Falling prices makes the rent-versus-buy decision difficult

Today's featured article looks at how Americans are changing their views on the rent-versus-buy decision.

Irvine Home Address … 4162 SALACIA Irvine, CA 92620

Resale Home Price …… $699,990

Back when real estate always went up — or at least when that was a commonly accepted as fact — the rent-versus-buy decision wasn't primarily financially or investment oriented. Most often people would chose to rent instead of own because they valued mobility, didn't want the liability and responsibility of home ownership and maintenance, or a variety of other reasons. Until the market crashed, renters did not consider losing their down payment and more if they need to sell unexpectedly. Much to the chagrin of realtors, potential buyers now know crashes are possible.

Buy? Nah, Rent. Nah, Buy.

Deciding used to be simple—buying a home always made sense. Then the bubble burst.

By Alina Tugend — Wednesday, March 16, 2011

Jean Sica-Lieber owned homes all of her life—when she was married and divorced, when her children were young and when they were grown. But recently, after selling her Rochester, N.Y., town house at a loss, she decided to rent. Sica-Lieber assumed it would be for a year and then she would buy a small place with a garden. But now, she’s rethinking that plan.

“Part of me, and I think this exists in most Americans, wants to be a property owner, despite the fact that unless we buy outright, the bank really owns most of it,” the 58-year-old publishing specialist said.

There are some people who get it. Equity is ownership. Negative equity is an oxymoron invented by the lending industry who preferred a nonsense term that made money-renters feel like home owners.

“But when it came right down to it, I’m single and don’t have children to do chores. How do I want to spend my time? Would I rather do more travel or pay property taxes?

She recognizes the opportunity cost of loan ownership. Without HELOC money to supplement income, high debt-to-income ratio living is a real drag.

So Sica-Lieber decided to hold off on buying that little house, and she renewed her lease on her town house for at least another year.

For Kelly Stettner, 41, who had rented all her adult life, buying a house brought unexpected joy. When their landlord put the duplex she and her husband were renting up for sale, they ended up purchasing a 1929 bungalow on an acre in Springfield, Vt. They, their two children, and their dog couldn’t be happier.

“Budgeting is different, but we’re exploring many options that we never had considered while renting—a solar panel, a vegetable garden, [do-it-yourself] landscaping, and much more,” said Stettner, an administrative assistant. “But the emotional end is what I couldn’t imagine. There’s a self-esteem from the responsibility of owning it. We’re responsible for keeping it energy-efficient, keeping it clean. We get to do what we want, when we want, on our own terms, and we directly benefit from it. That was something I hadn’t really anticipated.”

Those are the emotional payoffs of home ownership — or at least the perception of home ownership minus the inconvenient reality of debt. When people feel ownership of something, they tend to take better care of it.

For example, I recently moved to a different rental (I am still Irvine Renter), and this property has beautiful wood floors. I so enjoy the beauty of these floors that I take care of them as if i were an owner. I am caring for the floors because I appreciate their beauty. I get the benefit of use, so I feel and act like an owner even though I merely rent. I take better care of the floors in my rental because I feel that emotional sense of ownership.

I haven't owned my primary residence for over 10 years now. I never thought that would happen, and I do miss many aspects of home ownership. Unfortunately, the reality of local price declines and the still staggering cost makes me stay on the sidelines. I can see the stars and moon aligning sometime in the next two or three years. I feel no urgency.

To buy or to rent? That was never much of a question for most Americans. Buy as soon as possible, of course, to show that you’ve grown up and made good. Paying rent, the thinking went, is just throwing money away; owning a house is an investment in the future.

It amazing how much those myths are embedded in our culture.

Until the past few years, that is, when too many Americans who bought homes with too little down and at too high a price discovered that they couldn’t pay the mortgage and couldn’t sell either. That unaffordable house became an albatross. So now, potential homeowners are more likely to seriously consider renting. But which makes more economic sense in the short- and long-term?

It depends.

