Family values meets market realities...

[RadioRaheem84]

OK, so my fiance's sister and her husband and three kids are trying to purchase a home. She works at small insurance firm as a clerk making 11 an hour and he is a plumber making 30k. They want a home to take care of three kids. They already live in a three bedroom home they're renting for 950.

This got me to thinking. Is there a disconnect some members of the working class have when it comes to their desires to own a home and raise a family and the market realities they will face? What I mean is isn't owning a home only marginally better than actually renting? My fiance tells me that renting is throwing money away but home ownership is far better because it's yours, you can personalize it, upgrade it, etc. With fluctuating home prices, property taxes and upkeep, can it really be a better deal than just renting?

The entire point about the debate was that the real issue with them is not that they thought of the actual cost benefit analysis of owning a home vs renting. They're probably just under the impression that they just have to take the next step in their lives and that means owning a home. What pains me is that people all over the US go through the pains, exhaust their resources and get into debt to meet this desire, and it wasn't necessarily because they weighed all the options between the two choices.

Same notion with having children or keeping up with the joneses.

[The Idler]

Home ownership is a better standard of living for the working-class than renting.

[slum]

it is wayyyy more sensible in the long run to rent unless you make big money

landlords suck but at least in theory they pay for all the maintenance shit you'd have to do, which you prob not only cant afford but dont have time to do yourself
if you own a home you cant easily relocate if jobs go elsewhere



They're probably just under the impression that they just have to take the next step in their lives and that means owning a home.

^my bet's on that

or maybe im just bitter b/c the idea of owning a fucking house is such a pipedream, but really what sense does it make when you earn 11/hr?

[Quail]

I was thinking that it really sucks renting houses because a lot of landlords are really shitty - plus if they decide to sell the house, you have to move. So owning a home is more stable, but then...

it is wayyyy more sensible in the long run to rent unless you make big money

landlords suck but at least in theory they pay for all the maintenance shit you'd have to do, which you prob not only cant afford but dont have time to do yourself
if you own a home you cant easily relocate if jobs go elsewhere

I agree with this. If I had to pay every time something in the house I rent needed fixing, I'd just be living in a house with a dodgy front door that occasionally won't open and a leaky roof.

[Prof. Oblivion]

OK, so my fiance's sister and her husband and three kids are trying to purchase a home. She works at small insurance firm as a clerk making 11 an hour and he is a plumber making 30k. They want a home to take care of three kids. They already live in a three bedroom home they're renting for 950.

This got me to thinking. Is there a disconnect some members of the working class have when it comes to their desires to own a home and raise a family and the market realities they will face? What I mean is isn't owning a home only marginally better than actually renting? My fiance tells me that renting is throwing money away but home ownership is far better because it's yours, you can personalize it, upgrade it, etc. With fluctuating home prices, property taxes and upkeep, can it really be a better deal than just renting?

The entire point about the debate was that the real issue with them is not that they thought of the actual cost benefit analysis of owning a home vs renting. They're probably just under the impression that they just have to take the next step in their lives and that means owning a home. What pains me is that people all over the US go through the pains, exhaust their resources and get into debt to meet this desire, and it wasn't necessarily because they weighed all the options between the two choices.

Same notion with having children or keeping up with the joneses.

Renting is paying for a service. You don't get anything for your money besides the service for which you're paying.

Owning a home is owning a piece of equity that you live in. You have to pay taxes and upkeep, but when you leave you can sell it. From a financial perspective, it's almost always better to own a home than rent.

Besides, dude's a plumber. He can at least fix anything with the plumbing by himself easily and cheaply. He's probably handy generally so he could do a lot of the upkeep on his own. BTW I don't know why he's only making $30k if he's a plumber with his own practice, they usually make much more than that.

[TheGodlessUtopian]

I remember David Harvey saying something that the reason home ownership is so treasured in America because it was promoted by the bourgeoisie as a sort of insurance against workers going on strike (the rationale being that workers with a mortgage to pay didn't strike as they would likely loose their home as a consequence). Assuming it is true I think such an angle should be considered if the class dimensions are taken into consideration.

[RadioRaheem84]

Renting is paying for a service. You don't get anything for your money besides the service for which you're paying.

Owning a home is owning a piece of equity that you live in. You have to pay taxes and upkeep, but when you leave you can sell it. From a financial perspective, it's almost always better to own a home than rent.

Besides, dude's a plumber. He can at least fix anything with the plumbing by himself easily and cheaply. He's probably handy generally so he could do a lot of the upkeep on his own. BTW I don't know why he's only making $30k if he's a plumber with his own practice, they usually make much more than that.

