I arrived home last night to the unwelcome sound of rushing water.
The hose connecting the water supply to the tank on my toilet had burst during the day, dumping hundreds (maybe thousands?) of gallons onto the floor, then through it, and into my basement. The vinyl floor, the bathtub, and the six-inch-high plastic molding created a waterproof seal in the bathroom that prevented the water from soaking through the walls to the rooms on other side, and my hundred-year-old house has conveniently settled in such a way that the first floor slopes toward the bathroom, confining the water to the bathroom itself and the narrow, fir-floored hallway outside it. As far as I can tell, the water mostly drained through the hallway floor. It’s too soon to tell how the fir flooring fared (though it looks okay at the moment), but for now, the upstairs damage appears limited to the rug in the hallway.
The basement is another issue. Much of the basement has floor drains to accommodate water that occasionally seeps in with the winter rains, but there’s one finished corner with a bathroom, kitchenette, and carpeted bedroom that I use for storage… and that’s where I found as much as five inches of standing water. It’s not like there’s water damage to anything I use, so my monetary loss is minimal, but it’s a fucking mess, and it’s going to be a race against time to clean everything out before the mold sets it.
Regular readers will know that this flood was somewhat my fault. Last weekend I finally took on the awful task of replacing the wax ring on my toilet, only to be forced to replace the gasket and seals in the tank after it leaked on reassembly. It’s not that I did anything wrong, but in retrospect, I guess I should have replaced the aging flexible water hose too, which, either weakened by jostling, or perhaps subjected to higher pressure when I turned the water back on, gave out a few days later. Now I know.
Ah, home ownership. The American dream.
I’ve been there since 1997, so it’s not like the house has been a terrible investment, even after the real estate market collapse. But it sure can be a pain in the ass. Earlier this year my hot water tank broke, creating a less dramatic flood along with the unanticipated expense. The rest of my appliances are a decade or two (or four) old, the exterior desperately needs painting, and my century-old steel pipes are succumbing to sclerosis. It’s a bit anxiety provoking.
The point is, home ownership isn’t everything it’s cracked up to be, and certainly isn’t for everybody. I don’t regret buying my house, or struggling to keep it after the divorce. But when my daughter moves out in a few years, I intend to trade down. And depending on the housing and rental markets, it wouldn’t bother me to never own again.
I know that runs counter to the American dream—this aspiration toward home ownership that’s been driven into all of us. But the truth is, historically, home ownership isn’t generally a spectacular investment. Forced savings, perhaps, but outside of a well-timed real estate bubble, there are many better ways to invest your money. Had I put my down payment into Apple stock, for example, I wouldn’t be repairing my own toilet. Few millionaires do.
The biggest advantage to homeownership is stability. With a fixed rate mortgage, you don’t have to worry about your landlord raising your rent year after year, or selling your home out from under you. On the other hand, as a renter, when an appliance breaks or a pipe bursts or the roof leaks, it’s not your problem. At least, financially.
Renting can be a pain when it comes to repairs, too. My kitchen ceiling leaked for two weeks before they figured out where it was coming from (fourth floor bathroom – I’m on the first floor). They were supposed to replace the warped doors on my kitchen cabinets, fix the damaged part of the ceiling, and replace the inside top of the cabinets. I’ve been waiting for them to do that for two weeks now, while subsiting on toast and takeout, because everything that was in those cabinets and on my counter is on my stove now.
Before I left for vacation today, I ran into the maintenance manager of the building. He told me they slashed his maintenance budget so far that he can’t buy what he needs to do the repairs. The owner of my building is hoping to tear it down to build more overpriced condos, even though he can’t sell all the units in the ones he just built. That isn’t surprising, considering the smallest one bedroom cost almost $300K.
@40: There are a lot of reasons that isn’t necessarily true.
The first is that the timeline of investment is different. A landlord buys their property once, and locks in payments for a long time. During a period of high vacancies, they will charge less in rent, or offer more concessions.
The second is availability of capital. Even a 2% mortgage costs a hell of a lot over 30 years. If you make a small down payment, and can’t afford to pay off your mortgage quickly, the costs can really add up. Obviously, large landlords are able to negotiate better deals (if they don’t own the properties outright).
The third is that there are fixed fees associated with buying and selling. If you plan to own a property for 30 years, they amortize away, but if you’re not sure that you’re going to be around for more than 3-5 years, they can have a significant effect on your cumulative costs.
The fourth is that new properties are often mispriced. If you buy a townhouse or condo for $400,000, but it’s only worth $200,000, that’s a lot of money you’re throwing away (and will be for 15-30 years). It’s less common for rentals to be massively mispriced, simply because the market is more liquid — renters move much more often than owners.
The New York Times has a great calculator on their site about whether it’s cheaper to buy or rent:
http://www.nytimes.com/interactive/busin…
They also have an article on the topic:
http://www.nytimes.com/2011/05/11/busine…
Check out the graphic — note that Seattle is firmly in the “renting is cheaper” camp.