In nearly three-fourths of the nation’s top 50 cities, it is better to buy than to rent, according to the real-estate website Trulia.com. The site, one of the most popular for real-estate research, offers a “Rent versus Buy” calculator that compares the costs of two-bedroom apartments, condominiums, and town houses. The data for January show that cities where the housing bubble burst with a vengeance—Miami; Las Vegas; Arlington, Texas; Mesa and Phoenix, Ariz.; and Jacksonville, Fla., in that order—were the best places to buy instead of rent.

Renting was a far better deal in New York City; Seattle; Kansas City, Mo.; San Francisco; Memphis, Tenn.; and Los Angeles—less because of cheap rent than the continued high cost of buying in those cities despite the recession, according to Tara-Nicholle Nelson, Trulia’s consumer educator.

The website considers a home to be fairly valued, Nelson explained, if buying it costs about 15 times a year’s rent. So if you pay $10,000 a year to rent, you should be wary of paying more than $150,000 to purchase an equivalent piece of property.

The comparative advantages of buying versus renting aren’t easy to figure, though. Numerous websites offer calculators that have the user enter the requisite data and supposedly learn which course to pursue. But Russell James, who teaches personal finance at Texas Tech University, has researched these online tools and found them unreliable. When he plugged the same information into the top 10 online calculators, eight advised him to buy and two told him to rent. “At one extreme, I was told buying would save me around $61,500,” he reported, “and at the other end, I was told renting would save me $15,000.”

We developed the IHB calculator because most of the online calculators are intentionally misleading. Most rent-versus-buy calculators were not designed to give people accurate information. Most of these calculators were designed by realtors with the intention to present buying in a favorable light no matter the truth. It part of the ongoing campaign by realtors to dupe buyers into action — even if buying is harmful to the buyer — to generate sales commissions.

We are planning an upgrade to the IHB calculator this year. We may go high tech. I believe it can be a very useful tool if it can be streamlined for easier use and to present accurate information as clearly as possible.

James also warned that online calculators may be particularly misleading for lower-income buyers, who are more likely to purchase older homes that need repairs and are less energy-efficient. These buyers are also less likely to itemize their tax deductions, losing the advantage of the federal tax break for mortgages.

Whether you rent or buy, some costs may not be obvious. Home­owners must pay property taxes, private mortgage insurance (if they plunked down less than 20 percent when they bought), home insurance, and all utilities—some of which landlords may have paid before. They’re also responsible for buying any needed big-ticket items such as lawn mowers, snowblowers, and washer/dryers. Renters, Nelson said, face the “opportunity cost” of lost equity and the prospect of never owning a home free and clear; they also could pay substantially higher taxes if their income is large enough to deduct property taxes and mortgage interest. And any improvements a tenant makes to a rental property belong to the landlord, of course. Tenants might also face unexpected rent hikes and evictions.

The sad reality is most new homeowners underestimate their monthly costs by 20% to 30%. The most difficult period for most first-time buyers is the first year or two when they adjust to what their house really costs.

Real-estate experts warn that it’s important for potential homebuyers to plan ahead. The common wisdom is that a buyer should anticipate staying in a house for seven to 10 years to recover all the costs. Yet these days, most people expect to be more mobile, in pursuit of new jobs and careers. “The two things are working in opposition,” Nelson said, “the mobility of the job market versus how tough it is to recoup housing costs.”

An astute observer noted I have stated several times — perhaps too many times — people should expect to hold for seven to ten years to break even. Fair enough, but it is a message worth repeating, because most in Orange County real estate are still telling people rapid appreciation awaits those who buy today.

For buyers, times are very different than they were before the housing crash triggered the Great Recession. Then, the saying went, you just needed a pulse to get a mortgage. Now, you need a pristine credit score (in the high 600s, at least) and history without any outstanding debt or defaults, according to broker Allyson Bernard, the owner of Real Estate Professionals of Connecticut. And expect to put down at least 10 percent.

