Should Americans abandon the dream of home ownership?

[willow_girl]

For generations, the idea of owning a home was a key component of the American Dream. I believe this desire stretches back ever further in time, probably all the way to Europe, where to be a landowner -- to be "landed" -- was to be one of the gentry, not a mere peasant.

The neighborhood I grew up in was new, built just a decade before my birth in the post-WWII suburban housing boom, but it enjoyed a high degree of stability. Most of the homes were owned, not rented, and it was rather rare for families to come and go. Most people stayed for decades. I can go back to the old neighborhood now and run into elderly people who were parents when I was growing up. Many of my classmates seem to have settled down within a mile or two of where they were raised.

Sadly, though, home values in that neighborhood have dropped by 30-40 percent in the past decade, and I suspect many people there are underwater on their mortgages. The old idea that you bought a house and watched it gradually appreciate in value seems to have been turned on its head.

In the wake of the housing crisis, some commentators have broached the idea that perhaps we ought to scrap the idea of home ownership as part of the American Dream. I believe Glenn Beck brought up the subject in "Arguing with Idiots." The theory goes that most Americans move every few years anyway, as they scramble around trying to find and keep work, so why even bother putting down roots?

This new vision of America seems to be of a place where corporations can set up shop temporarily in the area most willing to give them tax breaks or grants, and count on a steady supply of rootless migrants willing to hunker down wherever work is, for however long it lasts.

I'm not sure the resulting community would be an improvement upon the one I grew up in, though. What do you think?

[Bearfootfarm]

The theory goes that most Americans move every few years anyway,

I don't believe that at all

[emdeengee]

No I don't think that the dream should be abandoned but I do think that people need to look upon it in a different way. We are all in a rush to own and yet historically most preceding generations only owned latter in life. I think that a solid retirement plan includes owning a mortgage free home. I also think that we need to be more realistic in the size of house and/or land that we should be aiming for. The old rules about saving for a big downpayment did delay home purchasing but it also guaranteed that you were serious and financially stable enough to buy and commit to long term payments. Smalll downpayments or no downpayments meant that a lot of people could get into the market but was it the right time? were they finanically stable enough or settled enough as to their jobs to actually be buying. Banks have become notorious in the way that they "trick" people into buying houses they really cannot afford. 35% of you net income for housing costs (mortgage, condo fees, insurance, taxes) and 2 1/2 times your yearly gross income as to the price of your house is what most economists recommend. When we were purchasing we were preapproved by the bank for $60 more than I knew we could afford and stay within the 35% range. Turns out the bank calculated the mortgage we could "afford" based on our gross income which would have taken up half of our monthly income and left us mortgage poor.

[willow_girl]

Originally Posted by Bearfootfarm

I don't believe that at all

Quick Google search indicated 40 million Americans move each year, and Americans move on average every 5 years: http://transcripts.cnn.com/TRANSCRIP...05/sun.10.html

Census Bureau stats from the 90's gave a rate of about 1 in 6 Americans moving each year, for about 12 moves over a lifetime: http://www.census.gov/population/www...le/geomob.html

[copperkid3]

I just did the mental math and since 1980, I've either owned outright or built from scratch, a total
of (9) count them, nine residences in two states and also owned and lived in a short time, a very
small trailer (the smallest in the court where it was set up) in Oregon. The very idea that home
ownership can't be had by anyone is absurd and frankly repugnant to my ears. But then so is
the pablum that is spewed forth daily from the WH and then flows downhill via MSM (Mainly Sewer
Manure). I'm willing to bet that those commentators that you're citing, are in that same group that
regurgitates whatever the socialist regime tells them to and then trys to dress it up with a pink bow.
Guessing that it goes hand-in-glove with the idea that since no one can have the American dream,
then we might as well take it from those who do.....

Sorry......but there's just not enough spit in that cup, to float a boat.

If I was 20 yrs younger and had a bit more readily available cash on hand, I'd be out beating the
bushes for those bargains.......and they'd be falling out of the tree tops. Fix them up, rent them
out and hold on for another dozen or so years, right off the depreciation and then sell them. Make
out like a bandit......although one who worked at it and took the 'risk'......yeah right.....
the American dream is still alive and well.....you just have to open your eyes and figure out how to
make it happen. Going the socialistic route of do-nothing but p-ss, moan and groan is for losers who
haven't got what it takes in the first place. And there are going to be those who aren't willing to
take that gamble.....fine.....those are the one's that I'll probably be renting to as well. But don't
buy into the rest of their 'solution' of if we can't have it, then we will take it. Because then you will
end up a dead red......cause I'm not going to give away my dream that I've sweated and worked for,
so that you can just waltz right in and take it. Not going to happen as long as the ammo holds
out and my trigger finger remains unblistered. Yeah...the dream still lives!!!

