Let’s include wet basements in buy-vs.-rent debate
I love my house. Really, I do.
My wife, son and I moved into it about a year-and-a-half ago, after selling our starter home. The neighborhood around it is great. The local school is strong. We can walk to our library, our choice of parks, downtown shops and even a neighborhood grocery store.
But … Since moving in we’ve had to hire contractors to remove and replace the dying tree in our backyard. A different set of contractors drilled through our basement floor to replace ancient plumbing. Another came out to rewire our dishwasher and garbage disposal. Then there’s our basement that leaks during heavy rains. We’ve priced that fix out. As homeowners who’ve ever waterproofed their basements know, leaking walls can produce some scary estimates.
I’m not trying to make readers feel sorry for me. I’m just trying to illustrate a point: It’s not cheap to own a house.
I bring this up because the unending debate over buying vs. renting is raging harder than ever. With home prices dipping in parts of the country, and residences not showing the double-digit yearly appreciation that some homeowners enjoyed just two years ago, the eternal question of whether it’s better to buy or rent has only become more intense.
Ask most real estate agents and they’ll tell you: It makes more economic sense to own. When you own a property, you’re building up equity. When you rent, you’re giving away your money. Owning a house also comes with tax deductions. Agents know these, and other, advantages of owning by heart.
But sometimes I wonder … like during that downpour we had in the Midwest last September, a night that I spent frantically mopping a river of rainwater toward my basement’s only floor drain.
The truth is, owning a house is hard and expensive work. The myriad of buy-vs.-rent calculators that you can find on the Internet – Try out this one or the one here – usually leave out the unknown costs of maintenance and repairs. I defy anyone to show me a house, even a newly built one, that doesn’t suck up at least some money every year. Then there’s time. Homeowners waste plenty of weekend hours mowing lawns, painting peeling shutters or repairing whatever it was that broke during the week. Renters? They can do whatever they want once Saturday rolls around.
Homeownership rates have dipped just a bit recently, but are still high, with the U.S. Census Bureau reporting that 68.2 percent of heads of households now own their own homes. But the recent wave of foreclosures and loan defaults proves that not everyone should own a house. For some people, renting makes more sense. It’s a shame that we don’t hear that more often.
Here are some things to consider: If your credit, or FICO, score is lower than 620, you’re going to struggle to qualify for a good loan, especially in the wake of today’s subprime lending crisis. You’ll probably end up with too high of an interest rate. If your employment situation is not stable, you might not want to be tied into a mortgage loan that you’d struggle to pay if your job situation changes suddenly. If you still have a high amount of debt, you should pay off most of it before adding the monthly stress of a mortgage payment.
The buy-vs.-own debate will certainly continue. But here’s one last point: As home prices in many parts of the country have stagnated or even dipped, renters have looked pretty smart. And you’ll never see apartment dwellers mopping rainwater out of their basements at 2 in the morning. (But if any are interested, stop by my place next time we get a downpour.)
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POSTED IN: Buying a Property, Educational Tools, Insights and Commentaries, Real Estate Tools, Rent
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