Posted on 08/31/2014 7:53:15 PM PDT by SeekAndFind
Between 1970 and 1990, the population of Philadelphia shrank by a quarter, dropping from 1.95 to 1.59 million. Like many American cities, it seemed caught in a downward spiral.
Since then – like many American cities – Philadelphia has stabilized. The population now appears to have bottomed out at the millennium, and has been regaining residents over the past decade. But as it rebounds, Philly is becoming a different kind of city.
In the two most recent decades, which comprise the bounce of the city’s population curve, owner-occupied housing dropped even more steeply than in the ’70s and ’80s. Between 2000 and 2012, the percentage of Philly houses and apartments inhabited by owners dropped from 59 to 52, the second-sharpest decline among big U.S. cities during that time.
Meanwhile, renter-occupied housing exploded. More units are rented today in Philadelphia than in 1970, despite 400,000 fewer residents. According to a report from Pew Charitable Trusts, the size of the Philadelphia rental stock has grown by 37,000 since the millennium — a gain of more than 10 percent.
Philadelphia is a concentrated case of a larger trend in American housing: We are increasingly renting instead of buying our homes. Rental household growth is rising at double the rate it has in previous decades. Developers are building more multi-family units than they have in years. Last month, the homeownership rate fell to a 19-year low, down to 64.7 percent from a peak of 69.2 percent in 2004.
(Excerpt) Read more at salon.com ...
Welcome to a vision of the New Amerika - 100 story tenements in the future and people glad to have their personal cracker-boxes so they don't have all the pesky problems of owning a home.
Consider the source. This is wishful thinking pure and simple.
...”aye forget about the kids which you have, and they can inherit or live there , forget about having your own place. The American dream is now obamas dream which is to rent and never own.”...
People who do not and will not have kids often do not have a vision of the future..They just live for today. Children give folks a reason to care about what happens beyond their time on this earth. I heard someone say the other day that America will change only when something shakes her foundations in a way that everyone can understand. Sadly, I think that might be true.
It's almost as if everyone except the 'rats is fleeing foul, fuming, fetid, filthy Philadelphia.
I agree with you 100% on that.
Ferals can’t get mortgages
I actually look at home ownership from a purely financial perspective, which means I have an arrangement that's probably very unusual: I rent the place where I live, but I'll own places that I'll rent to others. From a financial standpoint this arrangement would actually make sense for a lot of people.
I treat the place where I live the same way I would treat it if I owned it myself. The key is to find tenants who think the same way. My approach is to find tenants who are in a transitional state that precludes them from home ownership right now, but who would be ideal home owners under the right circumstances. I'll rent to them with the understanding that I'd be willing to sell the home to them at a discount if they should be interested. It's a good business model.
I'd also point out that your narrative typically only applies to older homes or to condominiums. I'm referring to a detached single-family home in a decent area that would probably sell for a minimum of $500,000 or so these days, and is not always on the rental market. Do the own/rent comparison for this case to see what I mean.
I tell you what -- when you get together the cash to buy a few rentals, you can run them the way you want. Meanwhile, I will run mine the way I want.
As a renter, feel free to choose the best unit you can afford. This is what free enterprise is all about. I have very low turnover, and when a unit does come open, I have a wide selection of tenants to choose from.
My units are well-maintained, and represent the best value for 30 miles in any direction. My market is working-class families. With an emphasis on the working. If no one in the family has a job, please rent somewhere else. My experience is that if you live on transfer payments, you will stay up late at night and hold loud parties. Low class friends will congregate in the parking lot, drink beer, smoke pot, and create a nuisance. People who have that lifestyle are promptly replaced by family-oriented renters.
If you want high end appliances and luxury carpet, I understand that desire, but you will pay 50% more per month than in my rentals. Don't go away angry, but please find someone else to rent from.
I have had tenants who thought they knew more about my business than I did. I try to screen them out at the beginning, because somewhere along the line they will be troublemakers.
I also screen out the prospective tenants who have too much money. Ultimately they are going to want a more luxurious unit than I have, and they can afford to move up.
When you are paying the mortgage, you are actually building equity for yourself. It starts slowly at first, as most of your first mortgage payments go towards interests (especially on 30-year loans) but year after year, your equity portion increases and you are essentially paying yourself for living in your own home.
I recently purchased a half-million dollar home with mostly cash because I had my previous home mostly paid off and so was able to put 75% down on this house. Now some would argue that I could have done just as well if paid a landlord rent for the past 20 years and socked the extra money into a bank each month. But I don't think so. I just would have used most of the extra money to go out to dinner more or get a fancier car. Also, in order to save money by renting, I would have had to settle for a smaller living space and would have had to depend on somebody else to do my repairs and maintenance for me. If I wanted to do any remodeling to make the inside look nicer, I'd have to ask permission of the landlord. But then again, why would I want to remodel my apartment on my own dime when I could get evicted at anytime?
