Is homeownership a joy or a burden?
House Keys
By Marcie Geffner, Tuesday, March 3, 2009.
Flickr photo by blmurch.Editor's Note: Inman News is pleased to introduce "House Keys," a new weekly column about homeownership by veteran real estate writer Marcie Geffner. "House Keys" offers a fresh look at today's changing images and perceptions of homeownership through current news events and personal stories. For information about publishing this column on your Web site or in print, contact Elaine Baker: (510) 658-9252 ext. 128.
"I don't know how you do it."
That's the comment I heard from my friend Kristi Fojtik, 38, a single woman who has toyed with the idea of buying a condominium now that home prices have fallen back to earth and interest rates have plummeted to new lows.
Fojtik occupies a rent-controlled apartment in Los Angeles that's much too small to accommodate herself, her belongings, her beloved cats and her aspirations of entertaining more than three guests at the same time.
So she's considered the possibility of buying a small condominium, but so far she's decided against it because she just doesn't know how she'd manage it. "I don't know how you do it," she says, having heard too many hardship stories about mortgages that reset to higher payments and homeowners who owe more than their homes are worth.
Because of course even a modest condo in Los Angeles comes with a whopping big mortgage not to mention association fees, homeowner's insurance premiums, pay-it-yourself utilities and burdensome property taxes. There is also the nagging doubt as to whether such an investment made today will ever pay off in the future. And those financial burdens and risks can be all the more daunting for a single person than they would be for a two-income married couple.
Therein lies a considerable challenge for today's public policymakers and real estate pros: How can homeownership be made more appealing and less burdensome for well-qualified prospective homeowners who are simply and understandably quite content to rent? And how can homes be made more affordable not just at the time of purchase but over the lifetime of the homeowner?
The tenant-friendly rent controls on Fojtik's apartment are a factor in her decision as well. Since her rent is capped at less than half the market rate of a comparable apartment in her part of town, she wonders why she'd ever exchange a $1,000-a-month rent check for a $2,500 house payment.
But while the financial hurdles are indeed considerable, it's not just the money that gives Fojtik such qualms and reservations about homeownership.
"I don't know how you do it," she says, having just heard my woeful tales about a sewer line that's clogged with tree roots, a closet door that's stuck shut and a houseful of rooms sadly in need of a fresh coat of paint.
Because there is also the perception that taking care of a house is too burdensome and difficult for one person to manage. Never mind the house-cleaning chores; homeowners are also responsible for maintenance and repairs that encompass everything from roof to roots. How can one person cope with everything that a house or even a condo requires? And why would my friend want to give up the ease of calling her landlord and instead take on the responsibility of hiring and paying contractors to keep her home in good repair?
Not long ago, Fojtik, who earns a steady paycheck in the entertainment industry, might have been the perfect prospect for first-time homeownership along with the legions of other singles who bought their own homes.
But today, despite an amazing growth in the ranks of single women homeowners in particular, there is a perception that homeownership is just too darn hard. "I don't know how you do it," Fojtik says as she voices her intention to hang on to her apartment because she just doesn't know how she could take on the responsibilities of homeownership.
Marcie Geffner is a freelance real estate reporter and former managing editor of Inman News.
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Submitted by Lenn Harley on March 3, 2009 - 1:32pm.
Most of my single buyers are women. We have no rent control in my market area of Maryland and Northern Virginia.
Who pays the difference between the rent controlled price and market??? Are these units subsidized with tax money???
Women, first time home buyers and move up buyers buy condos, town homes and single detached homes routinely. Many state that they want to begin building wealth, although not so many lately with declining prices. But, they know that eventually, prices will rebound.
Most just want their home HOME.
Lenn Harley
Broker
Homefinders.com
800-711-7988
Submitted by Robert A. Hulme on March 3, 2009 - 2:35pm.
First-Time homeowners are really coming out here in Utah. With all the programs and not a lot of rent controlled properties, they are rushing to take advantage of all the opportunities that this market affords them.
Robert A. Hulme
Realtor, GRI, e-PRO
Prudential Utah Real Estate
Loan Officer
Mortgage Xpress
www.UtahCountyRealEstate.us
www.UtahHomesForSale.ws
801-885-2586
Submitted by Mike McCutcheon on March 3, 2009 - 3:02pm.