Not a plumber with his own practice but an apprentice I believe making 15 an hour, 60 hour weeks, not licensed yet.

[RadioRaheem84]

Renting is paying for a service. You don't get anything for your money besides the service for which you're paying.

Owning a home is owning a piece of equity that you live in. You have to pay taxes and upkeep, but when you leave you can sell it. From a financial perspective, it's almost always better to own a home than rent.

Besides, dude's a plumber. He can at least fix anything with the plumbing by himself easily and cheaply. He's probably handy generally so he could do a lot of the upkeep on his own. BTW I don't know why he's only making $30k if he's a plumber with his own practice, they usually make much more than that.
This want a thread to just discuss the benefits of owning a home vs renting. That question hinges on numerous factors two of which are income and location. For a working person it might make more economical sense to rent in San Francisco than in Podunk, Iowa.

This thread was more about understanding the disconnect workers feel between traditional wisdom vs the reality of the market. Many workers see home ownership as the next step in their life and rarely outweigh the math or all the facts. They purchase and then adjust their lives to fit the debt. They worry about keeping it only after they've bought the home. Why? Because its considered the next step in family life and the traditional wisdom that owning > renting.

[Teacher]

Was going to post what someone said about Harvey.

My family always encouraged me to buy a home (which I eventually did) but I am somewhat regretting it now. I enjoy the space but it definitely does function as a method of labor discipline. While I still do political work, I now have to be extra careful about not getting in trouble at work because of the mortgage hanging over me.

The financial benefits of home ownership are pretty immaterial until you get much older, and who is to say there won't be another financial crisis between now and then that puts you under water?

While I was renting I might have been "throwing money away" but it was much more convenient (in terms of upkeep) and I was able to save a LOT more every month than with the mortgage.

[Jimmie Higgins]

As for the general question - on the "practicality" aspect of renting vs. owning, it depends on local and personal factors mostly. I've always heard that owning is cheaper in the long-run, and in California, for example, for people who can get credit, most of the time it would be better depending on the rents in the area. Oakland, SF, and San Jose have I think some of the fastest rising rents in the country - through the housing crisis too. It's easily around $1000 for a crappy 1 bedroom or studio in most of Oakland... much more if you live in a "nice" area. If I had money and had bought a house during the bust, I would probably be paying less on the debt than I do for rent... even if I did this now, it might be the case. But unless I find a suitcase of money, or banks are nationalized or something, I won't be getting bank-money anytime in the forseeable future.

So renting and being in my 30s and living paycheck to paycheck... it's a "precarious" situation and if my landloard decided to sell I could be kicked out and rather than paying the rent controlled rate based on living in the same place for the last 7 years, I'd be paying much more for less if i ended up looking for an appartment again. And all this money just goes to my self-reproduction basically. I pay 50% of my income on rent, spend $20/week on public transportation and that's then end of that money as far as it relates to me... my working hours right into the hands of landloards and supermarkets and electric and transportation companies etc. If I bought a car then I could sell that and recover a little of the money, the same with a house.


I remember David Harvey saying something that the reason home ownership is so treasured in America because it was promoted by the bourgeoisie as a sort of insurance against workers going on strike (the rationale being that workers with a mortgage to pay didn't strike as they would likely loose their home as a consequence). Assuming it is true I think such an angle should be considered if the class dimensions are taken into consideration.

There is a connection here, though I don't know if it was exactly this. I think it was a contested post-war conception of what the social compact was supposed to be - working class access to homeownership became an expectation as did regular wage increases for union jobs without having to strike, and job security. Homeownership definately gives workers more stability in life and so in a hostile world there is a sort of refuge, but homeownership also creates other pressures which might give workers something to fight for.

I think in the post-war experience, homeownership did eventually help win some workers to middle-class and ruling class interests, but not automatically. I think racism played a huge part in it because it allowed the ruling class to create a wedge in the class that basically said some people can enjoy post-war prosperity while other people are undeserving of it. The banks, government agencies, and developer organizations tried to rally popular support for their interests on this basis: keeping "them out" is how to ensure low taxes and upward mobility for wasps and ethnic whites alike. Then when the door closed on cheap homes and low property taxes, property-interests were able to use some of the racial and other divisions to get workers to support their agenda of pushing social costs onto urban centers to maintain good deals for land developers.

Because home-ownership became seen as working class stability, and became an expectation, it also could have gone a different way; workers could have organized fights over housing on a class basis rather than an "induvidual ownership" basis. There are some small examples of this - but it would take white working homeowners to reject post-war racism, it would require going beyond the liberal and trade-union political framework of the time and so on. I twould have required working class organization that was capable of creating a counter-weight to some of the bigest financial interests (in California anyway) in the post-war era and uniting with the urban movements which were having parallel struggles for housing rights as municiple cities cleared out the slums and deplaced black and other workers who were left out of the post-war class gains.