Better to pay yourself and have your own place to fix up and remodel as you like.
With the exception of the high-end rental market, your apartment is likely to have a "slummy" feel to it. Most tenants have a "landlord'll take care of it" attitude and so nothing proactive ever gets done unless the landlord hires a landscaper to cut grass and plant a few flower beds or do some carpeting and painting. But it's all done on the cheap. Not the best quality paint will be used and the carpeting will be plain vanilla.
An interesting experiment was done at my company a while back to prove a point (charging our customers for services instead of giving them away for free). We have regional manager's meetings on a regular basis and at these meetings, each manager is handed a package at hotel check-in that included leather binder for taking notes at the meetings, company logo pens, company T-shirts and other such freebies.
Well when these meetings end, about half the managers leave behind the leather binders and most of the freebies end up in the trash.
This one time, each manager got charged $20 for the package. There was a lot of grumbling and complaining about that. But guess what, not a single leather binder was left behind after the meetings and virtually none of the other trinkets were thrown away. This is because these items now had value to these managers because they had to pay for them.
So it is the same with owning a home instead of just renting an apartment. In your own home, you are going to be careful about putting a hole in the wall to hang a picture (you will actually look to see where the studs are) or replacing a fuse properly instead of just jamming a penny in the slot. If you are going to remodel your kitchen, you are going to spend the extra money and get Jenn-Air appliances instead of whatever Home Depot has on sale that week and you will install quality flooring, cabinets, etc.
An apartment dweller and townhouse resident are not in the same class as land owners. From the beginning, Americans struggled to become Landed persons. Do they now sell themselves back into the serfdom of the the Tenant class?
I hear you. Some folks really do not understand the populous very well.
My wife is a Broker/Owner of a Real Estate company - she has had over the last few years clients buying rental units for the investment.
One client bought a triplex about four years ago (the existing tenants came with the place).
The tenants were: a school Principal, an exotic dancer and a drug dealer.
Two of the three paid on time and never had any complaints - it was the Principal that caused the grief. He was constantly delinquent.
Sounds like you take care of your places and have a good reputation.
Keep it up!
Here’s why I like living in rural Texas for a number of reasons (in no particular order). As a homeowner, not a renter, or share cropper.
1. Lots of room, fresh air, and clear skies most of the time. Occasional high winds, hail, and dust to spice things up.
2. The nearest neighbor cannot hear me fart, see me pissing from the front porch, or hear me playing my guitar after midnight.
3. Most homes and land are reasonably priced depending on acreage and natural resources. You only need a few acres. Many owners overbuy and find upkeep becomes a problem.
4. Property taxes and utilities are reasonable. There are some exemptions for rural land owners that help reduce these.
5. Room to raise livestock, everything from chickens to cattle, for personal use or for sale or trade.
6. Lots of birds, deer, and other creatures to watch or eat (PETA - people eating tasty animals abound out here). Unfortunately some (the creatures not the people) are not friendly and you will need protection.
7. Some wooded area for firewood. (Yes, we still cut and burn firewood occasionally to reduce the utility bill. There are few burn restrictions unlike other parts of the country.
8. Some cleared area for garden and flowers. (Yes, we raise, eat and can our veggies if we have time.)
9. Room for out buildings, corrals, and other structures or improvements.
10. Room to pasture a few cattle for home raised beef. (Yes, we buy or sell cattle/horses at local auction as needed).
11. Room to plink (when I can find some .22 ammo).
12. An occasional oil or gas royalty check (This is Texas you know).
I wouldn’t be happy in a cramped urban area. I put a lot effort (scrimped and saved) into getting away from such when I was much younger.
As for renting, it is something you have to do until you can acquire the resources to buy and own. Ownership is an asset, rental is an expense. The middle class is disappearing because they have no savings or other assets (own little or nothing), only debt acquired by borrowing to meet expenses beyond their incomes, and all in vain to support a higher lifestyle. When debt exceeds assets, they are debtors and are financially bankrupt. As long as they are able to borrow they are called consumers. When they are no longer able to borrow, they are called victims by the liberal left.
America is a debtor nation. Stay out of debt if you can. It’s a good thing to do.
PS. When the money (supply) becomes worthless or devalued, residual value will be found in your other assets (home and improvements, vehicles, tools of your trade, precious metals, guns and ammo, etc.) Diversify.
I think we know who to blame for that. George Bush.
My reasoning may be faulty (I’m sure someone will jump in to tell me so!), but I pay a mortgage because I will need the equity in the house when it is paid off to help me in old age (house won’t be paid off until I’m 80). At that advanced age, I can either sell the house and put the money in the bank to live on for how many years I have left, or I can take out a home equity loan. Odds are, though, I won’t need to do either because I’ll have a bit more than a $1,000 taken out of my debt queue when the house is paid off...that, in itself, is a big financial plus. That’s my reasoning for owning...otherwise, as a single woman, I’d rent. (But then again, rental prices keep going up, don’t they? My mortgage does not).