Is this a trend in our society? Being adverse to hard work and long term commitment? In the East Bay (San Francisco Bay Area), we are seeing many first time buyers and a fair number of single women. Although renting a rent-controlled unit in New York, Sant Monica and other areas is great, where is the upside? At the end of the day, you have no equity and nothing to show for the experience. Better to work with a financial plnner and a very good realtor who can provide proper counsel to determine if never owning is right for you. Remember, there isno substitute for hard work and owning a home IS hard work
Submitted by Ted Jernigan on March 3, 2009 - 3:21pm.
Rent control in this case messes with the equation. It might be better to save the difference between her rent and the monthly cost of a house or condo. With discipline, she could have a very tidy sum for retirement if she started this practice now. I don't believe that everyone can or should be home owners. I see evidence of this everyday as I tour and show foreclosed properties. As much as I would like to sell everyone a home in McKinney, Texas, am I thinking of their best interest or mine if I do that?
Ted Jernigan
Ebby Halliday REALTORS
McKinney, Texas 75071
Jernigan@ebby.com
972-489-6173
Submitted by Eliese Pivarnik on March 3, 2009 - 4:23pm.
I agree with Jed. How can paying $1500 more a month, plus HOA fees, upkeep, and utilities (if they are included in her rent) make sense?
Investing the difference will most likely net her the same 5-7% appreciation (hopefully) she would have on her home.
Understandably, it would be on the investment amount and not leveraged to get the appreciation on the whole purchase price, but hey--this market is producing a lot of buyers remorse. I'd take my friends out to restaurants with big tables and see what the next year holds.
Steamboat Springs Real Estate Blog
Submitted by Marcie Geffner on March 3, 2009 - 7:00pm.
Thanks, everyone, for your terrific comments and suggestions.
Rent control isn't subsidized by the taxpayers, at least not directly and not here in Los Angeles. It works more like a government price cap originally intended to protect fixed-income senior citizens from sky-rocketing rents.
Rent-controlled apartments are very prized. Some of my friends have held on to them for decades and bought investment properties elsewhere with the money they've saved on cheaper rents. Whether that's "fair" or not is a subject of much and very heated debate. Forbes magazine, for one, famously called rent control one of the worst ideas of the last century.
But that said, my point was not so much to debate rent control as to illustrate how some renters simply don't want the headaches of homeownership.
-- mg
Marcie Geffner
www.marciegeffner.blogspot.com
Submitted by Matt Drouin on March 3, 2009 - 8:54pm.
I apologize for speaking my mind here but that renter mentioned in this article is not an example of the American Individualism that has made this country so great.
However, throwing artificially depressed rent into the equation sort of justifies her situation and attitude.
But if she is shy about owning a condo because of the overwhelming amount of maintenance involved, she has issues and is probably medicated. The reason condos and co-ops came about was because of market demand for less maintenance and lower cost of ownership.
Matt Drouin
Associate Broker
Nothnagle Realtors
http://www.nyhomesgetsold.com
Submitted by BECKY WHITE on March 4, 2009 - 1:27pm.
Anyone I have ever known who is over the age of, say, 55, and who lives in a rent-controlled unit has told me they will never give their apartment up. Any why should they? The rent is cheap and anything that really needs fixing must be done by the landlord. If the place is too small to have friends over for dinner, well, they can afford to throw a party in a restaurant. There is little incentive to waste capital on a home purchase once a person is over a "certain age", particularly since the market is so uncertain.
Plus, I have never seen HOA fees go down, have you? They always go up. Say a retiree purchases a condo outright; homeowners fees can go up, there could be special assessments, and a once-affordable home could be out of the sensible range of that person's monthly income, particularly if that income is fixed.
Submitted by Marcie Geffner on March 5, 2009 - 8:41am.
Thanks for your comment, Becky. While the rent on a rent-controlled apartment can increase by a set percentage each year, the amount of those increases is capped and predictable. Condos, as you point out, are subject to special assessments, which can be very costly. For example, few HOAs can get earthquake insurance, which means a small quake that cracks a lot of stucco can mean a big hit for homeowners. Renters don't have that risk except as it affects their personal belongings, not the real property they occupy.
Marcie Geffner, www.marciegeffner.blogspot.com