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Apartment living, some like it!

Posted by Rona Fischman  January 16, 2009 02:40 PM

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During the presidential election, there was much talk about how voters wanted a president that they could have a beer with. I couldn't imagine hoisting a cold one with Barack, until I found out that I lived less than a quarter of a mile away from him from 1989 to 1991. We were both living in Winter Hill section of Somerville. Barack likes apartments; I like that in a guy.

Barack Obama’s bachelor pads were a lot like where I prefer to live. On 60 Minutes, Michelle Obama picked on another of his student rentals as “a dump” and his Senatorial apartment as an only slightly better version of that dump.
(His family home in Chicago is a good bit nicer. So is his transitional apartment. And so is the guest house he moved into yesterday. And so is the White House.)

When I listen to the tales of Obama’s apartments, it does make him seem like someone I could have a beer with. If I did, I would reminisce about my apartments:

There’s the one with ten-inch-long centipedes and the one with cockroaches. There were the two different apartments next to a bar; I heard drunks have the same two arguments every weekend night for four years of my life. (You’d think I would have learned the first time!) There’s the one that had no central heat. There was the one that had rain leaking into the overhead light fixture. There was the one over the auto parts store with skylights; hot in the summer cold in the winter, but sunny. There was the little one that went condo last year...

All these places, and all these roommates, have shaped my life. I have had the best years of my life away from single family homes. I like it that way. I still live in an apartment, but I own it. That gives me the best of both worlds, in my opinion. Those who rent their apartment will disagree.
Are you an apartment lover? What are the good things about apartment living? Are single family homes over-rated?

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27 comments so far...
  1. in my opinion for a single person, or a married couple with no kids, there is really no reason to buy a home. Depending on your income, home ownership can be a pain. If you can afford and are willing to pay for landscaping, pool cleaning, etc.
    then it's no sweat, but if not you can find yourself spending a lot of your free time
    "working around the house" on weekends, and spending a lot of money on your
    "investment". Let's face it, for most people their house is their biggest investment.
    You have to wonder how many homeowners factor in all the costs (taxes, maintenance, time) they have invested in their little taj mahal.

    Posted by Hung Wang January 16, 09 03:23 PM
  1. Ah, the pitter patter of little rodent feet in the dropped ceiling. I remember it well.

    However, that was long ago, when I was young. I'm not young anymore, but I'm renting again. Now I get hardwood floors, central air, a dual-fuel range, an in-unit washer and dryer, and a pleasant view. No more rodents for me.

    There are pluses and minuses to any living arrangement. In an apartment, you get one number to call for every problem, and no responsibility for sudden repairs that can cost tens of thousands of dollars. If I need to move, I don't have much to hold me down. And while I'd like more space, frankly, it's enough of a burden to take care of the space I have now.

    In my opinion, though, hell is a condo. As a condo owner, you're intimately involved with strange people you can't stand and can't get away from, like wife #5 in a Mormon fundamentalist marriage. It's easier to negotiate peace in Gaza than get your neighbors to agree that, yes, a roof with a four-foot hole open to the sky probably should get fixed or something. You will have someone parking in your spot, rifling through your laundry, shaking your mail deliveries, and gossiping about you behind your back every day of your life. At some point, you'll discover that the neighbor who bores you endlessly with tales of their lunches in Paris and safaris in Africa hasn't paid a condo fee since Eisenhower. At least one vocal member of every condo association is a barking lunatic, and will take particular personal interest in you.

    Posted by Marcus January 16, 09 03:57 PM
  1. I am a single person without kids who bought a single family in southie and I am completely thrilled with my decision. I lived in a condo for six years prior, and it got to be a complete pain. One unit was foreclosed upon, and the guy ran off with our money. The new neighbor was a complete pain, and the upstairs owner was useless. We had to consult on everything, and I ended up feeling like I was just a renter with no control. I LOVE that I get to decide when to fix things, and how they should be fixed. I haven't had to do much, since I did a gut rehab on my place. But, I wanted a fenced in yard so I got to arrange, pay and pick it out myself, without having to consult with anyone, or chase down someone who just didn't care. I don't have anyone above or below me, and it is just fantastic.

