Saturday, December 20, 2014

Buy or Rent: Did I Make the Wrong Choice?

When I became an adult, I bought into the American Dream: marriage, career, kids, home, security, etc. I knew that if I worked hard, I could have it all.

Owning a home was a big part of that dream. It meant stability, putting down roots, an investment for retirement. I wonder sometimes if I was a sucker who bought into a dream that originated with a real-estate agent.

I have been a homeowner since 1981 when my then husband and I bought a single-wide mobile home. We lived in it for a year until we could save money to buy a starter house. I lived in that house for the next 25 years, remodeling, adding bedrooms and bathrooms, as well as the normal maintenence. During that 25 years, the value of the house increased from $35,000 in 1981 to $230,000 in 2005. That's when I sold it and bought the house I live in now. 

I loved my new house. It was perfect -- huge stone fireplace, vaulted ceiling, loft, 2 beds/1 bath upstairs for the kids, walk-in attic, garage, master bed/bath downstairs and pool all on 3/4 acre. I made a few changes -- replacing the fence, painting inside, new carpet upstairs -- but the house didn't require much changing. That was 10 years ago.

This week, the week before Christmas, the furnace broke and we found out that the septic system has to be replaced. In the last year, we have replaced the roof and all rotted wood, repaired the broken driveway, and painted the outside. During the wood-rot removal, the workers discovered the header over the fireplace was rotted completely which could have caused the roof to collapse. That necessary repair was not cheap.

This year, we are looking at a new pool liner and concrete decking repair, new kitchen countertops since the present ones are 40 years old, and numerous other expenses that go along with owning an aging home.

I bought this house in 2005 at the height of the housing bubble. In 2008, I saw the value of my house drop 25%. In all likelihood, I’ll not live to see my house return to its original value.

Would renting be a better option? The older I get, the more I think yes. Advantages and disadvantages exist with both choices:

My daughter is a senior in college and lives with two roommates in a resort-style apartment for $550 each per month. She lives in a 3 bedroom/3 bath really nice, secure apartment with granite countertops and modern furniture. The many amenities included are pool, gym, tanning bed, computer lab, free printing, coffee bar, and lots of entertainment. Most college housing today is like this.

If I had lived in something like this when I was in college instead of the cheapest housing I could find, I'm not sure I would ever have wanted to buy a house. Why would I want to work and save to own a house that I have to maintain when I could call the landlord to fix the broken furnace or to put in a new septic system?

People talk of the American Dream being dead. I see how goals have changed because of the economy and the decline of the joys of owning your own piece of land and home, so maybe it is changing somewhat. I don't believe it will die completely.

I still love my house, but I am tired of the upkeep that homeownership brings. I'm reminded of that 1980s movie The Money Pit starring Tom Hanks.  All of you homeowners will get a good laugh about his experiences while all of the renters will sit back and feel smart and smug.