America Should Become a Nation of Renters

The very features that made houses an affordable and stable investment are coming to an end.

Rising real-estate prices are stoking fears that homeownership, long considered a core component of the American dream, is slipping out of reach for low- and moderate-income Americans. That may be so — but a nation of renters is not something to fear. In fact, it’s the opposite.

The numbers paint a stark picture. After peaking at 69% in 2004, the homeownership rate fell every year until 2016, when it was 64.3% — its lowest level since the Census Bureau started keeping track in 1984. The rate rebounded in Donald Trump’s presidency, hitting 66% in 2020, but that trend is likely to be arrested by a housing market that is desperately short on supply and seeing month-over-month price increases greater than they were in the frenzied market of 2006.

This process is painful, but it’s not all bad. Slowly but surely, most Americans’ single biggest asset — their home — is becoming more liquid. Call it the liquefaction of the U.S. housing market.

Even in the best markets, single-family homes have historically been an extremely illiquid asset. Appraisals have to be made on an individual basis, and mispriced homes can sit on the market for months waiting for a potential buyer — only for that buyer’s financing to fall through.

Liquid assets, like publicly traded stocks and corporate bonds, earn what’s known as a liquidity premium: Their market price is many times the dividend or coupon that investors get from holding them. The more liquid an asset, the higher that premium goes. On the flip side, those same high-flying stocks and bonds can see their prices collapse when investors get spooked and withdraw their cash from the market.

Houses have typically traded with very little liquidity premium. That meant a relatively low purchase price compared to what it would cost to rent — the equivalent of the dividend from housing investment — and stable prices over time.

These two factors made houses a good investment for moderate-income families who often lacked the cash and the risk tolerance for market investments. As investments went, single-family homes were cheap and slowly grew in value in both good times and bad.

In the early 21st century, automated appraisals and mortgage underwriting began to change that. Combined with the repackaging of subprime loans into presumably safer CDOs, they created a far more liquid market for housing. In response, housing prices soared — and became more sensitive to the vagaries of the markets. When investors pulled out of CDOs, buyer financing dried up and the whole housing market crashed.

It may have seemed at the time like a failed experiment. But financialization had changed the housing market forever. Houses are now more prone to be priced high relative to rents, and to see their prices fluctuate with the market. The very features that made home buying an affordable and stable investment are coming to an end.

But the illiquidity that made houses a safe investment also made America less dynamic and mobile. In coastal markets with strong demand for housing, market forces would normally have led to the replacement of single-family homes with duplexes and apartments. But existing homeowners are reluctant to agree to development with unknowable effects on the value of their most precious investments. The result is less development — and sky-high rents for any residents not lucky enough to own their own home.

As institutional investors increasingly enter the housing market, however, the incentives begin to shift. Large investors can expand or redevelop their properties themselves, because they benefit from a greater number of overall tenants, even if rents themselves dip.

Meanwhile, the increased availability of rental properties could benefit homeowners in declining areas of the country. They frequently cannot move to more prosperous areas because they can’t sell their homes for nearly enough to buy a new place somewhere else. In an economy with more rentals, however, they could afford to try a new place for a few years without the commitment of a mortgage or down payment.

A nation of renters could lead to a world where location decisions are driven far more by personal preferences and life-cycle demands. Younger workers might prefer the excitement of the city. A couple just starting a family could reunite with their parents or siblings in a small town.

The U.S. is not quite there yet, and not just because too many people are chasing too few apartments. To see the U.S. as a nation of renters requires a revision of the American dream of homeownership. This country was always more about new frontiers than comfortable settlements, anyway.

https://www.bloomberg.com/opinion/articles/2021-06-17/america-should-become-a-nation-of-renters

Interesting take, but I don't see this happening. I think the heavy investments in real estate from big money interests are creating another huge housing bubble. These people learned nothing from 2008 and I hope they take a financial bath when they cause working class Americans to lose their homes.

All these bidding wars over normal middle class homes and driving prices through the roof is just child's play for big money. They don't give a damn if they are making housing unaffordable because they are making money in rents. Next they will raise rents across the country again. They will never be happy, even when half the working class can't pay for a place to live... what's wrong with America is greed.

Why should America take advice from OldCold.

It's a terrible long-term take on a short-term bubble.

2020 and beyond, isn't so much an influence of "big money", but a side effect of a ton of factors all hitting. Skyrocketing lumber costs have made it relatively cheaper to buy than build, and a lack of decent inventory on the market coupled with insane buyer demand, has created much of the pressure. The buyer demand is largely a factor of two things: one, people working from home in droves are no longer geographically bound. A person can earn a NYC salary and have a Cleveland cost of living. Two, a lot of people have been selling to try to cash in on the skyrocketing prices, which leads to more people in the Buyer's market because if you sell, now you need a place. People are putting their homes up for sale, but not in sufficient numbers to cover the demand and in a world where the cost to build has gone up like 40% due to material shortages and labor shortages, it is STILL cheaper to buy existing many times.

The bubble is going to pop soon. And in a HUGE way. There is a TON of real estate inventory that was kept off the market in 2020 due to all of the homes that got mortgage protection due to COVID. Once that mortgage protection ends (which should be soon) and the dam breaks on those foreclosures, the market will be flooded and current market values will bottom out.... and then, it will be a Buyer's market, again.

100% agree... if someone can't buy a property now because of the bubble I do agree that a good solution is continue to rent and save..... but there are lots of ways to buy a property and it still make great financial sense.... doing a live in flip or a house hack would be great ways to get a property that can earn you money and provide much better returns than the stock market can....

