The words sting every time I hear them, and I've heard them often: "If you rent your home, you're just throwing money away."
I've rented all my adult years, you see. That's partly because I was a student for about half of those years. Also, I may not have starved during my time as a starving artist, after college and graduate school, but I sure wasn't investing in real estate.
But the words are especially painful now, amid the real estate slump that may soon have us all wearing rain barrels. Real estate prices have collapsed, and home foreclosures have reached devastating rates down south and out west. They're increasing locally, too.
As a result, credit is drying up, and long gone are the fabled days of two years ago, when dream houses were seemingly being given away off the backs of trucks, to people with poor credit and no cash. Reality has set in, as it has a way of doing, and it looks like many home buyers may once again need to -- gulp -- save up for a down payment.
So what was I doing two years ago? Actually, I was thinking about buying a house. I had emerged from the starving-artist phase into gainful employment, I was establishing roots in the community, and I was sick of hearing the late-night screaming of the people in the apartment above mine.
And those dire admonishments about throwing money away on rent were ringing in my ears.
But my boyfriend and I were intimidated by the process. So in the summer of 2006 we did what comes naturally to longtime students like us (I've finished my studies, but he's still working on his): We decided to take a class. We signed up for the free home-buyers seminar offered by the Dane County Housing Authority.
And so three consecutive Tuesday evenings found us in a nondescript classroom at the authority's offices on Monona Drive. We were joined by other anxious-looking people, many of them young couples. My boyfriend and I took copious notes as a very nice woman from the authority explained fundamental concepts -- what is equity? -- and then introduced a series of guest speakers: A cooly confident mortgage loan officer; a soft-spoken real estate agent; a colorful, curmudgeonly home inspector. They explained the basics of their professions.
After the last session, we each received an official document certifying that we had taken the class. We also received swag bags containing, among other things, compact fluorescent lightbulbs. My boyfriend and I felt we had accomplished something.
Two years later, we're still using the compact fluorescent lightbulbs. We have not, however, bought a house. We're still in the apartment we rent in a pleasantly funky two-flat just off Willy Street. We live practically across the street from the Willy Street Co-op, where we shop for fresh produce every day. We're steps away from restaurants, nightclubs, coffee houses and a superb thrift store. Our screaming neighbors have moved out.
We like the apartment we're throwing money away on.
Still, I have indeed been feeling wary and regretful about not buying a place of our own yet, in light of what has happened to the housing market. But after speaking to some local bankers, I am reassured.
They reminded me that because my boyfriend and I have good credit and a bit of cash socked away, buying a house today probably would be much like buying it two years ago would have been. Also, they said, there are excellent buys out there right now. On some level, I think I knew all that.
So what is it that I regret? Would you believe the riches?
Some part of me believes that if I had bought just the right house at just the right time, at just the right laughably low teaser rate, and then sold it at just the right moment, I could be flush with cash now, and ensconced in a better house. It's a belief borne of the same frenzy that saw too many Americans buying more house than they could afford, in the optimistic hope that they could come out ahead in a market whose explosive growth would never stop.
It did stop, of course. But if only I had flipped a house first!
That kind of thinking is madness, of course, and it's similar to the madness that drove the dot-com stock mania some years back. The old, good reasons for buying a house, my banker sources reminded me, remain good: You sock away money. You get settled in a community. You escape your screaming neighbors.
Also, the bankers reminded me, the local housing market hasn't seen anything like the wild swings of Florida, California, Arizona. In short, one told me, it's a great time to buy! But of course he would.
And maybe my boyfriend and I will buy. One day. But we sure do like our apartment. Now pardon me while I dash across the street for some organic fingerling potatoes.