    Its a city house as well, so the yard isn't much more than a terrace. Looking forward to managing it without losing my entire weekend to it. It is nice to have outdoor space, especially as I have a dog.

    My mortage is around the 2k mark with taxes, and with the three zone heating the utilities are pretty reasonable as well. Might not be right for everyone, but I love owning a house. My two cents.

    Posted by buyerandseller January 16, 09 04:02 PM
  1. Hung Wang,
    I think you overstate your point. As a single person who owns my home - a single family with a yard - I consider it the best thing I've ever done. I LOVE working around my house on the weekends, gardening, tinkering and painting; I think a lot of people do. I like mowing the lawn and raking leaves, although I hate shoveling snow and pay someone else to do it (I can't even imagine the hassles of owning a pool, though). Lots of chores are also bonding opportunities with friends and family. When I lived in apartments, I couldn't wait to have land to have a dog, a garden and a garage. I enjoy planning/plotting my next home improvement project and shopping for unusual appliances, fixtures, etc. I think tools are cool. I enjoy personalizing my home and making it exactly what I want. I get off making as much noise as I want, at all hours of the day and night. I like having total control and would find the compromises of a condo a pain. My little house is a constant source of joy to me and, although I love to travel, I am always happy to come home. For me, buying this type of home was perfect.

    That said, I think it is critical to know yourself and if you choose to buy, buy with a clear understanding of what kind of homeowner you are likely to be. I don't recommend my choices to everyone. If you aren't a tinkerer like me, don't buy an old house. If you can't garden, don't buy a house w/acreage, etc. I think it is important to be brutally honest with yourself about what kind of homeowner you want to be/are likely to be. While I believe it is important to be rational and financially savvy in your decisions about homebuying, buying a home is more than a financial investment - with all costs including my projects, mine costs a tiny bit more than renting. It is your home, you will live there and there are important emotional, psychological and quality-of life-issues that should be considered.

    Posted by Nancy G January 16, 09 04:55 PM
  1. Mr Wang - I bought my first house in 1963 for 13K ,when I was single. It was in need of some repairs ,and after a couple of years , 10K in materials ,and some sweat equity , it was in great shape. Paid off the mortgage in 1978. Haven't done much since ,except normal maintenance , ( painting , roofing , water heaters , heating system ,...). The tax deductions for real estate taxes, and a home office reduced the costs considerably.
    It is now worth 3.65 Million, ( conservative estimate 2009 , offered 5 Million in 2006). Seems like buying a single family is a good investment to me ,and we love living in the house..

    Posted by REmaven January 16, 09 05:37 PM
  1. Well said, Nancy G!
    You make the point that there is no one right choice for everyone.
    Sounds like you have made a well thought out decision.

    Posted by Sally January 16, 09 05:42 PM
  1. REmaven. So your home has appreciated an average of roughly 13% over the last 45 years. That's amazing since historically homes appreciate at the rate of inflation and even stocks haven't returned 13% on average. Unless you spent hundreds of thousands of dollars on additions and/or upgrades, I suspect you are greatly exaggerating. And why didn't you sell in 2006? You could have put that money in a dividend paying stock account and cleared $300K a year just in dividends.

    Posted by John January 16, 09 07:17 PM
  1. I thought the high wealth areas of Mass were immune to the downturn? Down 25% in 2 years (#5). Guess not.

    Posted by Bobby January 16, 09 07:37 PM
  1. Nancy, glad you are happy with your house. I like mine very much as well. My point was basically to make people aware of some of the hassles/costs that people don't account for when they become homeowners. Also, I have known people who said they made x dollars on their house over the years and that it has been a terrific investment (my parents for example). I often ask them if they include maintenance, time, repairs etc. when making this determination, often many have not. In retrospect many would find the returns have not been nearly as great as they originally believed.