I do agree that housing prices are unreal right now... I'm hoping it cools off soon... we've considered selling our primary residence because of how much the price has inflated, but frankly where the heck would we move to? we like our street and overall like our house... would like some more land, but haven't found anything that makes sense.

We did purchase a couple rentals at the end of 2020 though that have done very well so far...

It wasn't Oldcold's take,, It was an article he posted....Yikes

With the middle class being squeezed out of the American Dream, it's just what it is.

But there is always people like my wife and I. Always owned homes or condos,, but nowadays, I just want to relax, let someone else take care of things.... so for now, renting works.

I think the mind set of younger people have changed quite a bit as a whole. Not for everyone, but for a lot of them. They leave college heavily in debt. They are having fewer children and generally later in life because they are starting out in so much debt it's financially wise for them to wait.

As such they are looking for more employment opportunities wherever they may find them. It makes sense for them to be mobile at a moments notice. People are also looking big picture at how much there really is to be gained by owning a home.

You have homeowners insurance, property taxes, which are both constantly being increased and the constant cost of the upkeep and maintenance involved in home ownership.

I wouldn't say that renting should be the goal for the bulk of your life, but it makes sense at times.

Early on, most have to do so. Later on it makes a lot of sense, especially if you have the retirement income to do so.

i think globalization, especially accelerated by social media and technology, should really give Americans a reason to due some self-reflecting on what the "american dream" is. it needs a very needed update.

we can come up with minor reasonings for why owning a home nowadays is difficult, but the core reason is that more and more people simply don't want to.

things like yard space and such isn't as appealing. don't let the pandemic fool us into thinking more and more people want to live out in open space. there's more and more people who are having less kids, making more career and life oriented decisions, and more concerned about other aspects of life. owning a home isn't part of a lot of people's american dream, because we have to realize that everyone's dream isn't the same.

hell, i'll use myself as an example. i bought this townhouse in 2017. i'm married and have two kids, and have a dog. its 1800 sq ft with two car garage. it cost 149k.

4 years we've been here, and my wife and i have realize that we don't need any more space. for what? we're constantly out and about, the kids are out with their friends, we go on walks with the dog but to the beach a lot as well, and we travel a ton. our individual lifestyle says we don't need anything bigger. so the major reason for not buying a bigger space is because of our family lifestyle.

NOW you add the minor thing, such as cost. since our preferred lifestyle says we don't need a bigger space, why in god's name would we spend 350K plus on a home that we won't get maximum value out of? hell that's the cheap end now and you can't even see those prices here in NE ohio. a house that you won't have to renovate are going minimum 450K, and there's so much demand that you gotta go 700K plus just to not get outbidded, HOPEFULLY.

my family will never maximize a house like that. i don't want to spend half the week maintaining a freaking house. cutting the yard and all that crap? why would i spend half my income to purposely stress myself out like that? thats freaking stupid.

then on top of that, who am i gonna pass that house down to? my kids don't want to live in ohio like that. one wants to go to school in Cali and the other hopes we move back to europe. so i should pay 350K + on a crib nobody is even gonna want after i'm done? screw that.

so in OUR situation, we can do so much more with that money than wasting it on a crib we barely use. vacations, investing on the stock market, dumbass purchases on gadgets, cars, etc.

i'm not gonna go house broke just to say i own a home. thats dumb.

now, for other people, they need that big house. maybe they have/want a big family, and live the typical suburbia lifestyle and such. i have no problem with that, and i hope every person fulfills their dreams with the house with the big ass pool in the back. thats dope. and maybe thats when cost becomes the priority because the housing market has priced them out of their preferred lifestyle. that sucks.

but we gotta remember that not everybody's american dream is the same. so when i see people on the media try to chalk everything up to rising cost, its a bit misleading. there's a lot of people who can afford a house/condo/whatever. there's a lot of them out there too.

but the houses like that look like a perfect suburb on a HOA in a TV series? those stereotypical houses are what are in demand, despite the fact that most people demanding those houses don't live the lifestyle necessary to maximize the value of that home.

some people want a certain image only to realize the hard way that the image will never make them happy.

but keep getting them 30 year mortgages to keep up with the jones's.

I'm glad I paid off my home over a decade ago because I paid for it in cash up front. I bought a fixer upper for 14,000 in the Fannie Mae program that gives private citizens a chance to buy a home before banks and companies can with the condition that you live in it for at least a year before you sell it. Since then, I put about 25 thousand into it to fix it up and this 4 bedroom, 2 bath home is now worth a LOT more than I put into it.

There are still plenty of properties out there to buy but people are just too lazy to fix them up. It's a shame because I have saved well over $100,000 dollars in just the last 10 years alone by owning my own home.

I agree with Swish. I live in a small starter home that I bought new 20 years ago. I can afford a larger home, but why? What am I going to do with all that space? Plus it would cost more in maintenance and utilities.

I know more more more is the American way, but sometimes just be happy with what you have. And stack money for retirement instead.

Every one has to find their own 'fit'. Too many want more more more.

Or, "show show show".

No doubt. Retirement is a lot more fun when you have the money to do it right.

As long as there is up to 10K interest to write off every year, a house is a good investment.

agreed... I've really struggled with what to do about my primary residence... have been in the same home for 6 years... I love our area... very close to my MIL... I would love a place with a pool...and would love more space... but I really don't want to move... so for now, even though I can easily buy a bigger place with a pool, I'll stay here for now... no (real) reason to move....

