For generations we’ve pledged allegiance to home ownership. Our parents, teachers and presidents told us it would be our ticket to wealth, prosperity and happiness. It’s partly why I bought a place in Manhattan five years ago. But that sentiment is, for obvious reasons, changing. Our recent housing debacle has erupted into a debate over the actual benefits of homeownership.
Some critics argue that renting a home is far more financially attractive and less risky, with some three million homeowners expected to face foreclosure this year alone, according to RealtyTrac. That’s up from 800,000 foreclosures in 2005. And if you bought a home during the peak of 2006, chances are, no matter where you are in the country, you feel a little or a lot duped.
I Heart Ownership
Call me crazy, but I’m still rooting for home ownership. Maybe it’s old-fashioned but I still think rent is “money down the drain” in a lot of cases. Remember, one very big reason why our real estate market is in shambles today is because banks handed us these laughable mortgages and we, in turn, became over-leveraged and unprepared for home prices to slide. We were also a flip-obsessed country, believing that quick gains from buying and selling were almost guaranteed.
Government intervention is playing a role in the recovery and we’re seeing prices stabilize. Real estate agents, once again, are getting very busy. In California, the hardest hit state, folks bought 600,000 homes in February, up 80% from a year ago. A turnaround looks to be in the works and now is a great time, especially for newbies, to get in the market.
“People have very short memories,” says Jacky Teplitzky, executive vice president at Prudential Douglas Elliman in New York. “The [critics]…are those who bought their homes two years ago and need to sell them now. But if you look at people who bought, let’s say, in year 2000…those people still have equity and they are still ahead of the market.”