[PC LOAD LETTER]

OK, so my fiance's sister and her husband and three kids are trying to purchase a home. She works at small insurance firm as a clerk making 11 an hour and he is a plumber making 30k. They want a home to take care of three kids. They already live in a three bedroom home they're renting for 950.

This got me to thinking. Is there a disconnect some members of the working class have when it comes to their desires to own a home and raise a family and the market realities they will face? What I mean is isn't owning a home only marginally better than actually renting? My fiance tells me that renting is throwing money away but home ownership is far better because it's yours, you can personalize it, upgrade it, etc. With fluctuating home prices, property taxes and upkeep, can it really be a better deal than just renting?

The entire point about the debate was that the real issue with them is not that they thought of the actual cost benefit analysis of owning a home vs renting. They're probably just under the impression that they just have to take the next step in their lives and that means owning a home. What pains me is that people all over the US go through the pains, exhaust their resources and get into debt to meet this desire, and it wasn't necessarily because they weighed all the options between the two choices.

Same notion with having children or keeping up with the joneses.
It's cheaper to own a home. The difference in a lease note vs a mortgage (incl taxes & insurance) can be put aside in savings for any future repairs. And if something serious comes up, sell the house and you can have tens of thousands of dollars for, say, a medical emergency or whatever.


Mortgages are like this. I'll assume a 30yr fixed-rate. Make sure they go for a fixed rate. Variable will be cheaper now and then you'll be screwed later. A quick estimate for a mortgage payment without taxes/insurance is for multiply the number of thousands of dollars financed after the down payment by the APR.


Say they're looking at a house that's $100,000 way out in the burbs, almost rural. They're going to put down $10,000, so $90,000 will be financed. Say they don't have perfect credit and get a 4.5% fixed-rate 30-year mortgage. That's (90*4.5) = $405/mo before property taxes and insurance. Call the county tax office and find out the property taxes for the previous year, divide by 12. Say it was, I dunno, $1500. Add another $125/mo, to get $530/mo. Then insurance, they'd need to speak with a rep, but I'll round it up to $600 even for everything. They can then put, I dunno, $200/mo in savings for emergencies (a 'shit just got real' fund, if you will), and they're netting an extra $150/mo for improved quality of life based on your $950/mo renting figure.


A trick, is to pay half the mortgage note every two weeks (or 1/4 of the payment every week, so $150/week by my example, they'll accept partial payments) instead of everything at once when it's due each month. There's 4.3 weeks in a month, so by doing this, you actually end up making 13 full payments a year instead of 12, beating out some of the interest and shaving a not insignificant amount of time off the mortgage. Most people budget for 4-week intervals anyways.

[Slavic]

There is no one answer solution to whether home ownership or renting is a better option since there are numerous variables to consider. The foremost variable that is key in owning a home is job stability. A home is a long term semi-permanent investment. It is much more difficult to recover from a job layoff or decreased hours if you are stuck with a mortgage. Renting provides more flexibility in these situation since the lease can be broken relatively cheaply and cheaper rentals can be sought. The same can not be said with home owners who depending on the local market may have to wait upwards of two years to sell their home. This long weight could be deleterious if they owners become delinquent on their mortgage and credit takes a hit.

@RadioRaheem84
What state does your fiance's sister and her family live in? I live in New Jersey so my perspective of housing, renting, and taxes is slightly off, but assuming that their family combined earns approx 40K gross, they could afford a home on that income but I don't think they could affored one much bigger then their current apartment.

[precarian]

Home ownership is far better for the working class, in my opinion. The whole drive towards renting property is part of the restructuring of capitalism which we're living through. As we transition into a network economy, people are to be socialised into becoming mobile economic units who can expect to be shunted around at will. After all, we're "strivers" constantly on the lookout for our next big "opportunity" to exploit...

All ties to settled communities, familiar places, friends and loved ones are to be ripped apart. Instead we become nomads and all our relationships are rendered temporary, to be jettisoned whenever the impersonal forces of the economy demand our movement. Everything is fluid and nothing is secure. "Liquid modernity", as Zygmunt Bauman called it.

Additionally, renting allows a parasitic class of landlords to seriously rip us off. After a day of wage slavery, a fair proportion of our salary goes towards paying the mortgage of some property-owning vulture. We don't actually "have a home." We just pay for access to one. This locks us further into dependence upon capital, as paying rent means that we must keep working. This is how post-Fordist capitalism will survive - by turning everything it possibly can into a temporary "service", for which we must constantly pay a fee.