I think more people need to buy homes that are well within their means... instead of trying to buy the most they can be approved for...

Amen!

So true. Paid our house off last year, and have never felt so free.

We plan to stay in this house until we just can't, or don't want to, maintain it anymore, and then we will probably rent a small condo or something.

I have an aunt that bought a house at 66, she is 71 now, and she can't retire because she has a mortgage.

This part makes perfect sense, and I doubt that anyone would disagree. The article, however, was trying to say this but from a financial standpoint. I doubt it'll ever make more financial sense to pay rent vs a mortgage.

I think a lot of that revolves around where you buy a home. If you invest in a location on the rise or established where your property values increase dramatically, it's a pretty sound investment. If over the long haul the location you buy a home gets worse I think you actually spend more in upkeep, property taxes, homeowners insurance and maintenance than you'll ever get back. There's a lot of decision making that goes into whether the home you buy is the correct decision or not.

Location is definitely a YUGE variable in this equation.

My assumption has always been that you'd have to have really big numbers in the column you listed to overcome the fact that paying a mortgage is, in a way, paying yourself. You're paying for small bits of ownership in your home that you can turn around and cash in on later. Rent is just you paying someone (probably so they can pay their mortgage). Rent is nice in that it doesn't come with hidden costs like replacing the fridge/HVAC/etc when those decide to quit, but many times rent is calculated with that stuff in mind (mortgage, utilities (if paid), and even property taxes).

Don't get me wrong... I've done more than my fair share of the "homeowner eye roll" over my relatively short time owning my home.

Home ownership is a long term investment. Unless you are lucky enough to get in at a low point in an up and coming area, you will often not profit much if you sell within the first 10 years.

Even more so if you just made the minimum payment the whole time.

The one variable that I think comes into play here has a lot to do with how long the person you rent from has owned the property. If their mortgage was taken out 20 ago, their mortgage payments are much lower and can create a situation where rent is much cheaper than home ownership at todays market prices.

I know in the city of Nashville home prices have skyrocketed over just the past ten years. It's like this area is a magnet for jobs. It's become a huge tourist location as well. I wouldn't pay a fraction of what they're asking for some of the dumps around Nashville. It's just crazy.

Just clicking

So, out of the blue yesterday, the wife and I decided to visit a home a Rama in Aurora...We expected it to be more than one builder and more than one model to review. that's how Home a Rama's have been in the past.

Nope... One house, one builder..That's it.

It was in Barrington Estates here in Aurora.. The model was very nice. Lots of goodies.. Great finishes.. 3400 Sq Ft. $950,000 list price. $279 per Sq ft,

We do this every so often.. More or less because we are a little nosey but mostly it's because we like to see what new features they are putting in homes these days.

It was a very high end finishing job.. Sub Zero Fridge, Built in Coffee maker. The range and oven were top shelf..

But small for the money IMO. If that's what close to a million gets you today, I'll be happy right where I am....

Indeed, Nashville has gone nuts. The Music City has always had the tourist thing going on since it is the country music mecca, but now it is a business and foodie destination as well.

My wife and I would go for weekends 3-4 times a year but now you can't find a nice room downtown for under $250-$300 and up a night. When prices started to rise we could head to West End and still get a Courtyard for around $175 a night on weekends....no more.

Two nights now with a couple of nice dinners is going to set you back $1000 or so. Even staying out in Franklin is pretty pricy.

We live relatively close to Franklin and since we moved here the home values have been escalating like crazy. We're less than 30 minutes from Nashville and I have to say that investing here was a wise choice.

A very good article warning of what 'might' happen with this housing price bubble.

Supreme Court blocks Biden's eviction moratorium

A divided Supreme Court on Thursday blocked an eviction freeze put in place by the Biden administration to shield cash-strapped tenants from the coronavirus pandemic.

In a ruling that appeared to break along familiar ideological lines, the conservative-majority court lifted the stay on a federal judge’s order which found the Centers for Disease Control and Prevention’s (CDC) eviction moratorium unlawful.

“The equities do not justify depriving the applicants of the District Court’s judgment in their favor,” the justices wrote in an unsigned order. “The moratorium has put the applicants, along with millions of landlords across the country, at risk of irreparable harm by depriving them of rent payments with no guarantee of eventual recovery.”

The court’s three liberal justices wrote in dissent, noting that stripping the federal protections may result in crowded living conditions where “the doubly contagious Delta variant threatens to spread quickly.”

The move comes after the Biden administration enacted an eviction freeze earlier this month aimed at areas with high infection rates as the U.S. contends with the highly contagious delta variant of the coronavirus.

The court’s Thursday ruling handed a win to a landlord group that has been fighting since last fall to block the federal eviction suspension, which has cost property owners some $19 billion each month.

Led by the Alabama Association of Realtors, the challengers had previously notched a key victory when a federal judge in Washington, D.C., ruled in May that the CDC measure amounted to an illegal government overreach.

But the judge, Dabney Friedrich, agreed to delay enforcement of her decision, citing the risk to public health if evictions were allowed to proceed. The justices’ move Thursday, though, lets Friedrich’s ruling take effect as the Biden administration weighs its next move.

The Justice Department, which has defended the eviction freeze on behalf of the administration, did not immediately respond when asked if it would continue to pursue an appeal of the underlying decision by Friedrich, a Trump appointee.