    Posted by Hung Wang January 16, 09 08:01 PM
  1. Mr Wang,
    I agree, many people do overestimate the return on their investment when they buy a home. But it is a very great leap from that possibility to asserting that there is "no reason" for singles or childless couples to buy a home. Of course, there are tons of good reasons for them to buy a home! Some of those reasons are financial and many are not. Financially, the bottom line is that as a renter, you pay all the same costs as you do as an owner, one way or another (otherwise landlords wouldn't make a profit). The real question is whether your lifestyle is more appropriate to renting or owning.

    Posted by Ritan1 January 16, 09 11:40 PM
  1. REmaven, I've got you beat! I bought a house in 1970 for $1, and it's now worth $4.3 trillion (conservative). I had an offer for $11 trillion in '04, but my six supermodel wives didn't want to leave, plus Brad and Angelina just love the guest room I designed for them.

    Sorry for any typos, I'm posting from my private jet on the way to buy Finland. I have to get back to my airborne polo match, but I'm too addicted to being online! I love the Internet, you can believe anything you read here.

    Posted by Marcus January 17, 09 01:10 AM
  1. one more point I would like to make in regards to where the housing market is headed. Use bank stocks (Citi, Bank of America, Wamu, Indymac) as a leading indicator as to where housing is headed. Stocks are perfectly liquid and can be sold at a moment's notice. Housing is extremely illiquid, and presents a further challenge in that there is not always a market, it's quality of being illiquid will inevitably work against it as there is no standing bid (buyer). The same dynamic took place in previous housing crashes. Homebuilder and banks stocks were crushed well before actual housing prices dropped.

    Posted by Hung Wang January 17, 09 07:12 AM
  1. John - Thanks for the great advise. If I put $5 million in stock in 2006. Say ,in a high dividend stock like GE it would probably be worth less than $ 2 million today.
    Also , If I sold in 2006 there would have been a significant capital gains tax. I haven't done the math but the tax`may have been near 2 million. That leaves me with $ 3 million to invest. So I would have about $ 1.2 Million today to buy a house. Seems like a great move. Did you work for Bear Streans ?
    Homes should be first a home .
    BTW - No addittions or upgrades,and no exaggeration. The house is antique with Ocean frontage and a deep water dock. Unique properties seem to appreciate better than the average cape in Chelmsford.

    Posted by RE maven January 17, 09 08:42 AM
  1. I don't find RE maven's numbers unbelievable. Not typical, like in a weight watchers ad, but not unbelievable. I have similar numbers for a now-deceased family member's house in a posh area of New Jersey

    Posted by rws January 17, 09 10:36 AM
  1. I think this debate is more than just renting vs. owning a home. It is first, do you like living in an apartment/condo style home or a single family style home? The second part of the question is, do you prefer to own the apartment/condo or single family home? The last part is how well you need/want to live within your home? Do you want/need Jacuzzi, customized closets, paint on the walls that make you happy etc...

    I looked at renting single family homes once, and the inventory was pretty bad. They were usually the worst homes on the market. The ones that were nice were very expensive. More than a mortgage for some. I think if you are a single family home type of person, owning is a better option most the time. There will always be some rental deals out there, but be prepared to move soon, because the house will sell and you will be looking for a rental again.

    Condo/apartment living is another debate. Owning generally gives you the ability to live within the 4 walls of your condo, they way you want. Most landlords I had (I rented in Boston for 10 years) didn’t like any color on the wall besides white. The bathrooms were very blah as well as the kitchens. But anytime something went wrong, I gave them a call and they fixed it. I also hated sharing laundry facilities or even worse, going to a laundry mat. You also didn’t have any say over who your neighbors will be. Owners are generally nicer neighbors. BUT not all the time!! Renting or owning, there will always be some whack job neighbors!!! I think owning has been less.