Many people who want prices to go back up quickly have complained about the tightening credit. I believe credit will tighten further and become more expensive going forward. The comment above reflects the current “bar” people must reach to buy a home. A FICO in the high 600s and 10% down is not onerous by historic standards.

Many in the lending industry have equated lower lending standards with progress. We are somehow going back to the stone ages of the 1970s by raising lending standards. Progress should not measured by how stupid banks can be with giving out free money to people who won't pay it back. Relaxed lending standards do not reflect progress, they reflect regression and stupidity.

Lenders, she noted, also demand a strong employment history: “[They’re] not just looking at your stability, but at the stability of the market you work in.” The restrictions are toughest, Bernard said, on the increasing numbers of self-employed, who find it harder and harder to obtain a “non-verified” mortgage. Bernard noted that she owns her home, but that if she didn’t, as a self-employed real-estate agent, “I couldn’t even get a mortgage.”

When stated-income became the easiest conduit for Wall Street money, those programs were doomed. In many instances, we have probably thrown out the baby with the bath water when it comes to stated-income loans.

Some version of stated-income can be underwritten successfully. There are many ways the self-employed can demonstrate income, and programs using these sources as documentation will eventually return. However, right now, if you don't get a W-2, it is very difficult to provide lenders with income documentation they will accept. We should never return to the days of signature mortgages, but programs that accommodate alternate sources of income can and will return to the market in time.

Still, now that housing prices are down and interest rates are low, many economists and most real-estate agents say that if you can find the credit, this is the time to buy. But Elizabeth Weintraub, a Sacramento agent who writes on the subject for the website About.com, isn’t so sure. “People think owning a home is their destiny, but maybe you’re not cut out to be a homeowner,” she said. “You’re making a commitment to buy more than four walls and a roof. You need to think, ‘Do I have a maintenance account set up? Will the tax consequences be significant? Can I afford to make improvements?’

“It’s OK to give yourself permission not to own a home,” Weintraub concluded.

That is the most important statement in the article. Prior to the collapse of the housing bubble, renting was universally derided as a sub-standard way of life. A tremendous amount of emotional baggage is attached to our desires to be home owners. Sometimes people just need to be given permission, the comfort of the herd, to make a change. The whole point of this article was to prepare people to emotionally accept the statement above.

By some accounts, the traditional stigma against renting is easing. There is even a small movement, Nelson of Trulia.com pointed out, of people who call themselves renters by choice.

Perhaps Irvine Renter is the start of a small national movement?

Texas Tech’s James, however, said he doesn’t expect any significant shift, partly because of Americans’ long-standing love for homeownership and partly because of the law. In Europe, where longtime renting is far more common, he noted, “there’s a totally different attitude.” Renters have strong legal protection—too strong, some argue—against eviction and dramatic rent increases. But in the United States, except in places (such as Manhattan) with a semblance of rent control, the cost of renting is unstable, he said, and therefore less appealing over the long haul.

That truism is only factual when borrowers use fixed-rate mortgages. ARM borrowers do not gain the certainty of costs lower than renting that fixed-rate mortgage borrowers gain.

Still, in deciding whether to rent or buy, the numbers matter only so much. Kelly Stettner regards owning a home in her Vermont town as good not only for her family but for the community, too. “It really does make us better citizens,” she said. “We’re responsible for keeping up good relations with our neighbors and making sure that our house looks good from the street.”

What does it say about her that she is a lesser citizen when she rents?

Upstate New York renter Jean Sica-Lieber thinks that the decision depends on where you are in life and what you want out of your future. “There’s a freedom that goes with owning,” she said. “And there’s a freedom that goes with not owning.

The author writes the ShortCuts column for The New York Times. Her book, Better by Mistake, is being published this month. She’s at twitter.com/@atugend.

Freedom is renting. Given my new line of work, I strongly considered moving to Las Vegas. Since I rent, that is an option for me. A quarter to a third of home owners in America do not have the same freedom, and many of those people will not regain their freedom for a very long time.