The White House expressed disappointment over Thursday’s ruling and called on all entities with a hand in evictions — from state and local governments, to courts, landlords and executive agencies — to mitigate the fallout.

“The Biden Administration is disappointed that the Supreme Court has blocked the most recent CDC eviction moratorium while confirmed cases of the Delta variant are significant across the country,” White House press secretary Jen Psaki said in a statement. “As a result of this ruling, families will face the painful impact of evictions, and communities across the country will face greater risk of exposure to COVID-19.”

Some 15 million people are currently behind on rent in the U.S., according to one recent estimate, though it was not immediately clear how many tenants could be placed at greater risk of eviction as a result of the court’s move. A patchwork of state and local eviction freezes were unaffected by Thursday's ruling.

The latest legal wrangling over the eviction freeze marks the second time the Supreme Court has addressed the measure in recent months.

In June, a 5-4 court rejected the landlords’ bid to block the policy, with Justice Brett Kavanaugh in the majority. At that time, Kavanaugh said Congress would need to pass new legislation for the CDC to lawfully push the previous moratorium past its July 31 expiration date.

But Congress did not renew the policy. Instead, the Biden administration in early August acted unilaterally to renew the lapsed eviction freeze through early October, prompting this latest round of court fights.

In Thursday’s ruling, the court again singled out Congress’ inaction.

“Congress was on notice that a further extension would almost surely require new legislation,” the court wrote, “yet it failed to act in the several weeks leading up to the moratorium’s expiration.”

Justice Stephen Breyer, one of the court’s more liberal members, wrote an 8-page dissent that was joined by fellow liberal justices Sonia Sotomayor and Elena Kagan. The trio blasted the majority for substituting its judgment for that of public health officials.

“The public interest strongly favors respecting the CDC’s judgment at this moment, when over 90% of counties are experiencing high transmission rates,” Breyer wrote.

The CDC policy, originally enacted in September and subsequently extended several times, has aimed to protect tenants who state under penalty of perjury that they are unable to pay rent and would face overcrowded conditions if evicted.

The measure aimed in part to provide an additional layer of protection while emergency federal rental aid made its way to tenants. But the Treasury Department on Wednesday said only some $5 billion of the roughly $46 billion allocated for emergency rental aid had been distributed by state governments.

https://thehill.com/regulation/court-battles/569662-supreme-court-blocks-bidens-eviction-moratorium

It's going to be interesting to see how this effects the economy. Most of these people got behind due to no fault of their own, yet many will be put out on the streets before the Holidays. It takes roughly 90 days to evict somebody from a home... some places less time other more... We could be looking at millions of new homeless by Thanksgiving or Christmas.

Don't think the court should have done this personally. Can't help but to wonder how many of these poor landlords will be homeless by the holidays over this by comparison...

It's a bad situation, but a question. Is it right for landlords to not be able to collect rent?

There is really only one correct answer to that, so I know you would say no.

So the feds allocated 46 billion to help renter, yet only 5 billion has been distributed by the states?

My only question now is WTH has the states been doing or not doing with this money?

Sadly it's yet another failure on the part of our government. There's no doubt that landlords should not be harmed or in default on their loans. They shouldn't be denied payments and rent cause them to be foreclosed on. They shouldn't have their credit destroyed. Covid is no more their fault than it is the fault of those renters.

Yet almost 90% of the money in assistance that was to be provided to stop this situation from happening has not been dispersed. The money was allocated to states and cities and it's just sitting there. This at least far the most part all could have been avoided......

89% of federal rental assistance remains unspent as potential evictions crisis looms

https://www.usatoday.com/story/news/poli...oms/5584441001/

Initially, I could see delays. To avoid extensive abuse of the system, I'm sure they require lease documents and rental agreements be uploaded or such to prove the need, which would need to be reviewed by hand.

But we are going on 18 months now, it should be farther along than this. Heck, pay people stuck at home to review documents.

The thing that sticks out in my mind the most about how harmful this is to both renters and landlords alike is a myth I see perpetuated a lot on this board and elsewhere. The myth is that states and local governments are better at handling their own situations than the federal government. That any federal money should be handed over to the states to be distributed because the state best knows their needs.

I certainly won't dispute that they know their own situation better than those at the federal level but this does go to show they are no less inept at handling funds. They are no better at addressing an issue with the money allocated to fix such problems.

To me it is a sad reflection that our government isn't only broken on the federal level but at every other level as well.

Can you explain that in more detail. IMO it is harmful to both renters and landlords.

j/c...

Was wandering through wine country (Ohio, Geneva lol) a few weeks back and ran into a nice couple we shared some time with. He's been a property manager and landlord for decades... I asked the simple question "Is the gov't making you whole on your rent losses?"

"Hell no. I've got nothing. The system is so full of red tape and people with no answers... but the dumbest part is that the tenants have to file on the landlord's behalf, stating that they can't pay their rent, before the any case is opened."

He said that a couple of his renters have done that (to the best of his knowledge) and nothing has become of it. He went on to say that a couple tenants are catching up slowly, a couple are way behind but finally paying consistently and a few he just knows will be total losses. He's had to dump a couple properties to maintain cashflow and hopes that something is done (eventually) to reimburse him for all the losses.

His wife was steering away from the convo, as he was getting pretty fired up, and he just left things at "let's just say the entire process they put in place is corrupt".

So, the first box in the flowchart makes no sense at all... Wouldn't you have the person incurring losses filing the claim rather than the person who was basically told "don't worry about it if you can't pay"?