    Owning a condo does come with a bunch of headaches. Something goes wrong inside the condo is all your responsibility. General/common areas are shared expenses, which means less cost to your for fixing the roof. BUT you have to deal with condo board. Which can be interesting.

    I live in a new small condo development, so there is little to worry about for a long time for maintenance and repairs. And less headaches of a ‘board’. It is just a few owners.

    I like my kitchen, I like my bathrooms, I like my custom closets, I like the surround sound I installed, my decks etc…All these likes add up to more economic costs to me, but the intangible value is worth it.

    For 10 years I didn’t care. An apartment was a place to sleep. So I thought, why buy? Thinking back though, I never really felt comfortable. I would go out every night for dinner. I never sat home in the morning for breakfast. I probably spent more on eating out than I do know on my mortgage. I love cooking a nice meal now in my kitchen, drinking some wine and sitting around my fireplace, and enjoying a nice Blue Ray DVD on 5-1 stereo surround sound. I never did that renting. It would be very difficult to find what I now have in the rental market for less than my mortgage, condo fee and taxes. Maybe in 2009, but eventually when inflation rises again, rents would go up.

    Sorry for the length ; )

    Posted by bill January 17, 09 11:28 AM
  1. remaven's numbers are definitely believable in my opinion, only for the fact the property is on the water. Waterfront in Marin County, CA, many parts of Hawaii, and the outer cape of MA (think Ptown) have generated similar returns over the last 50 years. Many years ago waterfront did not have the cache it does now.

    Posted by Hung Wang January 17, 09 12:35 PM
  1. After you decide whether you are a renter type or owner type (based on your preferences), it comes down to how much rent is vs. buying the same exact type of property. Times are different this year as home values are anticipated to go down, so if you are renting you might want to stay doing so.

    Take the monthly rent and multiply by 180 months (15 yrs). That is the safe price for the home/condo.

    $2000/mo rent x 180 months = $360,000

    $360,000 mortgage (zero down) is $2158/mo @ 6% Int.
    Taxes in Boston with residential exemption will be about $175/mo
    Condo fee avg. $200.

    Your ownership payment is ~$2533/mo. You will save over $6K yr in taxes in the first years. So you net out about the same monthly payment and you pay $350 in principal each month.

    So if prices for homes stay the same, then this would be a fair price.

    Posted by bill January 17, 09 01:34 PM
  1. maven,
    congrats. you apparently hit the proverbial jackpot and were fortunate enough that your income has apparently expanded exponentially along with your property value to afford the taxes alone. i'd be extremely interested to find out what town/city this gold mine is in.

    2 things on the rent vs. buy. one, i echo the sentiments that finding comparable single family houses to rent is extremely difficult. the second is, imo, if you're renting you should be making some quality sacrifices and attempting to keep your cost of living to a minimum within reason.

    Posted by still waiting January 17, 09 06:58 PM
  1. I can believe RE Maven's numbers. My father-in-law bought his home in Waverly Square, which was the poor section of Belmont, for about $8,000 in the 1950s. He still lives there, and the house is now worth about $1 million. Aside from a semi-finished attic and an additional bathroom, it's pretty much the same house.

    Back then, a travelling salesman with a stay-at-home wife and 4 kids could afford a 3-bedroom home in a safe area with good schools. Now, it takes 2 above-average salaries to afford what used to be called a "starter home." Families are leaving the state in droves because it's impossible to get in on the ground floor here. I refuse to pay $450,000 for a 2-bedroom, 1-bath home from 1945 that needs a new roof and furnace.

    Posted by Liz January 17, 09 09:43 PM
  1. Maven. Did I say put your money in a crappy company like GE? No. GE is a financial company and that's why it's stock is tanking. I wouldn't touch most companies in the US.

    When you are collecting dividends, it doesn't matter whether the stock goes up or down. All that matters is the company can increase it's dividend to offset inflation. The whole point of investing in stocks is so that you can amass enough of a portfolio to live off the dividends and never have to touch the principal. I guess this is news to you.