Irvine Home Address … 4162 SALACIA Irvine, CA 92620

Resale Home Price … $699,990

Home Purchase Price … $260,000

Home Purchase Date …. 8/23/96

Net Gain (Loss) ………. $397,991

Percent Change ………. 153.1%

Annual Appreciation … 6.8%

Cost of Ownership


$699,990 ………. Asking Price

$139,998 ………. 20% Down Conventional

4.82% …………… Mortgage Interest Rate

$559,992 ………. 30-Year Mortgage

$141,984 ………. Income Requirement

$2,945 ………. Monthly Mortgage Payment

$607 ………. Property Tax

$150 ………. Special Taxes and Levies (Mello Roos)

$117 ………. Homeowners Insurance

$0 ………. Homeowners Association Fees


$3,818 ………. Monthly Cash Outlays

-$714 ………. Tax Savings (% of Interest and Property Tax)

-$696 ………. Equity Hidden in Payment

$258 ………. Lost Income to Down Payment (net of taxes)

$117 ………. Maintenance and Replacement Reserves


$2,784 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$7,000 ………. Furnishing and Move In @1%

$7,000 ………. Closing Costs @1%

$5,600 ………… Interest Points @1% of Loan

$139,998 ………. Down Payment


$159,598 ………. Total Cash Costs

$42,600 ………… Emergency Cash Reserves


$202,198 ………. Total Savings Needed

Property Details for 4162 SALACIA Irvine, CA 92620


Beds: 4

Baths: 3

Sq. Ft.: 2550


Lot Size: 6,200 Sq. Ft.

Property Type: Residential, Single Family

Style: Two Level, Ranch

Year Built: 1970

Community: Northwood

County: Orange

MLS#: S651772

Source: SoCalMLS

Status: Active

On Redfin: 2 days


Premiere Location on Cul de Sac Street-3 Bedrooms, 2.5 Baths w/ Approx. 1915 S. F. , Wood Floors, Vaulted Ceilings, Sunny Kitchen w/ Newer Appliances, Tile Counters, Wood Floor, Garden Window, Breakfast Nook w/ Pantry, Spacious Family Room w/ Double French Doors & Sidelights Opens to Private Backyard, Built-In Entertainment Unit, Brick Fireplace & Recessed Lights, Formal Living Room & Dining Room, Master w/ Walk-In Closet & Window Shutters, Master Bath w/ Dual Vanity, Tile Floor & Tiled Shower, Private Backyard has Hardscape w/ Brick Accents & Grassy Area, Walk to Tot Lot & Large Grassy Area Behind Home, Walk to Award Winning Schools including Prestigious Northwood High, Enjoy Resort-like Association Amenities w/ Pools, Huge Spa, Tennis Courts, Volleyball Courts, BBQ's & Remodeled Clubhouse, No Mello Roos, Low Tax Rate, Assoc. Dues $83/Month

I play too much Wii Golf

I really enjoy playing Wii Golf. I have the Tiger Woods golf game, and it is more realistic, but Wii Golf captures the essence of golf. The thrill of golf. Sometimes you are forced to cope with unfair bounces and bad breaks. Wii Golf is more like real life. Golf has always been a metaphor for life, for dealing with capricious fate. Wii Golf is an instructional spiritual practice.

Wii Golf was designed by gamers who were interested in good gameplay. Some of the architectural devices they use (trees in fairways, ridiculous green slopes, and others) are a turn-off to many seeking the golf course experience. I love these features because they force you to overcome them.

Wii golf is broken down into groups of three holes, a par 3, a par 4, and a par 5. Once you become proficient at the game, you expect to birdie nearly every hole. The par 5s offer an opportunity for an eagle 3 if the wind is favorable. Practically speaking, the best you can achieve on each three-hole group is -4 (four under par). I will usually be either -2 or -3 for each three-hole group. Most often I will shoot between 6 and 9 under par for a nine-hole round, but sometimes, when everything comes together, I can get to -10 or better. The round above was perfection.