We had a tenant that in April last year flat out told us "The government says I don't have to pay", even though at this point they had already been 2 months behind for almost 6 months.

Lucky for us, their lease was up in May, so we refused to renew and they voluntarily left when it was up.

Boy was that a screw up on my part! That's most certainly not what I meant at all. Thanks for the catch.

My intention was to say that it IS harmful to both renters and landlords alike and the myth is how local and state governments handle things better than the federal government when this shows government failure at all levels.

My apologies for the mix up.

I did have to read that a couple times... but yeah, it pains me to say (I'm one of the "states >> Federal" people) that you're right about the consistent levels of incompetence and corruption.

Great job Supreme Court. Maybe some of these renters that have failed to pay their rent will go back to work.

That's just as poor of a characterization of the situation as the "evil landlord" trope.

That is a correct characterization. Businesses all over the Country are begging for workers and there is a segment of the population that just will not work.

Yeah, that's the same thing we heard about federal unemployment benefits. The claim was that they were drawing too much unemployment or they would go back to work.

Now that 26 states have ended those benefits, you just moved on to another excuse. Listening to you is like trying to follow the bouncing ball.

It would be interesting to know what these people are doing , or why these jobs aren't being filled.

I don't know if this is it, but when I had a mortgage or paid rent, it was a large portion of my monthly bills, and now that I don't have that hanging over me, I could survive on much less income than when I had to pay it.

There's jobs out there, why are people not taking them? I can't imagine all 9 million?? jobs are paying under minimum, or under a "living wage".

Just a guess but knowing a bit about our government, the money was probably never sent to the states, it's sitting with the federal government. And there is probably a lengthy and complicated application process by individuals to apply for the money where they have to prove they were harmed by covid and why they are entitled to relief, which then gets pooled and the state requests the funds from the federal government, who has it's own lengthy review process....

It's also highly possible that a lot of renters aren't even aware that there are funds available that they can apply for.

There are many variables to consider.

Each case is measured on it's own.

I own a home with a small mortgage.

I moved and leased it. That paid the mortgage and put $1600 in my pocket a month.

After five years I moved back. And was able to put in many improvements.

My son is building a house on land we bought. We bought the land two years ago. The property has more than doubled.

Location, location, location. Age. Short term, and long term plans. Interest rate. Real estate market. Can you do repairs and maintenance or have to pay others?

Lots of factors.

Whatever works for you.

What I can't do is answer your questions. But what I can do is show you examples that seem to show it's far more lower paying jobs that aren't being filled.

This latest rent moratorium did not hold up in Tennessee and evictions became wide spread here about as month ago.



I'm only using the state I live in because it's an example of what happens when the eviction moratorium has been lifted. The federal unemployment benefits ended back around that time as well here in Tennessee. So there is no federal unemployment nor are you protected from evictions here.

As to your question concerning jobs paying low wages, I can only address what are posted on the states unemployment web site.



I can give you one prime example of what's going on at least in Tennessee. My son in law is a district manager of a gas station chain. He oversees many stations in a designated area. He, as with some posters on this board, blamed the fact he could not get any help on both the eviction moratorium and the fact people were drawing so much in federal combined with state unemployment benefits.

At the time I asked him what there starting pay was. He said it was $10.50. I told him that many other businesses had risen their starting wages and were even giving sign on bonuses to attract workers. He dismissed that by hanging on to what he thought the issue was.

Now, about a month later he has come around to the idea that it's the pay structure and not the benefits that seem to be more of the issue.

Tennessee I must admit however is in a unique situation. We have two years of tuition free college to our high school graduates. As such we draw a lot of higher paying jobs to our state which give employees an ample supply of opportunities to land better paying jobs. In our case one of the popular opinions is that many of those who worked in the service industry have moved on to better paying jobs in other sectors.

I know this doesn't directly answer all of your questions. I also know the job situation in my state is not typical across the country.

No, the money has been allocated to the states.

j/c

I don't know about this "no eviction" thing. I know a couple that owned a rental house. The tenant hadn't paid rent in 12 months.

He got evicted.

Every time I hear this kinda thing, I always have to wonder what people are thinking..

Did they forget how much PPP money was handed out to retail business, rental properties and many others..

They got paid,, or at least could have had they merely applied...

I own a house at the moment and have a mortgage but have toyed with the idea of moving back to an apartment.

There's one MAJOR problem with any apartment or condo that I've always had, it's that you can hear people through the walls. There's also no review system for how quiet a comple or unit itself is. That's a shame because noise should be the primary concern. Lol, maybe there's some tricks people have to selecting a place!

what a lot of people don't consider is that you can buy the individual units and pay a maintenance fee monthly, sort of like how HOA's work.

now, obviously it depends on the building itself, but if you purchase a apartment in a recently built building, you can install some soundproofing materials or panels to help with the noise.

also, as far as reducing noise that you as individual can make, thats were acoustic panels and such really come in handy.

but you can renovate the interior of an apartment building like any other home if you purchase one. apartments are definitely more affordable than houses, but when it comes to apartment vs house, its all about your preferred lifestyle.

if you're constantly on the go, like more urban living, don't want the cost of upkeep that comes with owning a home with yard space, than apartments are a great investment.

i know your pain when i was purchasing apartments as real estate investment. some apartment were just loud as hell for no reason. others were quiet, but you can hear somebody below or above you opening the sliding door to the balcony.

the big issue though is that its not necessarily the building itself but the people living there. one apartment that im renting to a nurse has a neighbor problem. its like 4 dudes living in a 2 bedroom apartment above her, and they have all their band equipment inside (drums, guitars, etc). to your point with that one specifically, no amount of sound treatment is gonna fix that problem.

however, another apartment i have that is being rented out by a family, no issues with noise. but thats because their neighbors are all older. so with that one specifically, could there be a noise problem? sure, but nobody will know until the right (or wrong) neighbors move in.

