San Diego Housing Bubble News and Analysis

I think it varies... most all things are addictive after awhile... I would say renting is not as addictive as perhaps internet porn, but maybe it is as addictive as perhaps certain dairy products... What man has not stole a precious moment alone with a large chunk of extra sharp cheddar cheese....

Renting works for some and doesn't for others. As it has been well chronicled, I have consistently whined about renting but I always did try to temper the whining with the "it doesn't work for me" disclaimer. Indeed it works exceedingly well for many, dare I say, most people. For you especially it seems to work quite well. I must say, in my vicarious life through you, I imagine myself renting as well, thus saving more money in a declining market and building up virtual equity when the day of reckoning does come and you do buy a home. You are doubly rewarded as well because of the location you are in. I strongly believe that your bottom point is not nearly as far off as other areas of the county. I am not saying it is imminent but still, I think you could see ALOT of the risk unwound in your neck of the woods by 2010 sometime. Maybe not a bottom but definitely much less risky.

Yes, renting is addictive, especially if you rent a nice house in a nice neighborhood.

When we first decided to sell-to-rent back in 2004, we debated living in a smaller apartment (and save more money) vs. living in a house that would suit our needs for many years to come (and not saving as much).

We ended up renting a larger house with a yard in a good neighborhood. That was the best move we made, because we would NOT have been happy in a small apartment all these years with a family of five. Additionally, rents have skyrocked in our area, and the rental market is **tight** here. Not so in 2004, so we could negotiate more.

The flexibility that renting gives you is as addictive as the financial gain. For better or worse the world has changed in the last 20 years. People no longer work for 1 or 2 companies until they retire, now they're likely to work for 6 or 7, and doing so requires moving a lot. Owning a house can tie you down and limit your career options in this fast changing world.

You better have a very stable job or a house near an employment center if you want to avoid some painful decisions in the future.

I'm not but my brother is (addicted to renting). The funny thing is he used to be a realtor and persuaded me to buy my first house when I was 24, telling me what a great investment it was. That was back in 1994 when prices were low. He, on the other hand, could never find the right place at the right price at the right time. He's still renting all these years later, now with a wife and three kids. So I guess, he's addicted to renting. By the way, he's not a realtor anymore but a property broker. There's definitely an irony in that.

Some people love renting and some don't. I fall into the don't side. I'm only renting because it's a financial decision. As soon as it's cheaper to buy than rent, I'll be buying and holding forever. I love customizing/personalizing everything I own, so renting is not preferred to me. It's always nice to know what you will be spending in housing 5,10,15 years from now.

Asia, I guess the buy and hold argument or at least the rent stability aspects are appealing. The point of the thread was that in my area it is already rent nuetral, actually it is cheaper to buy, yet I sit. Mostly I think that Bugs' advice rings in my head, beckoning me to at least wait till the fall or winter, but even then I'm not so sure I will automatically do it. This is the only year in the last twenty that I have rented and I like it, a lot. I have more money than ever before, more invested than ever, yet my income isn't significantly higher. There are a lot of expenses with owning that I never realized until I stopped. There is also a lot of savings going with a smaller place, the place I'm in is about half the size of the last one I owned and it doesn't bother me one bit, point is, it will be hard to voluntarily end this party.

My god SD Realtor, I thought I was the only one! All these years living a dual life as normal guy on the street by day, cheese lover by night (and weekends). Oh what I wouldn't give to be back in London with that English cheddar, that sharp taste, that accent!