I will spare you the shot-by-shot description of my brilliant play. No need to go into detail about the masterful judgment of ball physics and creative shotmaking only a golfing genius could ever attain. No, I won't recount the amazing three wood I sliced onto the third green to within 10 feet. but i have to share the final hole.

The par 5 ninth has always been a nemesis. It's set up to be reachable in two only if the wind is behind. No backwind, no chance for eagle. The green is severe with mounds and plateaus on the left side and a steep gradient on the right. There are many difficult pin placements and few easy ones.

I got my favorable backwind, and I judged my tee shot perfectly between a large central pine tree and the nearby left rough. it provides a hilltop driver “from the deck” that lands in a small patch of fairway between two greenside bunkers. Too short, and the ball is in the water, and too long, and it hits the green and bounds over the back. If you don't hit this tiny square, your ball does not end up on the green.

After managing to get on in two, I pinpointed the cup on the other side of the green — the side you can't access with your second shot. I faced this 50+ foot putt with a swinging left-to-right break of great severity.

I stopped to laugh to myself about the degree of difficulty for a perfect score. The game was not making it easy for me. I used all my experience to try to pick a line and speed I believed would rattle the cup from three-putt land. As I watched it arc into the hole with perfect speed and break (I think the Wii helps you out sometimes), I felt a sense of satisfaction as deep as any experience I have enjoyed on a golf course. In some ways, more so.

16 thoughts on “Falling prices makes the rent-versus-buy decision difficult

  1. winstongator

    While she may understand that when you have a home 90% mortgaged, the bank owns most of it, she doesn’t understand that renters pay property taxes also – through their rent.

    It is ironic that just as home prices were peaking, when renting made the MOST sense, there was the largest stigma associated to it.

    Rent v. Buy depends very much on price. A neighboring house is for sale for $525k and currently rented, I would guess for $4k/mo. If you like that particular home, it’s an easy choice. Per your calculator, renting is almost 2x as expensive. Now, the flip side of the buy-rent equation: the home originally sold for $587k, so the current sellers are eating a $60k loss.

    It was one of the first homes sold in our neighborhood (blowing up the first-people into a new construction neighborhood seeing the most appreciation theory), in mid-2006. Other homes in the neighborhood have re-sold at much smaller discounts than the 10% this one will probably see. At $587k it was also above what comparable new homes were selling for – they were much closer to $525k. If comparable new home costs are less than your asking price, you are in trouble.

    1. IrvineRenter

      “It is ironic that just as home prices were peaking, when renting made the MOST sense, there was the largest stigma associated to it.”

      I remember that all too well. Imagine being a renter at the time telling loan owners prices were going to crash.

      1. winstongator

        It wasn’t even just crashing. You were an idiot for missing out on the ‘investment opportunity of a lifetime’ ‘/sarcasm’ In many of the bubble markets, it wasn’t just high prices that were needed, it was rising prices. Rising prices yield move-up buyers, RE commissions, mortgage fees, HELOC spending, and stokes the fire of new construction. Rising prices also covered up all the terrible origination practices, because if someone stopped paying or couldn’t pay, they would refi or sell. When you need rising prices to sustain a system, you will hit a real problem.

        1. WS

          The flack I received from people during the run up was constant and amazing. The only thing that saved me was that I and my closest group of buddies worked in finance together. We at least could spot the bubble and argue intelligently that there would be a crash. We often could not convince others, but at least they could not convince us otherwise and tempt us into buying the hype.
          We road out our late 20’s and early 30’s as renters on the Newport Peninsula. Solid income, great credit, no overwhelming responsibly…we had fun. Labeled as immature by many – “you should buy!, whats wrong with you?”

          Some fell to the pressure – newly married, the wife pressure plus family pressure can be too much and one or two folded despite our best efforts.