“Most people never really buy a home at all ... they buy a mortgage.”
Most people are idiots. Most are economically illiterate. Something like 50% of credit card holders have debt of $15K or greater on their credit cards. People know nothing about interest and don’t bother to learn.
Go to any web site that amortizes mortgages, and compare the total interest costs on a $120K loan over 10 years, 15 years, 20 years and 30 years. It becomes painfully obvious that a 30 year loan is a bad idea for most circumstances.
Any of those web sites will allow you to see how much you pay down the principle during the first 3 or 5 years of a 30 year loan - virtually none. Yet I’ve talked to many homeowners who don’t know that.
The fact that many people are financially stupid does not make credit cards or home debt bad. I pay my credit card every month and get percentage of reward back on my purchases. For me, a credit card is better than cash. For others, it is pure trouble. It is the person at fault, not the system.
“After less than nine years I was able to sell my house and walk away with enough cash to buy a retirement house in Arizona for cash.”
Yep. Buy a house with a 15 year mortgage and stay in it 9 years, and it is entirely possible to do very well. Do it a couple of times over your life, and it is entirely possible to pay cash for a house and live in it with only property taxes hanging over your head. But renters pay property taxes too...they just don’t know it because it is part of their rent.
“Just live in a nice middle class non-posh area and tell anyone in the family who has grand ideas of a lifestyle to go stuff it.”
I spent some time living in a non-posh trailer park. We had nice neighbors but we sure didn’t live in a fancy home. But it set us up well for the future. THAT is the problem - people spend for today and don’t think about tomorrow.
I was volunteering at a high school last year. The class was working on interest and how compound interest works. One of the students asked me what was the most important thing to know about interest. I told her the most important thing was this:
Get the bank to pay YOU interest instead of you paying the bank interest.
We then talked a little about it using a car loan as an example. I hope it sunk through...she did the calculations and was shocked at how much a car really costs if purchased on a 5 year loan vs cash, so maybe it got through. If so, it will have been one of the most important things she’ll have learned in high school.
This statement is correct, but there's an underlying reason why the monthly cost to purchase and own a home is almost always much higher than the monthly rent on the exact same home. If you buy a home today, you're paying a purchase price based on the real estate market today. If you rent that home, the rent your landlord charges will be based on an amortized purchase price that could date back years -- even decades.
This is because in many ways the real estate market is just as fouled-up as the market for buying new cars. If a home was built 20 years ago and it sold for $X to the original buyer, then is there any reason tied to sound economics why that the second owner would pay 20%, 40% or even more for the home today -- after it has aged and deteriorated for 20 years?
That's a good point, but I would make the case that the term "land owner" has a much different meaning in the early years of this country than it does today. I a largely agrarian society, owning your land was synonymous with owning a means of production. You could extend the same principle to a shopkeeper or blacksmith, too.
That whole idea slowly began to erode in the industrial age, once it became commonplace for people to "own their land" even while they got up every morning and traveled some distance away to work for someone else. What exactly does the concept of "land ownership" mean in this context? I would make the case that it doesn't mean anything at all ... which is how we've ended up in a situation where it has become commonplace to borrow an exorbitant sum of money to buy a home, then slave away for years knowing full well that you're never going to pay off the loan!
You don't need to build equity in your home to do this. In fact, building equity in your home actually flies in the face of one of the most important principles of finance that has gotten a lot of attention in recent decades (after Harry Markowitz was awarded the Nobel Prize in Economics for his work in this area): diversification.
From a purely financial perspective, a home is one of the least diversified (and most illiquid, I might add) investments you can ever own. More than anything else, it truly is a case of "putting all your eggs in one basket."
I won't call you an idiot or economically illiterate, but I'll suggest a different approach. Take your own circumstances and see if this would work better for you:
1. Buy a home, and calculate the difference between the monthly payment on a 15-year mortgage and the monthly payment on a 30-year mortgage. We'll call this figure X.
2. Sign a 30-year mortgage on the home, and make regular monthly payments on it.
3. Take the difference between the two mortgage payments every month (X) and invest it in a diversified portfolio of investments that lean toward conservative (a mix of stocks and bonds, but stocks should be concentrated in index funds).
4. At the end of the nine years you described, your mortgage will have a balance that we'll call Y. Your investments will have a balance that we'll call X'.
The advantage of this approach is that after the nine years are up, you now have the flexibility to do a lot of different things -- like selling the home, refinancing the mortgage for another 30 years, taking some or all of your X' and making a lump-sum payment against the principle, etc. I'd recommend refinancing for another 30 years, because you can then start the whole process all over again -- and your new X will be higher because your monthly mortgage payments will likely be lower.
Give it a shot on paper and see how it works for you. You should also take into account the tax deductibility of your mortgage interest payments, which basically means that you're borrowing money at a preferred (and effective subsidized) interest rate to finance your investments of X.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.