Santa Barbara Politics, Media & Culture

Sunday, October 12, 2008

The Owning v. Renting Debate a Year Later

A long-time reader reminded me the other day that it was just about a year ago that we had two posts and over 200 comments on the issue of owning versus renting.
my memory keeps remembering and reviewing those conversations on your blog where all those Santa Barbara real estate maniacs kept on pushing the wisdom of buying all those houses and leveraging money for the obvious utopia that would follow...Do you ever think about that? I wonder what they would say now?

I was reading how people in Riverside are abandoning their homes and clean up crews are finding expensive items and even left-behind passports and birth certificates in the aftermath. My, things have changed....

No, I don't think that will happen here...but if the renter advocates had been saving their money and getting out of debt, aren't they in a great position to buy today? Prices in Santa Barbara have been down by upwards of 35%, no? When homes can be $100,000 less than they were in December of 2007 -- why not buy?

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Anonymous sa1 said...

Well, I'm not sure which neighborhoods your refering to with 35% declines, I think mine is more like 10-15%. It seems though that SB has been spared the worst of it though probably because we have fought against over developement for many years.

Although I support B. Husein O., I'm really worried that a increase in Cap Gains tax will take more wind out of the sails. Ya can't win for losin'.

After the last couple of weeks, I'm sure alot of cash that would have gone towards new house buying has evaporated.

Not to blow my own horn to loud though, I've pointed out the predatory nature of the wealth transfer and greedy overconsumption for a couple of years now...

How smart are those luxury hotels gonna look into the coming years long recession? Are we still counting on that bed tax to pay for our six figure civil servants?

You think maybe Osbad's plan to start only the inland part of Naples has anything to do with selling 72 mega dollar properties or maybe he lost his funding too? Levy town all over with worse effects is what I smell coming.

Those Euro and oil rich foreigners are disappearing fast, are "service sector" economy is flat on it's ass, our State and Federal budgets are drowning in debt and we've given away our manufacturing capabilities to the Chinese so we can have even cheaper crap we can live without. So where do we go from here?

By all means, let's cap it off by giving up our agricultural land for more cheap housing.

Did anyone catch the report from HUD that said 5 million sub-prime (now troubled) mortgages were given to illeagal aliens?

Sorry, I guess I'm ranting again, don't worry DJ, Me and Amy are off to "rehab" again...(No,No,No)

10/12/2008 8:24 AM  
Anonymous Olive branch said...

The psychic rewards of owning your home, particularly in this pending economic storm are priceless. Privacy, independence, protection and certainty in one's life cannot be measured in projected profits or loss. A roof over one's head during the storm is elemental. And the sooner the homeless get out of the bushes and devote their exceptional survival skills to doing the same for their own lives, the better.

A few of them could put their social security checks together and buy homes in Olivehurst, California where you can still buy $30,000 homes and get their welfare checks mailed to a secure address.

You divide up the $24 million the city already spends on the homelesss and you can have at least 600 homes for them in Olivehurst, California and other equally affordable areas of this state. It is absurd to use millions more to keep them in the bushes of Santa Barbara.

It is time for the wealthy in this community to make $30,000 donations to House the Homeless in Olivehurst, California. And the price of a Grayhound bus ticket to get them there. The cost of a lot for an RV would be even cheaper. With falling prices and bank foreclosures, this is a time for opportunity to house the homeless and stop cramming them into socialistic schemes where there is no room. There are plenty of houses for sale in rural California that are a lot cheaper than any homeless maintenance program anywhere in this city.

Oh but I forgot. This would mean someone would lose their pricey salaries as homeless community organizers. Guess that plan to actually solve the problem won't work because these non-profit executive directors would be the next in line to be out of work. And we know their job security is mission number one in any non-profit.

10/12/2008 10:38 AM  
Anonymous Stock market is not cash said...

Correction: no one loses "cash" when they lose in the stock market. They lose a speculative value of a piece of paper, but they do not lose cash. Cash is cash and if you don't want to lose cash don't invest in anything other than CD's.

