When real estate means more than a place to live
Residential housing, at its most irrational, is focused solely on the social-emotional needs of the buyer or seller. Many people think owning a home proves one or more of the following things:
1. Proves you are grown up.
2. Proves you are successful.
3. Proves you are independent.
4. Proves you are a good “catch” in the dating world.
5. Proves you are a good spouse.
6. Proves you are a good parent.
7. Proves you are not a “loser” in a divorce.
This is all nonsense, but it is socially reinforced nonsense. Owning a house proves none of this, but owning property (whether it is a house or a condo) remains a socially-sanctioned outward marker of responsibility and worthiness. Being unable to buy, or losing a house to divorce or financial setback strikes some people as irresponsibility or unworthiness.
The reason that I bring this up today is that, recently, I have been having the darnedest hard time talking people out of buying for the short term. (That’s why I laid out my argument against it on Tuesday.)
Case number one:
A couple who came here to the U.S. from another country called me about buying a home in a specific school district. They came to Massachusetts because a close relative was ill. Now the health crisis has passed, but the children are thriving in the schools here, so they want to come back to stay for a few more years…
When I hear “a few years,” I launch into my “no brainer math” about renting versus owning for the short term. We had the discussion, they agreed. I sent them to a rental agent. Two days later, he was back. “I just can’t see paying $2000 a month for a house I can’t swing a cat in!” he says. I can’t have my children living like that. I am just throwing my money away on rent. (He’s suffering from #6.)
Case number two:
A retiree contacted me. He is selling his empty nest and would like to buy a condo for five years, then move out of state. He’s hit with me and my math. He agrees. But he persists. His wife insists on owning, not renting. One of my agents is meeting with both of them to go through the math again. (He’s suffering from #5. She’s suffering from #1 or #2.)
The counter-arguments are not wholly invalid.
1. Rental options for young families do not have the amenities that many parents want. They frequently lack yards, quiet, and character. Parents have dreams about what their children’s family home should be; rentals rarely meet that expectation.
2. Rent spent never builds equity. Renters never get to the end of their mortgages. Even in flat or negative markets, hope seems to spring eternal.
Those things said, I still think the potential financial loss and the stress makes buying for the short term not worth it. There are better uses of down-payment money to make a good life for you and those you love.
Am I overstating my case?