And I think that's a lot of the issue with long term apartment renting. If you choose an apartment you plan to live in long term, you have no control over the neighbors changing regularly. A lot of renters only stay for the length of the initial lease and then move on. So if you plan to stay somewhere over a long period of time, you may have several different neighbors.

When you decide to move there the neighbors may be respectful. But that can change every time their lease is up.

Of course when you purchase a home the neighbors can also change, but it's highly unlikely those buying a home will move as often and there is at least some space between you and your neighbor.

I'm still not as convinced as most that buying a home to live in long term is such a great investment. When you consider property taxes over the length of your ownership, the added cost of home owners insurance over renters insurance, maintenance over the lifetime of ownership, the money gained is often times inflated in peoples minds because they do not see that as money they spent when buying the home. Even down to appliances.

It's like the guy who brags about hitting a $100 lottery scratch off ticket. He never tells you how much he spent on losing tickets before he hit on that $100 dollar one.

I hopefully will never live in an apartment again. I hated it.

I always wanted an apartment in NYC, but that will never happen.

When I become elderly, I want to move back to Cleveland and live in a condo on the lake.

I agree.

That’s why I think more conversations on how we look at housing are important. Due to global connectivity, we have a more mobile population. Overall, that must be taken into account with rising rent as well. It’s not all “prices are out of control”. Some of that is due to the nature of society now. People are living longer, more educated, which means less births, more time committed to careers and social lives.

That just makes they traditional home in the suburbs less appealing over time.

However, I DONT want us to be a nation of renters as a large majority. That’s why we have to look at how and where we build apartment complexes, and also look to the evidence of more urban style living due to the rise of condo/townhome construction.

I would love for us to design a mortgage more suited for those style of livings. A 7-10 year mortgage on a apartment unit is doable, IMO. It’s a gloried HOA anyway due to maintenance fees, which means more financial protection for the building owners/landlords themselves.

That combined with sensible regulation such as sound installation between units and such, and I think that would help get us out of housing crisis that’s coming, as well as boost the economy. I think something like that would also help bring down the cost of construction due to multi family style living over single homes.

Just a thought anyway.

That's not the major problem from my perspective. The major problem is that if I bought a house 10 years ago and let's say, for sake of argument, my mortgage payment was $1500 (with insurance and property taxes built in) on a 30 year fixed... and somebody else rented an apartment 10 years ago and their rent was $1200...

Today my mortgage payment is still $1500. (property taxes might have gone up a little but not that much) Their rent now could quite possibly be $1600-1700 or more. Average rent in the US has gone up 30% over the last 10 years, a lot more in some areas.

Ten years from now, my mortgage payment is still going to be... $1500, even though my income will have gone up significantly over the last 20 years. Unless I aggressively paid of my 30 year fixed in 20 years, then my mortgage payment is $0 and I only owe the insurance and property taxes. And now I have an appreciating asset to sell to help fund my retirement or to leave to my kids or whatever. My rent could be $2500 or more and I own nothing.

Rent has been rising faster than incomes on average so that nice 3-5% raise you get every year is being eaten up faster by the increases in your rent, which you have no control over.

I'm not anti-renting, if people think it makes the most sense for them, if they move a lot or have other reasons, go for it.. but I enjoy having a yard for the dog and where the kids played when they were younger, I enjoy having a patio and a grill where I can entertain outside, I enjoy having a garage so I don't have to put the top up on the Jeep every night, I enjoy being able to decorate anyway that I choose and not have to worry about upsetting the landlord, my wife maybe but not the landlord.

I totally agree. I want to own my house not rent and pay off someone else's house for them. When you rent you never own anything. When you do own something the Government should never be able to tell you when or when not you can evict renters.

I always figured a rental property or two would be part of my retirement plan at some point... but I don't know if I have the patience to deal with people like that.

The Government should not be telling people who own property they can or cannot evict their tenants on the premise of them holding their end of the bargain. It is and should be a great way to supplement an income. But, it is also hard to find good renters anymore.

Only question/issue with that is - over someone's 30 year mortgage, how much did they spend roofing, perhaps siding, getting a new furnace or a/c. Property upkeep - be that paying someone to mow/fertilize, or doing it themselves. Landscaping. Those incessant "dish washer broke, microwave quit, house flooded, insurance, etc etc.

Renters, as a rule, don't have those expenses.

I own a home. I know what I paid for it. Currently, it is worth around $100,000 more than I paid for it. I also spent $35,000 to have it roofed and sided. I pay $2400 a year for prop. tax. I put windows in - myself - but it was still an expense. Foundation needs some work,

So many other 'owner' expenses over the years. So, do I come out ahead?

In one respect, yes, I have an asset I can sell. In another respect, when I sell, I have to live somewhere, right?

And yes, I've gotten the vaccine.

We've had several rentals, but sold some off over the last few years as we've gotten older and the desire to spend our free time turning them over between tenants has lessened. If you have a management company handle it, it might not be so bad, but then you're paying for that service.