          The worst of the worst was a roommate. A great guy, but a blue collar guy (well paid though). Fell in love with a real estate agent and decided it was a good idea to by a 2brd, 1400sq ft. condo in HB for high almost 700k with her in 2006. It previously sold for $350 in 2003. He financed zero down, interest only ARM.
          Me and a buddy spent 8 hours on a Saturday with him trying to convince him it was a horrible idea for so many (so many!) reasons. White boards, graphs, rent v buy calculations, price/income ratios, everything we could show him. After hours of protestations such as “property is only going up”, “buy now or be priced out forever”, “they are not making any more land”, “refi later after appreciation”, “asian money”, “it cant happen here!” and my favorite “I gotta get my d!c# wet sometime”….everything you can imagine.
          We thought we talked him out of it only to have him go silent on us and tell us two weeks later that he went ahead and bought the place.

          I felt like a failure as a friend, but tried to hold on the solace that I did everything I could. Perhaps I tried too hard, and he shut down and tuned us out.

          Anyways, 2 years later he was about 200k underwater and just washed his hands of the place, with no real damage besides trashed credit for a few years. Real estate girlfriend ditched him too.

          At least I did get the “you were right, I should have listen”. I felt better in a shallow way.

          Anyways, over those years I enjoyed wonderful times renting on the Newport Peninsula, downtown Manhattan Beach, Santa Monica and other beautiful places where the cost of renting was 40-60% less than the cost of ownership. All those moves were to chase better and better jobs – I could not imagine not have that freedom.

          However, even to this day I get people looking at me a little off, or see an adjustment in their eyes when I say I rent. Like something is wrong with me. But I do think that is slowly changing….

  2. winstongator

    If you think Miami is a good market to buy, you have to read this, Nearly 20% of Florida homes are vacant (thanks to CR for the pointer).

    Vacancies will drive down prices. Just as buying ‘made sense’ even with buying costs above renting when you could present-value appreciation, renting costs lower than buying might not make sense if you present-value price declines.

  3. Planet Reality

    IR this homes history shows purchased for $79k in 1989. Then foreclosed on in 1996 for $285k.

    What do they say about history?

    Now fast forward to 2011, it’s a “screaming deal” for $699k

    Below rental parity, market fundamental pricing.

  4. jb

    I have a pretty detailed excel spreadsheet that I use to compare buying vs renting. The closest calculater that I’ve found is the patrick.net one, but it isn’t there now. I haven’t tried yours. The main input that concerns me right now is the near-term depreciation that I see happening. I used the house from your post yesterday to do the numbers:

    If someone bought that house in ‘97 at $236K with 20% down, their payment would have been $1,400 at 8% int. This is 28% of a $59K salary.

    This year, say someone comes along to buy the house making 60% more which is $94K. They put 20% down on the $510K home which translates into a payment at 5% of $2,200 (28% of their income). If interest rates were still at 8%, however, that $2,200 would only buy a $300K mtg instead of a $408K mtg. With 20% down, the house would be “worth” $375K. So, if interest rates go back up to 8% at some point, there could be a drop of around 25% in order to maintain the same level of affordability.

    There is just too much near-term (<5 years) risk to justify buying. If prices fall more this year without a dramatic rise in interest rates, though, I may buy again.

  5. Vincenzo

    These calculators don’t take into account the fact that renting is very flexible even if you don’t relocate.

    For example, one year you can rent a small place, save thousands that year; then you can afford to rent an apartment in Paris for couple weeks of your vacation.

    The next year you rent something big on the beach with fountains and peacocks.

    The third year you’re unemployed, you move to a tiny place and live on unemployment checks.

    The fourth year you’re tired of commuting 5 miles and you rent something closer.

  6. Feral

    Something that doesn’t make sense to me…if Irvine Renter’s business is in LV, and the cost of living is much cheaper in LV, why continue living in OC with one of the highest rents and cost of living in the US, while commuting to LV with $4/gal gas? Is it the weather/restaurants/cool factor? Child won’t change schools? Significant other refuses to relocate? Seems thousands could be saved by living in LV for a couple of years. Not that it’s any of my business, but just seems strange. Sorry.