[MO_cows]

I think we went through a phase where a house was seen as an item to be "traded up". Look at the ads, how many "starter homes" do you see advertised still? Buy a house, wait a few years and sell it at a profit and buy a bigger house. Repeat, repeat, repeat. This helped to build the bubble.

I think people do move more often and farther than they used to and this is tied to their jobs. It seems like the smart money would be live in a rental that is below your means and save money to buy a place outright for retirement if your career is going to take you here, there and everywhere.

But if you think you are staying in one place, go ahead and buy. Over the long haul it's still a good investment. It just isn't going to double in value every few years anymore, that was not sustainable.

I wish I had the cash to buy up some properties now as investments, houses are on sale.

[plowjockey]

Maybe?

The first thing we should probably do, is stop referring to a home, as the "American Dream".

Buying a home should be pragmatic decision, based on many factors, the least of which, is whether we "want one" or not.

Even before the real estate "bubble", almost anywhere in the U.S., if you purchased right, you could probably buy a house and resell within a year or two,(if you needed to move) and at least come close, to break even.

It only really turned bad, when it no longer mattered how much you paid for a house, for next month and the month after that, it would be worth a lot more. If you could not afford the high payments, sell it in a week and walk away, with a bunch of cash.

The economics, I'm not so sure.

DS purchased a super nice house near Houston, for super cheap, during their oil crash in the early 80's. Since then, the value rose substatnially, then "skyrocketed", when the bubble was in full swing. Since then the selling price has "crashed", but the home is still worth a lot more than what they paid for for it.

My small, old home town, has neighborhoods that were one inhabitated with lower paying factory workers, who are long gone, along with the factories. The areas are run down, but not dangerous at all and are actually near some newer schools. The homes sell (for now) between $7-12K. I fpeople purchased these homes and fixed them up, it would again be a neighborhood od decent inespensive homes.

The biggest problem I saw with recent home ownership, was the "new toilet seat" syndrome.

Since banks were throwing mortages at you, why buy an older, smaller, more worn, maybe not a wonderful neighborhord,- but more affordable home, when you could get a brand news 4 bedroom home, with 3 car garage, 8 miles of solid oak woodwork, a jacuzzi, a home theatre and a $1500 chandelier, hanging above the doorway?

[Michael W. Smith]

If you are a person who is going to be moving in 5 years or less, then no, it probably doesn't make sense for you to buy a house and you might as well rent. Easy in, easy out - don't have to hope that your house will sell or try to sell it from another area.

However, if you are planning on staying put for 5 years or more, then yes, you should buy. Many times, what a person pays for rent is more than what a down payment would be. But of course, you have to be smart on what house you are buying - you certainly don't expect to buy a $125,000.00 and have a mortgage of $250.00 / month!

Of course, times have changed. Back when your parents bought a house, they bought it, and they STAYED in it. It didn't matter if another couple of kids came along - they shared a bedroom then.

People of today seem to buy a house right away after getting married, then they sell and either build a new house or buy a McMansion because their first house was too "small", too "old", didn't have the view they were looking for, didn't have the pool in the backyard . . . . . .

The houses you see for sale now - 20 years from now, you'll think "Why didn't I buy one or two of them? I would have made a fortune."

I think a large problem of the housing bubble - was people getting loans - who should never have gotten them in the first place - bought too large or expensive of house than what they could actually afford. The other problem was all the houses being built - if you have the same number of couples in your community and no one moves in and 10 new houses are built then two things are going to happen - either none of the houses that were built ever get bought, or else some (or all) of them get bought, but then the people trying to sell can't sell - because no one else is moving into the area.

[Home Harvest]

Originally Posted by Bearfootfarm

I don't believe that at all

I failed to find US statistics on this. Maybe someone else can help. (Edit: I see someone did find the statistics I was looking for)

Personally, I've moved on average every 10 years my adult life (3 houses in 30 years). However, as a kid we lived in 3 different rental properties before my parents built their first house. So, overall I've lived in 7 different houses and moved every 7 years for my entire life.

I'll admit that it seems different here in PA. People stay and complain about the lack of work, rather than move to find work. Go figure.

[Pearl B]

I think everyone has to determine that for themselves. In the wake of the housing bubble, its no wonder a question like that would come up.

Im not real sure of the history of housing and buying trends. If a person works and moves around a lot for employment it would make sense to delay buying.

If a person is young and not stable in a career field, it would make sense to delay buying.