We are down to just 2 units, both with long term tenants, and both pretty much maintain little things themselves , and just send us copy of the receipts, which we deduct from their next rent plus a little more if labor was involved.

The one property is one we plan to keep as it's small with little upkeep, so we figure when we get older and can't maintain our current house, we will sell it and downsize to that one.

Yes, there are other expenses in being a homeowner but they can be factored in. I would say with relative certainty that unless you bought a total lemon of a house and overpaid that the homeowner comes out better in the long run.

If you are handy and like to do things yourself (and can do them well) buy a fixer upper and you will get rewarded for your improvements. If you aren't, build a house in a development that's brand new and you should be a good 12-15 years in before the appliances start needing replaced or any of that and the foundation and structure should never really need work if you live there for 25-30 years.

There are some advantages to renting, but if you plan on being in the same general area for a long period of time, I still think owning is the better decision.

This is me thinking out loud, too, but I also imagine with renters that the appliance/structure repair and replacement rates are factored into the costs of the rent in some type of indirect cost pool.

For instance, in figuring out their operating costs, the leasing office, landlord, or whoever I'm guessing would likely take into account their overhead costs, with maintenance and repair being one of them, and probably spread them by unit on an average monthly or yearly basis. So I imagine most rental fees would cover at least an average monthly payment of general repairs and appliance replacements that would need to take place.

I guess it would also be better to pay that average rate with the guarantee you're going to have a decent place to live as opposed to all of a sudden finding out that you have a foundation defect that's going to cost a lump sum $25K to fix.

Obviously you have not heard about the HOA fees on top of rent that are used to cover these costs.

Depending where you are, they can be quite high.

I have not, as I've never dealt with a HOA.

Yes, we always figured the cost of a mortgage, taxes , insurance and an additional 10% for misc maintenance, into the rent cost.

We didn't carry mortgages on the properties, so that allowed us to cut back on our rent a little and be more picky about who we rented to. Our average tenant stayed 5+ years, which is very good in our market, part of that is because to get the same type of housing would cost more, so they only moved if they needed more space or a more convenient location.

Interesting side note. When talking to prospective tenants, many would site the reason for leaving their current housing was "The lease was up, time to move" Like people don't seam to realize they can renew a lease or something, and one young couple actually were surprised it was an option when we asked why they didn't renew with their previous landlord.

It's like they don't teach this stuff in school anymore. Schools used to at least try to get you ready for real life. We had home economics classes where we learned to cook, clean, take care of clothes and food stuff like storage and rotation, and manage a household budget. We had shop class that taught us to make things and repair things. We had civics and government classes to learn about being responsible citizens. We had history classes that looked at the good and bad attempting to extract lessons we could use to make the future better. We had a lot of things kids don't seem to have now AND we were still not well prepared, BUT we were way ahead of today's kids in being prepared... or life was easier to navigate for us... one or the other.

I gave up on thinking America would do what is best for kids and became jaded once I realized how many stupid people graduate high school and can barely spell, let alone function as a reliable and responsible adult.

AND you walked uphill both ways, too!

No that defies physics, but it was 6 feet of snow with no shoes.

Now that's just not true. Well the snow part is but we were allowed one pair of shoes every year.

Good stuff OCD.

And to play off that... the biggest part of the problem is that there is absolutely no education to the horrors of being strapped with debt. It's almost hopeless because now it's just a way off life... it's just "what you do". People buy cars and houses based on a predatory system that tells them what the can afford, for 90% of the country it's all about the payment, with no consideration to what the real price tag is.

Can't speak for the one-off landlords but yes, institutional landlords who manage complexes have a fund because they know maintenance is going to happen, they also have a fund where they put money every month because they know the life expectancy of the refrigerators, microwaves, the roof, etc. so they budget for replacement.

The upside to a renter is that your risk is limited to the amount of your rent. If you live in an apartment for 2 years and no repairs are needed, you pay your rent. If you live in an apartment for 2 years and they have to replace the fridge, the microwave, the AC, and the roof, you still just pay the rent.

I think a lot of it, at least for a lot of people is the cost of a one time hit.

Let's say you own a home. Replacing your roof could cost 20k. Then if your heating and cooling system go out, you could be hit with a another 10k or 15k.

Sure you can finance it but how many average workers can suddenly afford to take on that much added debt in a short period of time on top of paying their mortgage?

I see the advantage and disadvantage in both situations.

True, another advantage is the flip side to crappy neighbors.

In a rental, if someone moves in that you can't stand, you can pack up and move when your lease is up, much harder to do if you own the house and a new neighbor moves in that is a jerk.

This is where you have to plan when you first buy the home. If you buy a home with a 20 year old roof, understand that you will need to replace it in 5 years probably and figure out how much you are willing to pay for the house based on that knowledge.

Sometimes unexpected things happen but generally roofs, AC units, appliances, etc have a life expectancy range. So it's not rocket surgery to figure out when things are likely to crap out and how much it's going to cost to replace them BEFORE you buy the house.

And the institutional landlords also write off all those expense on a yearly basis AND get to write off the standard depreciation of nearly 4% of the purchase price... every year (up to 26 years). On a 500,000 property that's 20,000 of reduced tax liability before any of the year-to-year expenses.

And that's all fine and well. But the average life of an appliance has gone down drastically and things like foundation failures are not something one can anticipate when, if ever they might happen. There are a vast number of things that come up you can't simply anticipate or plan that may happen.

I mean it would be wonderful if everyone who buys a home could afford to take on another 30k or 40k in debt above the mortgage, insurance and taxes on their homes, but we don't live in a society where that's the rule of thumb.

