Saturday, March 21, 2009

Renting in Orange County. No Ball and Chain.

I'm still renting a single family house here in Lake Forest, California, paying way less than it would otherwise costs me to go into debt to live in a similarly-sized home per month here including mortgage, insurance, taxes and upkeep, particularly when one considers the economic situation and unemployment risks in this state. I mean, if I lose my job in the coming months, I have flexibility to pick up and go elsewhere. Look Mom! No strings!

I've said all along that this is wrong. It should be a privilege to rent and have this kind of freedom to get up and freaking leave. I should be charged a freaking premium to live this way and have no real obligations other than the monthly rent and utilities, especially right now.

But Orange County, California, and I presume many parts of the United States of America, have had it wrong all along. Instead, homeownership (homedebtorship) has been marketed at the premium, partly due to narcotic-like liar loan products since 2002, the resulting run up in single family home prices, and the incessant industry lies about "home appreciation" that everyone and their dog was suppose to "take to the bank". Come on. Who doesn't remember the famous Orange County, California adage: "15% is in the bag!". Jesus, who in their right mind isn't for 15% appreciation on their money?

But I've been renting. And I've been saving.

Like a mad dog.

I can't say I'm way, way ahead. Indeed, I've even lost money on investments over the last 12 to 18 months. But I have no ball and chain to me. I'm still throwing money into savings accounts and retirement accounts. I've cut my expenditures where I can. I started to grow a garden in my back yard, and I'm not eating out as much. Driving my car less and my motorcycle way more.

That all said, I would love to "own" (or actually go into debt for a home) here. I have been looking too. Carefully so. Homedebtorship definitely makes sense under certain circumstances. But not under all circumstances, and certainly not at any price.

We are now witnessing record home sales in Orange County the last few months.
And local realtors have claimed that these transactions have occurred either at or above the asking price! So these buyers either have a lot of down payment cash available, or their willing to continue borrow large amounts of money to live in a house. That's their choice. They must have awesome job security and a dependable income too, or maybe they won the lottery and inherited some serious dough.
More power to them.

Single family home prices are coming down now and mortgage rates too. Maybe the time is now to buy, or at least may be quickly approaching?

Not in my view. Not yet because home sales prices are still not congruent with local incomes in Orange County. Not yet because renting is cheaper, and it shouldn't be. Landlords can't rake renters over the coals. They certainly want to, and there time will soon come. Also, as I have stated numerous times on this blog, I do believe more housing trouble is on the way in the form of the shamefully under-reported Alt-A prime loans.
Sunny times are not necessarily guaranteed, nor is it "full-steam ahead" for California housing market.


colleeeen said...

Funny how much we have in common. We have also been looking to cut expenditures, even though we have been putting healthy amounts in savings every month for some time now. And we've been renting a house in Lake Forest for about 1.5 years and I am on summer #2 of vegetable gardening. Our rent is so relatively cheap, it will take another drop of at least 25% to get us off the fence.

But I can't recall a time in my adult post-college life (I'm 34) when it has been less expensive to own than to rent. We fell for the ownership dream back in 2002 and bought a townhouse. I occasionally suspect it was a mistake, but at least we have wonderful renters in it now and are breaking even. It never, ever occurred to me that we could own it for 7 years and lose 100% of any equity accrued in those years. I always knew the bubble had to burst, I just never knew how far it would go.

We think that if we never end up buying a house here, we'll buy a retirement property somewhere else and rent that out until we have rearranged our careers to get us out of here (I'm back in college right now).

Sarah said...

I am sure many are currently cutting costs, why not network with the moms in the bizymoms Lake-forest community & see what they have to offer