temeculaguy, I think your addiction to "renting" sounds more like your addiction to saving money and seeing it grow. I can see why you wait and see what will happen this fall/winter. You might see another leg down, you might not. Only time will tell. Like everything else in this universe, the amount of undershoot will probably resemble the amount of overshoot. So we might see even more decline. However, my view of buying RE is along the line of buy and hold and dollar cost average. I will never sell any property I buy and I will only buy primary residents. I'm currently renting a 2 bedroom apartment in Mira Mesa, an area where some would be considered "the ghetto". That the lowest I can see myself paying for a place to live. I will be buying my first modest ~1300 sq-ft house sometime this year that should be within a couple hundred of the rent I'm paying for an apartment. I will be able to continue to save and invest as much as I am doing now, but I will be living in my own place. In 5-10 years, when the more desirable places hit bottom, I'll be renting this place out and move up. I'll rinse and repeat until I live in my dream home. I think it's a great feeling to have someone paying you more than what you're paying in mortgage. That's why it's so critical for me to buy a place that's cheaper than rent at the start, because after 5-10 years, it's almost a certainty it'll cash flow positive. As long prop 13 is there, I don't see why I would ever sell.

I'm addicted to owning but am lucky enough to have bought before the bubble, back in 1998 when one could actually make the argument that renting was akin to "throwing money away". I change my home decor about as often as I change my wardrobe, which becomes difficult with a landlord lording over a rented dominion...

Ok, I will bite off on this one...

YES, I am addicted...

to renting a beautiful 1.5M condo for 3,500 a month.

but, I am also addicted to...

maxing out my SEP contribution at $42k per year
trust deed investing
owning cash flowing investment property with equity
having a 800 FICO score
buying a new car every 5 years with cash
having zero debt other than a couple investment property mortgages.
etc, etc, etc

oh ya... one more thing...

I am addicted to helping others understand that your financial plan sucks if you get brainwashed into believing that your home is suppose to be your biggest asset.

And yes, some day, when it makes sense I will probably be an addicted homeowner.

I'll reply.

My wife and I are shelling out $31,000 / year on rent for our 2200 sq ft San Jose home. I am NOT at all addicted to throwing thirty grand a year out the window.

On the other hand...during the 12+ months we've rented this place, its value has fallen over TEN GRAND a month. They were selling for about $850k when we moved in and now are down to about $700k. I'm sure glad I don't own this place. *whew*

I wouldn't say I live in a dump in Northpark, more that I inhabit it. I'm addicted to cheap rent. 900 a month and I can walk most anywhere I want and I ride to work.

Hopefully the RE train wreck gets bad enough to allow me to form an addiction to a lovely home, not just a compromise home.

Renting does present you with more options, but even with lots of job changes and several moves in the last 8 years, I still live basically in the same area.

Josh

I am NOT at all addicted to throwing thirty grand a year out the window.
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Sure beats throwing $120,000 out the window as a home "owner"!!!!! :)

What happen when you're only throwing away $20,000 out the window as a home "owner"? Would you still be addicted to renting?

We always rented till 1986/87 (can't remember; senior moment) when we got a really good deal and bought. Sold it in 1996 for $50K more than we paid. We were in hog heaven about that and when I hear about the last downturn being in the early, mid-90s, I am puzzled. I don't remember anything about that in the mainstream media (not surprising, I guess). Internet was really not available to the masses at that point.

Rented a really nice place (apt.) for 11 years, but what really bugged us was property mgmt found an excuse to come into our apt. at least twice a month (check smoke detectors, change the A/C filter--like we couldn't do that simple thing ourselves). I'm really big on privacy issues. We weren't operating a meth lab, growing marijuana, etc. Middle class, middle age.

AN,

No, probably would buy at that point. :)

I'm a big-time deflationist, and think things will be getting very bad over the next few years. If something should sway my opinion, and if it looks like the economy is going to get stronger (more stable, better paying jobs for the majority of Americans), then I would jump on the chance to buy...especially if rents are higher than PITI payments.

They fix it when it breaks

Nice thing about renting is that when something major breaks in my apartment like plumbing or the heater it costs me nothing to get it repaired or replaced. Heck this week they replaced my broken screen door for free and do clean my carpets every year for free that I renew my lease.

Homes are VERY EXPENSIVE to maintain especially when a major issue comes up. Most folks fail to see this until after the fact and with the major cash outlay just to get into a home, it is a lot more to buy than rent. At least until prices drop enough where its about the same cost to buy versus rent but I do not see this for at least a couple more years.