Tuesday, December 29, 2009

Renting Vs Buying

Megan McArdle on ownership vs renting a house:

For a long time, I didn't care so much about this. I liked the freedom renting gave me. But once you're committed to a city, and another person, that freedom starts looking overrated.
Most of her column is spot-on, and matches with my own experience.. For years I said that owning a house may be part of the American Dream, but isn't part of my dream, and happily rented. And then at some point, something changed. I can't point to a specific incident that pushed me over the edge, though the loud upstairs neighbors certainly helped. Likewise the hassles to get minor stuff fixed that was more important to me than to the landlord, and the inability to make serious modifications, no matter how heartily sick I was of white walls and beige carpet.

And of course I have no idea what Ms. McArdle's thought processes are, or were. But in my case, it wasn't that the freedom to pick up and move at the end of my lease was suddenly overrated; it was that it was no longer as salient. It had been an important factor in my renting for quite a while, but my situation changed; and with those changes, other factors came to the fore as higher priorities. I hadn't been mistaken in valuing that freedom before; but it was no longer as important as it had been.

I resisted the urge to jump in during the boom--running out to buy something because the price has been skyrocketing lately doesn't strike me as too smart--and besides, it took a while to get my finances in order for the down payment and so forth. And I didn't see it as an investment; if it turns into that, great, but mostly it's for a place to live. (Taxes & insurance push the cost up, but the payment on just my note is lower than I was paying in monthly rent.)

And another advantage of owning: my apartment had electric heat, because electric furnaces are cheap to buy & maintain. Which is what the landlord is looking for, since the electric bill is my problem. My utility costs have dropped.

I'm thinking about the home-ownership thing a lot lately, as I just paid my first round of property taxes and ordered some things online for the house. Are there hidden costs? Of course. There are also hidden benefits--I understand the economic argument against the mortgage interest deduction, and broadly agree with it, but as long as it's on the books I'm going to take it all the same.

[and reading back through, this post is particularly living up to the "random musings" title... oh well, i'm on semester break, I'm taking the morning off before going in & working on next semester's coursework.]

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