Didnt most of the problem come about by people buying houses in the hope of putting a little work in to them and then re-selling for an exorbitant price?
I think thats where all the problems began, and maybe remain.

Buying a place to stay vs. renting does make sense financially. Your going to pay either way, if you own you can re-sell with perhaps a small profit, as with renting the money is just gone.

I dont think the dream needs to be abandoned, just a little more well thought out and planned for perhaps.

[Jolly]

Stupidity and frugality generally do not gee-haw.

[Jena]

I have owned the houses I have lived in since I was 20 years old, except for one stint in a rental when I first moved to a new state. I am currently living in my 8th house. It is paid for. The longest I have ever lived in one house is six years. I have owned houses in 3 different states and at times have owned more than one at a time. I lost one in a foreclosure several years ago, broke even on most of them, made a fair bit on a couple. My purpose in owning my homes is not to have an investment, or to make money, but to have a higher level of control over where I live. I don't want a landlord deciding what color I can paint my living room or whatnot.

There are many reasons to own your home, but I think the idea of making money from one is silly. A home is not productive. Rentals produce an income and are a great tax break. Farms produce income. A house just sits there maybe increasing in equity, maybe not.

[emdeengee]

If you can rent at a good price in a nice neighbourhood then there is nothing wrong with that. A lot less worries than owning. We have friends who were transfered every couple of years so have been renting for 40 years. They were clever. Whatever their rent was they put an equal amount into a house savings account every month. They retire this year with just over $500,000 for their dream home and the joy for them is that they get to go anywhere in the world that they want to go.

[jwal10]

Look at the shows on tv, young couple want to buy. Every house they look at either isn't big enough, nice enough or doesn't have the newest and fanciest. All these sheeples in big cities that have rented for generations because they can never keep 2 nickles to rub together want everybody to be the same, pesimistic, lazy, welfare people like them and so do the people in Washington. They don't know how to work to get ahead, just try to bring everybody down to their level....James

[Txsteader]

I guess it depends on what your goals & lifestyle are.

My parents didn't buy their house in the 40s with the intention of selling it. DH & I did sell our first house so we could move out of the burbs, but we built this place in the 70s with the intention of living here until we die. It was/is important to us to have roots somewhere.....strong, deep roots. We're hoping that the kids/grandkids will keep this land, even if they don't live on it, and pass it down through the generations like the olden days. Maybe, someday, one of them will put down strong, deep roots here, too. And they can tell stories to their kids about Nana and Papa and childhood memories.

[tyusclan]

Originally Posted by willow_girl

Quick Google search indicated 40 million Americans move each year, and Americans move on average every 5 years: http://transcripts.cnn.com/TRANSCRIP...05/sun.10.html

Census Bureau stats from the 90's gave a rate of about 1 in 6 Americans moving each year, for about 12 moves over a lifetime: http://www.census.gov/population/www...le/geomob.html

One in six is a long way from 'most'. That is a small minority.

I agree that for those who intend to move every few years renting make much more sense, but if you do intend to stay in one place for a longer period of time, as most people do, then it can make sense to own your own home. In some cases, even for those staying put, renting can be cheaper than owning once you factor in insurance and taxes on a home.

There is no right or wrong answer. Everyone needs to do what's best for their particular situation and goals.

[tgmr05]

The american dream of home ownership was replaced with the horrid nightmare of mansion ownership and class envy that pervades so many today.

We need to get back to the american dream, and shed the horrid class envy mansion idea that brought about so many of our problems today.... forced loans to those who cannot pay, the thought that we are owed a home, etc.....

[Cornhusker]

One time when I was just a little kid, maybe 7 or 8, I remember my dad telling my mom "We might not own a house but we have a home"
That kinda stuck with me.
Having a home has nothing to do with owning a McMansion.
Also, who says you have the right to start out with a house you can't afford?
My first house cost me $11,000 and I worked 2 jobs to pay for it.
I raised my kids in that house, and it was home.

Historically, people made a down payment of 30 to 50% of the cost of a house. That way, they were motivated to keep up payments.
A home is not an investment. Its a place to live.

[Sawmill Jim]

Originally Posted by Cornhusker

One time when I was just a little kid, maybe 7 or 8, I remember my dad telling my mom "We might not own a house but we have a home"
That kinda stuck with me.
Having a home has nothing to do with owning a McMansion.
Also, who says you have the right to start out with a house you can't afford?
My first house cost me $11,000 and I worked 2 jobs to pay for it.
I raised my kids in that house, and it was home.

Yep you got it Only time i rented was while working on a house of my own . And this one is paid for and the sawmill land too .

Bought an old house in town once was happy as a clam to sell that huge old house . Just buy what you can afford .