Anyone still moaning about losing money in the stock market needs a course in basic investing rather than a cry towel. They bet against the market and feel justified when they win; but never take responsibility when they lose.

10/12/2008 5:07 PM  
Anonymous patrick said...

I like owning a home, it sort of gives you some control over your destiny. We bought ours in 2002 and it is still worth more than we paid for it. We have a straightforward 30 year mortgage and have refinanced twice (with a no fee, no zero point loan) to get lower interest rates and have a less than 6% fixed interest rate. Our mortgage is inflation protected, whereas rent isn't. A financial planner once told me that the price of a house only matters on the day that you buy it and the day that you sell it and whatever happens in between isn't really worth worrying about.

10/12/2008 8:50 PM  
Blogger Greg Knowles said...

I like Patrick's perspective. I know that my home in Santa Barbara has been the best investment I've ever made.

10/13/2008 12:30 PM  
Anonymous Cautious Observer said...

Owning a home is fantastic. Just remember, it is a HOME folks. That means "shelter". It should be thought of as such, and not as an investment vehicle.

In the long term, you will come out ahead if you own vs. rent. However, you have to be smart about buying a home. Don't buy something that is beyond your means, and don't overly leverage it.

If you bought a home last year, with the idea that it would primarly serve as a place to stay warm and dry, and keep your things, and where you would continue to live for the next five to ten years, then the current decrease in value relative to when you purchased it doesn't particularly matter.

If you borrowed tons of $$$ at questionable terms to purchase a home last year, thinking that you would "flip" it this year (or next...or even the next) for some major, easy, tax-sheltered profit, then you have a big problem.

10/13/2008 1:06 PM  
Anonymous anon said...

I like Patrick's situation, also, and wish I were there instead of being worried that I may lose my home after the mortgage readjusts in two months.

I am thinking that renting would give much more control over my own destiny rather than the extreme anxiety I have been feeling, worried that I won't be able to make the payments and will be foreclosed upon.

Curious, I looked for Olivehurst. Cute, tucked to the SE of Yuba City, between the freeway, train tracks and airport.

10/13/2008 9:13 PM  
Anonymous sa1 said...

S.M.N.C...What are you talking about? Obviously you have been to a Schwab 2 hour seminar and feel you're intelligent because you almost used correctly the words "speculative value".

–noun 1. money in the form of coins or banknotes, esp. that issued by a government.

The only person that had a cashless stock transaction was gifted it and hasn't sold or was gifted it and watched the company go BK.

10/14/2008 6:40 AM  
Anonymous Olive Gardens said...

anon, if Olivehurst is what you can afford and lets you sleep at night, then Olivehurst is what you get to call home.

Funny how those who demand we bail them out and provide homes for them are so choosy. Tell me again why I should pay your mortgage because you don't want to live within your means? I forget.

10/14/2008 9:42 PM  
Blogger Happy Programmer said...

We're in deflation so those with a lot of debt will get creamed. So if you were a renter and saved your money then you are doing well. If you are neck deep in debt, like most Americans, you're not going to like what's coming. Credit cards are going away as cash becomes scarce. 30 year fixed rates are going to shoot up since there won't be a lot of up front money to spot a large loan, it's preferable for those with cash to simply keep the cash under a mattress as the dollar goes up.

Good news is prices of everything including gas are doing down. It will be a good time to be a consumer, assuming you can find a job when employment is 10%. It's already 6.1% from 5% earlier this year.

10/15/2008 12:31 PM  
Anonymous Gidget said...

Santa Barbara used to be a nice sleepy town for tourists and pensioners. The sooner we get back to that the better.

This is no place for people who need to work to buy houses. It is best suited for those who already have the means to live here and not pollute to get their money. And for tourists to get bussed in an out and be done with them.

10/15/2008 7:16 PM  
Anonymous Mr J. B. said...

Every store front in Santa Barbara including the movie theater trailer ads are asking for workers. Give me a break you can't find a job in Santa Barbara. You just don't want the jobs that are already here. Move elsewhere and quit whining.

10/15/2008 7:17 PM  

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