With all that I've said about home ownership, if I was a first time home buyer, no way would I consider buying a home right now, at least not in my area. Housing prices are astronomical and anybody who buys one is likely to be upside down for a while once the market corrects.

Guy down the street listed his house for $450K, sold it in 4 days, best offer was $565K. Before he sold it he had the exterior painted, replaced the flooring, not sure what all he did but he had cabinet guys and plumbers and painters coming in every day for 2 weeks before he sold it. Then the couple that bought it moved in, repainted the exterior a difference color, ripped out all the carpet that was brand new, I saw cabinets going in... I think they paid $115K over asking price then had to spend at least another $20K replacing everything this guy had just done. Insane.

As I said, sometimes unexpected things happen and that's unfortunate. Usually they do not, most things are somewhat predictable, which means you can plan for them in your finances to make sure you can afford them.

By buddy recently sold his house in a exclusive neighborhood, got asking price, the appraisal came in 60k less, but the buyers accepted it.

Hurricane Irma did a number on his place and soaked the entire second floor and down through the ceiling of the Master Bedroom. They redid all the flooring and drywall, new tile roof, added roll down shutters in late 2018 (Yes took that long to get through the insurance hassle, luckily his wife works in the legal department of a major insurer, and knew how to handle these people)

The new owners had their flooring and painting contractors, and a countertop person come in an price it out before closing so they could get a jump on it. Easily put another 40-50k into it.

True. Like you said, it depends on where you are at in life.

I am currently typing from my recently leased apartment. We are in the downsize phase. We don't need 3500 sq ft. and are putting it on the market soon.

Homes take upkeep and I for one finally got tired of doing it myself or finding someone to do the maintenance.

But I do agree with you. You build equity with a home, value goes up, and payments remain constant plus any property tax hikes and insurance hikes. We were in our home here since 1986. We paid $165,000 for it then. I am not going to say what we will probably get on close, but it is a heck of a lot more than that. I will admit it is a sellers market here, so I figured now was a good time to cash out of the house.

If my wife and I don't kill each other in a 2 bedroom, 1350sq apartment, we might just keep it this way. So far we like it, but it's only been a few weeks and aren't totally moved in yet, so you never know. .

My parents did the same thing and loved renting after owning for so many years.

Peen, I haven't looked into the specifics but if you sell your house for that significant of a profit and don't re-invest that money in another home, don't you get hammered on capital gains tax for the profit?

I let my CPA worry about all of that, but it is my understanding you pay on profits over $500,000 for a couple. It's taxed at 15%.

More than I might want to pay, but it is what it is.

Also, I never really looked at the home as a investment. My investments, or retirement nest egg was always separate from the home. A house is someplace you live but get the benefit of selling and making some money. My wife and i always viewed the house profits as money we are going to blow and trips and whatnot to irritate our kids.

But hey, we always told our kids they would be taken care of when we pass, but if they viewed us as their retirement plan, they better come up with another plan. ( they will be fine)

Just a story for emphasis. I quit drinking a year ago, 3 weeks ago. I haven't had a drop. Four days in the hospital with liver numbers WAY out of whack can do that to a person. I have no real long term problems according to the Dr....things are back to normal, but they aren't. My energy level is way down and looks like it's going to stay there. Again, it is what it is.

The point is I collected wine for decades. I have a cellar with 312 bottles remaining. Seriously, many have aged in to expensive bottles. Saving them to drink in the future....now I can't. So much for plans, right? That isn't going to happen the rest of the way.

We have things to do, and we are going to do them.

Yep. If the sold home has/had been your principal residence for ANY two of the last five years, each owner can exclude from taxation up to $250,000 of gain.

Note: "Gain" is not the difference between what you owe and what you receive. Gain is the difference between what you have spent in/on the property (over the years; purchase + major renovations/additions) and the sales price after sales expenses.

DC: You are thinking of the old principal home sale rules that required you to "move up" to avoid taxation and had only one exclusion over age 50. That went away a long time ago...replaced by the above paragraphs.

FYI: A person's actual capital gains tax rate gain be a little complicated...but 15% applies to the largest group of people in my experience.

Sorry for the late reply. To be honest I am not sure how it works, so I am not sure what you are thinking.

Why would the landlord have to be the one to apply for government funds? Shouldn't it be incumbent on the individual in default be the one who needs to apply?

If a person needs food assistance, the grocery store isn't the one who has to get then signed up. It was up to me to sign up for Medicare, not my Doctors job to get me signed up.

I'm not sure what you are talking about??

If it's a multi-unit they are likely writing those off faster... you can do a cost segregation to accelerate depreciation.... when you sell the government will recapture the depreciation through taxes, but there are some incentives to delay the tax hit....

Edit: and any landlord should be taking advantage of tax incentives for being a landlord...not just institutional landlords

As others have said, for a primary residence you can gain $500k as a married couple before worrying about paying tax...

for investment properties you can roll that profit into another property using a 1031 exchange... there's a lot of rules on it and needs to be done through a 3rd party (so you never touch the money). A new property needs to be identified within 45 days and closed on within 180 days... so they are tricky. But that allows you to defer your capital gains tax... you'll eventually pay the taxes unless you die and the basis gets stepped up to your heirs...

That's awesome Florida! I recently starting investing in real estate with my brother in law. We currently have 4 long term rentals and are hoping to get a short term rental soon... it's been a wild ride but pretty fun so far...