    1. IrvineRenter

      The business opportunity I currently enjoy in Las Vegas is likely not permanent. The business I am building here in Orange County will be longer lasting. Buying and selling houses in Las Vegas is a great business interest, but I do have bigger-picture projects I work on.

      There are more opportunities for growing a variety of business interests here due to the skills and money present in Orange County. Given the high cost of living, that’s the only reason businesses locate here. It certainly isn’t because the environment is business friendly, or the tax rates are low, or the cost of living is low.

      Plus, there are significant lifestyle reasons to stay that are purely selfish. My wife and son would relocate and be happy, but we enjoy our lives here, and there are things we enjoy that we can only do here. For example, I take my son to Disney nearly every Sunday morning.

      I certainly would save money by relocating to Las Vegas, but I believe I will come across opportunities in Orange County that I would not find in Las Vegas that will make up the difference. If I am wrong, I have wasted money I could have saved. If I am right, I will come out ahead financially, and I will have stayed in Orange County. It’s a risk I am willing to take.

      1. ccr

        So .. Irvine is different – just kidding and thanks for being so open !

        I think LV is the Disney for Adults, so be careful how your sons evolves – 😉

        LV is very poor for Ocean activities, and the skills and business opportunities are very very specifics as well as the money which goes there.

  7. TO Renter

    Words hardly suffice to describe the negativity and ISOLATION heaped onto me by SHEOPLE in 1999-2002 for being an HB renter. The problem is … that’s nearly EVERYBODY WHO HAS A DECENT JOB, ergo ‘isolation.’

    I worked with a lot of really nice people at Boeing plants around HB.

    BACK THEN I would be met with an amalgam of feigned pity with the righteous finger-shaking at me for my misfortune brought about by an obviously [sic] pathological stupidity and lack of courage to MERELY sign a mortgage instead of pay off the debt from my second wife.

    MID 2007-2009 the revelation of my rentership brought about an erie silence … I would try shrugging it off saying “it used to be a curse, now it’s a good thing … go figure.” most again people had so uncomfortably little in common with me … I feel they stopped themselves from commiserating about their HELOCs and spec-houses.

    Fortunately now I have another nice job and I rent this extra-nice house in Thousand Oaks –I moved so fast and easy, for the career, it blew everyone’s minds I knew in BOTH counties.

    NOW when I say I’m renting … but it’s a nice place and come over to our upcoming party … I can see people seem VISIBLY JEALOUS about freedoms I enjoy. It’s like they are so screwed and trying soo hard to make ends meet.

    THE 2011 LANDSCAPE AT AGE 59: the career longevity is very uncertain so I may keep saving and wait until salaried full employment becomes impossible, maybe try consulting, (jobless recession can’t last forever, can it?) maybe buy something in a cheap location, or maybe buy a motor home and be the happy itinerant couple. I might buy if inflation gets suddenly worse and somehow my career in this region becomes more solid.

    Stepping back, I see that’s still a whole lot of “ifs.”

    Dear IHB people I feel I know you better than family members. I rarely post because I work hard. I still read this blog and all your comments almost every single day since it started. I’m still renting an extra nice house in Thousand Oaks. I hope to make it to one of your mixers sometime soon.

    Best regards

  8. ozajh

    There is a small nugget of truth in PR’s comment above.

    It is almost certain that governments the world over will make sure that SOME level of inflation will be maintained (although possibly not carrying over to wages), because deflation is so painful for them.

    Bur/rent calculators (and Fixed/ARM calculators for that matter) should always factor in inflationary expectations over the life of the loan, even if this is only a ‘best guess’.

  9. NateGeo

    IR, can i win a special prize if I identify the location of the last photo, the one with the fellow standing on the tee box with the blue ball, and the club house in the background?

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