Give me home ownership and settled communities any day!

[RadioRaheem84]

This is where I am coming from. My fiance's sister and her husband are a young couple, very young. The girl is 24 and juggling three kids and a soon to be plumber husband who is 26. They're fine, in my opinion for now renting a nice home in the suburbs in a nice part of the outskirts of town. But they're being pressured by not only their more well to do parents but by time they increasingly think is passing them by. There is this urge in small town Texas to grow up fast and take "personal responsibility" even if the costs are getting into debt and trying to maintain that lifestyle with working class salary. They both have well to do baby boomer parents who pass on the traditional wisdom that it's time to upgrade on the house, the city is an evil place for children and that the cookie cutter master planned community life awaits them if they just take the initiative. This is the disconnect that I am talking about. That perhaps traditional wisdom and baby boomer family value have not caught up to the realities people face in this economy. Both sets of parents grew up with union wages, worked hard and saved up enough money to start their own businesses with no schooling what so ever. I do not think they realize the generational difference that perhaps things might be a bit rougher for working people with no formal higher education. Entering the workforce is a bit harder than it was in their day. To them it's just a matter of "gumption" and "drive" rather than understanding the realities of wage stagnation over the years, automation, globalization, etc. Sure a home would benefit them better in the long run considering home prices in small town Texas are worth their price but they're reluctant to wait until the man is a licensed plumber and she moves up in the company to make a bit higher wage. The wait they think will have them throw money away on renting (another conventional bit of traditional wisdom) but they do not see the hastle and the money that might be potentially wasted on owning a home on such a small salary.

The older sister, my fiance's middle sister already lost her home two years ago because of the same traditional wisdom she was given (most notably that a home is a better environment for a kid than an apartment being the major one). She was maintaing the home off of two jobs after her divorce (even while married keeping up with the payments was a chore).

It just seems like the lengths some people go through to obtain home ownership have less to do with weighing the costs benefit analyis of renting vs owning and more to do with acheiving the next phase in life. Figuring out how to keep the house only comes after the purchase, and what you do after ward determines your level of personal responsibility. My fiance and I just always spared ourselves the headaches from all that and are more patient with allowing all that to flow from our daily savings plan, waiting to move up in our respective companies and deciding just where we actually want to plant ourselves.

And yes, I can see the benefits of owning over renting which would be better for the working class in some regards. In others I don't and that is only because of different situations. It's true that there is no solid answer to the renting vs owning debate.

[RadioRaheem84]

This whole thread wasn't really an attempt to rationally contemplate the value of renting over buying, but more or less to talk about how the logic an older generation shares with the younger about buying a house tends to stem more from traditional wisdom, cultural prejudices about the city, personal (class/cultural) preferences and middle class family values about parenting. It has less to do with actually rationalizing the entire descision. It has less to do with taking out the calculator and doing the math. It has less to do with thinking long term (outside of buying > renting).

[Decolonize The Left]

Pros to rentings:
- Can leave at any time (assuming no lease)
- Upkeep not your problem
- Can shop around for competitive rental rates
- High mobility
Cons to renting:
- Must deal with landlords
- Much less secure (i.e. you can be evicted)
- Cannot make major changes to space
- Much more expensive in the long run
- Generally speaking, is a net money loss

Pros to home ownership:
- More affordable in the long run
- More secure
- Can make any/all changes to space
- Potential form of income/windfall (can rent a portion, grow trees, farm, and- if need be- can sell the whole thing at a later date)
- Generally speaking, increases in value and hence a net money maker
Cons to owning a home:
- Upkeep costs, property taxes, etc...
- No mobility
- Heavily dependent upon neighbors, neighborhood, forces outside your control

In short, if you are young and have few immediate and direct responsibilities (or if those you have are mobile themselves) then you are much better off renting. But if you are more 'entrenched' in a certain place (i.e. your responsibilities are not mobile, such as having children, a steady job, good friends nearby who are not moving) then owning a home is almost always the better option.

Property can be passed to children. It generally increases in value. It can be farmed if necessary. It can be rented if necessary. It can be used in any number of ways to improve the quality of one's life. Renting can do none of this. Renting is merely a temporary roof which is convenient and (hopefully) inexpensive.

The only real answer is in the numbers: if this couple can afford mortgage costs and still manage to save, then they should probably buy. If not, then they should probably wait until they have a bigger savings plan in place.

[ÑóẊîöʼn]

If you have a mortgage, I'd say that you don't really own your home, at least not until the mortgage is paid off.