgage vs. market value of the home.
Interesting. I know the media really hypes everything and I try to just think ‘what are my circumstances?’. Fortunately for me, I own my own home and have kept it up so it is worth more than I paid for it many years ago.
I believe it depends on where you live as to whether it is cheaper to own or rent – one cannot just say renting is cheaper.
My prior home was a $512 mortgage payment, including taxes and insurance. As it was a 3/2, garage, wooded secluded lot, partial bay view, it would have rented for over $1200/month. It was MUCH cheaper to own than to rent.
On this current/final home, for the year I had a mortgage, it was $150/month, plus $1000 for the year in taxes/insurance. This home, a 2/2 with walkthru attic, would rent for over $1000/month.
In our area it is MUCH cheaper to own than to rent.
And of course, once the mortgage is paid off, who’s to argue with under $100/month for taxes and insurance???
Makes me sleep well at night and no landlord can evict me
This is My Personal American Dream – that I can live in, rent free, for the rest of my days! It’s a GREAT feeling! Simply the BEST!
The American Dream I remember was all about what we want to be when we grow up. How about an astronaut? But somehow, the American Dream became all about owning a home; and then suddenly this so-called dream has turned into a nightmare.
Credit to buy things has gone the way of the absence of trust that once reinforced it. Just like low mortgage rates and appreciating home prices ignited home ownership; now with real mortgage rates on the rise and prices falling, renting is and will be the default currency of choice.
I think those who got into trouble in this turmoil are mostly greedy people who are flipping properties.
Genuine home owners are still pretty safe.
Hi David,
I read this article a few weeks ago and I thought it might be pertinent to this entry. Let me know what you think.
http://realestate.yahoo.com/promo/renting-makes-more-financial-sense-than-homeownership.html;_ylc=X3oDMTFta3Jqcjk3BF9TAzI3MTYxNDkEX3MDOTc2MjA0NjUEc2VjA2ZwLXRvZGF5BHNsawNyZW50aW5nLWJldHRlcg–
I’m a homeowner and, while my home is losing equity right now, I still enjoy the peace and quiet that comes with owning a home vs. renting. Also, owning brings other benefits as well. You have the freedom to change whatever you like (within zoning and HOA rules), you can be much louder than in an apartment and you get a nice tax break. I’m just hoping I can keep my head above water so I can keep paying my mortgage. Good thing I stuck to the 28% rule and went with a fixed rate when I purchased the home back in 2007.