    You are apparently a real estate genius, but you don't know much about investing.

    Posted by John January 17, 09 09:47 PM
  1. REMaven. You say a home should first be a home, but your whole post is gloating how you bought a home for $13K and watched it appreciate to over $3 million. So you are the one in million that bought waterfront property 40 years ago and enjoyed massive apprecation. And if you would have invested that $13K Berkshire Hathaway stock 40 years ago, you would probably have over $20 million. So, I guess the point is, if you are lucky, you can become rich.

    Posted by James January 17, 09 10:00 PM
  1. I prefer to own no doubt.

    I'm just not willing ot lose money to do so.

    Posted by charles January 18, 09 03:06 AM
  1. my 1st apartment was directly over a liquor store. i was naive to the city when a panhandler asked me for change, i told him to hold on a minute and sprinted up to find all the spare change i could find. thoroughly satisfied with myself i went up to take a 3 hour nap woke up and upon leaving found him passed out on the front step with a bottle of generic gin.

    it was the best apartment ever, 1 small kitchen, 1 small studio room that served as BR and LR and 1 bathroom and the price of $420 a month in downtown New Haven, CT. I was in heaven in the mid 80's as i was able to entertain many ladies following a fun night of partying.....

    Posted by autoprt January 18, 09 06:38 AM
  1. Still waiting - I don't think that I hit the jackpot. Many properties in unique locations have had that kind of appreciation over 45 years. Marblehead , Cambridge, Back Bay, Beacon Hill, South end, Plum Island , Newburyport, name a few. Every property that I have bought and held as a long term investment has had a significant appreciation. The key is that all property will appreciate over the long term.
    I think that I was making $5/hr at the time I bought this house.Yes, my income has expanded since that time .The taxes are around $30K and after the tax deduction, this is about the rent or mortgage for an average condo in Boston.

    Posted by RE maven January 18, 09 09:47 AM
  1. As of 2003, the parent company of Philip Morris was one of only 147 companies in the NYSE to have increased its dividend every year for the previous ten years.

    Of companies which remained in the S and P 500 for the entire time from 1954 to 2004, Philip Morris had the highest average annual return rate at 19% versus 10% for the index.

    19% per year for 50 years, truly amazing.

    Posted by Hung Wang January 18, 09 02:42 PM
  1. when you outperform expected return by 600% i'd call it a jackpot. unique property is a bit of an understatement. there are 3 waterfront properties currently listed on the mls in mass (both shores and the cape) listed $3.65mil+ with less than 2500 sqft of living space, all 3 of which are on the cape. i know you never mentioned size but i extrapolated a bit because of the comparatively modest price paid in 1963. the notient that people did not value ocean front property 50 years ago is a little ridiculous. granted not all ocean front property was valued the same, but if you take a ride around gloucester, beverly, manchester, marblehead, swampscott, cohasset, duxbury, newport ri, kennebunk, me, etc you can see quite a few "houses" built in the late 19th and early 20th centuries. for a return like that to be possible in real estate you would need a drastic change in demographics coupled with a change in core values (ie deep-water docks are less prevalent today and people value them more now than they did 45 years ago). if it's true congrats but you still never said where this money tree is planted. share a little so others can find their own unique property.

    Posted by still waiting January 19, 09 04:23 PM
  1. I know oceanrfront lots in Turks & Caicos people bought 15 years ago for $40k are now going for $2mm, with no improvements. I bought mine in 2003, it's easily worth 10 times what I paid. You really need to buy in a place that gets "discovered"
    or in the path of totally unstoppable/unanticpated growth, maybe outside Phoenix, Fort Worth, (with natural gas under the ground), etc. I bought a property in Fort Worth from a failed bank several years ago, which is easily a 30 bagger now and pays more in gas royalties each year than I paid for the property. Obviously, you need a ton of luck...

    Posted by Hung Wang January 19, 09 07:04 PM
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Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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