Some economic experts, such as Tyler Cowen of George Mason University, have become bullish on U.S. GDP growth. Therefore, consumers again may be considering those big-ticket items such as buying a house. The financial information about purchasing versus buying is all around. Now famous is The New York Times calculator for weighing the two options. However, less attention has been paid to the non-financial factors to consider. This blog explores five of them, both pro and con.
Children able to be children
Landlords and other tenants usually have plenty to say when children in rentals behave like the young, not totally socialized creatures they are. The criticism can be traumatic for both the children and parents. Those who want to duck this menace would tend to purchase their own house, preferably with a large yard. Historically, for this they are willing to make tremendous sacrifices such as long commutes and working two jobs.
Not that home ownership is without constraints. Neighbors often have their own values about how children should conduct themselves. Also, the median age in the neighborhood might be tilting upward, with older residents not welcoming children. Before buying, parents must investigate the neighborhood norms and demographics.
Feelings of belonging and security
According to the U.S. Census Bureau’s 2012 report, 65.4 percent of Americans are homeowners. Among the motivations for that are the intangibles. They range from feeling a part of the neighborhood to having ownership of something. Those in the community tend to treat homeowners with more respect and attention than they do renters. Also, having property, which the laws of capitalism protect, remains a key value in American life. For those with those needs, not owning a home could represent a diminished quality of life.
Myth of freedom
Folks like to assume that their home, if they purchase it, is their castle. The reality is that communities, concerned with keeping up property values, have a maze of rules. Those could include how many pets can inhabit one residence, if a shed can be located in the back yard, and the time period for shoveling the walk. In addition, insurance companies have their own strict terms and conditions about what will be covered. For example, certain breeds of dogs are forbidden. The irony is that renters, since the community is not invested in them, often have more personal freedom. If the landlord is just happy to get the rent on time, they may be able to get away with more than property owners.
Ability to keep up with maintenance
For everything from external repairs to snow removal, the buck stops with the house owner. Since many people are investing more time and energy in making a living, maintenance might prove to be too much of a commitment. Farming out the tasks costs. Also there is aging. Pushing a lawnmower may go from difficult to impossible.
For those in condos and co-ops, those services are provided for a fee. The problem is that the fee is not capped and the monthly charge can rise significantly. In addition, to preserve the value of the purchase, condo and co-op dwellers still could be faced with internal renovations. Renters, since they’re not focused on improving the landlord’s property, have no such nagging concern.
Limits on relocation
Home owners who lost their jobs or businesses during The Great Recession often encountered a cruel lesson. Because they could not sell or rent their home, their options for trying to earn a living were restricted. Essentially they were stuck in areas of high unemployment or limited business prospects.
Although the economy might have improved, it remains volatile. That good job might be gone tomorrow. Anchor clients might take their business elsewhere. With gas costs so high, a long commute to a comparable job or a better business location might not be possible. Pulling out of a lease, even when paying penalties and moving costs, is a lot more doable than trying to sell a house. Since fewer employers are including purchasing a house in the hiring package, from the get-go more job hunters are making it known that they are renters, therefore moving won’t be a distraction for them.
Aside from the financial considerations of buying versus renting, there are no right or wrong answers in making this decision. Also, situations change. The aging couple might inherit a windfall and be able to afford to pay, without a sweat, for the maintenance and renovations. Therefore, after renting for years they can purchase the house of their dreams.